Charles Schumer and Bob Casey, the two U.S. Senators behind the Ex-PATRIOT act — a proposal to go after early Facebook backer Eduardo Saverin and others like him that have renounced U.S. citizenship and are getting out of paying capital gains tax on stock windfalls — have now revealed the details of their plan. We first wrote about it earlier today when the offices of the two senators first announced their intentions.Read the rest here
It’s pretty big: any ex-pat with either a net worth of over $2 million, or an average income tax liability of at least $148,000 over the last five years, “will be presumed to have renounced their citizenship for tax avoidance purposes.” The ex-pat will have to demonstrate to the IRS that this is not the case if it is not. If there is a “legitimate reason” for that person living outside the U.S. no penalties will apply. But if the IRS finds that someone gave up their passport for tax purposes, they will impose a tax on that individual’s investment gains “no matter where he or she resides.”
The rate of that capital gains tax will be 30 percent — the same that non-resident aliens currently pay on dividends and interest earnings.
The tax detailed this act, if approved, will backdate for 10 years after its approval.
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