We have many issues with our tax system and solutions differ for every person you ask. The people that give you a solution probably do not know that our tax system is causing for U.S. citizens, who reside overseas, to give up their citizenship. CNBC has reported a recent survey conducted by Greenback Expat Tax Services, which found that over 4 out of 10 citizens are considering giving up their citizenship.
Around 9 million U.S. citizens live abroad and many don’t feel that they should have to file taxes every year or had not received a tax return. Our tax system is complicated for citizens here but is even more complicated for hose abroad. On top of the currency conversion, citizens abroad are subject to extreme penalties for failure to file the required paper work or fail to file correctly. The complicated steps for filing the tax forms make it hard for even experts.
This story is meant to show another issue with our current tax system, not to say that those living abroad should be exempt. By exempting them, it would create more issues and would give them U.S. citizenship at no cost. We should look the system we have in place for giving up their citizenship. The exit tax is based on the fair market value of all your assets, which could be taxed as high as 39.6 percent. On top of taxing your assets, any assets in the united stated that are inherited could be taxed. This tax would fall on the person your assets go to and could be as high as 40 percent.
This is another example of why a tax reform is necessary and needs to consider all issues. There is no clear-cut tax system because it will always upset someone. The U.S. needs a tax system that does not depend on the wealthy to pay excessive taxes and create a better tax system for those citizens living abroad. These are only two of the countless issues with our tax system and it seems that it is time for major changes to the current tax system.
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Source: http://www.cnbc.com/2017/05/31/taxes-are-driving-these-americans-to-consider-giving-up-citizenship.html (June 1, 2017)