If you renounce US citizenship can you ever get it back, or is it "bye bye and don't come back buddy!"?
Eduardo Saverin, a co-founder of Facebook, has abandoned his American citizenship ahead of the social networking company's possibly oversubscribed IPO in May. “Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” his spokesman Tom Goodman …
You can still visit the US or even live there, just depends of the country you have got citizenship from. So if you had some German ancestry, you could drop your US citizenship, get a German passport then visit the US when ever you wanted without a visa.
Smart move by this guy as the US taxes it citizens on their global earnings regardless of where they live. So he would have to pay income tax to Singapore and then another 75% extra to the US.
"Smart move by this guy as the US taxes it citizens on their global earnings regardless of where they live. So he would have to pay income tax to Singapore and then another 75% extra to the US."
Not quite totally true.... The way it works on foreign investments is that you have to pay the US the difference in tax. Which can work both ways:
1. If you pay **less** tax in the foreign country you owe the difference. Assume a capital gains tax of 10%. If the other countries tax is say 8% you owe the US a 2% tax.
2. If you pay **more** tax in the foreign country, in certain circumstances you can take a tax credit. So again likewise 10% US and 12% foreign can sometimes get you a credit but it isnt 2% (bastards).
I dont fully understand it but my accountant does. But it certainly works out that you only ever pay the total of the higher tax rates and then not always that :)
Depends on the tax treaty between the US and other country. In some countries you will get double taxed. The original article said that Singapore has no capital gains, therefore he will pay 0% tax on his IPO earnings, unlike if he was US tax resident/citizen/gc holder where he'd pay (I believe) federal qualified dividend rate of 15%
PS: This is capital gains, not income as the GP stated.
> I get hounded by the tax man for a £5 under payment and these
> people just go an avoid it, and it is legal.
"Just" going and avoiding it has involved relocating to Singapore. How far would you be prepared to move in order to avoid that "hounding" that you're suffering? You are free to move too, if you think the benefit is worth it.
JUST PAY UP!
Scummy low lives avoid paying their way. So I pick up the tab??
There are Jeremy Kyle "guests" everywhere, no matter which country or class.
Just stop relying on 'me' to pay for public services, you Greedy Bastards!
WOW indeed, the parents did a very good job in dragging up its offspring to have no value in society, family, duty, respect, honour. Honestly, lower than a snakes todger!
Selfish, greedy, manipulative, useless twats.
@AC and They said WHAT? - If you have shitloads of money, more than you can ever sensibly spend in several lifetimes, why WOULDN'T you pay whatever tax they put on it? (If I recall, Peter Gabriel - living in the UK - once said this about Phil Collins - fucked off to Switzerland) I have never resented paying tax - it is part of being a part of the community I live in. If was lucky enough to have more than enough to live on for the rest of my life I might move somewhere else in the world, but I'd pay my taxes here and wherever I set up home.
I am being completely honest here - no attempt at humour. I have never understood why people think it is such a hardship to pay taxes that keep society running.
It's astonishing to see such absurd levels of greed. The US already has an insanely low tax rate and yet he is willing to abandon his citizenship in order to save himself a bit of money? It doesn't matter whether he saves himself $10m or a $100m, the reality is that he if he simply paid the tax he ought to he'd still be worth hundreds of millions of dollars and would never have to worry about money again for the rest of his life.
The problem with capitalism is that it's not about what you have; it's about what other people have. It seems astounding that politicians have convinced people that those at the bottom are abusing the system and should have their benefits and safety nets removed, whereas rich people should be taxed less because they're "job creators". Same with Mr Osborne - is it really appropriate to lower the top rate of tax at the same time that pensions are being slashed, hundreds of thousands are losing their jobs and millions are being given pay freezes? No doubt there is need for reform but it sends out the wrong message when the only people being asked to pay for austerity are those that can least afford it.
Well, yes actually, they are job creators, this guy especially. At the end of the day he contributed time and his own money at a very risky and uncertain time for a business which now employs 1000+ people and will continue to employ more into the future.
Where would you rather these jobs be created? Seeing as an internet based business can be created or moved to anywhere in the world, if the rates are not right in the current country the company moves and the key staff move with them. A country has to keep the rates for the rich sensible and at least comparative to other countries otherwise the people who own companies, especially less established ones, will simply leave and take the jobs with them.
Yes, the less well paid will be able to sit there and say the rich are taxed a lot more than them, but will they be happy saying that without a job?
"Well, yes actually, they are job creators, this guy especially. At the end of the day he contributed time and his own money at a very risky and uncertain time for a business which now employs 1000+ people and will continue to employ more into the future."
Facebook was built on the back of starting out in a country with very high internet access. If he'd started the business in Brazil he'd have been made nothing. This strikes me as just ungrateful: he built his business on the basis of being a citizen of the Land of the Free and abandoned it the instant it suggested he pay for the privilege.
