Here's a great example of how ordinary people can have their life saving wiped out by the IRS because they lived overseas: International Tax Blog: Example of a Mini-Eduardo Saverin.
We expatriates aren't complaining about the taxes, it's the absolutely ridiculous set of laws that punish us for living outside of the US.
Thursday, May 31, 2012
It's now easy to become a permanent resident of Panama
 |
| Panama City Skyline Photo by JurriaanH |
The law is maddeningly vague and it's for people who can demonstrate specific economic or professional activity in Panama, are financially solvent (you only need a bank account with at least four figures!), and are not criminals. It applies to nationals from the following list of countries:
- Argentina
- Australia
- Austria
- Belgium
- Brazil
- Canada
- Chile
- Czechoslovakia
- Finland
- France
- Germany
- Ireland
- Japan
- Netherlands
- Norway
- Singapore
- Slovakia
- Spain
- Sweden
- Switzerland
- United States
- Uruguay
The correspondent who tipped me off about this informed me that merely starting a business in Panama should be enough to qualify. As far as I can tell, accepting a job in Panama should also let you qualify.
Check out this English language description of the law at panama-guide.com.
Wednesday, May 30, 2012
The laws are failing expats with children
 |
| You had better think about them! Photo from Wikimedia Commons |
An immigration specialist I spoke with assured me that as a parent of a minor French child, so long as I have been a primary caregiver for at least two years, I have the right to remain in France. Not quite as good as the Blue Card, but much better than being deported back to the US! I'm lucky that in this case, France has looked into this matter and ensured that the right thing is done. Others are no so lucky.
 |
| Your author and hisdaughter in Meaux, France |
We're transforming from squabbling nation-states into a global society, even if we maintain separate governments and tighten our borders. Our legal frameworks just aren't up to the task of handling our emerging supranational culture. While it's still small, it's growing, but our state-centric legal systems are producing children who have no nationality and people discovering they owe thousands of dollars in taxes to countries they've never lived or worked in. Currently the laws in this area are very much hit or miss and I would love to see the world's governments come together and try to address this issue. With an estimated 200 million people living in countries other than the ones they were born in, it's getting harder and harder to ignore this problem.
Monday, May 28, 2012
The accidental Kenyan: What would happen if the African nation copied U.S. tax policy?
This is absolutely brilliant, but I doubt there are any US politicians who would give a damn. I would love Kenya to adopt this, but only on a "reciprocal" basis. That is, "we're going to tax our citizens abroad the same way that their resident countries tax them".
Actually, some Americans would like that because it means a handful of Kenyans would leave the US, but other Americans might finally wake up and realize how they're punishing the American diaspora.
A Communist Bar in Paris
Parisian culture is a rich blend of many cultures and ideas. You see this everywhere and one of the regular places I have lunch with my colleagues is the restaurant/bar Joli Môme (old French slang for "pretty girl"). Located in Square Bolivar in the 19th arrondisement of Paris, the Joli Môme is, for want of a better description, a communist bar. They have posters urging you to protect workers rights, pro-Melenchon stickers (a communist politician), great food and slow service.
My lunch last Friday was a delicious soupe marocaine followed by a fiery tagine poisson washed down by a Stella Artois, a great beer for a warm day. I remember thinking how, in the US, most companies would have fired me for that lunchtime beer but over here, no one cares.
Naturally, if I'm talking about sitting in a Communist bar, I have to talk about Communism in France. Communism in France can be summed up with one word: dead. The communists are unlikely to return to power in France not because the French necessarily abhor communism, but because communism would require a complete rewrite of society and French communists are very uncompromising. The French are often very idealistic, but they're also realists: communism isn't coming back short of a complete collapse of the economy and voters turning desperate.
