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Old 26.07.2012, 10:27
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US IRS helps itself to Swiss income

Finally an article in the Tages-Anzeiger showing how unjust and brash the US citizenship based taxation is not only to Americans living here but to the Swiss tax base as well. The US taxes its citizens living and working here even if they have never set foot in America. Although there are 'deductions'(FEIE, tax credits), they cash in especially in areas where there are differences in the tax codes (i.e., pensions). The newspaper unveiled how any tax deductions here are a gift to the IRS. Hopefully this article will help the Swiss government realize that they should protest this unfair & overreaching money grab from the Switzerland.

From the comments many were more shocked by the tax deductions for expats itself but there were also many comments on the dishonest nature of how the US double taxes its citizens living and working here.
http://www.tagesanzeiger.ch/schweiz/...story/20363075
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Old 26.07.2012, 10:45
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Re: US IRS helps itself to Swiss income

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...Hopefully this article will help the Swiss government realize that they should protest this unfair & overreaching money grab from the Switzerland...
Why would they care? It's your money that's going to the US, not Switzerland's.

Edit: oh, I see. Switzerland offers tax deductions for temporary expats, to attract specialists and managers. As americans don't benefit from these tax breaks (what they save on CH taxes, they pay in US taxes), that means Switzerland is less attractive to specialists and managers.

The question really is: is there a dearth of specialists and managers from the US. Are they really needed, or can the requirement be met from other countries with more reasonable tax law? Is Switzerland losing out because some specialists and managers won't come here, because they don't get tax breaks?
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Old 26.07.2012, 10:56
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Re: US IRS helps itself to Swiss income

The US might be losing out, just like they might be losing out because of post 9/11 visa requirements. But they appear to have made policy decisions that tax income and security at the borders (if not in the movie theaters) trumps exporting their talent and importing other talent, although they import quite a lot from Mexico. All those policy decisions are driven by US voters.
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Old 26.07.2012, 11:31
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Re: US IRS helps itself to Swiss income

A bit of a misleading OP - or at least, it confused me in the beginning.

The people who have "never set foot in America" are not likely to be getting the tax deductions here that apply to temporary expat workers.
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Old 26.07.2012, 11:39
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Re: US IRS helps itself to Swiss income

I don't care. Less competition from US professionals == more money for me!
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Old 26.07.2012, 11:42
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Re: US IRS helps itself to Swiss income

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I don't care. Less competition from US professionals == more money for me!
I would happily pay taxes to the US for the rest of my life in exchange to be able to live there.
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Old 26.07.2012, 11:52
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Re: US IRS helps itself to Swiss income

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I would happily pay taxes to the US for the rest of my life in exchange to be able to live there.
Actually, after a certain income, there isn't much difference in your net pay between Zurich and NYC.
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Old 26.07.2012, 11:55
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Re: US IRS helps itself to Swiss income

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A bit of a misleading OP - or at least, it confused me in the beginning.

The people who have "never set foot in America" are not likely to be getting the tax deductions here that apply to temporary expat workers.
I stand by my statement. I know of several cases where 'American expats' are recruited here from countries other than the US.
The US taxes anyone designated as 'US person' WORLDWIDE. The thousands of francs that a US person has to hand over to the IRS is less money available for the Swiss economy. Therefore indirectly there is less money available to EVERYONE working and living here.
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Old 26.07.2012, 11:56
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Re: US IRS helps itself to Swiss income

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Actually, after a certain income, there isn't much difference in your net pay between Zurich and NYC.
However I would be able to work their, which is something I cant do, as you say possibly at zero net cost.
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Old 26.07.2012, 12:00
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Re: US IRS helps itself to Swiss income

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Actually, after a certain income, there isn't much difference in your net pay between Zurich and NYC.
The US IRS confiscation tribute begins only at a certain threashold depending how much you make and in which Kanton you live. For example an American living in low tax Zug with an income of 150k would hand over more than someone living in high tax Jura.
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Old 26.07.2012, 12:09
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Re: US IRS helps itself to Swiss income

It really upset my democrat friends when they benefitted from Bush's tax breaks.

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I stand by my statement. I know of several cases where 'American expats' are recruited here from countries other than the US.
The US taxes anyone designated as 'US person' WORLDWIDE. The thousands of francs that a US person has to hand over to the IRS is less money available for the Swiss economy. Therefore indirectly there is less money available to EVERYONE working and living here.
I see. The obvious solution then, is for Switzerland to stop giving work permits to specialists and managers from the US, and instead give them to people from countries with saner tax policies, who'll therefore have more disposable income and improve life for everyone else.
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Old 26.07.2012, 12:13
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Re: US IRS helps itself to Swiss income

Then just renounce your US citizenship, simple
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Old 26.07.2012, 12:17
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Re: US IRS helps itself to Swiss income

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I see. The obvious solution then, is for Switzerland to stop giving work permits to specialists and managers from the US, and instead give them to people from countries with saner tax policies, who'll therefore have more disposable income and improve life for everyone else.
SADLY this is already happening but the US government stays in a dazed sleepwalk. For a complete salary package a 'US expat' is much more expensive than other expats. In addition to the US taxes imposed, don't forget the compliance costs (As per ACA, average 2kCHF to get US tax help).
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Old 26.07.2012, 12:45
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Re: US IRS helps itself to Swiss income

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The US IRS confiscation tribute begins only at a certain threashold depending how much you make and in which Kanton you live. For example an American living in low tax Zug with an income of 150k would hand over more than someone living in high tax Jura.
So the low-tax kantons effectively exclude Americans from any benefits? I wondered why we were so relatively free of them.
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Old 26.07.2012, 12:55
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Re: US IRS helps itself to Swiss income

Ahhh it was all well and good when they were proud to display their Blue book and claim themselves a citizen of the land of the free.

