California, Hold My Beer!

[Colonel_Buck]

https://www.bizjournals.com/sanfrancisc ... assin.html

[The Observer]

This is an embarrassingly bad proposal,” said Paul Bleeg, a partner at the accounting firm EisnerAmper in San Francisco. “If enacted this would cause some wealthy taxpayers to flee the state just to avoid paying CPAs like me tens of thousands of dollars in fees just to come up with an estimate of their personal wealth.

If that happens Gov. Gavin Newsom may have to adopt Gov. Cuomo's approach:

https://www.dailymail.co.uk/news/articl ... drink.html

At a press conference on Monday, he said of the wealthiest residents who have long left the city: 'I literally talk to people all day long who are in their Hamptons house who also lived here, or in their Hudson Valley house or in their Connecticut weekend house, and I say, "You gotta come back, when are you coming back?"

"'We'll go to dinner, I'll buy you a drink. Come over, I'll cook."

[Arthur Rubin]

https://www.bizjournals.com/sanfrancisc ... assin.html

I think I'm gonna have a heart attack and die from not surprise!

[Jeffrey]

California Dems’ Wealth Tax Follows People Who Move Out of the State

Reminds me of the Monty python line: “We should tax foreigners living abroad”.

[TBL]

Could a state even try to tax residents of another state? I could see them trying to retroactively tax anyone who ever resided in the state. I was born in So. Cal. and my parents moved us when I was ~4-5. I could just see them coming after all of us. /s
In the end, I agree with the assessment of implosion within a generation.

[noblepa]

Could a state even try to tax residents of another state? I could see them trying to retroactively tax anyone who ever resided in the state. I was born in So. Cal. and my parents moved us when I was ~4-5. I could just see them coming after all of us. /s
In the end, I agree with the assessment of implosion within a generation.

It already happens.

Back in the eighties, I worked for the accounting firm of Ernst & Whinney, now merged with Arthur Young to become Ernst & Young.

At that time, E & W was a simple partnership. The legal construct of the Limited Partnership did not exist.

Since it was a simple partnership, there was no such thing as retained earnings, as there is with a corporation. Every penny of profit must be assigned to the partners, individually. That isn't to say that the partners received all that money. Indeed, much of it was kept in the partnership's coffers, but, for tax purposes, it was taxable income for the partners. The amount retained by the firm increased each partner's equity in the firm.

As I was told, each partner had to file income tax returns in every state where the firm had an office or clients. That meant that each partner paid income taxes in about 35 states, maybe more. The partnership had to assign a share of the profits made in each state to each partner, who then paid state income tax on that amount.

Fortunately, the firm had hundreds of young freshly minted CPA's who could prepare all those tax returns.

[TBL]

I see what you're saying, but it was limited by state to the profits made in that state. Seems similar, but reversed, to local businesses here having to report income for people living in Mississippi or Arkansas for income tax purposes even though Tennessee doesn't have an income tax.
I'm more thinking of individuals taking their entire net worth out of state, so no further financial ties to California. Then this tax law is passed but Cali attempts to get their 0.4% from you since you lived in Cali at some point in the recent past?

[LaVidaRoja]

Professional athletes have always had to file returns in every state where they earn income, even though many of them reside in states without an income tax. Ditto people in other fields of entertainment. If years later you are receiving residuals from a movie made in New York, you still have to file a New York return.

[Colonel_Buck]

https://reason.com/volokh/2021/01/23/ne ... NdteSLZm0M

[Burnaby49]

American citizens living permanently in Canada and working here are required to file United States income tax returns because America, almost unique amongst the world's nations (I've read that Ethiopia is only the other country with a similar law), requires citizens to pay taxes on their income regardless of where they reside or work. So a joint Canadian/American citizen I know who was born in Texas but moved here with his parents when he was two years old and has lived here for over 60 years since is taxable as an American citizen. Since we have a huge number of dual citizenship Canadians it's a big issue here.