Today, François Hollande, the President of France is a socialist, the first socialist president since François Mitterrand who left office 17 years ago. But I suspect we'll find that Hollande's socialism is different from Mitterrand's in that Hollande actually appears to be a socialist and Mitterrand was, well, Mitterrand. Mitterrand was a larger than life figure and very politically adroit, the latter showing in his quick abandonment of his early hard-left economic reforms after they turned disastrous. Hollande's reforms are forthcoming and I'm quite curious to see what will happen.
Mitterrand was elected at a time when the US and the UK were taking a hard right turn and France was a bit unusual in not following. Hollande, on the other hand, has become president after we've long traveled down the right fork and people are watching him closely. If an economic recovery comes to France, regardless of whether or not it's Hollande's doing, I suspect that there will be a rethinking of politics in Europe. The free market austerity program has been a dramatic failure in Europe and many are struggling to find other solutions. Greece has seen a massive political upheaval at the polls, with even a neo-Nazi party getting seats in parliament. Meanwhile in Iceland, they're rewriting their constitution and arresting the bankers (!). Hell, even in Germany, the Pirate Party is likely to win 10% in the next election. For my American readers: in the US, that result would be meaningless because you can have 49% of the populace support a party and have that party win no seats. I'm not exactly sure how that represents "democracy".
Europe is getting very, very interesting right now and almost anything seems possible. I'm looking forward to the change as Europe, in contrast to the US, seems to be evolving. I don't know if the result will be good, but I can hardly imagine it will be worse than the mess we're in now.
My lunch last Friday was a delicious soupe marocaine followed by a fiery tagine poisson washed down by a Stella Artois, a great beer for a warm day. I remember thinking how, in the US, most companies would have fired me for that lunchtime beer but over here, no one cares.
Naturally, if I'm talking about sitting in a Communist bar, I have to talk about Communism in France. Communism in France can be summed up with one word: dead. The communists are unlikely to return to power in France not because the French necessarily abhor communism, but because communism would require a complete rewrite of society and French communists are very uncompromising. The French are often very idealistic, but they're also realists: communism isn't coming back short of a complete collapse of the economy and voters turning desperate.
Today, François Hollande, the President of France is a socialist, the first socialist president since François Mitterrand who left office 17 years ago. But I suspect we'll find that Hollande's socialism is different from Mitterrand's in that Hollande actually appears to be a socialist and Mitterrand was, well, Mitterrand. Mitterrand was a larger than life figure and very politically adroit, the latter showing in his quick abandonment of his early hard-left economic reforms after they turned disastrous. Hollande's reforms are forthcoming and I'm quite curious to see what will happen.
Mitterrand was elected at a time when the US and the UK were taking a hard right turn and France was a bit unusual in not following. Hollande, on the other hand, has become president after we've long traveled down the right fork and people are watching him closely. If an economic recovery comes to France, regardless of whether or not it's Hollande's doing, I suspect that there will be a rethinking of politics in Europe. The free market austerity program has been a dramatic failure in Europe and many are struggling to find other solutions. Greece has seen a massive political upheaval at the polls, with even a neo-Nazi party getting seats in parliament. Meanwhile in Iceland, they're rewriting their constitution and arresting the bankers (!). Hell, even in Germany, the Pirate Party is likely to win 10% in the next election. For my American readers: in the US, that result would be meaningless because you can have 49% of the populace support a party and have that party win no seats. I'm not exactly sure how that represents "democracy".
Europe is getting very, very interesting right now and almost anything seems possible. I'm looking forward to the change as Europe, in contrast to the US, seems to be evolving. I don't know if the result will be good, but I can hardly imagine it will be worse than the mess we're in now.
Friday, May 25, 2012
Germany Blue Card: It's Now Much Easier to Move to Germany
 |
| Photo by R/DV/RS |
The German Blue Card has been approved! The end of that article states that the upper chamber of German parliament, the Bundesrat, must still approve the law, but this has already happened (article in German).
So what does is take to move to Germany?
- Have a job offer of at least €44K (€35K for some areas)
- Have a degree or equivalent experience.
 |
| Random Germany Photo Photo by Juiwen Wu |
You can apply for permanent residency in Germany after three years, or only two years if you develop a B1 proficiency in German.
