
Why I’m Giving Up My Passport - JumpCrisscross
http://www.nytimes.com/2014/12/08/opinion/why-im-giving-up-my-american-citizenship-passport.html?&hp&action=click&pgtype=Homepage&module=c-column-top-span-region&region=c-column-top-span-region&WT.nav=c-column-top-span-region&_r=0
======
klunger
I am an American who has lived in Norway for several years. I have to deal
with this crap every year and, when the time comes to choose between
passports, I am honestly not sure which choice I will make. I love US, as I
spent my formative years there and those were some pretty good years, but am
less a fan of US tax law.

Yep. I find the Norwegian taxation system to be considerably more manageable
and equitable. You pay taxes that are not much higher than in the US and
actually get things in return, like excellent health care, free tuition a
social safety net, better infrastructure, and a much much higher standard of
living across the board. Wellstone was right: We all do better when we all do
better. It's genuinely great, but I digress...

The other awesome thing about Norwegian taxes is that the government does it
for you. At the end of the year, they send you form with all of your taxes
done and ask, "Is this right?" If it is, you click a button and are done. If
not, then you might have to do a little work, but it is still so so so much
less than managing the US taxes.

~~~
nostromo
> You pay taxes that are not much higher than in the US and actually get
> things in return

This is what bothers me the most about the U.S. Federal Government. Most of
the things I enjoy in the U.S. are provided by my city, county and state.
Things like courts and fire protection and cops and roads and schools and
water and sewage systems and electricity and parks.

And what's amazing about all that is I don't pay very much for it. States and
cities seem to be able to really stretch our tax dollars.

I pay a lot more into the federal government and in return I get interstates
(which are awesome) and the TSA at airports and borders. Other than that, I
don't really have many tangible interactions with the federal government at
all. This was made very obvious during the shutdown, which I wouldn't have
noticed if I hadn't been reading the news. It seems to be largely a money pit.

~~~
johnchristopher
Bear with me as I don't live in the US but doesn't some money taxed by the
federal entity trickle down to the states somehow ?

edit: What's the state/federal taxes ratio ?

~~~
rdtsc
See a sibling comment. It does work like that. There an interesting power
division between fed, state and local.

Fed usually use the "carrot" approach to distributing some taxes. So instead
of "forcing" states to comply say to set a speed limit. They'll just withhold
the funds for road repair and maintenance if speed limit is not set according
to some standards. Perhaps the same goes for other things welfare money,
drinking age, etc.

Some people are fiercely in favour of more state control (almost down to a
religious type conviction). I never really got that. I came from Europe and
when I think of "government" I think of one government entity. It operates at
multiple levels but it is more or the same entity. And basic things like
traffic laws, gun laws, sales taxes, etc are uniform.

~~~
dnautics
Because in theory you have more control over your state and (even more) your
local authorities. This is a consequence of simple voting power theory - and
extending the notion of 'control' beyond single votes to activism, letter-
writing, pamphleteering, etc. (In practice it doesn't work that way because no
one seems to care that much about the local authorities, probably because it's
more exciting to keep people excited about people in power at higher levels).

Europe will come to understand that philosophy as it merges to become the EU.
Already the EU is an overcomplicated mess where the dynamics of agency are
unclear. It will get worse as the EU claims more power over the member states.

~~~
seszett
> _Europe will come to understand that philosophy as it merges to become the
> EU_

I'm not sure that is very likely. France for example is 65 million people, so
around 1/5th of the US. That is not a very large difference, and that's twice
the size of the largest US state.

With anywhere between 1 and 11 million inhabitants, French _régions_ are
actually close to US states, yet since 1789, there have been little will to
delegate more power to the régions (or the smaller _départements_ ).

Some people like having a central government that ensures equality between all
parts of the territory. On the other hand we might have more little overseas
régions that might have a hard time fending for themselves if the central
state didn't allocate more money to them without asking the other régions'
opinion.

~~~
dasil003
I'm not sure about your comparison. 315M is a lot closer to 500M than it is to
65M. And as far as land mass and GDP go, the US is bigger than the whole of
Europe. The EU is newer and so it's hard to say if it will ever get the teeth
the US federal government has, but it should be noted that State's Rights are
enshrined in the US Constitution, so philosophically it's closer to the EU
than to French régions. There no is question of delegating power to states,
it's a question of states _ceding_ power to the federal government.

------
jqwerqlkwjgoi
Posting this from a throwaway account, because, well, you can never be too
careful.

