Author Topic: WTF? "Revenge Tax" and Remittance Tax  (Read 2045 times)

johnsonmez

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WTF? "Revenge Tax" and Remittance Tax
« on: May 30, 2025, 10:36:29 AM »
Section 899: The "Revenge Tax"
https://www.forbes.com/sites/virginialatorrejeker/2025/05/22/one-big-beautiful-revenge-tax--hits-foreigners-from-unfair-tax-jurisdictions/
https://www.investmentnews.com/regulation-and-legislation/revenge-tax-to-hit-us-allies-with-tax-rules-tagged-unfair-by-trump/260655

https://theusaleaders.com/news/new-5-remittance-tax/
The US is proposing a 5% remittance tax on money sent abroad by non-US citizens and residents
e.g moving funds from US broker to non US broker/bank

What does he want? and can he make it happen?

Should I be insane to trust US until 2028 as a non-US resident/citizen investor?
How am I supposed to proceed?
US was a safe haven (geopolitically safe) for me. Its no longer the case?

These are small warnings to get out. Maybe I will regret it if I don't listen ?..... 
World is becoming multipolar. Each group of countries might cut trade ties with other groups. e.g Residents of China who keep funds in the US would say goodbye to their funds, and vice versa.
This is state-related but sanctions apply to ALL residents of a targeted country. So in a multipolar world, the next step could be confiscation of fund of individuals who reside in other groups. In addition, they can categorize based on nationality, not just residency.
« Last Edit: May 30, 2025, 10:57:43 AM by johnsonmez »

erp

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Re: WTF? "Revenge Tax" and Remittance Tax
« Reply #1 on: May 30, 2025, 10:49:35 AM »
I think it's 5% per year, increasing up to 20%?

In answer to your bigger question, it sure seems like it might be insane to trust the US right now. They are trying pretty hard to make the regulatory and tax environment inhospitable. In the short term it's not obvious what other options or strategies exist, but it might be a good time to remain flexible and see if someone clever finds a more optimal strategy for how to manage investments if the US becomes increasingly obstinate.

In the short term I'm in "wait and see" mode, an extra 5% in one year won't be a huge hit and much of Trump just blows over. I am paying more attention and waiting to see if anyone comes up with some more concrete ways to manage the real investment risks over the next six months.

johnsonmez

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Re: WTF? "Revenge Tax" and Remittance Tax
« Reply #2 on: May 30, 2025, 11:13:21 AM »
I think it's 5% per year, increasing up to 20%?

In answer to your bigger question, it sure seems like it might be insane to trust the US right now. They are trying pretty hard to make the regulatory and tax environment inhospitable. In the short term it's not obvious what other options or strategies exist, but it might be a good time to remain flexible and see if someone clever finds a more optimal strategy for how to manage investments if the US becomes increasingly obstinate.

In the short term I'm in "wait and see" mode, an extra 5% in one year won't be a huge hit and much of Trump just blows over. I am paying more attention and waiting to see if anyone comes up with some more concrete ways to manage the real investment risks over the next six months.

You're waiting outside of the US or in?

If a bank is telling you that you should take your money out, you probably should, right?

What's stopping trump from refusing global standards and imposing capital gains taxes to funds of foreigners who are tax residents of other countries?
What's stopping him from imposing unrealized capital gains taxes on top of that?
What's stopping him from confiscating funds of foreigners for whatever reason he comes up with?

erp

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Re: WTF? "Revenge Tax" and Remittance Tax
« Reply #3 on: May 30, 2025, 11:42:44 AM »
I mean, complete asset seizure is basically the doomsday scenario. I'm outside of the US, but I think that if there's political support for widespread seizure of assets owned by people outside the US then it definitely doesn't stop there - almost overnight that's a collapse of the US-centric global economy.

If the apparatus of the state is alright taking my assets then it's only a matter of time before they're taking anything they can get their hands on by force (do you really think that partisans hate Canada more than they hate democrats - they'd be on the list too). I guess that long term, we'd probably reshape the global economy with the US as a pariah, and either the EU, China, or India in a central role. It'd be a nightmare of instability, probably a huge swath of destroyed wealth, maybe outright war, but life would probably go on.

The thing that might stop the US from stealing assets from almost everyone is that it would turn the US into North Korea or Russia - they'd end up being pushed right to the edge of global trade because they're not trustworthy. It's not obvious to me what that would look like, because a year ago it was an absolutely insane concept ... but here we are.

(if your bank tells you to take your money out, you should)

GuitarStv

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Re: WTF? "Revenge Tax" and Remittance Tax
« Reply #4 on: May 30, 2025, 11:59:44 AM »
Right now, there's no way to know what will happen.  Whether or not Canada is determined to have 'unfair taxes' which would trigger the higher tax rates is as totally up in the air as everything else America's shit government does.  It seems likely that this is something Trump would do though for lulz, but would then trigger a mass exodus of Canadian investors (and likely those from other countries around the world) from the US which would have a significant impact on the markets.

So do we get TACO Trump again, or is he serious this time?  Nobody knows, certainly not Trump.

Fru-Gal

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Re: WTF? "Revenge Tax" and Remittance Tax
« Reply #5 on: May 30, 2025, 12:07:23 PM »
I’m in the US. That remittance tax is crazy harmful and regressive. Right now if you’re supporting family outside of the US, you don't have to show national ID docs to use a money transfer service. It’s already expensive to do this. So now the money transfer service provider would have to see your citizenship papers as well?