Why ungrateful? Others will still be in the USA. Others will pay a tax.
(Note in advance: I think my arguments/position can be seen as wishy-washy, maybe equivocating...)
And, let's be honest. There are many entrepreneurial types who create something that doesn't have much of a government "thank us" foot print, other than national security and local police, firefighting and similar. If someone toils in the night, is not a criminal, and sources knowledge from the very same sources available to anyone with ambition, then a government is greedy to impose a HUGE tax or one that is more than a few percentage points. It's a cash land-grab.
And, anyone creating a land-free business should be able to travel and work or toil on his or her own hobby, tax exempt, and if it produces occasional income but nothing stable or sustainable, it should be exempt from taxes so long as the toiler keeps meticulous, honest, furnished records for tax exemption qualification purposes. If a person travels to another land and is taxable there, then ONLY that land should receive the taxes until the toiler sets foot back home -- ESPECIALLY if back "home" there is no corporation, sole proprietorship, or other business entity type functioning or registered and owing local, unpaid taxes.
I realize that the USA may have the lowest taxes of industrial/advanced countries, but that is no excuse to tax citizens worldwide. I also understand that if a person is aware of his or her travel plans to be out of the USA for the minimum qualified tax-exemption period, he or she need only declare (in writing?) to the IRS that he or she will be OUTUS and is requesting formal exemption from the taxes. I realize, too, that a person who chooses to allow him/herself to be subject to USA globe-spanning taxes, he/she might find an enjoyable, lower tax option.
However, moving is not a small choice. It could be for a number of reasons, and affinity is likely one of them. If one is not actively using the embassy, consulate, or other resources available to qualified/verified citizens, and one is abroad and interacting extensively with a new local community, that community may be what the person wants to support. Forking over money to back home just deprives that individual of what he or she otherwise to CHOOSE to commit locally.
Don't mistake me: I'm not making a "down with the USA" statement. I'm talking about what is emotionally irritating to some: being forced to renounce or keep paying -- unless playing dangerous games hopping around the globe and avoiding stepping foot in the USA or suddenly being taxed much much higher than in certain countries where the tax may be zero or astoundingly puny. To me, taxes I pay are for MY existence/footprint and the time I was THERE, not the future. Of course, it is a difficult position to take when some of us have had the government (federal and state) safety nets keep us out of the gutter. OTOH, there those who will insist that that social safety net was paid for by taxes one already forfeited from payroll and services and sales taxes. But, even then, there are times when plenty of people have taken out of the system more than they put in, and until they have effectively "restored the balance from imbalance", it is a dangerous or precarious argument unless careful accounting was done to at least nullify the $$$$ portion of the argument.
Sadly, an individual can figure out how to build or buy a self-supporting dome home for living on the Moon, or Pluto, and eventually, governments will change the word "Global Taxation" to "Solar System Taxation", even if said governments didn't explicitly play a role in the conveyance and protection of the individual. Of course, they could act like cement and breakers/demolition mobsters and pierce one's dome, and then say, "NOW you need our protection"....
Anyway, wealth and entrepreneurship MUST circulate, and MUST be free to move to and operate where they will reach their best potential from the entrepreneur's perspective. From the USA, we're free to move, and if we plan carefully, there is little the government can or will do to assert against some people. But, other countries will definitely actively seek to prevent "capital flight" (unless the right officials are paid off)...
"a very risky and uncertain time for a business". For the business, yes, for him not so much. He was a college student, spending his summer vacation on a startup, something that probably looks pretty good on the CV of a Harvard graduate. And I wonder how much of a dent $1000 made in his net worth at that point.
Having said that, I wish him the best. If the job creation he's investing in involves Singaporean sommeliers, well, that's his choice. America was at no expense for his birth and upbringing, was it?
Your post describes one of the biggest problems with Globalization, i.e. citizens and companies benefiting from the infrastructure, education, laws and sales made in country 'A' -usually a 1st World country- and paying their taxes to country 'B', usually the lowest bidder. The fact that many of these 'B countries' are -more or less well disguised- dictatorships*, where most of the taxes paid by people like Mr. Saverin are used to line the pockets of the elites, while the common citizens have a low living standard, and little chance to improve it.
The process above described implies that the conditions at 'Country A' will worsen, as their lower tax income prevents them from adequately maintaining their Health, Educative and Judiciary Systems and their infrastructure, while at the same time the middle classes -the biggest consumers- vanish.
Does this state of things sound familiar?
IMHO Mr. Savarin is a parasite, and the guys that wrote and approved the laws he uses to cheat the rest of mankind are also parasites.
(Steam pressure going down - Mission accomplished ;-)
Note*: there are several exceptions to this, like Switzerland, but they have been in this business for centuries.
Because I have no idea what you are on about?
