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Why More U.S. Expatriates Are Turning In Their Passports
- jacquesm 17y agoStrange world where family and friends consider you a traitor for giving up your nationality. Words like that shouldn't be used lightly.
- Sukotto 17y agoA traitor is someone who committed treason. In the US, treason is defined in the Constitution http://en.wikipedia.org/wiki/Article_Three_of_the_United_States_Constitution#Section_3:_Treason http://en.wikipedia.org/wiki/Article_Three_of_the_United_Sta... So "traitor" doesn't hold up. But since he pledged allegiance to the US, and then renounced the country they can certainly call him an oathbreaker, liar, false witness, or perjurer. Not that I care personally. I'd do it myself if I were in his position.
- ahoyhere 17y agoIf you are born a US citizen, you don't have to pledge anything to stay a US citizen. It's a birthright. You don't have to pledge anything to get a passport. So you can't call him an oathbreaker, liar, false witness, or perjurer. He's just a man who gave up his citizenship because it was undesirable.
- Sukotto 17y agoYou only have to speak an oath once for it to be morally binding. The guy went out and got citizenship in another country and renounced the US. Did he ever pledge Allegiance to the flag of the United States (and the Republic)? If so, then I consider that a broken promise.
- Rod 17y agoSince when are the citizens property of the state?
- Sukotto 17y agoI never claimed that they are. From the upvotes on your comment and the downvotes on mine it's clear that you're not the only one who mistakenly thinks I did.
- Rod 17y agoPledging allegiance to the flag of the United States is more of a ritual than anything else. Unless you're in the Military, it means very little. If a U.S. citizen can't break the umbilical cord with Uncle Sam, then he's not free at all. The so-called Land of the Free has been converging to Authoritarianism for a while. It's really quite worrying that the few people brave enough to break-away are labeled as traitors.
- jacquesm 17y agoIf that oath is so 'binding' on first saying how come people are asked to repeat it all the time? Oaths to flags and countries are pretty meaningless, unless taken by an adult that has a viable option to pledge allegiance to some other entity (say in immigrant). What if every country should ask for a pledge of allegiance from its citizens, would that mean that any immigrants are to be refused on the grounds that they're oath breakers? If the Netherlands (where I was born) would ask me to pledge allegiance I'd hand in my passport instantly because I think that is not something a country should ask of its citizens. Especially not a country that has 'freedom' high in it's list of standards. It's more of a symbolic device than a pledge that you can hold people to or call them an oathbreaker if they don't. Most kids don't even realize the meaning of all those words, just say them to avoid being an outsider. Get them while they're young...
- ahoyhere 17y agoAs a rule, Americans have no idea how much they are indoctrinated. I tell my European friends about how I know 3 different songs about the flag, and 3-5 additional songs about how awesome America is, and were made to sing them in school, and they are aghast. When I tell them about the mandatory daily Pledge of Allegiance, and that book by Avi about the "rogue" kid who refuses to say it (based on true stories), they about shit their pants. Then I tell them about Cuba, and they die. Land of the Free, my ass!
- fexl 17y agoAny decent common law contract should include termination conditions, allowing the participants to escape eternal liability.
- bediger 17y agoI "pledged allegiance" thousands of times from about age 5 on. Until about age 13 I didn't even think about, pledging allegiance constituted a ritual at the start of a day of school, which was pretty ritualistic in and of itself. Even after I started to think about not saying the "Pledge of Allegiance" I decided that the cost was too high, by observing the Jehovah's Witness in the classroom who didn't say it. I think that after saying the pledge became a habit, it became a matter of saying it under duress. And the school authorities cooperated in promoting this. So, I personally regard that pledge as voided by the semi-official duress placed on my as a child by school authorities.
- alain94040 17y agoCan someone help me with this apparent contradiction: "pledging allegiance" is pretty much the oppostise of "being free". How do you reconcile the two? Really, the textbook definition of being free is that you have no allegiance.
- david927 17y agoI'm a U.S. Citizen and next month I'll be giving up my passport to be a citizen of the Czech Republic. Normally I would keep both passports, but the way the U.S. taxes its citizens abroad pretty much precludes that.
- arethuza 17y agoAny idea why the US objects to people having dual nationality?
- david927 17y agoThey don't object. (The Czech Republic does.) And the reason they don't object is that they're getting tax revenues from you but you're not consuming services.
- timthorn 17y agoThey do object - if I were to apply for US citizenship I would have to renounce my British citizenship.
- david927 17y agoSorry for the confusion. They don't object to me having a US passport and adding Czech citizenship. In the same way, I'm sure Britain doesn't mind you adding US citizenship. But the countries, in my case Czech, in yours the US, that are being applied for, do mind. The US Embassy hinted that I can sign saying that I've renounced my citizenship, even though I haven't actually renounced it. I don't know if that works in your case, however.