Several points, as an American who has lived abroad for most of my life, and
only recently found out about the taxation laws and requirements:

* the requirements are Overwhelming. Most people don't realize how bad it gets. It's not about the money (most "normal" Americans living abroad owe no money to the IRS), but about the reporting. Every bank account, every stock you own or owned within the last several years, every company you started, and guess what — even if you own 15% of an LLC, that is considered a "controlled company", so all of its financials are to be reported. It's insane!

* it's not work you can easily shift to an accountant. Oh, you _do_ have to hire one, because there is no way a US citizen can do his own taxes (in contrast to most EU countries, for example), but you still have to prepare all the information. Ever tried to report interest (accrued monthly) on six bank accounts, in three currencies, over the past 6 years?

* the benefits of being an American: frankly, I can hardly name any these days. I guess the ability to work in the US counts as one.

* it used to be that having US citizenship would be a dream, especially for people in former Eastern European post-soviet countries. But this is no longer the case. These days being a citizen of one of the EU countries gives you much more benefits and earns you much less hate abroad.

The problem with taxation of expats is very, very serious, and as others have
mentioned it is unlikely to be resolved, because there is no organized lobby.
The real tax-evaders don't have this problem: it's "normal" people who do.

~~~
kissickas
I'm an American expat (albeit a young one) and I agree that you have plenty of
good points there. But how many are exclusive to the problem of expats and
aren't just problems with the tax system in general? Maybe it's because I do
see value in having an American citizenship, but I wouldn't mind paying taxes,
even as an expat, if it were simpler.

Luckily I'm young and make less than $97,600 (yet another seemingly arbitrary
corner of the tax code), so I don't have to pay taxes. Of course, I still have
to file and then request an exemption, but that's no surprise in a system
where lawyers are the only ones voting on the laws.

~~~
jqwerqlkwjgoi
I don't mind _paying_ taxes. What I do mind is the overreaching US tax system
which puts a huge reporting burden on expats.

If you're young, things are slightly simpler. You don't have a financial
history, you (usually) only have one bank account, no savings, no trust funds,
no stocks, no shares in companies, and often no mortgage. Believe me, it gets
much, much more complicated later on. But I do hope you know what FBAR and
FATCA requirements are when you say that you file and request an exemption.

I've seen other tax systems and the US one is the only one with these
overblown reporting requirements.

------
ianferrel
I expect that the American taxation of expats is unlikely to change because
there's simply very little economic pressure to do so.

The value of an American citizenship is incredibly high. The vast majority of
people in the world would go to great lengths and expense to be able to have
one. The taxation requirements, as onerous as they are, are still worth it to
the vast majority of citizens.

Similarly, the value of a British citizenship (or of any other powerful
western country) is very high, and most people would put up with great costs
to have it. The author mentions that he pays quite high taxes there as well.

The marginal value of having _an additional_ citizenship from the set of
powerful western countries is quite low, though, which is why this author no
longer feels that the costs are worth it. But only an _incredibly_ small
fraction of people are in a position to be citizens of more than one powerful
western country, which means that the costs of being a citizen will likely
continue to be judged (by most people) against the value of citizenship on its
own, not as a marginal addition to some other citizenship.

~~~
arbuge
>> I expect that the American taxation of expats is unlikely to change because
there's simply very little economic pressure to do so.

On the other hand, it is possible to change it with very little loss of
revenue to the US because this taxation raises very little money in practice.
Because of the 97.6k income exemption, as well as double taxation tax credits,
the only real thing it does is create mountains of expensive paperwork for
expats (as well as the IRS). Think along the lines of paying $5k to a
specialty accountant to prove that your US tax bill is zero, every year.

The other part of your comment about this affecting only a small fraction of
people is inaccurate. It affects all US expats - currently several million
(6.32m is the last number I've seen). The only criterion for being affected is
US citizenship. Foreign citizenship is irrelevant. You will be taxed in most
foreign countries if you are _resident_ there, regardless of your citizenship
- and then taxed again by the US on the basis of your US citizenship.

~~~
_delirium
I don't think it's quite that bad. I've been an expat for some years, and I
pay about $200/year to a CPA to make sure everything's filled out. At least
for regular employment income it's pretty straightforward, if slightly
tedious: report your income and foreign tax paid, run things both with and
without the AMT, and declare any foreign bank accounts (declaring again,
another way, if any had over $10k in a year). I could probably do it myself,
but I figured I'd pay a CPA just to make sure it's done right. Things do get
more complex if you run a business or own property, I suspect, but just as an
employee I haven't found it difficult to do the annual "$0 tax owed"
paperwork.

~~~
Someone1234
$200 is an awful lot of money for effectively nothing at all. You sound like
someone who doesn't expect to be abroad very long, if you expected to be
abroad for the remainder of your life (as many expats are) you'd likely find
that $200*40 years to be less pleasant of a proposition.

