Ex-Patriot Act to respond to Facebook’s Saverin’s Tax ‘Scheme’
Of course all of this was unnoticed until all the hype of the Facebook IPO which brought Eduardo Saverim back into the spotlight, two US Democrats stepped in to propose a new, draconian tax law to capitalize on the mania.
Extract from ABC News
At a news conference this morning, Sens. Schumer and Bob Casey, D-Pa., will unveil the “Ex-PATRIOT” – “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy” – Act to respond directly to Saverin’s move, which they dub a “scheme” that would “help him duck up to $67 million in taxes.”
The senators will call Saverin’s move an “outrage” and will outline their plan to re-impose taxes on expatriates like Saverin even after they flee the United States and take up residence in a foreign country. Their proposal would also impose a mandatory 30 percent tax on the capital gains of anybody who renounces their U.S. citizenship.
What this story really means to expats?
According to current regulations, a US citizen regarded as a covered individual who renounces citizenship pays an exit tax that treats his currently-owned stock holdings (and virtually all personal assets for that matter) as if they’d all been sold on the day of expatriation.
In addition to the capital gains levied on everything you own, US Senator Chuck Schumer (D) of New York and Senator Bob Casey (D) of Pennsylvania want to penalize expats who’ve renounced citizenship by taxing all future capital gains earned in the US at 30%.
What all these means to an expat with a net worth of $2 million or greater (or an average income tax liability of at least $148,000 per year over the last five years) will be impose a 30% tax on the capital gains applied to them “no matter where he or she resides.” It will also backdate 10 years.
I will say that´s pretty heavy and against freedom, they want to tax you if you ever acquired or had the fortune of being born with US citizenship no mattering how long you live outside the country.
These conditions could get worse in the future like in Argentina, their citizens are not allowed to take out anything but a small bit of cash to travel with.
Assuming the nonsense being spouted by the two Democratic senators from New York and Pennsylvania actually does get passed, it’s likely going to make the search for foreign asset diversification that much more difficult.
There are still options and you would be wise if you consider establishing your residence in another country, investing in properties or moving your money overseas as away to store some value. Even though it will be getting more difficult for Americans to do so, there are still some places like South America, Ecuador that still has potential. You will be able to get some cash outside that can’t be immediately seized without following well-established international legal procedures.
Whichever plans you decide to follow do not delay and be sure to actually do it. I could not comment on the latest attempt by the US authorities, just that if you think it maybe your case, there are many ways to get an account here in Ecuador, let me know if you need more details…. Just get moving!