Yesterday, I read a rather sobering article about how many expatriate Americans are renouncing their citizenship. A lot of them are doing it because of new tax laws that target Americans living abroad. The new laws have made it very inconvenient and unpleasant for Americans trying to file their taxes while they live out of the country. A lot of banks in other countries are not wanting to do business with Americans anymore, because of these new laws that require them to report any accounts owned by Americans so that they can be properly taxed.
America is one of the few countries that forces people to declare income earned worldwide. Consequently, a lot of people end up paying taxes in their host country and to the United States. They also have to hire professional tax preparers to straighten out the convoluted paperwork for them. That gets old, especially if you’ve made a life abroad and don’t want to go back to the United States. So to escape the taxes and the invasion of privacy, some expats are changing their citizenship. While some are able to do it without a second thought, others are finding the decision to be very heart wrenching.
Lest you think renouncing your citizenship is easy or inexpensive, bear in mind that ditching your US passport is not free. You have to pay to exit America. They get you coming and going.
I have not given any thought to renouncing my US citizenship… yet, anyway. I am American born and bred and I try not to be ashamed of that fact. However, I can’t help but understand why people from other countries are disgusted by some of the laws we’ve passed and actions we’ve taken that affect other countries. The law forcing international banks to report on their American customers is especially disrespectful, particularly when it violates the host country’s own laws. Moreover, the law, which was supposedly intended to bust wealthy people sheltering their money abroad, is affecting wealthy folks less than it does regular folks who just want to live abroad. If you can’t find a local bank who will work with you, that makes it pretty tough to live in another country.
Bill and I would really like to live abroad again. We enjoy the challenges of living in another country. We also love to travel. We’re both proud Americans, but if we end up living abroad for more than a few years, these tax laws could end up being a serious pain in the ass. We will have to do some research as to how we can live with these laws or even if we’ll want to deal with it.
So much for the land of the free and the home of the brave, right?