U.S. Hikes Fee to Renounce Citizenship by 422%

http://www.forbes.com/sites/robertwood/2014/08/28/u-s-hikes-fee-to-renounce-citizenship-by-422/

by ethana • 12 years ago

33 15 12 years ago

The US is unusually fussy about renouncing citizenship compared to most other countries. They assume anyone who does so is doing so for tax reasons, which would make sense given the US has a lot of rich people and it taxes its citizens even while they're abroad.

bruceb• 12 years ago

The US does tax people while they are abroad but it also extends it services to Americans who are abroad. You are in some ways insured by the US. If you get kidnapped you might just be rescued by the US gov't directly or indirectly. Also having a US passport allows you to travel more freely than some other nationalities.

TazeTSchnitzel2• 12 years ago

Ehh. The UK doesn't tax its citizens abroad and lets you into more countries with more rights than a US passport does.

dalke3• 12 years ago

That's a post hoc justification. By that logic, Americans traveling overseas should pay extra taxes for that bit of "insurance" coverage. There are about 30 million overseas tourists per year (see http://www.infoplease.com/ipa/A0778210.html ); according to http://en.wikipedia.org/wiki/Emigration_from_the_United_Stat... there are about 5 million US citizens living overseas. (I've excluded Canada and Mexico from both of those populations.)

Assuming overseas tourists travel for only a week, this suggests they should pay an extra 2% in taxes, because they are about 10% of the overall cost. (I suspect it's higher, since tourists often need rush jobs, like an emergency passport replacement, or information about local hospitals, that residents don't need.)

I notice, though, that this isn't the case, which tells me that the underlying logic is at best incomplete.

In addition, taxation is a pure headache when combined with jus sanguinis. The Forbes article pointed out the backlog in Canada. This is because a lot of US citizens moved to Canada and had children there. By US law, these children are also US citizens, even if they've never entered the US nor consider themselves such; nor even ever plan to leave Canada.

They are still supposed to file taxes to the US, report information about their bank account holdings, etc. In addition, 'foreign financial institutions banks, brokers, pension funds, insurance companies, hedge funds, mutual funds, trusts' etc. are required 'to report to the IRS holdings of their clients who are U.S. persons.' These can be a large headache, and may even limit some financial options as certain foreign financial institutions now refuse to accept US citizens.

Hence, the US has put obligations and restrictions on them that they don't want, and must pay money to actively remove.

joeguilmette• 12 years ago

I needed a document notarized. The US Embassy wanted to charge me $50.

joelrunyon2• 12 years ago

(not so)Fun fact: Only 2 countries in the world tax you base on your citizenship rather than your residence. One of them is Eritrea...and...the USA.

joelrunyon2• 12 years ago

The logic here is always mind boggling.

People leave their citizenship because of things like FACTA make compliance hard. So, the response (rather than making it easier), is to make it harder? I don't get it.

dalke3• 12 years ago

Why would anyone want to leave the US? The US is the best country in the world. Why do you think you'll be better off as a non-American? Is it because you're stealing things from us? Are you one of those overseas tax cheaters (who has the audacity to do it personally, instead of through a large multinational country)? Are you stealing money from us? Just to be safe, we'll make doubly sure to get your money. Because cheaters never win.

droope2• 12 years ago

Because cheaters never win.

ha not sure in what planet you live in

turingfail• 12 years ago

For anyone who would like to comment: http://www.regulations.gov/#!documentDetail;D=DOS_FRDOC_0001...

(Comments from the public are "Due Oct 21 2014, at 11:59 PM ET")

U.S. Hikes Fee to Renounce Citizenship by 422%

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