Today I received a tax bill from the IRS for my 2014 taxes. It was a hair above $12,300 dollars. I paid it immediately. The last person I want on my back is Uncle Sam. Unfortunately, having to pay that much in taxes at once and unexpectedly means that our investment activities are done for the rest of the month and potentially the rest of the summer. In theory we could have asked for some kind of payment plan but I dislike having any outstanding liabilities with the government. I have a built in aversion to any interaction with the tax man or law enforcement. The less I have to do with them the better. So I complained for a few minutes then paid it.
As far as I know, Americans are the only ones required to pay taxes when they make their earnings abroad and live abroad. My wife carries a French passport. She hasn’t lived in France for over a year. She pays no French taxes on her earnings.
I understand those who find this kind of long arm taxation to be a bit of government over reaching, particularly as no other country has a similar tax regime. I respect that position but I feel slightly different.
For the first 28 years of my life I did not have an American passport. I remember how difficult that was. When I traveled to foreign countries on my Jamaican passport I was always bombarded with questions. What are you doing here? When are you leaving? Prove to me you have the money to pay for your hotel. Once, in Munich, an officer approached me at the hauptbahnhof and escorted me to a back room where I was interrogated then he wrote in my passport that if I was found in Munich after the weekend was over I could be arrested. I was studying in Paris at the time and returned to Munich to spend the weekend with a girl I met at Oktoberfest. Not even the threat of arrest could get my to go back home without seeing her. Young and dumb.
Since February 6, 2009 when I became a naturalized American citizen everything changed about my travel experiences. No one even double checks my passport at the border. At times, they stamp my passport without even checking to see if I have a right to be in the country. It truly is a privilege for me to be an American, particularly as my mother came to America illegally in 1983, leaving her five children behind in Jamaica. It would be seven years until I lived with my mother again. All of this is wrapped up in my American citizenship. I see it as perhaps the best thing that’s happened to me. I see the difference in the course of my life and those of my cousins who remained in Jamaica. There was no difference between us growing up. We had similar grades. We were from the same neighborhood. We had the same economic status. The only difference was that I had an opportunity to live in America and they did not. That opportunity offered me a chance to go to some of the best schools.
Even when my mother could not afford to pay for me to go to college there were so many scholarships available for a young black kid in 2000 who had good grades and a high SAT score that it felt that programs like the Gates Millennium Scholars Program were literally begging me to take their money. I became a lawyer and worked in New York. In law there are few things that carry the same weight as “my New York lawyer is on the phone.” After four years in New York I decided I wanted to go live in Paris and try something different and it was my American passport that allowed me to do so. I could not have simply picked up and moved to Paris on a Jamaican passport. I reap the benefits of being American everyday, even when I’m not in America so I have no problems paying my taxes so long as that’s what the tax regime is. I do believe that those living abroad should have a reduced tax burden but that’s splitting hairs. I know for sure that if something happens President Obama will send in a group of well trained military men to come find me. I may not use the federal highways everyday but still I am benefitting from being American.
Those who were born American may feel differently and might find the system unfair. To them I say “you have a point.” That’s a fight I cannot fight with a good conscience after benefitting so much from being American. I’ve seen both sides of the coin. Being American is awesome. If paying taxes while living abroad is the price to pay so be it.
Naturally, I would prefer to put that $12,300 into our investment account. That’s a lot of money to give to the government when I’m neither working for an American company nor working in America. But then I think to myself, would the company have hired me if I wasn’t American and I didn’t have the benefit of attending one of the five best law schools in the country and I didn’t have an opportunity to work at one of the five or so best firms in New York? True, there are others who work with me who do not have that profile but I don’t know if a kid from Jamaica who had never left the island would be where I am today. So instead of buying shares in Gilead or Kraft-Heinz or a slew of other great investment ideas that money went directly to the government.
The funny thing is, I wouldn’t be able to invest in those companies directly if I wasn’t American or at minimum a permanent resident. No one likes paying taxes but it’s a fact of life. As my wife said when I was complaining, having to pay so much in taxes means you’re really blessed. It means you also earned a lot last year. So, yeah, there you have it. No more investments for us for maybe the next six weeks. We will find other interesting things to say here but no more “New Purchase Alerts” for a while. We will still be updating, looking at our watch list and the like. We will also keep our monthly allocation of $588 on Loyal3 to Coca Cola and Intel but not much else. God bless America.