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Comment by sneak | Hacker News Reader

Legality aside, how do US citizens (loosely defined as people who were born in the US decades ago) who do not live or work in the US have any moral obligation to pay taxes to the US?

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When they travel, they may take advantage of visa-free entry into many countries, negotiated through treaties with the US. If they get into legal trouble abroad, they enjoy consular protection from the US State Department. They enjoy the right to vote in US elections, and the (at least theoretical) right to move to the US should they fancy it.

If they really aren't interested, it's a pretty straightforward process to walk into the nearest embassy and opt-out: http://travel.state.gov/content/travel/en/legal-consideratio...

It's not straightforward at all. There are a bunch of financial implications that are very difficult to navigate.

What financial implications are there, aside from "The IRS wants to make sure you're not leaving just before an anticipated windfall to avoid taxes?"

For example: you have to pay up front, lump sum taxes on things like pensions and retirements, but you still can't withdraw them.

It's expensive to renounce US citizenship.

> lump sum taxes on things like pensions and retirements

You mean if they've been living and working for years in the US, and taking advantage of US tax-advantaged retirement accounts?

Now we're talking about a different person than the parent commenter: "(loosely defined as people who were born in the US decades ago) who do not live or work in the US "

e.g.

https://www.irs.gov/Individuals/International-Taxpayers/Expa...

> rules apply to you if any of the following statements apply.

> * Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than a specified amount that is adjusted for inflation ($147,000 for 2011, $151,000 for 2012, $155,000 for 2013 and $157,000 for 2014).

> * Your net worth is $2 million or more on the date of your expatriation or termination of residency.

> * You fail to certify on Form 8854 that you have complied with all U.S. federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency.

This applies to a tiny subset of people who are either a) Extremely wealthy, or b) Already tax deadbeats.

There are other countries with passports that convey much of the same benefits without the same tax obligation.

"If they get into legal trouble abroad, they may enjoy consular protection from the US State Dept". FTFY.

The "right to move to the US" is ridiculous. I do not have that right unless I pay rent or buy property.

Actually the process is not so straightforward. They still tax you for years afterwards, for one thing. I've also heard that getting the US gov't to actually accept one's passport resignation can challenging, especially if they think you owe them money.

Laws and morality are not aligned quite often. Especially in this case. They have a legal obligation. And I haven't heard of a case of anyone being forgiven their taxes because they said they don't have a moral obligation to pay.

Now let's play devil's advocate and see how you could benefit from those taxes even if you are away? -- Well you could return and then start taking advantage of services, goods, infrastructure, security, protection etc. Something could happen to you and you could request assistance or evacuation. You can use your passport to travel to many countries without a visa. You could vote. But yeah that's all I can think of. Not very convincing. Certainly does not seem worth it.

The main problem they are trying to solve I imagine is people who become rich, and then all of the sudden scurry to a private islands and stop paying taxes.

> The main problem they are trying to solve I imagine is people who become rich, and then all of the sudden scurry to a private islands and stop paying taxes.

Basically, this guy: http://www.foxnews.com/tech/2012/05/11/facebook-co-founder-r...

US citizens benefit from the passport and the effects of American foreign policy on that passport.

It's not terribly uncommon for people to renounce their US citizenship to prevent this. If you left the US decades ago, you don't to have to pay, because you'll have that option instead.

That said, I don't think US tax policy makes much sense. I know of no other country that tries to tax the foreign income of citizens living in foreign countries.

Canada makes it pretty difficult as well. Canadians living abroad have to sever all ties with Canada completely (no address, no bank account, no property... not sure about drivers license, you may give that up as well:) in order not to pay Canadian taxes.

Looking into it, there are 3 things that would always make you a resident of Canada: a home, a spouse or dependants in Canada. Personal property, bank accounts, employment with a Canadian company, a drivers license, a passport, and other such things are also considered and enough of them together might make you a resident.

http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s5/f1/s5-f1-c1-...

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