Originally Posted by
eFDeeeX
Will someone explain to me how the company will make money off of tax equalization?
I don't get it.
Overall, they won't. But from
MANY individuals, they will be taking money that is rightfully that persons under the existing tax burdens of an expat in Hong Kong.
It works like this: They are going to work your taxes as if you lived wherever you are right now. They are going to take that money from you, just like they do now. They will then work your actual taxes for both the US and Hong Kong
based on your expat status and they will pay the Hong Kong and US Governments your burden.
The problem is, in Hong Kong, the tax rate is less than in the US. That and the the Foreign Earned Income Exclusion
and the foreign tax credit/deduction can make your US burden Nil, so essentially what a lot of folks will owe is just Hong Kong taxes.
At the end of the day, in very general terms, if your burden to the US is now more than about 16%, you would be better off without equalization in Hong Kong.
YMMV.
France is an entirely different animal because the tax rate is MUCH higher than the US.
Equalization is a good deal for ALL in France.
Not sure for whom it's a good deal in Hong Kong, but I crunched my numbers and Fred would be keeping some of MY CASH under equalization (a full 10% difference in overall burden). The company email says the only people who won't benefit are those who will be in a domicile that won't exist ( I haven't figured out how people who won't exist could possibly be at some sort of disadvage...it's like saying tax equalization won't benefit martians) and some people with "
special situations".
There are
a lot of special situations out there. I would lose and I don't have anything unusual at all in my taxes. A few minor bad investments, a house in the US I'm renting out, single guy...sounds like the target demographic for the FDA to me.
SHOW US THE NUMBERS and MAKE IT OPTIONAL