Facebook increasing bandwidth?
There's value it that?
No we have to constantly battle with employees to get on with what they are doing eventhough we allow access during breaks and lunch. For some that is not enough, checking phones every two minutes, answering messages, having conversations during work hours etc etc.
The problem with Facebook is that it artificially instills in people that their personal lives are sooo important that it takes.preference over everything else. They then suffer withdrawal symptoms if they can't get a fix, when in fact their lives are just mundane.
It's certainly debatable to what extent they are net job creators, as it is with a great many businesses.
Without Facebook, a great many people who turned out in this version of reality to be FB users would presumably be using other social networking sites, which would also be employing people.
.....through their work, on very ordinary salaries with no possibility creative tax planning, to ensuring that our society functions. Without their contribution we wouldn't have any kind of functioning society at all. They (many millions of them) are every bit as important to us all as people like this chap. The difference is that they are, like me an thee, ordinary folk without the overweening sense of entitlement that so many members of the 1% elite seem to have.
This post has been deleted by its author
> his own money at a very risky and uncertain time
A whole 1,000USD of it - he probably drinks that much in a single night now
> a business which now employs 1000+ people and will continue to employ more into the future
Not to mention all the people gainfully employed due to the inefficiency created by other people using FB at work
"A country has to keep the rates for the rich sensible and at least comparative to other countries otherwise the people who own companies, especially less established ones, will simply leave and take the jobs with them."
I am so sick of hearing the same old argument.
One point you’re talking THROUGH YOUR ASS!
Go, fuck off and take your jobs, but don’t expect to sell or trade your goods in Britain! The HUGE profits earned from British consumers will be closed to you and YOUR COMPETITORS will HAPPILY comply and take the £100MILLIONS off you! Eventually make you bankrupt! So go and don't come back you greedy low live (tory) Jeremy Kyle "guest".
No one has the bollox to tell them where to stick it! If they want the £100Millions, then they play by our rules.
From my reading of this article, this guy has been in Singapore since 2009. If you're abroad for something along the lines of more than 340 days in a year you don't pay income tax anyway - the only issue here is capital gains tax which applies if you are abroad or not. So I'm not sure why you're even talking about income tax rates.
Also, given that this guy was from Brazil and has lived in Singapore for the last few years I can understand the decision. $100M to change citizenship from a country you only lived in for let's say 12 years... I'm not sure I'd characterize that as astounding levels of greed. Sounds more like prudent behavior given that he doesn't live here anymore anyway. Keep in mind that his money, technically speaking, has not been made yet - not until that IPO...
As a Yank living overseas, I have to correct your '340 days' assertion. I spend zero days per year in the USA but still have to file a 1040 every June and pay tax on my global income regardless of source. There is a generous exclusion of US$90k or so per year, but everything over that is taxable by the USA as well as the country(ies) in which its actually earned. Salary, interest, dividends, and capital gains.
We also have to supply details of all bank accounts and their balances, even if we spend zero days per year in the USA. Land of the Free!
Sounds like Denmark, except Denmark don't have the 90K basline, and their tax office has no respect whatsoever for double taxation agreements.
Tax on my foreign investment income last year, incl. companies tax in the registered country and danish income tax = 87%. i.e. My company showed a profit of $1 and I got to keep 13 cents.
IIRC Australia has global taxation.
In fact, most of the western world probably has it.
"Abroad for more than 340 days..." Not true - the US is almost alone in taxing its citizens if they don't live in the country regardless of how long they've been away.
What do non-resident taxpayers get for all this tax? Apart from loads of expense, tax and hassle? they don't get to benefit walking the safe streets of the US... I guess the US will send the black helicopters to go rescue you from terrorists/kidnappers compared to, say, the UK who will do fuck all.
The US (or anywhere else for that matter) isn't such a great place that I'd give them a few extra millions if I didn't have to - like if I didn't live there and had no plan to go back. It's not like he gets to make the tax rules anyway.
Here in the UK I'd do the same thing. The openly corrupt and self-serving UK government does extremely little to merit a tithe on my success.
I'd chuck UK citizenship away in a heartbeat if I could afford to move elsewhere, though it might be more financially expedient to just buy myself a member of the cabinet and maybe pay them 100th of the tax into a personal bank account to have the bill waived.
" If you're abroad for something along the lines of more than 340 days in a year you don't pay income tax anyway ..."
A US passport carrier always pays US taxes. Income and CG. You only can avoid state tax since you are not resident but if you maintain a property in some states you pay state tax too.
The number of nights in the country is something like 60 allowed per year for UK plus other evidence concerning domicile and residence. But, though some commenters seem to. be confused about which country they inhabit, GB is not part of the USA and has a completely different legal and tax system. According to all my American friends, quite a few where I live in continental Europe, they have to complete tax returns every year and pay if required, no matter if they never even set foot in the USA, for ever. In addition, since the latest Swiss problems with USA demands, most banks here will no longer conduct business with them. By the way, the total USA tax level is not that benign and the state gives precious little back for it, depending on which state.