While the Canadian tax treaty with the US exempts most income from double taxation there's one issue that overwhelms the rest, home ownership. Capital gains on the sale of principal residences is tax free in Canada but is taxable in the US. I'll use myself as an example of how this could impact a dual citizen. Wife and I paid $69,500 for our modest house in Burnaby in 1978. It's now worth about $1,500,000 (at the peak a few years back it was $1,900,000). You've read those numbers correctly, that's Vancouver housing insanity. As a Canadian citizen that gain is tax free but, if I had dual US citizenship, it would be taxable. So I get a lot of whining from dual citizens about the unfairness of it. My position is too fucking bad. If American citizenship is worth that much to you stop complaining and pay the tax. If it isn't revoke the citizenship. Somehow I've struggled through life without an American citizenship and I don't doubt they could too if they really had to.

[NYGman]

American citizens living permanently in Canada and working here are required to file United States income tax returns because America, almost unique amongst the world's nations (I've read that Ethiopia is only the other country with a similar law)

Correct, Us and Ethiopia share this distinction. This issue impacted the current PM of the UK, as he was born in NY, and never renounced his citizenship, he was liable. You can always renounce, but if you are set on keeping it, there is a price (Being subject to US income Tax) you have to pay. This also caught out a lot of people under FATCA, where these dual Canadian/US citizens got caught out, when disclosing their US SSN.

I always thought the view was that being a US Citizen is a privilege, and paying US Income tax is the price you pay for that. You can give it up if you don't want the privilege, although they may be an Exit tax if you do that, but that is to ensure no one exits with a deferred tax bill. So if you don't want to be subject to the tax anymore, there are legal ways to do that. Just my $.02

[LaVidaRoja]

On a Federal level, I believe Mass will lose this. The real issue is on the State level. Suppose the person who had previously commuted is laid off. Where do they file for/collect unemployment? Is the employer now required to pay into the New Hampshire unemployment fund?

[noblepa]

American citizens living permanently in Canada and working here are required to file United States income tax returns because America, almost unique amongst the world's nations (I've read that Ethiopia is only the other country with a similar law), requires citizens to pay taxes on their income regardless of where they reside or work. So a joint Canadian/American citizen I know who was born in Texas but moved here with his parents when he was two years old and has lived here for over 60 years since is taxable as an American citizen. Since we have a huge number of dual citizenship Canadians it's a big issue here.

While the Canadian tax treaty with the US exempts most income from double taxation there's one issue that overwhelms the rest, home ownership. Capital gains on the sale of principal residences is tax free in Canada but is taxable in the US. I'll use myself as an example of how this could impact a dual citizen. Wife and I paid $69,500 for our modest house in Burnaby in 1978. It's now worth about $1,500,000 (at the peak a few years back it was $1,900,000). You've read those numbers correctly, that's Vancouver housing insanity. As a Canadian citizen that gain is tax free but, if I had dual US citizenship, it would be taxable. So I get a lot of whining from dual citizens about the unfairness of it. My position is too fucking bad. If American citizenship is worth that much to you stop complaining and pay the tax. If it isn't revoke the citizenship. Somehow I've struggled through life without an American citizenship and I don't doubt they could too if they really had to.

IIRC, it was during the Carter administration that this changed. Before that, expatriate income was not taxable.

I heard a story that Aramco, which operates many oil fields and refineries in the middle east, used to hire a lot of American engineers. The pay was good, they paid for a couple of trips home every year, and the income was not taxable.

Then, the law changed and the income became taxable. Suddenly, it wasn't such a good gig for Americans, so many quit and were replaced by Germans, or other European engineers.

What happened? When the German engineers needed to purchase supplies of equipment, they went to companies they knew and had done business with; German companies. American suppliers were left out in the cold.

The American engineers went home and America suppliers saw their market share drop. A lose-lose situation for all concerned.

[noblepa]

American citizens living permanently in Canada and working here are required to file United States income tax returns because America, almost unique amongst the world's nations (I've read that Ethiopia is only the other country with a similar law)

Correct, Us and Ethiopia share this distinction. This issue impacted the current PM of the UK, as he was born in NY, and never renounced his citizenship, he was liable. You can always renounce, but if you are set on keeping it, there is a price (Being subject to US income Tax) you have to pay. This also caught out a lot of people under FATCA, where these dual Canadian/US citizens got caught out, when disclosing their US SSN.

I always thought the view was that being a US Citizen is a privilege, and paying US Income tax is the price you pay for that. You can give it up if you don't want the privilege, although they may be an Exit tax if you do that, but that is to ensure no one exits with a deferred tax bill. So if you don't want to be subject to the tax anymore, there are legal ways to do that. Just my $.02

Boris Johnson did finally renounce his US citizenship after settling the issue with the IRS. Details were never released.