~~~
JoshTriplett
I would hope that that cost covers tax preparation in general, not just the
US-specific paperwork.

~~~
matthewowen
At least in the UK, paying any money at all for tax preparation is unusual.

~~~
Someone1234
Having to do tax preparation is unusual period.

I've filed a total of zero tax forms with the UK government in my lifetime.
I've filed several hundred with the US government in a couple of years (and
paid third parties money to file "for me" because filing directly is insanely
difficult).

~~~
tptacek
Having to do significant tax prep is unusual in the US, too: most US employees
have taxes withheld (which is required by law), and usually end up with the
Treasury owing them at the end of the year.

~~~
ganeumann
Guess it depends on what you mean by significant. Mine is a significant
burden, but I'm probably unusual, so I checked the national averages.

The IRS says the average time to complete a tax return is 13 hours: \- 12%
complete 1040EZ at 4 hours each, \- 19% complete 1040A at 7 hours each, \- 69%
complete 1040 at 16 hours each [1].

Since some 150 million returns will be filed this year [2], that's an
aggregate of almost 2 billion hours spent. That's just federal, of course.
States are probably less time each, since they piggyback on federal, but
there's certainly some time spent there.

[1]
[http://www.irs.gov/instructions/i1040/ar03.html](http://www.irs.gov/instructions/i1040/ar03.html)
[2] [http://www.irs.gov/pub/irs-soi/P6187.pdf](http://www.irs.gov/pub/irs-
soi/P6187.pdf)

------
foz
I'm an American citizen living and working in Switzerland for the last 8
years. When my daughter turned 5, I took her to our local bank to open a
savings account for her. The people at the bank turned pale when they realized
I was an American. They explained to me that they would have to do a giant
pile of paperwork and due to the trouble, they could not open an account. My
wife (who's Swiss) had to go to the bank to do it for me. I've had this
experience several times, and only hold one account here. It's not like I'm a
tax-dodging rich person, I'm an average programmer earning a modest wage.
Meanwhile, I know Americans who live here and have quite a lot of money, and
manage to move it around and not pay much tax at all. It makes me really want
to give up my passport, too.

------
Someone1234
As someone with an indefinite (10 year renew, for $500/pop) "green card" I've
decided going for citizenship after 3-5 years is too risky. I operate a
foreign bank account in order to repay my student loans (since it costs me
roughly 1% to send money that way Vs. 3% or more via a credit card (even with
0% foreign transaction fees)).

My concern is that if I was a US citizen, the bank might close my account for
the reasons cited in the article. So now I won't be able to get citizenship
(and e.g. vote, get a US passport) until my loans are completely paid off and
I can close the account.

I will say that my "plan" is if I ever leave indefinitely, that I will
renounce my citizenship. Having to file US taxes is extremely painful even for
someone with "simple" taxes like me (one job, no additional sources of income,
few deductions). Before I moved to the US I never had to fill out a single tax
form (ever). Americans just love pointless bureaucracy like no other...

I'll be damned if I am filing US taxes from abroad. I just refuse to on
principle alone.

~~~
melvinmt
> My concern is that if I was a US citizen, the bank might close my account
> for the reasons cited in the article. So now I won't be able to get
> citizenship (and e.g. vote, get a US passport) until my loans are completely
> paid off and I can close the account.

So when you're a US citizen, they will close your bank account, and you will
not be able to _become_ a US citizen anymore? I don't quite follow.

~~~
Someone1234
I'm not sure what you aren't following.

\- I am currently a green card holder

\- I can remain in the US indefinitely, I only have to pay $500 to renew my
green card every 10 years, inform them if I am abroad for over 6 months, and
not commit any serious crimes.

\- I can apply for US citizenship in 2-4 years. US citizenship grants me some
rights and takes away from restrictions.

\- If I apply/gain for US Citizenship my bank abroad might close my account
due to the US government rules (see the article).

\- So instead I won't apply, will remain on a green card, and will wait until
the account can be closed in 7-10 years time.

\- Once the account is closed I can apply for US Citizenship if I wish.

~~~
melvinmt
OK, I get that you have the risk of your bank account being closed due to
citizenship (which I imagine, is something that can only happen _after_ the
fact?) but I just don't see what the possibility of closing of your foreign
bank account has to do with _obtaining_ your citizenship.

Not trying to be pedantic, just genuinely curious (I'm a GC holder myself):
Why should the USCIS care about your foreign bank account?

~~~
Rudism
He's saying he can't get citizenship in the sense that he can't risk having
his foreign bank account closed--not that he is prevented from doing so by the
US government.