Also, Tax Evasion is illegal. Tax Avoidance is legal, being simply the using of permittied allowances and devices to reduce one's tax assessment
Actually, the problem with Socialism is it has been given a bad rep by those corrupt leaders who tried to impose it on their people.
It's been a victim of a major assault of FUD by those who stand to loose everything (the Rich and Powerful) if it was ever implemented properly, and the every-person as a result of that assault seem to think socialism and communism are the same thing.
"Actually, the problem with Socialism is it has been given a bad rep by those corrupt leaders who tried to impose it on their people."
Really? How else do you get Socialism but by imposing it on the people? What, do you want to be socialist on your own? How would you "redistribute" other people's money if it's only your money that you control?
And also, "corrupt leaders"? What other kind of leaders are there? When are people going to stop believing in cuckoo land and get it that utopian dreams are utopian (and dreams, actually)? At least capitalism (or free market or whatever other variation we seem to be having these days) accepts some (or plenty) people will be greedy and tries to work with it. Of course it's not perfect, but it is realistic at least. Oh, and it doesn't take away freedom in the name of some childish BS fantasy and "greater good" or whatever way you want to call it. If you don't like being an adult, dealing with reality, taking responsibility for your actions and choices and standing on your own two feet - you can always stay home with mummy and daddy - that's perfectly fine - but don't ram your life style choices down the rest of our throats.
"... it has been given a bad rep by those corrupt leaders who tried to impose it on their people."
No, actually it has been given a bad rep because it must be imposed on the people and there are always some who will oppose that, or any, imposition on lifestyle choice as a matter of principle.
"It's been a victim of a major assault of FUD by those who stand to loose[sic] everything (the Rich and Powerful) if it was ever implemented properly..."
I'd like to understand this clearly, proper implementation means some will lose everything. You are of course aware that statement by itself certainly eliminates doubt and ensures fear of anything close to either socialism or communism.
Oh sorry, were you being ironic?
What a load of ole shite!
I don’t care what you have, as long as it's earned honestly and you’re not going to dodge your commitments.
If you've worked hard and earned millions, good for you. I'd be the first to say that it's deserved.
But that doesn't mean you them go on to avoid paying your way. Like it or not, if you earn more, you pay more!
Your ignorance is astonishing. What has capitalism got to be with taxation? Oh that's right, nothing.
"The problem with capitalism is that it's not about what you have; it's about what other people have", nope thats socialism, socialists are always talking about how they should/will spend other peoples money.
This post has been deleted by its author
...spending money that other people haven't even earned yet!
One upon a time it was bribing the electorate with their own money. Now they are bribed with borrowed money. Which was fine so long as whichever way the vote went the goverment got in, and goverments the power to grab the money...
but in these can't pay, won't pay times...
>> as P.J.O'Rourke succinctly put, "to punish success and reward failure"
That would be true if those earning £20,000 paid 10% tax (take home £18,000), £50,000 65% (£17,500) and £100,000 83% (£17,000). That would punish success and reward failure - if earning £20,000 PA were considered failure.
Any scheme where the percentage of tax increases and the amount take home still increases is more akin to 'lessening the harm of failure by reducing the rewards of success'.
Where I take issue with it is, if everyone were to pay a fixed amount (i.e. cost of public expenditure divided by number of public) then someone on minimum wage would probably come home broke after working 70 hours a week at minimum wage. Okay, perhaps I'm plucking exaggerated figures from the air... but the point stands that I reckon companies can only get away with paying only minimum wage because they are subsidised by the tax system.
Say what you want about capitalism and greed (it's really greedy to not have money you earned forcibly removed from you? So stopping a robbing is greedy now?).. but what does it say about society that instead of appreciating it when people give to the needy out of the goodness of their heart (yes, that really still happens!), that when we see successful people we immediately want them to be forcefully robbed to help out those less fortunate?
If that's the case, then why would anybody take chances or even take the effort to build a company? Some people live in poverty just to try and build a business so that in the future they could provide a better life for them and their family. Why go through all that knowing that if you ever make it, somebody else will just come along and make you give it up anyways? How is that right to you? Maybe instead of hating him for his success, you should go do it yourself!
Don't forget that the US is the only major western country that taxes its citizens on worldwide income regardless of whether they are resident in the country or not.
By renouncing citizenship he is still liable for the capital gains tax on any windfall he gets from the IPO, but is not liable for tax on income he gets from investing his cash-pile. In renouncing his citizenship he has renounced his rights to US healthcare and other services. What he has done seems totally reasonable. If he was, say, British, and about to make a huge wadge of money from a British IPO he could achieve the same thing just by moving overseas for a few years, without the renouncing citizenship part.