But when they find out that subjects them to the tax laws of the chosen land they're up in arms.

Don't get me wrong, as it is my profession I can comfortably say I find the US tax laws aggressive, but they are the laws. If a dual citizen who has never set foot in the US doesn't like it, then give up your passport and take issue with your parents for giving you this luxury.
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Old 26.07.2012, 13:30
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Re: US IRS helps itself to Swiss income

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SADLY this is already happening but the US government stays in a dazed sleepwalk. For a complete salary package a 'US expat' is much more expensive than other expats. In addition to the US taxes imposed, don't forget the compliance costs (As per ACA, average 2kCHF to get US tax help).
And I should be worried about this why, exactly?
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Old 26.07.2012, 13:42
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Re: US IRS helps itself to Swiss income

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Ahhh it was all well and good when they were proud to display their Blue book and claim themselves a citizen of the land of the free.

But when they find out that subjects them to the tax laws of the chosen land they're up in arms.

Don't get me wrong, as it is my profession I can comfortably say I find the US tax laws aggressive, but they are the laws. If a dual citizen who has never set foot in the US doesn't like it, then give up your passport and take issue with your parents for giving you this luxury.
1) This post is meant as a constructive critic and NOT a rant against the US. If the US and Swiss governments are not made aware of the facts there were never be any change.
2) This is a US law and would likely be found in violation of human rights law in an international court (not recognized by the US). Eritrea does the same and they were condemned.
3) The US is making it increasingly diffcult to renounce. Wait over a year for an appointment, handover 15% of all assets(above a certain threashold) etc. One person I know can't afford it because she would have to sell her property to pay this.
The governments need to be made aware that extraterriortial taxation is not in anyone's interest, or at least by anyone that has a sense of fairness. Most Americans abroad are hard-working, proud of their country and want to promote it but this is being made increasingly difficult.
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Old 26.07.2012, 13:48
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Re: US IRS helps itself to Swiss income

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1) This post is meant as a constructive critic and NOT a rant against the US. If the US and Swiss governments are not made aware of the facts there were never be any change.
2) This is a US law and would likely be found in violation of human rights law in an international court (not recognized by the US). Eritrea does the same and they were condemned.
3) The US is making it increasingly diffcult to renounce. Wait over a year for an appointment, handover 15% of all assets(above a certain threashold) etc. One person I know can't afford it because she would have to sell her property to pay this.
The governments need to be made aware that extraterriortial taxation is not in anyone's interest, or at least by anyone that has a sense of fairness. Most Americans abroad are hard-working, proud of their country and want to promote it but this is being made increasingly difficult.
And many more used Switzerland as a safe tax haven to hide assets.

I do see your points, and I agree issues need to be raised but it was all going so well until that guy from UBS shopped everyone.

My point is, the US had every right to tax it's citizens how it sees fit. It's aggressive, yes, but you have a choice.
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Old 26.07.2012, 14:02
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Re: US IRS helps itself to Swiss income

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And many more used Switzerland as a safe tax haven to hide assets.

I do see your points, and I agree issues need to be raised but it was all going so well until that guy from UBS shopped everyone.

My point is, the US had every right to tax it's citizens how it sees fit. It's aggressive, yes, but you have a choice.
The US has indeed very efficiently ended Swiss banking secrecy. The trend in the future is that any concept of financial privacy will be eliminated.
You are right that overseas American's still have the 'choice' to renounce or not but US congressmen may soon close this 'Loophole'. I refer to pending legislation from Senator Schumer.
I still don't see how the US has the 'right' to confiscate tax revenue from Switzerland. This erodes the tax base here. 5kCHF tribute paid to the IRS is money not spent or invested here.
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Old 26.07.2012, 14:07
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Re: US IRS helps itself to Swiss income

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So the low-tax kantons effectively exclude Americans from any benefits? I wondered why we were so relatively free of them.
Just the opposite, IME.

One factor influencing our choice to live in a low-tax canton was our US tax liability.

Living in canton Zürich and paying higher CH taxes meant a larger deduction (foreign earned income) from our US taxes - and that large deduction kicked us into the US alternative minimum tax.

Living in a low tax canton means I pay a larger proportion to the US, avoiding AMT. There are quite a few Americans in my corner of SZ for that reason. Sure, we pay far more overall than our neighbors who are not burdened with the blue passport, in fact we pay as much to Uncle Sam as we do to Helvetia - so in that sense we don't reap the benefit of low SZ taxes. But at least we aren't hit with the AMT on top.

I wish I could afford to live in SG...
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