For several years, I’ve been thinking about giving up my American citizenship.
This is not an act of disloyalty or of protest, I hasten to add. I admit there have been moments – when George W. Bush was reelected, for example – when I was angry enough to repudiate my nationality in protest. But I feel an emotional attachment to the United States that anyone who grew up there would understand.
Note: This article is part 1 of a series about giving up US citizenship. At the end of the article you can link to the next installment.
The reason I’ve considered giving it up is purely practical and has to do with taxes.
I hasten to add, again, that this is not about disloyalty. I love the US and I’m not trying to avoid paying taxes. In fact, my income is taxed in the Netherlands at a far higher rate than it would be if I lived in the US.
As an expatriate American, however, I’m still required to pay taxes to the US as well because the US taxes non-residents on world-wide income, although the first $97,600 (the 2013 figure; it goes up each year) that I earn is exempted. As a teacher, I’ll never earn that much. According to the Wall Street Journal, the only other nation that taxes non-residents on world-wide income is Eritrea (though North Korea may also do so, but no one really knows).
Like everyone, I hate filling out tax forms. As an expat, it’s the long form, plus schedules, plus an extra form to claim the expatriate exemption. And it has always annoyed me that I was required to fill out these forms at all, knowing that I wouldn’t have to pay because of the exemption. I pay an accountant to do it instead, but I resent that expense because of its pointlessness.
Once I gained Dutch citizenship, thoughts of giving up my US citizenship centered on these pointless forms.
The last straw was the new “FBAR” form, the “Report of Foreign Bank and Financial Accounts,” introduced a few years ago. Expatriate Americans are required to fill in yet another form, listing every account that has their name on it, along with the highest balance each account carried in that tax year. I object to this form for three reasons:
- It’s none of their damn business how much money my husband and I have in which accounts.
- It’s a nightmare to fill in! Dutch accounts don’t show a running balance, so I end up having to sit down with a calculator and do a year’s worth of arithmetic to figure at what point each account had its highest balance.
- What’s the point? I assume this is meant to be some sort of information-gathering exercise to catch money launderers or terrorists or to prevent people from hiding their money from the US tax authorities. How does knowing my highest balance on my accounts help that effort when you don’t know what that money was for? (We bought a house last year so our active accounts had very high amounts for about a day.)
So when the FBAR requirement started, that’s when I got serious about giving up citizenship. I knew it would take a few years as I moved my pension money out of the US and generally consolidated my finances. The idea of never having to fill out all these forms again (or pay someone through the nose to do it for me) made it worth it.
But now, the US has put another big stumbling block in my way: they’ve raised the price.
That’s right: Americans have to pay to give up their citizenship. The price was $450, which is ridiculous already. Just this month, the price was quietly raised to $2,350!
According to Yahoo News, the price rise might be an attempt to crack down on US citizens who are “hiding their wealth overseas.”
It is also a response to increased renunciations of citizenship due to – surprise! – the onerous FBAR form.
I don’t have any great wealth to hide. I just don’t want to fill out those forms anymore. There are no real practical advantages to keeping my US citizenship; only inconveniences.
According to the same article, Senator Ted Cruz wants a law passed that would take away the citizenship of anyone who goes to Syria or Iraq to help ISIS terrorists.
This seems woefully unfair. These “bad guys” can give up their citizenship for free, while the rest of us “good guys” – law-abiding, peaceful people – get slapped with a $2,350 fine? Really?
The US isn’t earning any tax payments from expats with moderate incomes, like me. The purpose of making its non-resident citizens report world-wide income is to raise tax revenue from wealthy expats. These wealthy expats are the ones who can afford to pay the $2350 fee, which is probably significantly less than their tax bill would be.
The end result: lower tax revenues from expats, and a whole lot of angry expats who want to give up citizenship. Has Congress really thought this through?
My whole US citizenship series:
- Part 1: Giving up US citizenship?
- Part 2: Republicans, expatriates, and FATCA
- Part 3: How my citizenship hit me in the gut
- Part 4: My renunciation day
- Part 5: Thanksgiving reconsidered
- Part 6: FATCA, the Tea Party, and me
- Part 7: Individual freedom, self-reliance and renunciation
- Part 8: Equality? Competition? Not overseas!
- Part 9: The American Dream
- Part 10: The irony of renouncing under duress
- Part 11: Open letter to President Obama in response to the State of the Union Address
- Part 12: 7 Reasons NOT to renounce
- Part 13: Citizenship matters
- Part 14: Citizen of a parallel world
- Part 15: Renunciations in the news
- Part 16: Vote … as a non-citizen? Really?
- Part 17: The ridiculous story of a pilot and his taxes
- Part 18: On receiving my Certificate of Loss of Nationality
- Part 19: So you think you want to emigrate…
- Part 20: Indignation Fatigue and FATCA
- Part 21: The US election, as seen by Americans overseas
- Part 22: On receiving my California voter ballot
- Part 23: Watching America fall apart on my renunciation anniversary
Hi, I’m Rachel!
Rachel’s Ruminations is a travel blog focused on independent travel with an emphasis on cultural and historical sites/sights. I also occasionally write about life as an expatriate. I hope you enjoy what I post here; feel free to leave comments! Read more...