"What an unpleasant streak of bile-fueled ignorance. I think you summed up your position perfectly when you said "The problem with capitalism is that it's not about what you have; it's about what other people have".
Stow your faux-socialism until you have your facts straight."
Actually, it makes sense. Pure capitalism is all about leveraging your own wealth so as to get more back from others. Economics is, at its heart, the sciences involved in the distribution of a finite quantity: wealth (since wealth is based on matter, and matter is finite--ask any physicist--therefore wealth is finite, too). Economics NECESSARILY involves the transfer of wealth, and these transfers must necessarily be from one party to another. What differs is the methodology. So for capitalism, socialism, communism, whatever, it's ALL about what you have in relation to what other people have. It's what determines what happens to that stuff.
"Economics is, at its heart, the sciences involved in the distribution of a finite quantity: wealth (since wealth is based on matter, and matter is finite--ask any physicist--therefore wealth is finite, too). Economics NECESSARILY involves the transfer of wealth, and these transfers must necessarily be from one party to another..."
You're in luck, I'm a physicist who minored in resource economics. Your premise strikes me as false inasmuch as general economics isn't a zero sum game. Consider two markets, the stock market and the commodities market. The commodities market is a zero sum game where on person's gain are necessarily the loss of another, as there are only so many barrels of oil, pork bellies, etc. at a given time. Contrast this with the stock market which is not a zero sum game and aggregate wealth can be created and there needn't be any losers because it isn't based on "matter" but on another concept more commonly associated with "utility".
Certainly it may appear that the stock market is based on matter since every fule knows that the price of AAPL is based on how many bits of matter known as iP"odd" devices that Apple sells. That would be true if there wasn't any value, in the form of utility, added to the materials that constitute an iP"odd" in the same way that the commodities market works, pork belly in = pork belly out. It's that added value that doesn't come from "matter" that makes it different and yet it is the same inasmuch as it comes from energy in the form of labor, electricity and heat (that's blood, sweat and tears to you and me). How convenient it is then that you should bring up physics where we know that matter and energy are interchangable. Here we come to a rub since a fair deal of human energy comes from the sun via nutrition from vegetation, for you obligate carnivores that is regardless of whether rabbits eat it first (aside; preferably served with a nice sangiovese), and for practical purposes the sun's energy may as well be unlimited since when it goes dark the point rapidly becomes moot.
Should we find a way to shuffle off this terran coil what I'm uncertain of is that energy, and therefore matter, is limited and, lest this digress into a dissertation as to whether the universe is endothermic or exothermic and all hell breaks loose or hell freezes over, this should be left to another day.
"Contrast this with the stock market which is not a zero sum game and aggregate wealth can be created and there needn't be any losers because it isn't based on "matter" but on another concept more commonly associated with "utility"."
There, I call false on your claim of falsity. Wealth isn't really CREATED--it's FOUND. Like petroleum. Its wealth value was always there, but someone had to locate it underground first and then figure out how to refine it into useable fuel before its value can be tapped. People invest in new technologies in exchange for a share of this value should it work out.
"Wealth isn't really CREATED--it's FOUND. Like petroleum. Its wealth value was always there, but someone had to locate it underground first and then figure out how to refine it into useable fuel before its value can be tapped. People invest in new technologies in exchange for a share of this value should it work out."
So we agree that petroleum is a commodity, good, it's a start. I won't say the "Mona Lisa", "Venus de Milo" or "Statue of David" wasn't always there and just needed to be found by the artist because it's really immaterial to the discussion. The problem is that you're not even recognizing a rather large sector of the economy, services. In service sectors absolutely nothing is found as it is based on the utility people derive from the services, in either free time, a particular expertise, a pleasant atmosphere or whatever else. Perhaps it's having someone tend to the lawn or a night out at a restaurant on Mother's Day. I see how it gets confusing but once you figure out quickie take out food joints first sell convenience and the food is only for differentiation, it becomes a little clearer.
Case in point, one of the wealthiest people I know is a school chum who was waiter for 20+ years but he didn't "find" a plate of food and decide to sell it for $37.50. He just provided a level of service that was beyond the expectations of nearly everyone and retired in '07 at 39 years old, bought a boat big enough to live on and moved to Belize. He didn't find anything, he made it.
It depends on what you consider "fair"
If there was a flat tax and everyone paid eg £1000, then someone who makes a million and someone who makes £10,000 pay the same exact amount of tax. A lot of people consider that unfair, enough people that society taxes as a % of income rather than an absolute amount.
However I wonder if it really is unfair. Lets flip it round. Lets say you go to fill up with petrol and they charge you more because you earn more. People earning £10000/year only have to pay £1/litre for petrol whereas if you are earning over £20000/year you have to pay £2/litre.