------
MAGZine
Is it just me, or does "being a citizen," feel increasingly archaic as time
goes on? The idea is still deeply embedded in society and government, and
passports still speak volumes (insofar that they're valued differently), but
citizenship seems more of a formality. Some are very tied to their countries
of origin, but there seems to be a growing trend to simply follow the wealth--
whether it be money, standard of living, etc.

If holding additional citizenship becomes a burden, people simply drop it.

~~~
ececconi
I just became a US citizen after living in the country for 23 years. For me,
the notion isn't archaic at all. I was a permanent resident for some time. The
US could revoke my residency if I spent more than six months consecutively
outside the USA.

I do think many people think the term is becoming archaic. For people who live
and call a country which they are not citizen in their home, it's definitely
not archaic. Becoming a US citizen was one of the most important days of my
life.

~~~
mhurron
> I just became a US citizen after living in the country for 23 years.

Why? For what benefit? I haven't seen a reason yet to even consider doing
that.

~~~
ececconi
Read the fine print. You don't have any real rights to your permanent
residency. The USA can decide not to renew it for any reason they deem fit.

Also, laws may change in the future that further restrict the entitlements
permanent residents have. Permanent residents can be deported. I've been
subject to extra screening in customs.

There's a lot of reasons to be a US citizen if you're planning on staying in
this country for life.

~~~
mhurron
So it boils down to they treat a foreigner like a foreigner which was clearly
spelled out from the beginning.

I've changed countries once, at this point it wouldn't really be assumed I'm
planning on staying anywhere for life.

------
pvnick
Good for him. There is nothing "patriotic" about complying with unreasonable
and out-of-control tax demands. I expect that this process will accelerate as
income taxes continue to rise and more indirect income taxes are added such as
the affordable care act health insurance requirements and booming student loan
debt/interest. It may just wind up being a wise move drop the financial burden
of being an American citizen and leave. How ironic...

------
codegeek
"So most expatriates owe no money to the I.R.S. each year — and yet many of us
have to pay thousands of dollars to accountants because the rules are so hard
to follow."

This is where the problem is. The rules are just so damn hard and complex. I
lived in HongKong for a couple of years outside US and expat tax is nothing
short of nightmare even when you know you won't owe a penny to the IRS. The
tax in HongKong is as simple as it gets and Yes US is a much bigger country
and all that but I fail to understand why things are so complex. I love my
accountant but sometimes I wonder would she exist if I can do my own taxes in
a matter of a few clicks ?

Coming back to giving up US passports point, well good for the author but like
someone else mentioned, the value of US citizen or even a Permanent Residency
(green card) is really high even though you have to go through so much trouble
just to file the damn taxes. Unless you are tremendously successful already
with tons of money and not to worry about your financial future AND can choose
to live anywhere, sure giving up the US passport will be much easier.
Otherwise, it will take serious guts.

------
Havoc
I'm hearing the same thing on the ground - US citizenship is highly prized but
people are still dropping it like a hot potato because of this.

The article is wrong in that:

>We are the only country (except, arguably, Eritrea) that taxes all of its
citizens on worldwide income

Nope. South Africa does this too...the rules are very forgiving though so it
tends to be OK anyway despite it being technically "world-wide income".

~~~
tim333
I think what the guy was referring to was taxing citizens who don't live in
the country on income arising outside the country. SA doesn't seem to do that:

[http://www.sars.gov.za/ClientSegments/Individuals/Tax-
Stages...](http://www.sars.gov.za/ClientSegments/Individuals/Tax-
Stages/Pages/Tax-and-Non-Residents.aspx)

~~~
Havoc
ah - thats going into specific legislation. We're probably both right in our
own ways....

It boils down to the definition of "resident" under SA law. I studied this at
varsity and we can debate it...but lets rather not. My point was simply that
SA tax laws have "taxed on global income" rules...contrary to what the article
suggests.

------
aikah
In each bill I get from my bank(a european bank),it's noted,right next to the
headings, that if you are an american citizen,the bank will report any
operation on your account to the US administration! US went to great lengths
to compel foreign banks who operate in the US to snitch on US citizens
abroad,even those who havent lived in USA for a long time. I'm not really sure
how many countries in the world do that.

~~~
mcv
I'm currently working for a Dutch bank, and as far as I can tell, this is a
specific exception for US citizens. There's also specific rules for doing
business with countries the US doesn't like (Cuba, North Korea, Iran and a few
others). Other countries don't get special exceptions.

That said, of course all countries try to catch tax dodgers, but they go about
that in a different way than the US does.

------
grownseed
"Almost all my friends are cultural mutts — people with hybrid backgrounds,
for whom nationality isn't the most important part of their identity."

I do identify with my birth country to an extent, but definitely no more or no
less than any of the other places I've lived in since I left. I'm afraid this
might upset some people, but the piece of paper in my pocket has value only
insofar as I can't get a better deal somewhere else.

I've grown pretty tired of "ownership through urination" and I know my multi-
cultural friends all feel the same. I know this is mostly down to historical
baggage but I really, really wish we could do something about it.

I'm genuinely curious, are there any recognized countries without actual
land/borders?

