Why I gave up my US passport

http://www.bbc.co.uk/news/magazine-24338387

by nekojima • 13 years ago

75 100 13 years ago

bbc.co.uk

beedogs3• 13 years ago

I haven't renounced yet, but it's so very tempting. The arrogance of the US's dual-taxation bullshit is enough of a reason to consider it.

pekk• 13 years ago

Be honest: it's not really about your perception of arrogance in a tax policy. It's really about the money. You think you are entitled to the privileges of US citizenship but somehow exempt from its legal obligations.

NamTaf2• 13 years ago

What benefit from paying income taxes, exactly? You're not living there, so you don't benefit from any of the social services that income tax funds.

Just about every other country I can think of does not tax citizens abroad who do not earn money on their native soil. What makes you think the US system is right and all the others are wrong?

victorf2• 13 years ago

Obviously you are incorrect, the GP is claiming that the tax burden costs more than the worth of any privileges he's getting. I bet it's more a problem of choosing where to go permanently that isn't equally awful in a different way. Your assertion is ridiculous, as if everyone thinking about it who doesn't immediately renounce is getting fat off "entitlements" and is loving it.

beedogs3• 13 years ago

Which "privileges"? The ability to say I'm American? Tell me how that's worth it. Tell me how it's fair that I should be criminally liable to report my income and bank balances every fucking year to a country I neither live in nor draw a paycheck from.

You'll be unable to come up with a reasonable explanation for this, but feel free to insult me again by ascribing my desire to live elsewhere unmolested to a sense of 'entitlement' or some other garbage.

MichaelGG2• 13 years ago

What I'd be more interested in is if there is harassment for doing so. My daughter is an American citizen unfortunately (happenstance of birth), but won't be living in the US for any foreseeable reason. She'll be burdened with tax and reporting issues all her life if she doesn't renounce. But if she does renounce, will they hassle her when visiting family? What about if she does do some temporary work in the US, will they deny visas?

nly• 13 years ago

Happen-stance of birth? What are the rules there about citizenship by birth? In the UK one of your parents has to be a citizen, or have been "legally settled" (allowed to stay indefinitely).

jmreardon2• 13 years ago

With the exception of children of foreign diplomats, if you are born in the USA, you have citizenship. Who your parents are is irrelevant.

rrouse2• 13 years ago

Amazingly, if a Canadian mother is transferred to an American hospital, the baby is an US citizen and the same goes if it's an American transferred to a Canadian hospital.

Interesting to learn

http://en.wikipedia.org/wiki/Birthright_citizenship_in_the_U...

sliverstorm3• 13 years ago

If you are born on American soil, you are an American citizen.

jacalata4• 13 years ago

Only since 1983 - my mother is a British citizen born to Australian parents while they were over there for a couple years.

sliverstorm3• 13 years ago

It seems only fair to leave that choice up to her.

jacalata4• 13 years ago

He's asking for information about what the best choice is, presumably to help her make an informed decision. I don't see him saying anywhere that they are going to make her go either way.

philiphodgen5• 13 years ago

At the moment the U.S. government is remarkably sane about this. People who renounce citizenship can re-enter the USA on tourist visas, get work visas (like an L-1), etc. They can even get green cards and re-acquire citizenship.

"Sane" will continue until we have a critical mass of people like Senator Schumer in the Senate.

Disclaimer: I am a lawyer. And I do lots and lots of expatriation cases.

victorf2• 13 years ago

But not if you explicitly renounce to avoid taxes, there's a checkbox for that in amongst the "have you ever committed acts of terror?" questions.

mscarborough• 13 years ago

Unfortunately the US gov could not care less.

I'd be inclined to say "well if you left, then fine", but with the dual taxation and the inability of Congress to pay their bills (it is not just Democrat money, by a long shot)...what exactly are we paying for and why should everyone be responsible for it?

steven2012• 13 years ago

If a US-born citizen (as opposed to naturalized US citizen) renounces their citizenship, can they claim it again afterwards? Or is it forever gone?

rrouse2• 13 years ago

The State department website on it says that the renunciation is final unless it meets certain guidelines, which basically means that if you did it at age 18+, you're going to have to go through the immigration process just like every other non American.

http://travel.state.gov/law/citizenship/citizenship_776.html

philiphodgen5• 13 years ago

That's correct. Once you have renounced U.S. citizenship you are like all the other billions of people on the planet--if you qualify to re-enter the USA and apply for citizenship, you can do so.

