Posted May 24, 2012 at 5:29 pm
by Simon Black
This week, the universally stupid brainchild of US Senators Chuck Schumer and Bob Casey known as the Ex-PATRIOT Act inched a bit closer towards becoming law.
‘Ex-PATRIOT’ is an absurd acronym that stands for “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy”. I call it the Tax Slave Act… and it proposes three key provisions:
1) Individuals who are deemed, in the sole discretion of the US government, to have renounced US citizenship in order to avoid US taxes, will be permanently barred from re-entering the United States.
2) Such individuals will also be required to pay a 30% capital gains tax to the United States government on ALL future investment gains derived from the US. Currently, non-citizens who do not reside in the US pay no US capital gains tax.
3) These proposals are RETROACTIVE, and, if passed, would apply to anyone who renounced his/her citizenship within the last 10-years.
During a Sunday interview with ABC News, House Speaker John Boehner threw his support behind the bill… certainly a big step towards its eventual passage.
In the years since the exit tax on assets was established, two things have happened:
1) The number of Americans renouncing US citizenship has risen steadily, from 235 people in 2008 to 1,780 last year (according to Schumer’s office).
2) The asset bubble has burst, and assets are worth much less than just a few years ago. As such, the government isn’t collecting as much revenue from the exit tax.
My sense is that the government has been watching the number of expatriates rise over the years, and simultaneously watching the value of the exit tax fall… and they’ve been looking for an excuse to make sweeping (i.e. retroactive) changes.
Eduardo Saverin is the perfect excuse. The Facebook co-founder’s recent renunciation of US citizenship has become a rallying cry for politicians to go back in time and steal money from former citizens retroactively…plus establish a larger base for future tax revenues.
This is a truly despicable thing to do considering that these former citizens followed the appropriate rules at the time, paid the tax, and moved on with their lives.
[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "US citizens now one step closer to becoming permanent tax slaves" ]
Posted May 24, 2012 at 1:59 pm
by Bobby Casey
What isn’t so widely distributed is the news of Facebook founder Eduardo Saverin renouncing his US citizenship to presumably save 10′s of millions of dollars in taxes. With a 4% stake in the company, Saverin stands to make about $4B with his shares so the savings would clearly be tremendous.
Saverin was born in 1982 in Sao Paulo, Brazil and grew up mostly in Miami, Florida. Being born in Brazil he holds Brazilian citizenship and a passport. Once his family came to the US, they naturalized as US citizens making Saverin a dual American/Brazilian citizen.
Since 2009 however, Saverin has been living in Singapore. In 2011 Saverin renounced his US citizenship and is now a Brazilian citizen and permanent Singapore resident. Sounds like Saverin really understands the meaning of Geo-arbitrage.
While the press on this is relatively light, what is out there is attempting to eat him alive. He is being labeled as un-patriotic, a tax cheat (he stands to save 10′s of millions of dollars in taxes since Singapore has no tax on capital gains), and generally an immoral human being for robbing the US of taxes due.
I could likely write a book about this topic (maybe I will…), but for sake of time and space let’s leave out the concept of immorality with regards to income taxation.
The US is the only developed nation in the world that still taxes its citizens and permanent residents based on their citizenship, not residency. Every other country in the world only taxes its people when they live in the country while the US taxes its people no matter where they live in the world.
This is an absurd concept. If a German citizen moves to Australia he no longer files a German tax return or pay German tax. He would only be subject to Australian tax since that is where he lives.
As an American, if you move to Australia, you would still file a US tax return and pay taxes in both the US and Australia.
Of course there are some complicated tax treaties and the US earned income exclusion, but if you have investment income or are a high earner, you will owe tax in both places even though you are only consuming the public resources in your country of residence.
From my perspective, Saverin should not have been paying any US taxes since he moved to Singapore in 2009. Why would he? He isn’t using the public services in the US. It just doesn’t make any sense.
Like any smart businessperson, he made an intelligent business decision – he renounced his US citizenship and gave up the most expensive passport in the world.
In the business world there is a profit motive and the free trade of goods and services for money. Businesses compete with other businesses for quality people to employ in their work force. It is only rational. They provide competitive salaries, benefits and perks to attract the smartest and most productive employees.
[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "Are You an Un-Patriotic, Immoral Tax Cheat?" ]
Posted April 11, 2012 at 2:07 am
by Jim Blankenship, CFP, EA
As we approach the tax deadline, I’m sure that many of you are putting a lot of time and effort, blood and tears into filling out your tax returns.
As you do so, hopefully you are remembering to include everything necessary, but sometimes things slip through the cracks.
Below are 13 reminders for you – topics that you may not have thought about – that may help you as you prepare your tax return this year. Good luck and many happy returns!
1. Don’t forget to make the IRA contribution that you said you were going to on your tax return. It’s perfectly legal to file your return before you make the IRA contribution, but you have to do your part and actually make the contribution by April 17, 2012 for the 2011 tax year. Forgetting to do this will cause you to have to pay extra tax and most likely penalties and interest once the IRS catches up to you.
