(Aside: this went out to the subscribers to my email newsletter as I was sitting in the terminal at LAX waiting to fly to the Middle East. The newsletter is called “Jell-O Shots.” Very fast, very effective. You should sign up. You’ll get quick, jet-lagged missives when I’m on a plane or about to be. There is a signup area on the front page of this website.)
Headed to Dubai and Riyadh. Topics: real estate and expatriation. People vote with their feet and their wallets.
After a long absence, the Jell-O Shot returns. Mostly I write this while sitting in an airport somewhere, usually jet lagged. I haven’t been on a long flight since last May. This email is your clue that travel is kicking back in gear.
I’m headed for Dubai, then Riyadh. This is a normal loop for me. The two things on the agenda for meetings?
For most people, the concept of nonresidents buying U.S. real estate will generate a yawn. Dog bites man. Film at 11. The market is down, the dollar is cheap. What’s not to like? (FWIW I see purchases of single family homes for personal use as well as traditional commercial/investment property purchases). My job there is to make it happen. And keep the taxes low, as much as possible at least.
People are voting with their wallets.
But expatriation? Yes. Our office is doing a startlingly large volume of business in helping people terminate their U.S. citizenship or green cards.
People are voting with their feet.
The process is complex — not only do you log out of the citizenship/residence system, but you also have to log out of the U.S. tax system properly. That can get expensive. The IRS behaves somewhat like a lover scorned, wanting to land one last kick in your derriere as you’re walking out the door.
When I go to the Middle East (and I go a lot) people grumble about U.S. foreign policy. But people don’t terminate their U.S. citizenship for that reason, in my experience. They cite U.S. tax policies.
Reflexively you think, aha! They don’t want to pay income tax. Well, not exactly. Our best salesman is IRS Commission Shulman and his holy war on U.S. taxpayers who have foreign bank accounts. Bluntly, it is the prospect of facing dozens of required tax forms — sometimes obscure — with monster penalties if you screw things up. This has been the pattern since 2008 when the IRS started gearing up to pursue offshore bank accounts held by U.S. persons.
Living a normal life and unintentionally subjecting yourself to gigantic (as in hundreds of thousands of dollars) penalties for a paperwork foot fault strikes most people as unfair.
The second tax reason given is the estate tax. For multinational families with assets abroad, with some family members U.S. citizens and some not, the U.S. estate tax can eviscerate the family firm, or the family real estate holdings. If the wealth was created outside the U.S. with significant non-U.S. inputs (human or capital) it strikes many as unfair to sacrifice 35% to the United States Treasury.
The U.S. passport is too expensive. What you get for what you pay is out of balance.
That’s why people give up citizenship and permanent resident status.
And the people who are doing this are precisely the people you’d want as productive, contributing members of the U.S. society.
End of rant. 🙂
I’m sitting in the barn that passes for a terminal at LAX, ready to board the bus to take me to the Emirates nonstop to Dubai. I’m looking forward to re-connecting with friends there. More later.
And you can always unsubscribe if you want. There’s a little hyperlink buried in this email that will let you do that instantly.
(Available on +1-626-999-4000 while abroad — my T-Mobile cell phone).
As always, call/email. I’d love to hear from you.