Insidious New Exit Tax May Cost Expats Dearly! By Mark Nestmann March 2007 Congress is on the verge of passing an outrageous law that would impose the first-ever "exit tax" on expatriates (former U.S. citizens or long-term residents). If it passes, it could include a little-known provision, which demands that expatriates pay a tax on all unrealized gains of their worldwide estate. The gains will be assessed based on the fair market value of the expatriate's assets and the tax due within 90 days of expatriation. This exit tax applies to assets held in retirement plans and trusts, both domestic and foreign. The only thing it doesn't apply to is U.S. real estate investments, which remain subject to U.S. tax under existing law. Presumably, the phantom gain would be taxed as ordinary income (at rates as high as 35%) or capital gains (at either a 15% or 25% rate), as provided under current law. When the assets are actually sold, no further U.S. tax will be due (although the gain might be taxed again by the country in which the expatriate resides, leading to double taxation on the same income). Also, expatriates who must withdraw assets from retirement plan to pay this tax, and are under 59-1/2 years old, will be hit with a 10% penalty tax on top of the exit tax. And finally, when distributions are actually made, the country where the expat resides could tax those distributions a second time. Talk about legislative overkill! In all cases, the first US$600,000 of gains will excluded from the exit tax (US$1.2 million in the case of married individuals filing a joint return, both of whom relinquish citizenship or terminate long-term residence). http://www.escapeartist.com/efam/89/Exit_tax.html
Wow, thanks for that link, eye opening. I particularly found of interest these two excerpts: "There's also a stinger to consider for those who might be tempted not to comply. This new law states that anyone who does not comply with the new U.S. Tax Code will be denied entry to the United States." Is that supposed to scare anyone? They are renouncing their citizenship after all.. "By enacting an exit tax, the United States joins the ranks of Nazi Germany and the former Soviet Union, which confiscated part (and sometimes all) of the assets of wealthy emigrants." Wonderful...
This kind of thread is only good for dreaming and mental masturbation, specially for US citizens. Nevertheless I like to dream and yesterday I was checking out Forbes' taxheavens online, the Cayman Islands won hands down. "As of December 2005, just over 70,000 companies were incorporated on the Cayman Islands including 430 banking and trust companies, 720 captive insurance firms and more than 7,000 funds." http://www.forbes.com/realestate/20...-forbeslife-cx_mw_ee_0315taxhavens_slide.html Here is additional info on the subject: http://en.wikipedia.org/wiki/Offshore_financial_centre
I believe there are ways around, this although unfortuately I would be covered ok under the law. For example, you could sell all of your assets, while still in US, and buy property in your expat country and later sell if you want and convert to non USD. I am in the process of applying for Canadian citizenship, because of my Canadian Dad, and then possibly renounce American. But honestly that would be real difficult to do. I have family and friends here. Until I am consistently making over $1,000 a day trading it's not a concern really. It's good to plan, but I am probably atleast 1 year away. Check out what your $$$ buys in Panama. http://www.buypanamarealestatenow.com/?gclid=CPLDqJLBgYsCFU5cIgod_R0EHQ
does anyone have any insights on possible issues that might come up if i were to ever move offshore but still wish to run my automated system on a server in canada?
Go to Persia.....banks pay over 18% interest on funds that you are not trading. Buy Persian rugs at wholesale within Iran from smaller communities where they are manufactured, and then ship them to Dubai and sell at high retail.....between the bank earned income and the rug sales you should easily do a 100% + return a year.
Yes, but the not-getting-shot-kidnapped-beheaded risk premium in this Iran carpet shopping idea might be rather high..
I'm not sure how you can avoid taxes by going offshore. Don't you have to trade through a US brokerage account? Then wouldn't there be tax withold on profits?
The trouble with this is that the 18% (or similar) interest rate on rials is aprroximately the same, or possibly even lower than, the rate of inflation. Other major problems with Iran: Unstable property laws. Poor Internet connectivity and censorship thereof. Inefficient and backward banking system (in the country that invented the cheque). Pollution in big cities. Generally unpleasant and nasty government.
You are possibly extrapolating from the news from countries such as Pakistan and Iraq. The murder rate in Iran is much lower than that of the USA.