Germany needs skilled workers and they don't have enough workers with the right skills. This could be your big chance to move to Europe. It's time to start rereading my How to Get a Work Permit series.
The new law should come into effect July 1st, 2012.
Update: here's the German government English language explanation of the Blue Card. It's pretty damned impressive.
Update 2: Blue Card applications are now being accepted.
Wednesday, May 23, 2012
Ignored Data Behind the Politics of Renunciation
Many of you are undoubtedly familiar with the Pareto Principle. This principle was developed by an Italian economist who observed that in many cases, 80% of your results are determined by 20% of your actions. The difficulty, of course, is identifying the 20%, so let's try to do that.
My wife has a Masters Degree in French law and has worked extensively as a French political advisor. She's explained that in her experience many politicians make their decisions based on the data they receive ... except ... if there is a minor but highly political issue that the public is responsive to, they often take the opportunity to use this as a smokescreen to distract the public while the real work happens behind the scenes. In that case, the politician is often in a position of having to respond to public perception and this may very well not be in synch with the data. For example, I have been reading a British immigration report from July of 2000 which showed fairly conclusively that both skilled and unskilled migrant immigration was beneficial to the UK economy yet UK immigration has been capped at 20,700 (non-EU) immigrants, despite internal reports making it very clear that this does not satisfy market needs. However, it does satisfy political needs.
So let's step back from the politics and look at the numbers. Here are US renunciations since 1998 (the published data starts in 1997, but that year is rather anomalous and I'm not including it until I better understand what is going on):
So we can see a sharp rise in the number of Americans renouncing their citizenship, but note that this is measured in the ten thousandths of a percent! Given that most of those are probably middle-class expats who probably owed little to no money in taxes, it's quite a stretch to suggest this is a serious political issue worthy of our politicians hunting down renunciants. However, when the estimated 6.32 million US expats are taken into consideration, we realize that laws designed to punish expats are affecting one US citizen in fifty. That should be something politicians should pay careful attention to and that's why we see the increase in the number of US citizens giving up their citizenship. And don't forget that I've already pointed out that more US citizens are giving up their citizenship than is being reported (the US only reports on renunciations, not relinquishments).
Out of curiosity, I've decided to try to find out the renunciation rates of other countries. The only other country I've been able to get data on is New Zealand. Their Department of Internal Affairs for the Citizenship office graciously sent me their total number of renunciants per year and the highest total was 24 for 1998. However, they have a much smaller population than the US, so I again calculated the percentages (note that both US and New Zealand percentages are calculated against the correct yearly population):
As you can see, the numbers aren't terribly different. However, we can't conclude much from this because there are several pieces of information we don't have. For example, like the US, New Zealand only tracks renunciants who have formally renounced. Thus, we don't know who may have indirectly given up citizenship by acquiring another "exclusive" citizenship. However, unlike the US, there is no legal incentive to give up citizenship because they don't have the United State's unique citizen-based taxation. Thus, it's very likely that the graph above represents a comparison of US voluntary and involuntary renunciations versus New Zealand's involuntary renunciations (due to taking citizenship in a country that forbids dual citizenship).
I would love to find more information like this. I've filed a Freedom of Information Request with the UK government and hope to have an answer in a few weeks (the answer is very likely to be "we don't know" if they don't track this data). If any readers can find this information for other countries, along with a source, I would be very grateful.
My ad-hoc method of research into this topic reveals four primary categories of renunciations:
Unfortunately, because I've only been able to get the data for New Zealand and the US, I can't prove my suspicions, particularly since they don't appear to match the New Zealand data.
I'm quite confident there would be a taxpayer revolt in the US if they had to face the onerous tax requirements that American expats face. However, we expats are out of sight and thus out of mind. Further, we have no political power in the US and politicians happy to flog populist anger and improve their poll ratings at our expense.
