More American Expatriates Give Up Citizenship

The New York Times has a story that ought to cause concerns in Washington. Americans living and working overseas are beginning to increasingly renounce their citizenship because of double taxation issues and the fact that they are treated as would be terrorists in their financial dealings. And the story does not even get into the issue of LGBT Americans who are moving overseas so that they can be together with their partners who may be unable to remain in the USA. One would think that keeping hard working citizens would be a priority for the U.S. government, but it seems that such is not the case. Not only is the USA no longer the true land of the free where religious freedom is truly afforded to all citizens, but now its expatriates are getting screwed financially as well. Frankly, as third class citizens in Virginia (second class in the nation as a whole) the boyfriend and I have no strong compunction to remain in America once our elderly parents pass. Indeed, my children for the most part likewise recognize that the USA is a fraud in terms of legal equality for all. Citizenship is a two way street and not just about what citizens can do for a country, but also about what a country gives back to its citizens. Here are some story highlights:
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Amid mounting frustration over taxation and banking problems, small but growing numbers of overseas Americans are taking the weighty step of renouncing their citizenship.
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“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.”
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Anecdotally, frustrations over tax and banking questions, not political considerations, appear to be the main drivers of the surge. Expat advocates say that as it becomes more difficult for Americans to live and work abroad, it will become harder for American companies to compete.
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American expats have long complained that the United States is the only industrialized country to tax citizens on income earned abroad, even when they are taxed in their country of residence, though they are allowed to exclude their first $91,400 in foreign-earned income.
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Some U.S.-based banks have closed expats’ accounts because of difficulty in certifying that the holders still maintain U.S. addresses, as required by a Patriot Act provision. “It seems the new anti-terrorist rules are having unintended effects,” Daniel Flynn, who lives in Belgium, wrote in a letter quoted by the Americans Abroad Caucus in the U.S. Congress in correspondence with the Treasury Department.
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Kathleen Rittenhouse, who lives in Canada, wrote that until she encountered a similar problem, “I did not know that the Patriot Act placed me in the same category as terrorists, arms dealers and money launderers.”
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Relinquishing citizenship is relatively simple. The person must appear before a U.S. consular or diplomatic official in a foreign country and sign a renunciation oath. This does not allow a person to escape old tax bills or military obligations. Now, expats’ representatives fear renunciations will become more common. “It is a sad outcome,” Ms. Bugnion said, “but I personally feel that we are now seeing only the tip of the iceberg.”