Meghan Markle is still a US citizen, so any income she gets from residuals from her acting career are taxable in the US. Presumably, any income she has in the UK is also taxable.

The interesting thing is that her and Prince Harry's son, Archie, is probably a US citizen, as well, meaning that when he grows up and starts earning money, he may be on the hook for US taxes.

A child can not renounce his US citizenship. Nor can his/her parents renounce it on his behalf, so Archie is a US citizen until at least the age of 18. Basically, there is on way that a child, born a citizen, can cease to be a citizen until they are old enough to renounce on their own.

[noblepa]

While the Canadian tax treaty with the US exempts most income from double taxation there's one issue that overwhelms the rest, home ownership. Capital gains on the sale of principal residences is tax free in Canada but is taxable in the US. I'll use myself as an example of how this could impact a dual citizen. Wife and I paid $69,500 for our modest house in Burnaby in 1978. It's now worth about $1,500,000 (at the peak a few years back it was $1,900,000). You've read those numbers correctly, that's Vancouver housing insanity. As a Canadian citizen that gain is tax free but, if I had dual US citizenship, it would be taxable.

I believe that is what got Boris Johnson in tax trouble. Like Canada, the UK does not tax the gain on personal residences. Johnson sold his home in London for a tidy profit. Somehow the IRS got wind of it and went after him for the tax on those profits.

He has since renounced his US citizenship.

[noblepa]

Could a state even try to tax residents of another state? I could see them trying to retroactively tax anyone who ever resided in the state. I was born in So. Cal. and my parents moved us when I was ~4-5. I could just see them coming after all of us. /s
In the end, I agree with the assessment of implosion within a generation.

Another example is lottery winnings.

If my brother, who lives in Florida, comes to visit me here in Ohio, and buys what turns out to be the winning Power Ball ticket, it must be collected in Ohio, even though Florida is part of the PB system.

Despite the fact that he never established residence in Ohio, Ohio would consider the winnings to be Ohio income. Even if he chose the annual payments, the checks mailed from Ohio to Florida would be taxable in Ohio.

[Pottapaug1938]

In August of 2017, my wife and I won some money on a Powerball ticket, purchased in Virginia. The prize was not large enough to deal with collecting it, so we mailed the ticket to some friends in Virginia.

[Burnaby49]

Another example is lottery winnings.

If my brother, who lives in Florida, comes to visit me here in Ohio, and buys what turns out to be the winning Power Ball ticket, it must be collected in Ohio, even though Florida is part of the PB system.

Despite the fact that he never established residence in Ohio, Ohio would consider the winnings to be Ohio income. Even if he chose the annual payments, the checks mailed from Ohio to Florida would be taxable in Ohio.

I'd forgotten about that. Lottery winnings are taxable in the US but not Canada. So if the US finds out that a dual citizen living in Canada has had a big win they'll come after him for it.

[AnOwlCalledSage]

The interesting thing is that her and Prince Harry's son, Archie, is probably a US citizen, as well, meaning that when he grows up and starts earning money, he may be on the hook for US taxes.

A child can not renounce his US citizenship. Nor can his/her parents renounce it on his behalf, so Archie is a US citizen until at least the age of 18. Basically, there is on way that a child, born a citizen, can cease to be a citizen until they are old enough to renounce on their own.

My understanding is that Archie is entitled to US citizenship, his parents can apply, but he is not automatically a US Citizen.

A child born outside of the United States automatically becomes a U.S. citizen when all of the following conditions have been met on or after Feb. 27, 2001:

* The child has at least one parent, including an adoptive parent, who is a U.S. citizen by birth or through naturalization;
*The child is under 18 years of age;
* The child is a lawful permanent resident (LPR); and
* The child is residing in the United States in the legal and physical custody of the U.S. citizen parent.

If he is not a lawful permanent resident, then he isn't a US citizen by default. My reading of 8 USC 1255 is that you have to apply for immigrant status for it to come into effect.

[JamesVincent]

If he is not a lawful permanent resident, then he isn't a US citizen by default. My reading of 8 USC 1255 is that you have to apply for immigrant status for it to come into effect.

Aren't they living in California now?