The tax rules for giving up citizenship have specific provisions fully expecting people to give up citizenship twice. :-)

Disclaimer: I am a lawyer, and I do lots and lots of expatriation cases.

bdamm• 13 years ago

Presumably rules regarding American parents transmitting citizenship could come into play.

rodgerd2• 13 years ago

It's right there in the article, in the interview with the guy who did just that.

LekkoscPiwa7• 13 years ago

Some of the stuff the people in the article write is just plain stupid. If I could get US citizenship for my newly born daughter (born in Poland) after being in the US total just 5 years, why she couldn't get it done, is beyond me. People who have lived in EU complaining about US burocracy and pointing it as a reason for giving up on an US citizenship are beyond me too. US taxation system is a walk in a park compared with EU. All the people from the article seem to be carefully selected socialists big time who just couldn't wait to give up on the US citizenship no matter what. And for one each of them there are literally thousands foreigners who would rather live in the USA, including Germans, Canadians, etc.

ajmurmann2• 13 years ago

The issue is not the complexity of the taxation system, but the fact that only the US and Somalia tax based on citizenship. http://en.wikipedia.org/wiki/File:Individual_taxation_system...

vellum• 13 years ago

That's Eritrea

http://en.wikipedia.org/wiki/International_taxation

joonix• 13 years ago

Sure, they are the only ones, but does that mean it's morally or logically wrong? Theoretically a government spends a certain amount of money on each individual as they live, become educated, and work in the US. If they decide to leave the US to work abroad, they shouldn't get any tax revenue back from you? They do allow you to deduct taxes paid to your residence country.

logicallee4• 13 years ago

Yes, the article wasn't exactly clear but pretty much all of the stories (well, I only read a few) refer obliquely to one thing: you are subject to taxation by the United States even while you're a resident abroad, and paying taxes abroad.

It is as though your 'home state' continued to tax you (or make you file paperwork) long after you've moved to California. Nobody else (worldwide) does this. It doesn't make any sense.

This is a primary motivation people have for renouncing U.S. citizenship.

martey3• 13 years ago

It is as though your 'home state' continued to tax you (or make you file paperwork) long after you've moved to California.

This is an imperfect analogy (since there is not really a concept of "citizenship" for individual US states), but note that claiming residency in one state while living in another will often require you to pay taxes in both.

Nobody else (worldwide) does this. It doesn't make any sense.

I think it is pretty clear its purpose is to prevent US citizens from deciding to live abroad in order to pay less income tax. The legislation that requires US citizens to report foreign bank accounts (which some of the people in the BBC article mention) is called the "Foreign Account Tax Compliance Act" [1] is supposed to prevent all citizens from committing tax evasion by hiding funds in foreign bank accounts.

I think there are multiple reasons why you or others could argue that these rules are counterproductive [2] or otherwise detrimental to the interests of the United States, but I do not think they can be dismissed out of hand.

[1] http://www.irs.gov/Businesses/Corporations/Foreign-Account-T...

[2] https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance...

CHsurfer• 13 years ago

US citizen, living in Switzerland. I don't want to give up my citizenship and I don't mind to pay some tax to the US. I did get a great education and attitude growing up there, but the risk of making a mistake could be ruinous to my family (French wife, two kids born here). It's fair that if you make a mistake, you pay a penalty, but with the current rules, it turns into a crime. Very scary because it's so complicated.

halostatue3• 13 years ago

I’ve seen this said several times—the right way to say it is that the U.S. and Eritrea are the only countries that tax non-resident citizens’ income regardless of the source of that income. There are often tax treaties in place with Western countries that reduce that value to zero based on taxes paid to the country of residence.