I imagine in that situation a lot of people would suddenly find the idea of proportional deductions "unfair". Imagine if the person in front of you in the queue can buy a mars bar for half the price you must pay.
Nevertheless generally society thinks %s are fairer when it comes to tax. If two people are taxed at 30% they both lose 30% of their income. On the otherhand the person who earns a million is more paying a higher absolute amount of tax. eg £300,000 while the lower income person on $30000 is paying just £10,000. Is that fair?
Well society goes further doesn't it. The %s even increase for higher earners, so that guy earning 1 million might have to pay 50% on it, whereas the other guy pays 30%. So even proportionally the guy who earns more is paying more.
Some people think this is all fair, but really if it was a board game and the rules were like this, or TVs cost a lot more for rich people than poor people, people would complain. The reason tax works as it does I think is mainly for practical reasons - higher rates for richer people gathers more tax. The reason that's tolerated is that rich people are a minority. The poorer (relative) masses tolerate it. Some of them even advocate it, as a lot of people have this sense that it's fundamentally unfair that a single parent with kids should earn a lot less than a single business person with no dependencies.
The original flat fee approach was recently attempted in the UK, as the "Poll Tax". Poll taxes have a very, very bad reputation.
The problem with flat Poll taxes is easy to work out if you consider the issue of "disposable income". For the sake of argument, let's assume there are no other deductions, such as National Insurance:
Taxpayer 1 makes £20K / year. Poll tax is a flat fee of £1000. That leaves Taxpayer 1 with £19K after tax. Subtract the costs of living: a car (say £100 / month, including fuel), a mortgage (say £800 / month), two kids (say £500 for food, clothes, etc.) That leaves Taxpayer 1 with just £180 or so per month as disposable income to spend on anything else, including his savings.
Taxpayer 2 makes £200K / year. Poll tax is a flat fee of £1000. That leaves Taxpayer 2 with £199K after tax. Subtract living expenses: an expensive car (say £250 / month, including fuel; we'll assume he's into Chelsea Tractors); the mortgage will likely be quite high (say £2.5K / month). His kids, Quentin and Quentinella are spoiled rotten, so let's make that £10K / month on their private school fees, food, fancy clothes, etc.. That still leaves Taxpayer 2 with over £3900 per month as disposable income to put into savings and other luxuries.
Taxpayer 3 makes £2 million / year. Poll tax is a flat fee of £1000. That leaves Taxpayer 3 with £1999000 after tax. Subtract living expenses: a very expensive car (say £2500 / month, including fuel; we'll assume it's a mid-range Ferrari as this isn't a billionaire we're talking about here) ; an expensive house in a posh part of London: say £10K / month. His two kids, Kensington and Chelsea, will be asking for the same toys and fancy schooling as Taxpayer 2's, but XBox360s and a flat screen TV will cost the same, as will the private schooling, so that's another £10K or so per month, but let's add a live-in nanny as well: £2166 / month. That still leaves Taxpayer 3 with £141,000 / month. Or, to put it another way: he still has about £1.9 million to play with each year. More than enough for that yacht he's had his eye on.
(You can assume that the income is combined across two parents if you prefer, or you can assume all three examples are "single parent fathers". It's the total income that matters in any case.)
As you can see, the wealthier you are, the less you have to worry about living costs, taxes, etc, and the more money you have to spend. Once you reach billionaire levels of money, your basic living expenses become little more than a rounding error.
A flat fee may be the most logical solution, as you're really just paying for a service provided by the government, but it is perceived as being "unfair" because those at the poorer end of the scale feel like they're paying more as a proportion of their income than the rich. And they'd be right.
The thing is, as a proportion of their income, the rich are paying proportionately bugger all for pretty much everything, so this isn't a particularly compelling argument when viewed objectively. As you've pointed out, nothing else is charged according to your earnings, so why should the services provided by a large organisation (like a national government) do so? The wealthy can afford to pay for their own private healthcare, private pension schemes, private education and so on, so they're hardly a burden on the State; why should they be required to subsidise poorer citizens too?
Nobody wants to be a billionaire because they like staring at the Queen of England's, or Benjamin Franklin's, face. They aspire to wealth because it means they never, ever, have to worry about where the next meal is coming from for either themselves, or their family.
Proportional (i.e. percentage of income) taxation really is fundamentally Socialist. It exists—and is tolerated—because it feels "fair", but it's also a lot more convenient and easier than fixing the many other problems that make it effectively impossible to impose a flat annual fee instead. I can think of a few solutions, but they'd require some serious socio-cultural changes. (E.g. making public transport free at the point of use. And that's just a small part of it.)
Not so. The "time-is-money" argument only makes sense when applied to income tax, and even then it fails.
In most countries income tax rate is graduated depending on how much you earn. For example a CEO ( in Ireland ) may be paying 52% income tax, while the min-wage guy pays 20%.