~~~
kissickas
Depending on how adventurous you are, you could look at "The World Passport."
You can get a passport that has been accepted at 160 nations, supposedly,
although based on my research a few years ago it's pretty hit-or-miss. Some
great gems on their website like:

>Does this mean I don't have to pay my national tax?

>No, you must pay that proportion of your national tax officially allocated to
peaceful pursuits.

I wouldn't dare travel without another passport as a backup, but I would love
to live in a world where I could. And as an American, cutting out the 40% or
whatever of my taxes that goes to MiniPax would make me ecstatic.

[http://www.worldservice.org/docpass.html](http://www.worldservice.org/docpass.html)

Edit: Here's the list of countries that have accepted it. Part of me wonders
if a substantial number of these are legitimate, or if they're just from very
tired border agents.

[http://www.worldservice.org/visas.html](http://www.worldservice.org/visas.html)

------
nagrom
I note with some amusement the difference in the way that foreign income for
private citizens is of interest to the IRS and yet foreign income for
corporations can be left abroad and remains untaxed. One would have hoped that
it may be the other way round.

------
angersock
The funny part about this to me is that the largest beneficiaries of tax
loopholes are big companies like Apple, Google, etc. They have billions
squirreled away overseas, and the .gov is likely never going to see a dime of
it.

So, instead, they prey on little folk.

------
davidw
I'm kind of conflicted about this article. As an American living abroad, it's
very, very pertinent. On the other hand, it's basically political in nature so
I'm going to flag it in any case, as I don't think it's fair to complain about
political articles _except for ones I really happen to like_.

Edit: for those actually interested in _doing_ something, this group looks to
be legit: [http://americansabroad.org/](http://americansabroad.org/)

~~~
qdpb
Do you also have to pay "thousands" of dollars to accountants? This particular
bit seems to be an exaggeration, as I would imagine any tax software should be
able to deal with foreign income. And with only federal income to report, this
should be cheap too.

~~~
vajrabum
Here's an example that explains the tax rules for Canadian Green Card holders
who have Canadian tax free retirement savings accounts. It all seems equitable
and simple until you start reading deeper and it becomes clear that as a US
Green Card holder from Canada working in the US that you probably need regular
services from a tax attorney or a very sharp CPA with experience advising
Canadians working in the US to keep you out of trouble. You probably only need
that for this issue when the rules change but they do change and it's not the
only issue that you're going to need professional advice for. The cost of that
specialty advice adds up fast. [http://www.serbinski.com/working-in-
usa/rrsp.shtml](http://www.serbinski.com/working-in-usa/rrsp.shtml)

------
ibejoeb
>Some 7.6 million Americans live abroad... We are just like ordinary Americans
— except that we lack representation.

That's a wild claim. The author is absent from New York and is free to visit
[http://www.elections.ny.gov/VotingAbsentee.html](http://www.elections.ny.gov/VotingAbsentee.html)
to learn about voting.

~~~
arkem
I think the claim is more that there is no Overseas Constituency (basically a
congressional district for non-resident citizens) like several other countries
have.

See:
[http://en.wikipedia.org/wiki/Overseas_constituency](http://en.wikipedia.org/wiki/Overseas_constituency)

------
peter303
Most citizen renunciations are dual citizens living aboard and deciding the
paperwork is not worth it. Its rarely someone with a a single US citizenship,
residing inside the US and deciding to exit due to taxes or moral convictions.
Some of these dual citizenships inherited their American citizen by birth
without ever living inside the USA.

------
deletemeafter30
My wife is British, I'm American. I am currently working on several US based
companies but I'm confident my Entrepreneurial streak and her desire to go
back to the UK will bring about me forming a business overseas.

I knew this was a concern, but I didn't realize so much so that people were
giving up their passports?

Reading through the comments, I see a lot of talk about "What are the common
people to do?" and that the well off seem to be dancing around this problem?

Am I off base? I just don't see why I couldn't do the same, even as an
'Average' businessman.

I don't see any moral dilemma in moving my money around to the Caymans, or
wherever need be to avoid this problem, either. Why is it presented as so
difficult, when so many others seem to be doing this so successfully?

As much as I love the United States, having lived here my entire life, I am
not going to let them fuck me over.

------
percept
Disregarding the broader debate, I think most would agree that the filing
process for Americans who willingly comply is itself egregious.

You can be making less than the exempted amount, and still be obligated to pay
thousands simply to file a return.