Canada will tax non-resident citizens if they have certain ties to Canada (http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html), but only on income generated in Canada.

joseph_cooney• 13 years ago

All the people from the article seem to be carefully selected socialists big time who just couldn't wait to give up on the US citizenship no matter what

"survivor" bias? Maybe those are the only kind of people who want to give up their U.S. citizenship?

yapcguy2• 13 years ago

What may be driving some people is simply the fear of getting the paperwork wrong. The penalties listed on the forms are scary.

You can't just do it in Turbotax for 50 bucks, you need a qualified tax professional to help you. Good luck finding one familiar with the latest US regulation when you're abroad. The fees will be in the thousands, every year, for the rest of your life.

The financial toll and mental stress all adds up and I guess at some point people just give up. It's a shame that the burden of paperwork results in people giving up their citizenship.

LekkoscPiwa7• 13 years ago

I do it with Turbo Tax for 50 bucks. The thing is not to open an account outside of the US. If you follow that rule you are fine and your return won't be longer than US return. If you really, really need that account in a foreign bank simply don't advertise left & right you are an US citizen and open an account using your local (German, Canadian, whatever) driver's license. I have lived in Poland 3 years so far with US citizenships it costs nothing. And the benefits outweight any issues that might be there in any case.

bowyakka2• 13 years ago

What part of the US tax system is easy compared to the EU, seriously because I come from the UK and being in the US is the first time in my life I have had to even file a tax return.

The US system seems to guarantee you need an accountant.

halostatue3• 13 years ago

Yeah. The Canadian tax system is simple enough that I could do it on paper. I mostly use an on-line system because it helps me balance the deductions my wife and I have for best tax benefits.

LekkoscPiwa7• 13 years ago

Ever heard of Turbo Tax? If I can do it in 2 hours each and every year a day before the deadline being US citizen in Poland, yeah you need a lot of bad faith to have issues.

scottlilly• 13 years ago

I'll be able to apply for Paraguayan citizenship in about a year, and I plan to renounce my US citizenship immediately afterwards.

I'm so much happier here in Paraguay (even with all the cultural differences), instead of the US. I also can't say I feel happy about how things have progressed in the US over the last few years - regarding politics and economics. I really expect that Paraguay is the country where I will build my family and my future.

clueless123• 13 years ago

I wonder what is going to happen to all those US citizens living abroad with the new health insurance requirements.. Will they be forced to pay even they can't benefit from the services ?

( Specially if they are already covered by their host country healthcare system. )

maratd• 13 years ago

I'm very curious about this as well. Are there any provisions in ACA for those living abroad?

Amadou• 13 years ago

"U.S. citizens living in a foreign country are not required to get health insurance coverage under the Affordable Care Act. If you're uninsured and living abroad, you don't have to pay the fee that other uninsured U.S. citizens may have to pay."

https://www.healthcare.gov/am-i-eligible-for-coverage-in-the...

jacalata4• 13 years ago

US citizens who live abroad for 330 days in a calendar year are exempt: see question 12 at http://www.irs.gov/uac/Questions-and-Answers-on-the-Individu...

bentoner• 13 years ago

That's really harsh. Someone living abroad could easily spend > 35 days/year in the US on business or visiting family.

fpgeek• 13 years ago

Overseas Americans who eventually return to the US do receive one benefit from the ACA: the ban on excluding coverage of preexisting conditions.

That means the most for those whose coverage in their host country wouldn't have met the HIPAA requirements for creditable coverage, of course. However, even those whose coverage would have satisfied the HIPAA requirements do get to avoid at least one round of confusing paperwork.

leecbaker• 13 years ago

As I understand it, if you ar a resident of the another country as defined for the Foreign Earned Income Exclusion (330 days a year outside the US _or_ have permanently settled with no evidence of intention to return to the US), you are exempted from the insurance requirements.

This really sucks for people who leave the US long durations (8 months in my case) at a time, but return occasionally. Have to either get insurance for the 8 months that isn't usable, or pay the fine.

mathrawka3• 13 years ago

Last year I was a contract worker for a US company while living in Japan. In addition, I had some side income earned, and all this was taxed as a Sole Proprietor in Japan. The paperwork was about 5 pages worth of just filling in boxes with the numbers from my books.

