@SaundersWSj and Liam Pleven article on life as #Americansabroad

The long awaited article – “Exapatriate Americans Break Up With Uncle Same To Escape Tax Rules” – from Laura Saunders and Liam Pleven appeared on page 1 of the Wall Street Journal on June 17, 2014. The article was superb and reflected the meticulous research from these veteran journalists. You can tell the quality of an article by the comments it generates. This article generated intelligent comments which reflect an understanding of the problem. Since the article appeared on page 1, it is likely that the article will be read by many.

I offer a sincere thanks to Ms Saunders and Mr. Pleven.

A very nice article. But one thing all these journalists seem to keep missing is the double taxation due to the mismatch in tax systems and non recognition of tax deferred investments where expats reside.

For example, homeland journalists routinely draw attention to the FEIE but always miss the mark on the double taxation of investment income (interest, dividends, cap gains, rent etc). Moreover, they completely neglect the punishing costs and complexity of investing in non-US mutual funds due to the PFIC rules.

In addition to this, none of the non-US retirement funds are recognised as having tax deferred status during the build up stage. To make matters worse, they also get double taxed when the person retires.

To top it off, the CFC rules completely sabotage expats from owning small businesses, unless of course they are incorporated in the US.

The FEIE creates the appearance that expats are getting a break and perhaps FEIE is okay for short term temporary expats. But for long term expats who build lives outside the homeland the situation is pure hell due to all the double taxation issues (not to mention 20% VAT) along with the complicated form filing, penalties up the wazoo, and now bank account closings and mortgage cancellations.

These are the reasons many expats are cutting ties with the homeland. They were able to tolerate the existence of bad US laws as long as the US didn’t enforce them, but that is now changing and expats have no way to remedy the situation (no representation in congress) other than getting rid of US citizenship or going underground.

It is truly a fucked up situation and to this day, no journalist has really been able to put together the whole story. Bits and pieces here and there, but never the whole thing.

End of rant.