Taxes - Am I naive or just uneducated?

[nun]

Quote:

Originally Posted by Independent Are you sure about that? Suppose I leave the US, take all my money with me, become a citizen of another country, surrender US citizenship, have no US income or assets. How, practically, is the US going to collect US taxes from me?

The US will tax you when you sell US based investments. Once the money is abroad and you've renounced your US citizenship (and assuming your net worth is less than $2M) you'll probably be clear of the IRS.

I read an interesting twist on the whole US citizenship thing the other day. A UK couple in the US on a 1 year work visa had a child in the US. So the kid is a US citizen, the parents don't want the child to be a US citizen, but they carn't do anything about this as the child has to decide when its 18 and go through the US citizenship renunciation paperwork to avoid having to file 1040s. Also the kid must register for selective service.....the US way of gaining citizenship and taxing based on citizenship is really dumb.

[ladelfina]

And if this kid gets a job in the UK at 14 or 16, or his parents give him a UK bank account or investments that generate significant income he'll be beholden to file 1040s even before being able to make that choice, no?

[bosco]

Quote:

Originally Posted by nun the US way of gaining citizenship and taxing based on citizenship is really dumb.

I agree with you that the US way of taxing based on citizenship is really dumbd.

However, the principle of citizenship based on location of birth goes back a long way. There are 2 basic citizenship principles

jus solis (by virtue of birth at a location)
jus sanguinis (by virtue of 'blood'--who you were born to)

Much of these date back to the time of Caeser. Most countries use some combination of these (e.g. Germany doesn't necessarily confer citizenship if you were born in Germany unless you are "German.")

The reason that the parents cannot renounce a child's citizenship for him is that this would be a violation of the UN Treaty on the Rights of the Child, which prevents a person's (even a child's) nationality from being stripped from them due to the decision of another without due process and without their consent. Since they are not old enough to consent, it must wait until the age of majority, unless there was fraud or some other reason for a hearing.

I can tell you that this is a good rule. It leads to absurdities here, but those absurdities relate to stupid tax policies. This rule was violated in my case (my Canadian citizenship was illegally stripped from me as a child, and not even deliberately). It took me many years and a lot of trouble (and literally an act of Parliament) to get it back. Besides, at age 18, the person may decide that having dual citizenship is worth the extra bother.