My situation was pretty complicated on the US side, so I enlisted the help of a professional to get everything kosher on my US return. I have never seen such a complex tax return in my life. In the end, it was 40 pages long, and that is not including the FATCA I did seperately. And all that just to show that I owe $0 for US taxes.

However, we are considering moving back to the US, if even for just a year, so I keep my US citizenship for now.

ethana• 13 years ago

It used to be free to renounce U.S citizen ship, but I think it's $500 bucks to file for it now because too many people are lining up.

philiphodgen5• 13 years ago

The fee is $450. Most people are happy to pay it.

(Disclaimer: lawyer; handle lots of these cases).

spodek• 13 years ago

I grew up loving the philosophy and values I learned about America -- Jefferson, Adams, Thoreau, King, Edison, Feynman, ... welcoming Einstein and so many others. Young as the country and its culture is, we've produced some greats.

As I've matured and times have changed it's been impossible to miss other parts of America grade schools don't teach -- increasing division between rich and poor, decreasing social mobility, corporate control of the government, entrenched racism, sexism, jingoism, needless wars based on lies, ... I could go on. Anyone could.

I haven't lost faith in my country -- such vague words could mean so much in this context -- but I don't like how the powerful are influencing the processes that led to it flourishing so long, even taking into account its colossal mistakes (Prohibition?), nor how those without power aren't taking responsibility to gain power like they (we) could. I'm impressed with the love many foreigners have for much of our freedom, which I share.

I tell myself living in Manhattan is like living outside any country. Legally New York City may be part of the United States, but culturally it's its own world.

Still, I find it valuable to look at where you live sometimes with rose-colored glasses because life feels better when you love your home, but regularly to evaluate it warts and all. How else can you change it if you feel you can, or escape before the need becomes desperate, should the need arise?

(Here is where people often ask where it's better or point out places it's worse. I don't argue against asking those questions, but we don't have to jump to comparisons with others, which distracts from evaluating it from what it could be. Or once professed or aspired to be.)

ryanhuff• 13 years ago

Don't you think that the division between rich and poor has historically been worse than it is today? I can't imagine that the early[edit] 1900's, characterized by horrendous labor practices that ultimately brought on the labor movement, were of a society with a more narrow division of rich and poor than of today. I have unsuccessfully looked for a reference to compare today's middle class to those of the early 1900s. Please share if you know of any.

jsaxton86• 13 years ago

This isn't perfect, but it's a good start:

http://en.wikipedia.org/wiki/File:2008_Top1percentUSA.png

http://en.wikipedia.org/wiki/Income_inequality_in_the_United...

aptwebapps• 13 years ago

Usually when people talk about the growing income gap they're not looking back as far as the early 1900s. Like here:

http://www.motherjones.com/politics/2011/02/income-inequalit...

If you want to look further back, you can probably find the data somewhere here:

http://research.stlouisfed.org/fred2/

arbuge• 13 years ago

It is hard to fathom the complexities you face when overseas as a US citizen due to the US tax code, which is basically the only code of a major developed country to tax its citizens wherever they may live worldwide, regardless of their source of income.

There is a system of tax exemptions and credits within the code to offset the double taxation this would imply when living in a jurisdiction which imposes its own income taxes, as most countries in fact do. The difficulties arise in reconciling the US tax liabilities with those owed to the foreign country, calculating the applicable credits, etc. In practice this requires expensive tax professionals in most cases - and they get really expensive if you're an entrepreneur with an overseas corporation, which is pretty much a nightmare to deal with on several levels - different accounting standards, controlled foreign corporation tax reporting, paying estimated taxes when having no clue what the result of a complex tax calculation process will be, etc.

Besides income taxes, there are also bank account reporting requirements (TDF 90-22.1 form) which have made many people's lives difficult. The penalties for not reporting any foreign bank account are draconian even if you live overseas and need an account where you live (you will). Even worse, foreign banks are reluctant to deal with US citizens because of the reporting they in turn are required to do on their behalf, resulting in frequent difficulties opening and maintaining bank accounts overseas if you are a US citizen.

