More American Expatriates Give Up Citizenship

[babylonsister]

More American Expatriates Give Up Citizenship
By BRIAN KNOWLTON
Published: April 25, 2010


WASHINGTON — Amid mounting frustration over taxation and banking problems, small but growing numbers of overseas Americans are taking the weighty step of renouncing their citizenship.

“What we have seen is a substantial change in mentality among the overseas community in the past two years,” said Jackie Bugnion, director of American Citizens Abroad, an advocacy group based in Geneva. “Before, no one would dare mention to other Americans that they were even thinking of renouncing their U.S. nationality. Now, it is an openly discussed issue.”

The Federal Register, the government publication that records such decisions, shows that 502 expatriates gave up their U.S. citizenship or permanent residency status in the last quarter of 2009. That is a tiny portion of the 5.2 million Americans estimated by the State Department to be living abroad.

Still, 502 was the largest quarterly figure in years, more than twice the total for all of 2008, and it looms larger, given how agonizing the decision can be. There were 235 renunciations in 2008 and 743 last year. Waiting periods to meet with consular officers to formalize renunciations have grown.

more...

http://www.nytimes.com/2010/04/26/us/26expat.html?hp

[ZeitgeistObserver]

1. I find the renunciation interesting.

I don't know of any other country that has a formal renunciation process or ceremony. Usually you just become a dual citizen.

[Xipe Totec]

2. It's all about the money

They'd rather give up their citizenship than pay taxes in arrears.

[Oregone]

3. It only is an issue that affects high earners

Ill never have to worry about it anyway. I think if you make under ~$80K, no extra taxes

I thought if you renounce though the US will try and seize a huge portion of your assets on the way out.

[FreakinDJ]

6. Not True

if you plan to retire in a foreign country they Tax your Retirement Savings with Capitol Gains Tax in addition to the Income tax you must pay on it when you withdraw the funds.

[Oregone]

7. Interesting. I didn't know that

That seems pretty nuts. Again, probably not something thatll affect me. I don't have much retirement in the US.... :)

[Go2Peace]

10. How do we know this has to do with Taxes? Some people are leaving because they fear corporate rule

I would bet the majority of citizens becomming expats are heading to more progressive countries or to retirement. This looks like bullshit spin to me. America has lower taxes on the rich than most countries.

Edited: Guess I should read the full article. Looks like they have statistics for why and these particular incidences have to do with the tax issues.

The title made it sound like people are leaving due to taxation rates. These are people who have already moved but can't maintain their citizenship due to tax policies.

[Oregone]

14. You can leave without renouncing citizenship

"I would bet the majority of citizens becomming expats are heading to more progressive countries or to retirement."

Sure...but that wouldn't make them renounce. Many countries permit dual citizenship and would not require people to renounce US citizenship. There is no benefit in doing so in most cases (where I live, I have almost full rights, other than voting, so really no incentive to renounce even if they required it).

Its more than people wanting to simply leave.

[clemoni]

34. US has higher direct Income tax than most of the countries.

US has higher direct Income tax than most of the countries. I know that because I am in France (a so-"communist" country that gives away all money to poor according to most Americans). I pay a lot of tax in France. Yet I still need to pay tax in the US.
What if people leave for taxation: they are RIGHT! The US feels it is normal when 99% of the other countries do not tax worldwide? Can the US for once think they are wrong????
Look at the Health system.... they still think they are right. Yet they have 45 million inhabitants that are not covered correctly and thousands that die for not going to surgery or treatment due to Health bill???? The US is just a semi-developed country that is all...

Please USA, change a bit and work a bit more toward helping people instead of helping lobbies...

You see.... even if people renounce for taxation.... it is still all about politics!

So renouncing about taxation is renouncing about political beliefs!!! Once again, the USA think they can remove fundamental rights against minorities... Minorities cannot talk (no representation, true) and people do not care (true as well). LOL.

[malaise]

12. Not true

I know two Americans who renounced their citizenship over the Vietnam War

[Xipe Totec]

13. And they waited until now?

Because if these guys are renouncing citizenship over the Vietnam war, they've been out of circulation too long.

[malaise]

24. They both did it ages ago

and it had nothing to do with money, taxes or anything like that.

[Xenotime]

31. It's about that everywhere else is better than being in the U.S.

Hence the need for change.

[clemoni]

38. cound not agree more

Yep.

