I find it curious that more countries don't do what America does, and tax you wherever you live. While this policy would absolutely screw me over as someone who lives in a very low tax country, I'm not sure what the argument _against_ it for a country like the UK is.
The US can only do this because it has sufficient power to force other countries to report information on how much US citizens make to the IRS. If the UK tried making the same demands, the most likely responses from other nations would be "screw you, no" and "that sounds like a lot of work, pay us."
For one thing, in Europe at least, people are relatively mobile between countries. While it's different legally of course, imagine US states trying to tax you permanently even if you move elsewhere? (Yes, California supposedly tries sometimes but, in general, the idea is silly.)
>US states trying to tax you permanently even if you move elsewhere? (Yes, California supposedly tries sometimes
To clarify, California tax agency will sometimes aggressively audit residents who claim to have moved elsewhere, when evidence indicates they have not actually abandoned their California domicile.
A few years ago they tried to impose 10 years of taxes on anyone moving out of state, and make it retroactive to anyone who had already moved in previous years.
To state that this was a proposal to tax "anyone moving out of [the] state" is patently false. It would have only applied to people over a very high wealth threshold, $30,000,000.
You also omitted that this would be a wealth tax, not an income tax. Big difference. Income is determined on an annual basis and is usually sourced to where it is earned. Wealth is an accumulation over years, including unrealized or unrecognized (for tax purposes) income from various sources (e.g. different states).
Finally, this was a failed bill submitted by a few legislators, which would have required 2/3rds vote in both chambers. It never even made it out of the chamber of origin and so never came up for a full vote. So, "California" in fact did not "try" to impose this tax, since it was never even close to passing under California's rules, let alone being signed into law. And as several commentators elsewhere have observed, it would probably face significant challenges in court even if there was some alternate universe where it was CA law.
The US taxing you anywhere you live is only possible because of the premium people place on US citizenship. Even so, some people elect to give it up when they emigrate somewhere else.
You need to have a citizenship. I’m willing to bet that living in another country with a strong passport for long enough to renounce your British one, just so you can move to a tax haven, while losing your right to live in the UK, is a bridge too far for most Brits
I think it's because there would be an uproar :-) Don't forget the UK is much smaller than the US - over there you can travel a landmass half the size of the whole of Europe and that law wouldn't bite you.
The equivalent law in the UK would mean that if you just moved 60 miles from the UK to France you'd have to pay tax twice. Much more limiting.
Edit: two people have now told me that you get an IRS tax credit for foreign tax payments. I stand corrected - never knew that!
> The equivalent law in the UK would mean that if you just moved 60 miles from the UK to France you'd have to pay tax twice.
To my understanding, that's not how the US taxes work. You have to file a tax return with the US, but you get a credit for the taxes you've paid to other countries [0] so you actually end up paying whichever tax is higher.
There is a significant degree of double taxation for overseas Americans, the credit only covers a subset of common cases. It is not uncommon to pay more taxes as an American overseas than you would pay to each country separately if you were only filing in one.
While FTC helps with most things, you can still get knocked for stuff that doesn’t fit into the US tax code. Like stamp duty - you’re taxed in the UK when buying property, then taxed in the US when selling (you’re exempt in the UK on your primary property).
That's correct. But it means even if you move from a high tax country/state to a low tax one (which may provide a very different level of services for the lower taxes--as is often the case with US states) you still get hit.
You don't pay tax twice under the (still ridiculous) American system, the IRS does credit you for whatever foreign taxes you've paid. I'm not sure if it's 1:1 but there is a credit.
> I'm not sure what the argument _against_ it for a country like the UK is.
Part of the reason is there are very rich, politically active people who prefer the status quo. Such as the prime minister's wife, the owner of the Daily Mail, and suchlike.
What if you have a passport from that country? You're still technically "using their services" (their diplomatic presence and apparatus) wherever you go, no?
Fun fact! There are only two countries in the world that require expatriates to pay income tax back to their home countries: Eritrea and the United States of America!
>expatriates : An expatriate, or expat, is an individual living and/or working in a country other than their country of citizenship, often temporarily and for work reasons.
There are other countries as well, Americans just like to complain about it.
> There are other countries as well, Americans just like to complain about it.
If you are not an American who lives abroad then, with respect, you don't know what you're talking about. May you never have the experience of a bank in your country of residence refusing to do business with you because they fear the reporting burden incurred by serving clients of your nationality. Perhaps the Canadian Revenue Agency wishes it could compel banks in foreign lands to report the financial activities of the citizens under its purview, but the IRS actually can, and does.
Many people live in countries different from their citizenship. If you have an Indian passport but have lived in Germany for 5 years, should you pay taxes to India?