- jancona 17y agoIt's more nuanced yhan that. You have to renounce your citizenshop, but after Britain doesn't recognize that you'll be a dual national. See: http://www.richw.org/dualcit/faq.html http://www.richw.org/dualcit/faq.html
- deleted 17y ago
- markbao 17y agoCan an expat/tax guru shed some light onto how that whole tax thing works? Do you pay local tax + US federal tax, or something?
- david927 17y agoYou pay the taxes of the country you're in, and also U.S. taxes. Now you have some write-offs, such as the Foreign Earned Income exemption and you can write off the resident country's taxes, but it's still expensive -- and going to services you're by definition not using.
- DougWebb 17y agoThere are also tax treaties with some countries that can reduce the burden. For example, as a NJ resident who works in NY I only pay taxes to the jurisdiction that wants more (which is NY) because of an agreement between the states. I'm pretty sure there is a similar agreement between the US and Canada, where the US gets the income tax while Canada gets all of the sales tax.
- jleyank 17y agoThere is a US/Canada arrangement. While I must file US taxes each year, I pay nothing - there is the Foreign Income exclusion, and there is also a foreign tax credit. So, unless you live in a country with lower taxes than the US you end up with no net tax.
- ahoyhere 17y agoLiving in Austria, I have to pay the total of my Austrian taxes... but the US gets first cut. So if I theoretically owe $25,000 to Austria total, but $20,000 to the US, I pay the US the $20k and Austria gets $5k. Even though I get awesome healthcare and other social services from Austria. Basically, it's the world's shittiest deal.
- confuzatron 17y agoThat's deeply strange. Presumably Austria, or the EU, have an agreement with the US that allows this to happen. On the face of it, you're saying to the Austrian government "I know I earn X of your Earth Euros, but I'm going to be sending a large chunk of that out of the country, tax-free, mkay?".
- markbao 17y ago(different comment, different question) It sounds like renouncing your citizenship is somewhat permanent. If you ever wanted to come back for an extended period of time, can you re-apply for Permanent Residency? I was a citizen of China (now a US citizen). It took years for my green card to be processed, and a good amount of time for citizenship.
- david927 17y agoI don't understand the question. You mean, if you give up your US passport, can you get a green card later? I think you can but you wouldn't receive any special treatment from having had the passport earlier.
- Retric 17y agoI think in some cases you can skip and they let you pretend you never left. However, you will need to pay taxes on the missing years etc.
- FluidDjango 17y agoIf you dislike the idea of being taxed while residing abroad, how about the idea of being "exit taxed" for the right to stop being taxed: "Relinquishing U.S. citizenship is a fairly simple process: after filling in a few forms, and in some cases, paying an exit tax (based on the applicant's worldwide income and assets)..." Wonder how much that amounts to?
- ojbyrne 17y agoI don't know the specifics but I do know it has one particularly onerous clause for people in startup land. Any illiquid assets must be sold (perhaps just valuated) and capital gains paid on the proceeds.
- CalmQuiet 17y ago> based on income and assets In other words, "Sure, you can leave. Just send us a chunk of yourself... even if you made it on foreign soil and using foreign resources."
- geoka9 17y agoExactly my sentiments. However, since it says "in some cases", maybe this refers to paying the regular taxes due before relinquishing.
- jaaron 17y agoNo, the exit tax can be pretty bad: "The so-called ‘mark-to-market' tax will apply to the net unrealized gain on the expatriate's worldwide assets as if such property were sold (the ‘deemed sale') for its fair market value on the day before the expatriation date."[1] [1] http://www.withersworldwide.com/news-publications/324/exit-tax-u-s-expatriates-to-become-law.aspx http://www.withersworldwide.com/news-publications/324/exit-t...
- squidsoup 17y agoI've been living abroad for 12 years and wasn't even aware that I was expected to pay taxes in the states. Presumably if I ever move back to the US to work this is going to bite me in the proverbial...
- david927 17y agoAss..uming that you make less than $91,500, and that you haven't been back for more than 30 days, you're ok. The Foreign Earned Income Exclusion means that "Americans working abroad can exclude up to $91500 per year from their US taxable income."
- ahoyhere 17y agoWhich, if you're moderately successful and/or earn in euros or pounds, is very easy to reach. And you have to pay the US first, meaning the country where you stay is gipped, even while providing THEY provide you with social services. Which the US, of course, doesn't.
- octover 17y agoYou pay the country you live in first, or else the US Embassy in Stockholm, various international tax accountant/lawyers and every double taxation treaty I've seen is wrong.