~~~
sologoub
There has been a good amount of discussion here about the merits of having an
automated return generated by the government and have people simply either
agree to it or update with additional deductions as appropriate.
Unfortunately, because of heavy lobbying, such a thing won't materialize any
time soon. [1]

Personally, I'm in favor of a simpler, flatter tax with fewer deductions.
Right now the system rewards those who game it more aggressively, rather than
rewarding those who behave in financial responsible ways. For example, having
a house that one can barely afford with a huge mortgage is better tax-wise
than having a modest home and saving/investing more. That seems entirely
backwards to me.

[1] [http://www.businessinsider.com/intuit-opposes-free-tax-
filin...](http://www.businessinsider.com/intuit-opposes-free-tax-
filing-2013-3)

~~~
superuser2
Being "financially responsible" is the last thing a government wants to
promote. From a moral standpoint we like it when people save, but for the
prosperity and growth of the economy at large, everyone should be spending
every cent they make.

~~~
superuser2
The purpose of many tax cut/rebate programs is to encourage you to spend money
and bolster the economy. If you disagree, want to maybe argue the point
instead of just downvoting?

~~~
sologoub
Not sure who down voted, as directionally you are correct.

That said, there is such a thing as a health propensity to save in economics.
You want the growth, etc., but you also want demand to be somewhat resistant
to short-term ups/downs. That can only be achieved if the consumers save
enough in order to keep spending, even if the income is fluctuating.

In practice, this is very very difficulty and has to do with social
norms/attitudes as much as with actual economics.

Personally though, the amount of pull back we had in spending in the 2008
crash was not fun. I'd rather forego a bit of growth in exchange for a more
consistent demand and a financially more sound neighbors who will not drag me
down with them if/when economy sputters.

------
f3llowtraveler
Keep voting Democrat and Republican, and you will keep getting these results.

------
brownbat
The comments here seem universally in favor of the author, so I'm going to
stick my neck way out, but...

I'm actually kind of worried about tax evasion. Especially here, because
jurisdiction shopping seems uniquely available to the wealthy.

I take the author's point that not everyone caught up in this is actively
trying to evade taxes, but I'm also not especially saddened by paperwork
hardship stories, nor am I moved by taxes on income after the first ~ $100,000
a year.

I'd find the arguments for change far more persuasive if they were accompanied
by compelling suggestions on how to prevent tax fraud from people who can
afford to buy a house abroad and spend X days a year in it.

I'm serious, I'm in your corner 100% if you just meet me half way, acknowledge
these laws have some purpose. There's a problem they're trying to solve, take
that seriously. Present a better solution for that problem, rather than just
saying we should shrug our shoulders and tear the whole thing down.

------
ausjke
Can turbotax/intuit etc help mitigating the regulation problem?I'm OK paying
the tax but the paperwork is unnecessarily complex. I think this is the key
point here.

------
dev360
This was a good thread. I was planning to file for US citizenship before
moving back to Sweden but many of the comments here made me reconsider,
especially with regard to the reporting requirements. I am willing to gamble
with my permanent residency since I am married to a US citizen, and as many
have pointed out, citizenship doesn't offer any discernable advantages except
the ability to work in the US.

------
dcherman
I don't know how accurate this statement is, but I find this pretty ironic.

"The extraterritorial reach of the income tax dates from the Civil War, when
the government wanted to prevent Americans from fleeing to Britain to avoid
taxes."

------
gcb0
All that gets even more fun when you request citizenship.

\- green card holder has all the obligations of citizens, none of the benefits

\- you are start with lots of assets that are now taxable in the US, already
overseas.

------
sdfgfgdfgq245
Posting this from a throwaway account.

What are the consequences of not filing if you don't owe anything? It seems
likely the IRS could eventually force backfiling, but have they issued any
fines?

~~~
mark_l_watson
I read read horror stories in International Living, etc. about people paying
huge penalties for minor mistakes in filings.

Also, with FACTA, foreign banks get screwed by the U.S. if they make a mistake
on paperwork - really big fines.

------
jmadsen
The laws and attitudes of the Congressmen is something I find very typical of
our politicians:

Screw over everybody so a few wealthy folks don't "get away with anything".

