"Calif Bill" wrote in message
.net...


And are not those British taxes deductible, or a credit against US taxes?

Hi Bill (et al),
I wasn't going to discuss this here, because I know that its beyond
understanding of most folks in the states. They hear 'tax exemption' all
their sympathies go out the window, and are replaced with thoughts like 'I
pay my taxes, you should pay yours' and 'gee, I wish I had an $80K
exemption' and they miss the details. Its the inability or unwillingness to
consider those details that enables things like this tax law to get passed
in the first place.

Let me explain the details one time, then I'm EOT because the talk I've seen
here shows me that my frustration is not understood nor sympathized with,
and instead (knowing the history of this forum), people here love to get all
piranha on each other when they see someone truly upset, as I am.

First of all, I don't pay taxes to the Brits. I pay to the HK government,
which is a Special Administrative Region of the Chinese Government. So my
tax dollars (at a 15% flat 15% rate of my income-plus-10%, with no
exemptions or deductions) goes to fund the big Chinese entity in the east.
That's a condition of working here in HK which I was fully aware of and am
not concerned with. My HK tax, after all the nickles and dimes, is
reasonable as HK prefers to keep taxes low to entice businesses to come
here. I pay something in the realm of $3000 US for yearly HK taxes.

Second of all, I still don't pay any US taxes on my income. That exemption
was actually increased, something that only affects the expats who earn more
than $82K a year, which for the record is not even in the ballpark of my
salary. As far as HK expats go, I earn a teacher's salary.

Now, some of most of you are already not listening, because I said the magic
turnoff words 'don't pay US taxes', but consider the rest of the picture.

The new US tax burden is on the Housing Benefit alone. It was designed to
target those expat corporate execs who are earning $100K per year, but are
being given luxurious $3K -$4K per month apartments in cities all over the
world as a tax-hidden benefit, most of which are in countries with standards
of living far below the US. Those guys are living like kings, as $3k buys a
mansion. It specifically lowers the excludable housing allowance from
whatever it was (beyond what my housing was worth) to about $11K. For most
expats in the world, the new housing cap has no effect, as your average
teacher's apartment is probably in the realm of $300-$400 a month.

Here in HK, thats not the case. In fact, HK is being held up as a specific
place where the new law doesn't fit. Apartments are EXPENSIVE. I could not
affort to teach here if I had to pay my own rent; my 1-story 2 bedroom flat,
with a kitchen that measures 3x4 feet and a bedroom only big enough for a
bed (no dresser) rents for $3500 per month. In fact, the rental on my
efficiency apartment exceeds my yearly income.

And any housing benefit I recieve that has value beyond $11k, I now have to
pay US taxes on. So my tax liability is now based on US$31000. To top that
off, the tax tables for this particular expat tax aren't 'stepped': you pay
the full rate on the first dollar, instead of a smaller percentage on the
first chunk, as with most other US taxes. On top of that, its a higher tax
rate than regular income tax. The result is that it looks like I'll be
liable for about $6000 in US taxes next year. Keep in mind, the new law
prohibits me from writing off my HK taxes against that, as its a tax on a
different part of my income. The HK tax is against my US income tax, which
is sheltered. Also, there are NO shelters allowed against the new housing
tax. Its a flat rate without loopholes. Also, keep in mind that in any other
part of the world, if I were getting a $3500 apartment, I'd be a corporate
exec with discretionary funds, corporate largesse, access to corporate
accountants, and could easily dodge this bullet with voodoo bookkeeping.
But, of all the expats in the world, its HK medium income workers who are
being caught in the crosshairs the most.

Now, for the IMPORTANT part (for those of you who stopped reading at 'I
don't pay taxes'). If I worked in the US, I wouldn't pay taxes either,
just as many of you don't pay taxes. My income, as a teacher with 15 years
experience, would be about what it is now, however I could itemize. I could
write off my exemption, my yearly donation to a ROTH or 401K, my mortagage
interest, my work-related expenses, my home improvement costs, education
expenses, travel expenses, moving expenses, etc etc etc, and at the end of
the year, I'd be getting back pretty much all I sent in. (Maybe less a
thousand or two, but not much.). But since I do not have any US based
income, I can't write off those expenses. I'm not even allowed to have some
of them (ROTH), and the others I have to just eat, like the mortage interest
and housing expenses. But thats okay; the $82K exemption I am allowed
roughly offsets those expenses, and the net result is the same. So please
don't think that my tax exemption is any big thing: its another way to get
the same benefit I would get if I itemized US-based income as a teacher. Its
been that way since I moved overseas; the only difference is that its easier
to file.

But this NEW thing....thats a different story. Its a harsh tax, without
loopholes or exemptions, that will hit HK workers (and Singapore and
Bermuda) hard. My housing benefit is an invisible benefit: my house in Congo
was nicer than my HK apartment, but because of the inflated rate of HK
apartments, I have to pay a huge percentage of my takehome pay, in excess of
the tax I already pay the HK government, to the US. And the US is the ONLY
NATION on earth that makes its expats pay taxes.

Now, before any of you get all 'I wish my income was sheltered' on me, go
back and read what I wrote. If you earned what I earn, you shouldn't be
paying more than a few thousand dollars a year either. THE TAX SHELTER DOES
NOT GIVE AN ADVANTAGE: IT ONLY LEVEL THE FIELD TO WHAT WE"D HAVE BACK IN THE
US. But if you still think that 'well, if you chose to earn a teacher's
salary, then you have no grounds to complain about not having anything left
after this big tax' then how can you dare challenge RDean's defense of HIS
taxes. He's saying the precise same thing to you: just because you're not
rich, don't bitch about losing a big chunk of your income (forget about
percentages).

OK, thats EOT, because if you still don't get it, I can't help you.

--riverman