That would mean that the high earning CEO works for the government up to about 27 weeks per year, while the min-wage guy only works 10.
"I imagine in that situation a lot of people would suddenly find the idea of proportional deductions "unfair". Imagine if the person in front of you in the queue can buy a mars bar for half the price you must pay."
One problem is a certain quantity called the "cost of living". This quantity for a given area is fixed (as sustenance, shelter, and other requirements tend to be absolute rather than proportional to wealth). One main reason taxes are proportional is because tax burden butts up against the cost of living and thus places increased burden on those who make near and especially below the cost of living (the tax burden makes it difficult to afford a meal, IOW) whereas the excessively wealthy can be taxed heavily and still have more than enough to sustain themselves.
Another problem is that, in a way, wealth has gravity. The more you have, the easier it is to amass more of it (though monetary leverage, economies of scale, and so on). It's like a game of Monopoly or a poker table. Someone with the lead can leverage the lead to drive the smaller guy out, and eventually, someone will get all the money and end the game...unless something is there to redistribute the wealth and keep the game going.
“…person who earns a million is more paying a higher absolute amount of tax. eg £300,000 while the lower income person on $30000 is paying just £10,000. Is that fair?”
YES! IT IS!
Is it fair that the millionaire is still eating caviar after paying his tax, while the lower earner is eating beans?
If you work hard you deserve a decent standard of living. If your lazy, then expect to eat beans and shut up!
Honestly, you need to ask your parents just which lolly pop stick they got their values from.
This post has been deleted by its author
Since he's a foreign born national, the question is if he has a green card or actually went ahead and became a US citizen.
There are cases where people had dual citizenship and then renounced their citizenship as a way to dodge taxes. As well as US Citizens renouncing their citizenship becoming a citizen of another country as a tax dodge.
While one doesn't know what will happen when the IRS and lawyers get involved...
He still has to pay taxes on his stock, although he might be able to legally own US stock anymore anyway, which would mean he just threw away a couple hundred mil.
Similar thing happened to a co-worker of mine, moved to another country, but he only lost like $350, so not too big of a loss, payroll ended up giving him a 'performance bonus' to make up for it.
This post has been deleted by its author
I think the current rules are he has to pay US taxes for the next decade and I expect this to encourage congress to increase that 10 years. Maybe he will take some of that billion that the IRS will want to challenge the law that allows the IRS to tax non-residents non-citizens, many of which have no connection to the US at all and have no way to vote. Many overseas kids born to American parents were registered as a US citizen by their parents are now finding themselves breaking US laws by not sending the IRS a form every year and a cut of any income above $90,000.
Yeah, those merkins sure like to be taxed. Uh, sorry, tax others.
Seriously, as much as aggregate US taxation levels are far below what their lavish government spending would require, it is astonishing how greedy their citizens can be in taxing others who have dared leave the mothership.
So he doesn't have to pay.
By becoming a citizen of another country he has to pay their taxes. But the country he is planning on moving to doesn't have a capital gains tax. So when he sells his shares, he pays no taxes. Thus his move could be viewed as a tax dodge. Therefore the IRS could go after him.
It interesting to see what the IRS does...
I can see all the arguments for him doing it and if you can then why not, especialy given all the factors. But the way it's presented is that he is doing it soley to avoid TAX. Now he did well inthe company he helped build and in that will get a nice income, but if he had not of done well would he of stayed, would he of claimed support. So if he can say no to the reverse coin the moraly he is doing nowt wrong, but he wont be the first to of tried this approach and I'm sure there be means and ways for the TAX man to take his cut.
But hey, worst case because its more money than we mortals see in a lifetime it will be a case that he is able to haggle with the TAX man and pay less than us mere mortals. If its less than a few million your done for TAX evasion and have to pay fines and the full amount, over that you get to haggle and get off with nobody non the wiser.
Do I blame him - no, poor global TAX laws that are allowed to be in effect a subsidised product that had it been a physical product for consumers would incure many fines over monoplies etc. There to blame.
Good luck to him.
I bet he doesn't pay less than us.
All the stories in the newspaper about the rich dodging taxes. I bet, with a few exceptions, that most of them are still paying far far more tax over their lifetimes than we are. I bet some of them end up paying millions in tax.
I won't even earn millions.
I don't know about that. Look up a strategy known as "Buy, Borrow, and Die". For the richest people, most of their wealth is in pure investments. They make wealth by their assets appreciating, and most countries don't have a good system for taxing income from (unrealized, to use the financial term) asset appreciation if the asset remains intact (only if you sell the asset, then it becomes capital gains). To actually get money, instead of selling the asset they borrow against the asset. Loans typically aren't taxed, either. Finally, the debts are simply carried over until the person dies. The assets are then inherited and their values "stepped up" under the tax code, meaning if they're sold then, there is no capital gain and therefore no tax in their liquidation to pay off the also-carried-over debt.