------
205guy
Expatriation and taxes are complex issues with many facets, and I feel the
author of the article is naively or deceitfully ignoring them to only focus on
the unrealistic solution that would benefit him. First, let's get the
taxation-without-representation trope out of the way: you can always vote by
absentee ballot in federal elections in your place of last residence in the US
[1]. I think it reflects rather poorly on someone if they don't even make that
effort--and then complain about it.

As for actually paying taxes, that's fairly well covered in the comments: you
don't unless you're making big bucks. The issue seems to be paying an
accountant to do the paperwork. Yes, it is slightly more paperwork for an
expatriate, but plenty of people in the US pay an accountant to do their taxes
too (itemizations, deductions, capital gains, and lots of fancy accounting to
reduce taxes). Accountants seem to be about $500, so the $5K figure is for the
full service expat (the upper tier whose company pays for everything--or used
to), or for those who have 2 businesses like the author. Heck, taxes for
business owners in the US are probably $5K as well. For regular employees, it
is also possible to download the forms online and file your taxes yourself.
That's what I did when I lived abroad as a student and employee.

The new reporting by foreign banks for US citizens seems to be an actual
issue. Making foreign banks deal with US bureaucracy sounds like a nightmare,
and if they do refuse expat American customers, that might be a problem in
day-to-day living. That probably does need some real-world solution, such as
raising the limit to 20K for a basic checking account.

The complexity of the US tax forms comes from the innumerable deductions and
allowances that are meant to encourage some form of economic behavior (e.g.
buy solar panels or invest in local businesses). It's not an ideal system, but
it does provide a lot of flexibility and it's one way for the gov't to set
economic policy in a county that frowns on more direct gov't involvement.

Finally, on the moral side of the issue, I don't see any problem with a
country keeping tabs on the wealth of its citizens who are free to come and
go. It's the tyranny of the IRS: rich and poor alike must file. Nobody argues
they shouldn't pay taxes when they are in the US, but in order to do that
properly, you can't turn a blind eye to what happens to their money when they
happen to be out of the country. As other commenters have said, having US
citizenship is an insurance of some sorts, and if/when you move back, the irs
wants to know where you stashed all your foreign earnings.

I think the US _is_ unique in this regard: lots of wealth, lots of freedoms
including travel, lots of tax deductions, and a ruthless IRS that is known to
go after the rich and the poor alike. Other countries would probably like to
have the power to enforce their tax regimes abroad, but can't.

[1]
[http://www.howtogermany.com/pages/voting.html](http://www.howtogermany.com/pages/voting.html)

------
logfromblammo
To summarize more concisely, American citizens living abroad must pay taxes
with their time and with their personal information rather than with their
dollars or foreign currency.

The issue at hand that induces an increasing number of dual citizens to drop
their American citizenship is that the U.S. government is supposedly forbidden
from both prying into the private affairs of individuals and from compelling
involuntary servitude, yet it does so on a massive scale with respect to its
citizens living abroad.

These people are often paying more in tax to their local sovereign authority
than they would if resident in one of the United States, and would thus owe no
money to the U.S. even if they earned 100 times more. They are not trying to
avoid the expense of taxes. They are trying to avoid the annual ordeal of
stripping naked before their distant federal overlords in a humiliating ritual
designed to show that they are guilty of no crime, absent any individualized
suspicion of wrongdoing.

They _should_ enjoy the presumption of innocence that the U.S. is compelled by
its foundation law to extend, and be able to keep their private affairs
private until there is enough specific evidence that a crime has been
committed to issue specific warrants. The federal U.S. government has instead
been acting as a bully and an ass, with no discernable goals other than to
demand obedience and enforce compliance, for far too long.

They can tax foreign-domiciled citizens as much as they like, for now. Rather
than question that here, I would very much like to remove their ability to
levy their onerous information reporting requirements on those people and upon
the foreign persons that would very much like to do business with them without
some nosy busybody rudely inserting himself into the transaction to interfere.

When people who supposedly represent our interests act in such a fashion, it
reflects _extremely poorly_ upon the nation as a whole. While foreign entities
currently tolerate the behavior, it is only because they lack more viable
alternatives.

But beyond the behavior, those expatriates have firsthand knowledge of how
other nations operate their taxation systems. And they know that the U.S.
system is almost always worse when measured by the scale and complexity of the
paperwork. There is no particular technical reason why it is that way. But
every time a reform is proposed, the media narrative magically transforms it
into an issue about _money_ and _fairness_ rather than _transparency_ ,
_privacy_ , _simplicity_ , _efficiency_ , or any of the other standards that
show it to be a _colossal failure_ when compared with _any other modern
economy on the planet_.