2. Don’t forget to include the IRA deduction. On the other hand, if you’ve made your IRA contribution much earlier in the year, or possibly by monthly automatic payments or some other arrangement, don’t forget to include that deduction on your tax return as you prepare it.
3. Remember to file Form 8606 if you made nondeductible IRA contributions or Roth Conversions. This form is required for these options, so make sure you file the correct forms.
4. Check out the Saver’s Credit. If you make an IRA contribution, or participate in an employer’s plan like a 401(k) you might be eligible for an [continue]…
Posted April 2, 2012 at 3:45 am
by Andrea Coombes
An unexpected letter from the Internal Revenue Service can make your stomach drop, but you can take steps to reduce your audit risk.
Taxpayers overall face a low audit risk: The IRS audited 1.1% of all individual tax returns filed in 2010, or 1.6 million returns of 141 million filed.
The vast majority of those audits—1.2 million—were done by mail. Just 392,000 involved an in-person meeting with the IRS. That’s not necessarily good news. Taxpayers often are confused by IRS correspondence, and with such audits they don’t have the benefit of working with one single agent, the National Taxpayer Advocate says.
But the risk of an audit skyrockets for some. Fully 12.5% of taxpayers whose income topped $1 million faced an audit. And self-employed people who filed a Schedule C with gross receipts of $100,000 or more faced an audit rate of about 4%—four times higher than average taxpayers.
Here are seven red flags:
Sole proprietors filing a Schedule C can reduce their audit risk by sticking to the facts—or at least making sure their expenses and income are not dramatically different from similar businesses.
For example, one Chicago-based hot-dog-stand owner said his [continue]….
Posted September 22, 2011 at 3:51 pm
Everything you need to know about IRC Section 6050W
Starting in 2011, all US payment providers including PayPal will be required by the Internal Revenue Service (IRS) to report sales information to the IRS about certain customers who receive payments for the sale of goods or services through PayPal.
We want to help you understand these changes.
Applies to sellers receiving over $20,000 in gross payment volume AND over 200 payments Applies only for sales on or after January 1, 2011
Posted August 17, 2011 at 5:37 pm
For International individuals who wish to control their own destiny
by Dr. Charles Freeman
The report, is crammed with interesting and hopefully valuable information for international individuals who wish to control their own destiny.
Such individuals need all the impartial and informed news, reports and advice they can get to help them live freely from those who seek to tax and regulate them into servitude, I am happy to be of assistance and producing for such people is a great pleasure for me.
Let’s face facts. The more a person pays out in excessive and involuntary taxes, the more intrusive and/or pointless laws and regulations he must conform to and obey… the more he belongs to the dictates and whims of other men.
Governments by their nature believe that they own their citizens. They might not actually stand up and say as much, but they certainly think it.
And while I am on my soapbox… not only do men who make up “your” government want to own you (or at the very least, control you), they so often manage the actual various affairs of state with a degree of sometimes unbelievable incompetence.
For example, no government I can think of is currently inventing more new laws and regulations to marshal their citizens towards ever greater levels of “compliance” than that of the so called “European Union”.
When I look at the crazy bungling bureaucracy that runs it, I shudder. The essence of any bureaucracy is that it is a system that allows all those involved in it, whether officials or politicians, to avoid any moral responsibility for their own actions, which for them is probably just as well.
They always have plausible sounding arguments for every piece of new legislation that they produce.
But the eventual results are quite often insane as anyone who objectively follows the goings on in Brussels and the many crazy and out of touch edicts that flow our from there will know only too well.
If you are like me, you might quite rightly think that as a self providing adult you are quite capable of making your own decisions about how you live your life and run your business. Also that the faceless bureaucrooks in Brussels, Washington or wherever, are the very last people you would want to make any decisions for you, particularly important ones.
Ordinary business people risk getting squashed between the mafias and international bureaucracy. Organized crime could amount to $500 billion a year, according to the International Monetary Fund (IMF) or $1,000 billion, if United Nations crime consultant, Tim Wall, is to be believed. The truth is, nobody knows.
If you think you’re overtaxed, consider the case of the owner of a Swedish fashion chain, Stefan Persson, who has worked all year only to find he owes more in tax than he has earned. Not surprisingly, he is now thinking of emigrating and taking his company with him.
On a taxable income of SKr178 million ($23 million) the tax grabbers are demanding SKr54 million in income tax plus SKr127 million wealth tax, leaving him out of pocket by SKr3 million after working all year. In this topsy turvy nanny state, rather than run a business creating jobs, wealth and tax revenue for the government, he would be better off signing on the dole and becoming a burden on the state.
How crazy can you get?
But there is worse to come, following increases in wealth tax. Assuming the same income and assets, he will be forced to find a further SKr45 million in the next tax year.
“It would be enormously beneficial for me to live in almost any other country,” he comments wryly. Although he loves his homeland and has no wish to live elsewhere, he has no choice but to consider moving himself and headquarters of his company Hennes & Mauritz, abroad.
Even though 80 per cent of his firm’s operations are outside Sweden, he has patriotically continued to support his country and pay his taxes. But there are limits to the price of patriotism.