And in case you're wondering why US expats care when we often owe no US taxes: it can easily cost us $1,000 just to file a tax return. The lowest price I've seen from a reputable expatriate tax return firm is $300 for the 1040, Schedule B, Form 2555 and Form 1116. And that assumes that you have the simplest possible taxes, have only earned income (that's a very specific legal term) and don't have to pay for notarized translations of foreign financial documents. If you were unaware of your expatriate tax obligations, you can easily pay $16,000 to enter the OVDI program and that still doesn't eliminate fines and possible criminal charges for being unaware of your legal obligations to the IRS. You try to explain to an American teacher in Uganda who's struggling to pay her rent why this is fair.
My wife has a Masters Degree in French law and has worked extensively as a French political advisor. She's explained that in her experience many politicians make their decisions based on the data they receive ... except ... if there is a minor but highly political issue that the public is responsive to, they often take the opportunity to use this as a smokescreen to distract the public while the real work happens behind the scenes. In that case, the politician is often in a position of having to respond to public perception and this may very well not be in synch with the data. For example, I have been reading a British immigration report from July of 2000 which showed fairly conclusively that both skilled and unskilled migrant immigration was beneficial to the UK economy yet UK immigration has been capped at 20,700 (non-EU) immigrants, despite internal reports making it very clear that this does not satisfy market needs. However, it does satisfy political needs.
So let's step back from the politics and look at the numbers. Here are US renunciations since 1998 (the published data starts in 1997, but that year is rather anomalous and I'm not including it until I better understand what is going on):
 |
| Source. This data matches my own research, but until I have generated my own numbers, I will rely on this. |
 |
| Source: information received via email from the Department of Internal Affairs of the New Zealand Citizenship Office. 2012 renunciation data is obviously "Year to Date" |
As you can see, the numbers aren't terribly different. However, we can't conclude much from this because there are several pieces of information we don't have. For example, like the US, New Zealand only tracks renunciants who have formally renounced. Thus, we don't know who may have indirectly given up citizenship by acquiring another "exclusive" citizenship. However, unlike the US, there is no legal incentive to give up citizenship because they don't have the United State's unique citizen-based taxation. Thus, it's very likely that the graph above represents a comparison of US voluntary and involuntary renunciations versus New Zealand's involuntary renunciations (due to taking citizenship in a country that forbids dual citizenship).
I would love to find more information like this. I've filed a Freedom of Information Request with the UK government and hope to have an answer in a few weeks (the answer is very likely to be "we don't know" if they don't track this data). If any readers can find this information for other countries, along with a source, I would be very grateful.
My ad-hoc method of research into this topic reveals four primary categories of renunciations:
- Politicians for whom dual-citizenship is a political liability.
- People escaping from oppressive regimes.
- People acquiring citizenship in countries that forbid multiple nationalities.
- Americans.
Unfortunately, because I've only been able to get the data for New Zealand and the US, I can't prove my suspicions, particularly since they don't appear to match the New Zealand data.
I'm quite confident there would be a taxpayer revolt in the US if they had to face the onerous tax requirements that American expats face. However, we expats are out of sight and thus out of mind. Further, we have no political power in the US and politicians happy to flog populist anger and improve their poll ratings at our expense.
And in case you're wondering why US expats care when we often owe no US taxes: it can easily cost us $1,000 just to file a tax return. The lowest price I've seen from a reputable expatriate tax return firm is $300 for the 1040, Schedule B, Form 2555 and Form 1116. And that assumes that you have the simplest possible taxes, have only earned income (that's a very specific legal term) and don't have to pay for notarized translations of foreign financial documents. If you were unaware of your expatriate tax obligations, you can easily pay $16,000 to enter the OVDI program and that still doesn't eliminate fines and possible criminal charges for being unaware of your legal obligations to the IRS. You try to explain to an American teacher in Uganda who's struggling to pay her rent why this is fair.
Subscribe to:
Posts (Atom)