It really is very embarrassing to think that my Big Brother not only watches
me in my every waking moment, but he also preemptively beats up every single
one of my friends in the schoolyard, just to ensure that I can't even have a
moment's peace on a sleepover.

~~~
seanmcdirmid
If you live in a low income tax country like HK, Singapore, or Switzerland,
AND you make over $100K a year, you have to actually pay money to the US
government. This is where the housing deduction comes in useful.

------
icantthinkofone
>We’re responding to the burden and cost of onerous financial reporting and
tax filing requirements that are neither fair nor just.

I would swear it was a joke article but apparently he's serious. It takes all
kinds to make a world.

------
tn13
Good. Give it up. Most of us like me are willing to pay an additional 10% tax
every year just to get US citizenship.

------
HarryHirsch
What does that fellow want from me now? He _says in the article_ that the
first 100 kUSD of foreign earnings aren't taxed, and to fix this he wants to
_end taxation of expatriates altogether_.

It's reminiscent of Prop 13 in California. It was sold as a means to keep the
elderly on fixed incomes in their homes, but it also applies to commercial
real estate, and that was the purpose of the execrable thing.

Pass the bucket, I'm going to throw up.

~~~
cmdkeen
Because it is a marginal tax rate on everything if you have to pay an
accountant to prove to the IRS you don't owe anything. Plus in most instances
that income will be being taxed in another country - the author is in Britain
and we definitely have tax here!

So not only is it double taxation but it is taxation without representation,
something that's generally considered bad...

~~~
ClashTheBunny
He can vote. He just doesn't know how. The only Americans that can't vote are
in the non-state regions within the territory of the United States. I live
overseas and have no problem voting in every election held in Massachusetts.
Your district where you vote is the place you last held residency.

~~~
adamvi
> Your district where you vote is the place you last held residency.

As an American abroad, this makes little sense to me.

Rather than spread our votes out across the country by forcing us to vote
where we last held residency, why not allow Americans abroad to elect their
own representatives?

I have more in common with other Americans abroad than I do with the average
voter in the state where I last lived nearly 20 years ago. We wouldn't expect
a former New Yorker, now Texan to continue voting in New York's elections. But
if someone moves from New York to, say, Mexico City, that's exactly what
happens.

~~~
mcv
While representation is certainly an issue, many expats with two nationalities
get to vote twice; in both their countries. Double representation isn't
exactly fair either.

It would be nice if people simply voted and paid taxes where they live, and
moving to another country was easy, removing the need to hold on to previous
nationalities.

------
bruceb
Being a US citizen certainly benefited him when he was abroad yet he was
selected to be a Rhodes scholar.

I support a reduced tax bill when you are living abroad but to say Americans
should pay no taxes is ridiculous. They most likely had some direct/indirect
benefits from being American and also can always return to a vibrant and
economical strong society. It is like insurance, they should still have to pay
some premium.

~~~
MCRed
You're missing the point.

This isn't about tax avoidance-- as the article points out the first $97k
earned abroad isn't taxed and above that it isn't double taxed.

The problem is that the regulations are absurd, not well documented, and the
fines and penalties for innocent errors (such as not filing the right form at
the right time for bank accounts on which you owe no tax) are extraordinary.

As an american who has spent an extended time abroad, we also suffer from the
fact that the rules for banks are so bad that many countries simply won't open
bank accounts for americans, because they aren't prepared for the hassle.

It's often quite difficult to live and work in a country and not have a local
bank account. It makes getting and making payments to people in that country
much more difficult.

~~~
bruceb
You should tell the author of the article that because he states: "The
challenges facing expat Americans abroad would disappear if the United States
taxed and regulated only those who lived in America."

He is advocating taxing avoidance clear as day.

I agree the rules and regulations should be better. But he is going one huge
step further.

~~~
josh_fyi
He does NOT pay US tax under the current system. So, he is not trying to avoid
US tax. He is trying to avoid paying $5K to an accountant to do his US tax
forms for which he does not owe any tax.

~~~
bruceb
It doesn't matter what he personally pays or doesn't.

He clearly states US citizens abroad should not pay US taxes. (edit to add
"US" which I thought was obvious)

~~~
DanBC
Imagine someone born in the US. They leave the US at three months old. They
live their entire lives in their parents - in their - country. They are
educated there. They work there. They don't have a US passport and haven't
ever visited the US.

In your opinion: should that person pay US tax?

~~~
bruceb
That person should be able to give up their citizenship for free. Many people
even if they don't live in the US get the benefit of people the US citizen.
The author didn't live in the US yet still got a Rhodes scholarship.

