Re: Nando.net on expatriate tax issue

[Black Unicorn <unicorn@schloss.li>]

On Sun, 28 Apr 1996, E. ALLEN SMITH wrote:

> 	Of course, the mainstream media is failing to question why such taxes
> should be in existence at all.
> 	-Allen
> 
> >Billionaires' tax loophole could complicate passage of health reform
> >---------------------------------------------------------------------------
> >Copyright 1996 Nando.net
> >Copyright 1996 The Associated Press

[...]

> >Instead of imposing a large and immediate tax on wealthy citizenship
> >renouncers, the House version tightens current law. It requires expatriates
> >with a net worth of $500,000 or more to pay taxes on capital gains and
> >other income from U.S.-based assets for 10 years after they renounce their
> >citizenship.

Uh.  Hmmmmm.

I refer you to section 877 of the current tax law.

(a)  In General.- Every nonresident alien individual who at any time after
March 8, 1965, and within the 10 year period immediately preceding the
close of the taxible year lost United States citizenship [unless he shows
non-tax avoidance intent with the burden on taxpayer to make such showing]
shall be taxable for such taxable year in the manner provided in
subsection (b)...

(b) Alternate Tax:

[Imposes the larger of normal taxation calculation and the calculation
with the source rules in (c)].

(c)  Special Rules of Source.- For purposes of subsection (b), the
following items of gross income shall be treated as income from sources
within the United States:

[Sale of real property or stocks and debt obligations]

(end)

In other words, you get taxed on capital gains and sale of stock or
property as well as real income for 10 years after your expatriation if
you cannot show you renounced citizenship for non-tax purposes.

What precisely does this reporter think is being "tightened" in his or her
version of the House bill?  (Note that in current law there is no $500,000
floor).  In fact the reporter hasn't bothered to describe what the
provision really does.  (Imposes a expatriation is taxable event
analysis).  Talk about a snow job.  I won't say it is or is not advertant,
but it's bloody annoying.


> >The House version would be extremely difficult to enforce and would allow
> >patient expatriates to avoid the tax by holding their assets for 10 years
> >before selling, they say. In the interim, they could raise cash by
> >borrowing against the assets.

Which is the law today.  What is with this guy?  Get your facts straight
media.

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