Finally, as a US citizen overseas you are still entitled to social security payments from the US government, but get no benefit from your contributions to Medicare, which only covers you within the USA proper. For that matter you also get no benefit from most of the residual income taxes you pay to the USA that you can't offset with tax exemptions/credits. It's not like those taxes will be used for any of the infrastructure etc. you use overseas.

mahyarm• 13 years ago

Here is a quick youtube issue summarizing the citizenship based taxation issue the USA has. Supposedly it came out of the civil war:

https://www.youtube.com/watch?feature=player_embedded&v=DKFE...

okonomiyaki3000• 13 years ago

I'm turning Japanese.

hrasyid2• 13 years ago

Is there any historical examples of a representative democratic country simplifying its tax code? How was it done?

The United States have been around for centuries, and each elected governments and congresses have their own idea about how the tax code should look like. Probably that's why now we have very complicated system, because it's the aggregation of centuries' worth of ideas.

The logical step is to simplify it, but I don't think it's really possible with the current US political system. Each part of the complexity benefits some group, and every group will influence the lawmakers to keep their benefit/loophole.

rodgerd2• 13 years ago

New Zealand has dramatically (dramatically!) simplified our tax for ordinary (salary/wage employees), especially in the 1980s and 1990s. Given the period was one of dramatic economic and social change I doubt most Kiwis could give you a remotely impartial account (myself included); a couple of key elements that appear to be completely absent in the US culture are:

1/ A willingness to accept loophole losses. I have almost nothing I can really claim on as a salaried employee - childcare and charitable donations are about it. There used to be more. I certainly can't claim deductions for "having a mortgage", for example. If I was a lot poorer or had a lot more children (7+) I could get a tax redution for that, but nothing like as generous as the US rates are.

Most of the loophole reduction went hand-in-hand with tax cuts, but we're talking dropping from a top rate of >60% by the end of the Muldoon government down to the 30s for the top tier.

2/ Much of the compliance burden and risk falls on employers, so business groups tend to support simplification, because it mitigates risk and reduces costs for them.

3/ There's more a perception of getting value out of taxes paid in New Zealand than the US. Mainstream political dialogue tends to be around fixing perceived problems in government, not nuking it to a smoking hole, pissing in the hole, and sowing the ground with salt.

Many US progressives/lefties I've spoken with seem to react with suspicion and horror at the idea of being able to have the IRS estimate your taxes on your behalf in case they swindle them out of their tax breaks, which is both a nice combination of 1) and 3), and illustrates the gulf operating. Mainstream left/progressive voters in New Zealand are not commonly of the opinion that accepting the IRD's estimate on owed taxes is going to stiff them out of thousands of dollars in loopholes.

hrasyid2• 13 years ago

Nice example.

>Many US progressives/lefties I've spoken with seem to react with suspicion and horror at the idea of being able to have the IRS estimate your taxes on your behalf

I felt the opposite when I first heard that US tax system was too complicated. What I know before about filing tax was simply 1) approve my employer's filing about my salary 2) declare child and donation. How complicated could that be?

snowwrestler• 13 years ago

The U.S. greatly simplified its tax code in the late 1980s, in an era of divided government at that. Its complexity has increased since then as subsequent Congresses have tinkered with the tax code.

greg5green2• 13 years ago

If corporations are people, why do they not need to pay taxes when they go all "ex-pat?"

jmspring• 13 years ago

Current citizen, wife with dual citizenship. Long term we will probably end up in her country (an EU nation), we are already looking at strengthening some of those ties.

She had to divest some interests when she took up residence here, if we decide to go back over there (likely in the next 3-5 years), we will look carefully at whether or not staying in vested in the US makes sense. The US feels like it is trying to turn every benefit into something akin to a 401k -- HSA accounts, etc. Which isn't ideal, but they still aren't separating things from the employer based healthcare model...so in a sense many are getting the worst of both worlds.

Healthcare may actually be the motivating issue for us.

Why I gave up my US passport

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