This post has been deleted by a moderator
> "Your" country is pissing away your money for garrisoning the world and fascisizing itself "for your own good". I won't mention crony capitalism.
> Still doesn't have enough money so it hands out obligations that are basically backed by its power to wring the goods out of its people in the future.
> Still doesn't have enough money so it prints it up, taxing people through inflation without them actually noticing.
> Lefties demand more taxes to pay for their preferred "let's change reality" boondoggles and perks.
> Guy has the ability to say "sod all that" to this retardation.
> Gets called a cunt.
Some of the arguments here demanding taxation seem a little strange to me. Some of the "socialist" arguments here are so irrational, it becomes tempting for me to dismiss the whole concept. One person's definition of middle class is easily another's definition of rich and wealthy.Hardly absolutes.
Are all of us who use pensions in the UK guilty of tax avoidance? I'm sure there are plenty of people in the UK who do not have the money to put into these "tax avoidance" schemes?
Exploiting loopholes and paying no tax for eg, can be described as immoral, but not illegal.
But renouncing citizenship, and its benefits, to not pay tax? Why the hell not? Freedom goes both ways, for the individual as well as the citizens. The rights of a commune do not supersede the rights and freedoms of an individual, especially when the individual no longer benefits or belongs to that commune.
Sometimes I think people are so fixated on what should be taken away, they forget what should be given up as well.
A question to those, from what I can tell, seem to advocate tax payments "if you can": when do you deem a government and its citizens to be greedy when it comes to taxation? Individuals aren't the only ones who can be greedy!
Obama and France's François Hollande both want to raise the taxes on the rich(?) so both of them should expect this to happen more often. Why should a person pay very high taxes when they can get citizenship where the taxes are lower?
... it doesn't give enough incentive for working, thinking and innovating. After a few years of this, with the exception of a few elites -political, scientific, military- , most of the population goes for the lowest common denominator, and everything stagnates and rots.
But the problem with Capitalism is that wealth and power tend to end in the hands of a few, who at some point in the game have enough power to lobby/corrupt the system for their profit. This process snowballs for some time, until The Powers That Be gain the ability to erode the middle classes until they almost disappear, killing in a single blow the biggest wealth producers, the biggest consumers and the biggest taxpayers (taken as a group). And then everything stagnates and rots. We are almost there.
And that's a reason why proportional deductions make sense. To help prevent too much power and wealth in the hands of a few. Also helping to give an acceptable standard of living to the population helps to prevent riots/coups/revolutions, something that most people -at least most people that shouldn't be threading baskets- considers a good thing. Similar arguments cold be made about a National Health System and a National Educative System.
I'd love to be wrong on this, but there are many chances that our grandchildren -most of them- end up living like serfs.
The icon? A flameproof suit! ;-)
For the last few years, the US has imposed an exit tax on unrealized capital gains if you have assets of more than $2M.
Therefore, anything he owns that has gone up in in value will be taxed at the US capital gains tax rate. What we don't know is what he declared his Facebook shares as worth. That will reveal whether he has ducked his obligations or not.
For some people with worth barely over the threshold, they may need to sell their house to cover their taxes. In addition, you must also pay gains based on currency movements between your investment currency and the US$, causing fluctuation in your net worth out of your control, that will probably never be realized.
My advice to US citizens is to renounce if you do not plan to work in the states or live there again, especially if you are currently under the threshold. Then it's just a matter of paying the fee to renounce, moving to a foreign country, acquiring citizenship of another country, making an appointment to visit to an embassy out of the country, visiting the embassy, waiting for at least 6 weeks during a period of reflection, and a final visit to the embassy to renounce.
Additionally, he also need to file tax returns for the next 10 years with the US as well, again because he's a high net worth individual. Have a look at US expatriation form and instructions F8854 to see what's really going on.
What's fair is not the issue, the rich avoid tax no matter what rate is agreed. 50%, 40% or even 10% makes no odds if they actually PAY 0%.
Anyway what annoyed me in the article was the obsequious language used by his spokesman "has found it more practical to live in Singapore".....
He's rich enough you think he'd have the guts to admit he finds it more lucrative.
It calls to mind a documentary I saw interviewing the droves of F1 Drivers who live in Monaco: only one of them was willing to admit the real reason they move there is the small matter of zero Income Tax.
If he risked his own hard earned money on a wild card investment like facebook he invested wisely an benefited in proportion to his risk. $1,000 dollars represents a good proportion of the money available to live on. The lack of $1,000 dollars would have impacted on his lifestyle a great deal. With only what a student could earn working part time very few would risk that much money on such a venture.
However if his parents gave it to him along with his 'allowance' then the risk he took is severely diminished and so the enormous rewards are more difficult to justify.
Biting the hand that feeds IT © 1998–2022