One by one, major Swedish companies are being driven out to a more tax friendly environment. Some companies have already moved their headquarters not to offshore island tax havens, just to other European countries with “normal” rates of taxation.
Furniture company Ikea is now in neighbouring Denmark, and packaging group Tetra is based in Switzerland. Telecoms company Ericsson does 60 per cent of its research and manufacturing in Sweden but only sells six per cent of its production within the country, so is considering moving abroad. What logic is there in staying in such an over taxed environment.
A key reason for these moves is that high taxes and social security payments are making it difficult to recruit the foreign scientists and technicians essential for Sweden’s high tech companies if they are to develop new products and retain their world market share.
Would you be tempted to live in a country with tax rates up to 50 per cent, plus social security payments, high as 39 per cent levied on total earnings with no maximum limit and top of that a wealth tax on 100 percent of the listed value of shares. 100% Wealth tax in Sweden is not just of the super-rich. It affects 42 per cent of full time workers.
Sweden is an extreme case. but the same principal applies in many of the developed countries. When these companies pull out their money and transfer their production, they generally only take a fraction of their workers with them. Those left behind are on the dole – a – temporarily – so that the government has more unemployment benefits to pay out of – a reduced tax income.
Editors note: Dr. Charles Freeman is the offshore guru, consulting expert and the author of the best selling report, How To Legally Obtain a 2nd Passport” Updated & Revised – for 2011
Posted August 15, 2011 at 4:42 pm
from The Reformed Broker
Warren Buffett’s latest New York Times op-ed is about the absurdity of billionaires paying a high-teens percentage in federal income tax while the middle class shoulders a 30-some odd percent burden each year. He is amazed at the lengths Congress will go to protect he and his ilk..
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investor
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
Buffett is not calling for an across the board tax hike, contrary to what the kneejerk all-taxes-are-always-bad-all-the-time crowd will tell you.
Rather, he is looking for a bit of pragmatism as the nation seeks to get its fiscal shit together [continue]…
Posted June 20, 2011 at 12:27 am
by Barrie McKenna
The Globe and Mail
Janet Selby never imagined she was anything other than a Canadian.
After all, she has lived in Canada for all of her 47 years. She went to school here, voted in elections, travelled on a Canadian passport and built a successful career as an accountant and corporate recruiter.
But a recent call from her online broker forced her to confront a long-forgotten past. Ms. Selby spent the first four days of her life in the United States, born in 1963 to two Canadians pursuing graduate work at the University of Illinois in Champaign, Ill.
That makes Ms. Selby an accidental American – a reality that comes with sweeping tax and reporting obligations that could now cost her thousands of dollars and a monster headache.
“It’s frustrating,” Ms. Selby said from Toronto, where she has lived most of her life. “I’m a responsible citizen. I’ve paid my taxes dutifully since I’ve been earning money. It makes me feel like it’s an overreaching tax grab by the Americans.”
Ms. Selby is not alone. Hundreds of thousands of Americans living in Canada may soon run into the increasingly long and muscular arm of the U.S. Internal Revenue Service. Many aren’t aware of what is about to hit them as Canadian financial institutions comply with a new law that requires them to identify their U.S. customers to the IRS, tax experts warn. Banks and customers who fail to provide the information would be hit with steep penalties on all their U.S. income.
Unlike almost every country in the world, the United States taxes its citizens based on worldwide income, regardless of where they live.
Posted April 28, 2011 at 12:00 pm
by Mike Young
The Texas House just passed an Internet Sales Tax Bill (HB 2403) aimed squarely at Amazon and other Internet retailers. Instead of cutting spending, these leftists are raising taxes. That’s not pro-growth. It’s wealth redistribution, stealing from entrepreneurs to fund government programs that should be cut or eliminated.
This Texas Internet sales tax bill isn’t as “bad” as ones passed in more liberal states. However, there is nothing “Main Street” or “fair” about taxing online businesses.
Once an Internet sales tax is in place, you can be sure that the rates will increase and more online businesses will have to pay it because the government is filled with a bunch of politicians who want to rob entrepreneurs to pay for their favorite goodies.
I’ve included a copy of the bill below.
Posted December 2, 2010 at 12:18 pm
by Kathleen Peddicord:
“Most U.S. expats realize that the United States taxes its citizens on their worldwide income,” writes international tax guru Chris XXXXX.
“They understand, too, that every U.S. citizen must file a U.S. tax return every year, regardless where he chooses to reside.
“What many don’t recognize, though, is that an American abroad can use a foreign corporation, in a zero-tax jurisdiction, to legally and legitimately reduce U.S. tax on his business income.
“Your first line of defense as a U.S. expat is the Foreign Earned Income Exclusion (FEIE), which excludes from U.S. income tax the first US$91,500 of wage or self-employment income earned by a U.S. citizen ‘residing’ in another country. (Technically, you’re ‘residing’ abroad if you’re outside the U.S. for at least 330 days during any 365-day period.)
“However, this is only the start of strategies available to you as an American abroad to reduce or even eliminate your annual tax bill.