[mwooldri]

15. UK *definitely* has a formal renunciation process.

Giving up British citzenship is not easy. You have to prove you have citizenship to another country, otherwise the UK will claim you back - you can't be "stateless". Citizenship by birth is easy - if one person is British by birth (the so called "natural born" business) then their children will be British by descent - but if you are British by descent your kids would have to be born on British soil in order to retain that citizenship - inheritance only goes down one level.

Therefore my sons are dual citizens automatically... Natural Born American, and British by Descent.

[ZeitgeistObserver]

28. My s-i-l is a Brit with Canadian citizenship.

No renunciation, nada. My grandkids are dual of course.

[anigbrowl]

20. Most other countries don't claim the right to tax citizens who live abroad

If you're a US citizen and marry someone in another country and settle there, you still have to file and pay US taxes. For example, a friend of mine married a Thai lady and they moved over there, but he still has to file by April 15 same as if he lived here. The calculation of taxes is somewhat different for people abroad, and paying Us income taxes offsets his requirement to pay taxes in Thailand (most countries have tax treaties to prevent double taxation) but it's pretty weird all the same. I think he hasn't even been back to the USA in the last 3 years or so, but that makes no difference tax-wise.

He's not a banker or anything, IIRC he's a film lighting technician.

[stray cat]

4. can we get them to give the green card to someone who wants it?

[clemoni]

33. ridiculous

This is just ridiculous.
The people that want to renounce citizenship has nothing against most values the US have. This worldwide tax is just absolutely unfair. Period.

I am leaving in france for example and I pay A LOT OF tax in France. Do not forget sales tax as high as 20% in France for example. Also estate tax is very heavy. Yet the US does not care and does not get the fact that taxes is everywhere in a country: not only on Income tax!
The US taxes a lot people on Income tax and usually more than most of the countries in the world. I know that because I pay about 42 000 euros of French Income tax but yet, the US believes that French is a bit of a tax heaven country apparently because they think I have to pay another whooping USD 15 000. Very nice of them.

Well, I cannot tell I am really happy with the US Health system turn of events. Yet i cannot really vote. Do not tell me that voting for a New-Yorker that represents New-York and note the citizens abroad is really voting!

The US is now a major joke and I am actually quite happy that there is a growing number of citizens that renounce citizenship. I am maybe selfish because I will not due to the large family that I have in the US and the fact that I will be tax on a value I gain on my properties in France in the US (another ridiculous thing from the US). But maybe thanks to this wave, the US might change a bit... I am not very hopeful with this country but you never know...

[FreakinDJ]

5. Because of the Tax Code

For a Private Citizen to take his retirement savings out of the country he must pay FULL Capitol Gains Taxes in ADDITION to any and all personal taxes

For a MultiNational Corporation to send $Billions of Dollars overseas in the form of wages for Outsourced Jobs - they get the Business Deduction

Ya think these people feel cheated by their government

[ProgressiveProfessor]

8. Additionally, the US is the only nation taxing W-2 type income earned overseas

You can never sit foot on US soil for years and be required to pay Federal and State and local income taxes. The claims for non-Federal taxes are often made by you last state of residence/home of record. Been through that personally.

[Oregone]

9. I don't get it

If you don't meet the bonifide US residency test and you make under a certain amount overseas ($87,600), don't you owe zero US/State taxes period (but you still must file)?

[mwooldri]

16. Sounds about right....

In my first year I was a dual status - part resident and part non-resident. This was the only year we filed Married Filing Separately - it worked out better that way. I claimed my UK taxes and earnings as an exemption on my US taxes - still had to pay federal but the State gave me a small refund. After that it wasn't a problem: everything was derived from the USA and we filed married joint thereafter because it worked out better that way.

Though I'd prefer PAYE - Pay As You Earn - likelihood of having to file a tax return = low.

Mark.

[anigbrowl]

21. Correct, but if you don't file on time...

you'd get fined. they might not collect it but you could theoretically be arrested for tax evasion if you returned to the US. And $87k isn't a huge amount of money...in Europe that's about what a college professor would earn. So we're not talking only about financial wheeler-dealer types.

[Oregone]

22. Well, you get an automatic 2 month extension or so. :)

So you have more time to file...

And $87K...thats one hell of a lot if you consider quintiles and such (in my opinion). :)

BTW, do you know if thats jointly, or individually?

