To quote from this blog post (its a bit odd that its a PDF, but whatever):
... the new expatriate regime (Exit Tax Provision) requires expatriates to recognise gain on their assets, and imposes a new tax on gifts and bequests by expatriates to Americans, This new provision (styled Section 877A) is an addition to (and not a replacement of) the current expatriation tax rules of Section 877. Under the Exit Tax Provision, certain individuals who renounce their U.S. citizenship or U.S. long-term residents who relinquish their U.S. residence status (collectively covered expatriates) must recognise gain, or otherwise be taxed, on all their assets on the date they expatriate. In addition, gifts or bequests they make to U.S. citizens or residents after expatriation will be subject to tax at onerous estate/gift tax rates.
In other words, if you're a US resident and you leave the US permanently, then they deem all of your world wide assets sold, and then tax you on the gain. This includes retirement funds, as well as savings. Congress is proposing this as a way of funding tax relief for serving members of the US military.
Its not law yet, but still something I should pay attention to.
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posted at: 10:20 | path: /travel/usa | permanent link to this entry
#1 IanN
It seems the US is taking lessons from the Mafia and the Taliban, except the government (currently?) stops just short of demanding the death penalty for people who leave their organisation.
I'm really glad I live in a more tolerant country, and I hope it becomes more so now that the kowtowing John Howard is out of the picture.