- ahoyhere 17y agoThat's not what my tax specialist says. It probably varies depending on the country the treaty is with or maybe there's something nutty about my income. Trust me, I don't misremember - it made me mad as hell.
- david927 17y agoI would double-check your tax specialist. I've never heard that before.
- DrSprout 17y agoIt would be better if there were some way to suspend US citizenship. That said, you shouldn't be allowed to vote while not being subject to the tax code. It's the flip side of "no taxation without representation," and it's equally important.
- octover 17y agoI think I'd happily suspend my tax burden and right to vote while living abroad. If you want to vote you got to file your taxes seems to be fair to me.
- ahoyhere 17y agoIt's extremely difficult to vote from outside the US, anyway, because you cannot vote in a "nationwide" sense -- you must vote as a citizen of a state. Which, since you don't live in the US and ergo don't live in a state, is tricky. Typically you can vote in your state of last residence, however... ...voting in your state of last residence can cause you to be liable for income taxes to the state. Land of the free, says I.
- gcb 17y agovoting nationaly is overrated (you have 2 options). And voting in your state of last residence already works like you described. You vote, you pay for that, for medical services you didn't use, for roads you don't drive, etc, etc...
- DanielBMarkham 17y agoWe have several trends happening all at once. Entitlement programs are going broke -- the U.S. government has promised more than it can deliver. More places abroad, with low costs of living, are becoming very amenable to U.S. citizens. Finally the U.S. is reaching out for incomes and bank accounts above certain amounts -- and those amounts are subject to change. Seems to me (without doing the math) that there is already an income amount somewhere around 10K a month or so where it might be better to be a citizen of a different country. You could take the tax money and pay for the services yourself. If this trend continues, it's possible that we could see an exodus of folks from the U.S. Kind of like white flight but on a global scale.
- octover 17y agoMany Americans living abroad are ignorant of the duty to still file federal taxes while residing abroad. It gets fairly complicated fast and mistakes can have huge ramifications for those that ever intend to move back. If you haven't filed you can go back and file them late. So long as you live in a country with a double taxation treaty with the US (most countries do, google it) and your local taxes are more than the fed wants you won't owe anything. It gets worse if you work for yourself, i.e. I'm a freelancer, and so I get to pay social security and medicare no matter what. Also recent law changes have meant that you have to report any bank account with more than $10,000 in it. As to services of the embassy they charge for everything I've used them for, and it's not cheap, more annoying cause at least the Stockholm embassy won't take a US check or bill pay from Swedish internet banking, instead you have to get the equivalent of a cashiers check which is all but obsolete in Sweden. I'm going to go dual citizenship this summer. I want to be able to vote in national elections and it will allow me to live and work anywhere in the EU, plus sometimes it's easier to travel on an EU passport. Sometimes I want to toss aside the US citizenship cause of the headache and expense of filing my taxes properly, but I wouldn't want to close the door on being able to return to the US easily either. The whole tax citizens abroad is mostly based in a bygone era when rich people went abroad to avoid taxes. These days the world is a lot smaller and it's biting regular folk in the ass.
- ahoyhere 17y agoI plan to give up my US Citizenship as soon as possible. Unfortunately, it'll be another 4 years' wait for me.
- hannibalhorn 17y agoIt's now becoming so popular that the Department of State is introducing a fee to renounce - $450. See DOS-2010-0035-0001 on regulations.gov.
- quant18 17y agoIt gets even worse if you try to incorporate a business abroad and own more than 50% of it. Form 5471 and 8832. Wrangling with the definition of a CFC, qualified dividends, etc. Subpart F (the rules for when the U.S. government considers your company's income as if it was just plain old personal income). Etc. All these laws were designed to catch rich U.S.-resident tax evaders, but they have the side effect of making life miserable for U.S. expatriates. And probably it won't change, because no one in the U.S. really thinks about expatriates anyway ... maybe because of the ingrained mental image that the U.S. is supposed to be a sink, not a source, of migrants. And for everyone else, it makes for a very strong incentive NOT to partner with an American when you start a company, because of all the accountants' fees you'll need to keep up with the paperwork, or worse, the danger that you simply don't know about any of these draconian requirements and it hits you like a truck years later when you have some serious income. Another really perverse incentive created by U.S. taxes on expats is the housing exemption. Basically, if you have a dollar, you can either spend that whole dollar on renting a nicer apartment, or pay 35 cents to the U.S. government and be left with 65 cents to save or spend. Hence lots of American expats keep spending more and more on housing, up until the point where the marginal utility of $1 more square footage or $1 swankier address drops below 65 cents ... and of course, driving up prices for everyone else.