[anigbrowl]

29. well yeah. I just mean most countries don't even bother taxing expatriates

Joint-individual I'm not sure, and don't want to look it up now. I suppose it is a lot in terms of what %age make that much, but it's not so surprising for anyone with a professional job. I wouldn't class a senior nurse or college professor as economic elite, maybe upper middle class. Mind you I'm thinking of people working in a large city, where pay is usually higher. Like in San Francisco, that's around what a police Lieutenant gets.

[ProgressiveProfessor]

26. Its not quite that simple, and we had MD come after us for not filing even though we no longer

lived there. The state took the position that since it was out last residence prior to moving overseas, it was our home of record for tax purposes, even though we had expressly changed our home of record to another state.

[Oregone]

27. Gotcha

Life gets complicated once you move. :)

[clemoni]

37. alternative minimum tax, indirect taxation and justice

Do not forget the alternative minimum tax, man and also do not forget that some countries have very high indirect taxes such as very high sales tax. Therefore the US should not manage a country like France the same way as a country like Caiman Islands. Yet they do.

I am advocating a list of tax heaven countries that they would double tax and forget about this stupid worldwide tax to relieve ex-pats for doing stupid filing.
I agree that probably 50% of the ex-pats might not pay a dime. Yet don't you think it is stupid that they have to hire a tax lawyer for 1000 dollars to tell the US they do not owe anything and that they have to do it for the rest of their life. Don't you think it is enough to declare tax in the residential country!!!

I am not sure why there is a debate here. Leave the ex-pats alone, they already pay enough tax and has enough headache with their local taxes! Just publish a short list of bad countries and that is all!

There should not be any debate! This debate is ridiculous.

[Go2Peace]

11. Seriously? If you move your retirement (legally) to another country you get taxed?

Even if you plan on leaving it a retirement fund to pay taxes later? If that is the case that is absolutely shitty. Another cog in the attempt to enforce decisions on the populace.

[mwooldri]

17. If it's taxable income - yes.

Your regular IRAs, 401k's 403b's ... yep you put the money in tax free, but when it comes out it's taxable to the US government - no matter where you are. Then you have to jump through hoops in your retirement country to declare the taxes you paid to the US are offset against local taxes, if applicable. The Roth IRA is tax free payout... but your host country may require their cut.

I'm in the weird situation that I could choose to pay some additional voluntary contributions to the UK government and get a UK pension at 65-ish... as well as US Social Security at 67... as well as a private pension (my 401k and retirement plan through work).

IIRC though the UK and US have a tax treaty that means that any UK government pension payout is tax free to anyone in the USA, and vice-versa i.e. Social Security Retirement is tax free as far as the UK government is concerned for US residents in the UK.

[Oregone]

18. But you could rent for 1 year in the states, withdrawl, and move back, right?

As long as you meet residency when you withdrawl, aren't you solid? IF so, seems like renouncing citizenship is a bit rash

[FreakinDJ]

32. Yes SERIOUSLY - you get Taxed twice

Personal Income taxes when you pull it out of your 401K

Capitol Gains when you try to move it overseas

The loop hole is - move overseas in excess of 365 days, denounce your US Citizenship, then file to remove your money as a FOREIGN CITIZEN. Because Foreign Citizens don't get Taxed

[closeupready]

19. I just find the idea of that very sad.

I couldn't ever, ever do that, no matter what.

Could I retire elsewhere? Absolutely. Would love to.

But I would never give up my citizenship.

[Oregone]

23. Id drop it like a bad habit if the US tried to draft me

[Canuckistanian]

25. Cutting the ties to your home country like that must be wrenching

But when you see the stark differences between where you're living right now and where you came from, some see the decision as obvious.

After all, that's what happened to immigrants in the early 20th century when they came to America.

It's just sad to see that the "idea" of America is dying among even expats.

[clemoni]

35. believe me it is sad for them too

Yes it is sad. They wish they can be represented; they wish it can be fair for them; they wish they would not be a minorities and the US would respect fundamental rights...
But when you think those are the values of America you do not renounce in America, you just renounce in the fake society that is happening that is all.
Nobody cares about the ex-pats. If they were represented, I believe they would not quit the USA that easy.

[Xenotime]

30. Fine by me. If they choose not to participate in the democracy.

[clemoni]

36. selfish

This is just a selfish comment showing that ex-pats are minorites and that nobody in the US cares too much about justice for them... I hear you!!!