It’s also messed up because the uber-wealthy aren’t using retail money transfer services, none of this applies to them. As I’ve said before, the rich belong to no nation. They can have enough assets to have multiple international banks/residences.

Probably the answer to OP is to create some form of international corporation. The corporation is the only entity that has rights now LOL.
« Last Edit: May 30, 2025, 12:43:28 PM by Fru-Gal »

Morning Glory

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Re: WTF? "Revenge Tax" and Remittance Tax
« Reply #6 on: May 30, 2025, 12:26:19 PM »
Ugh my dad could get caught up in the remittance tax depending on how it's interpreted (non-US-citizen who has a state pension but no longer lives here. He was a permanent resident when he earned the pension though).  There's a lot of bad stuff in that bill that I'm not going to worry about until some version of it actually passes.

The "revenge tax" looks confusing and hard to enforce.

ChpBstrd

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Re: WTF? "Revenge Tax" and Remittance Tax
« Reply #7 on: May 30, 2025, 12:44:58 PM »
U.S. perspective here:

We're talking about a country where the national philosophy of life is consumerism, and where people happily sacrifice years of their life, endure terrible inconveniences, consume unhealthy food/water/air, allow much of the population to live in poverty, run a risk of not being able to afford lifesaving medical treatments, and buy utterly unnecessary things for the excitement of buying it.

We do so because these sacrifices are believed necessary to keep the money flowing into stocks, real estate, and "job creation". The elderly, the mentally ill, disabled people, and addicts can be seen begging on the streets, and our taxpayers won't help them because they are non-productive economic assets. People routinely die here so that we can maximize GDP. We are now re-legalizing child labor to squeeze a bit more profit out of people who are otherwise liabilities. We are taking away access to government-provided healthcare for millions because we know tax cuts spur economic growth, and because we want to incentivize the poorest people to work harder and produce more.

This is not a country at risk of some kind of communist seizure of all assets. Property rights are paramount. In Star Trek terms, we are the Ferengi. We will happily give up all our freedoms if we can be persuaded there is a profit to be made. But numbers in an account are scripture.

Other cultures compromise on the value of accumulating property and income, and also make policies on humanitarian, traditional, or pragmatic quality of life values. Not the modern U.S. We have only one value, and that is money. We will sacrifice tradition, family, freedom, dignity, pride, safety, our own health, and the lives of our fellow citizens for the sake of stock prices and growth statistics.

Does this eventually lead to totalitarianism? A return to serfdom or slavery for the people whose ancestors once escaped such conditions? Yes it does. But in the meantime it's a great place to be invested because the whole nation is oriented toward this one ultra-primary value of accumulating economic assets. Any politician who endangers that goal will lose the next election. Asset seizures are inconsistent with the national objective.

That said, I think the bigger concern is that the U.S. could destabilize is destabilizing itself by being so single-minded. Everybody is dissatisfied here. Most think it is somebody else's fault (rich people or minorities, depending on political affiliation). Almost nobody understands the bigger picture, that we are optimizing one aspect of life at the expense of everything else.  So we have a pattern of desperately falling for political gimmicks, such as tax cuts that increase the deficit, or subsidies, or free college, or stimulus checks from the treasury, or whatever. We're all in favor of dismantling many of the institutions that brought such great success in the past. Eventually we will reach the ultimate gimmick, which involves granting total power to a CEO-emperor, who promises to make everyone rich.

I suggest you stay diversified, and I am working on diversifying too. Understand the alternatives involve investing in cultures that are not 100% committed to money-making, and so long-term returns must be lower. You might even invest in the eventual victims of whatever nightmare the U.S. becomes. Ancient Rome enslaved entire populations despite its utter corruption, so keep an open mind to the risks and possibilities.

yachi

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Re: WTF? "Revenge Tax" and Remittance Tax
« Reply #8 on: May 31, 2025, 07:58:01 AM »
I recently heard about the Estate tax for nonresident not citizens that's been part of tax law for a long time.  It's a tax due upon the death of the holder of US-situated property, but only if that holder is a nonresident and not a US citizen.  It apparently goes unpaid because it's hard to enforce.  It's an example of a tax that treats non-US people much differently than US people.

Out of the Blue

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Re: WTF? "Revenge Tax" and Remittance Tax
« Reply #9 on: June 02, 2025, 10:18:53 AM »
Right now, there's no way to know what will happen.  Whether or not Canada is determined to have 'unfair taxes' which would trigger the higher tax rates is as totally up in the air as everything else America's shit government does.  It seems likely that this is something Trump would do though for lulz, but would then trigger a mass exodus of Canadian investors (and likely those from other countries around the world) from the US which would have a significant impact on the markets.

So do we get TACO Trump again, or is he serious this time?  Nobody knows, certainly not Trump.

The "Revenge Tax" is not so much a Trump thing but a Republican thing. It was first introduced as HR 3665 Defending American Jobs and Investment Act on 25 May 2023: https://www.congress.gov/bill/118th-congress/house-bill/3665/text

Then it was reintroduced on 21 January 2025 as HR 591. Of course it's possible that we will get TACO again. But so far most of the backlash to the OBBB seems to be on things that affect US people - Medicaid, SNAP, SALT taxes, and increasing the national debt, so this could easily slip through. Foreign investors don't tend to be a very sympathetic group in US politics.

If it comes through, Canada's digital services tax would almost certainly trigger the Revenge Tax - it is exactly what the Revenge Tax is aimed at.