Why More U.S. Expatriates Are Turning In Their Passports
time.com
time.com
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.
Words like that shouldn't be used lightly.
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.
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.
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.
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.
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.
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...
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!
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.
Really, the textbook definition of being free is that you have no allegiance.
Normally I would keep both passports, but the way the U.S. taxes its citizens abroad pretty much precludes that.
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.
If you pledge your allegiance to another country -- which includes accepting citizenship -- you sacrifice your US citizenship as a de facto result.
This only doesn't apply to countries with special grandfather clauses for blood relations, for example, my friend Patrick got dual citizenship with Ireland at 21 because his grandparents immigrated to the US.
I hear, however, that the State Dept is fairly lenient if you want to beg for your citizenship back.
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.
Trust me, I don't misremember - it made me mad as hell.
Your expert disagrees with what mine told me, and it seems to disagree with the IRS as well. I'd suggest you obtain a second opinion if this situation is relevant to your life.
While the rules aren't great, they're not impossible either.
The other thing to note is that if you are married even to a foreign spouse without green card you can file jointly and you now get a full $182,800 exclusion. There are also rules where you can deduct further for housing expenses as well as tax paid locally.
This is the IRS guide you should read. http://www.irs.gov/publications/p54/index.html
The bad news though is that for entrepreneurs, consultants etc. If you are self employed, in a partnership (including LLC's) you are not exempt from paying self employment tax (15.3% of the first $106,000 earned.
This is likely the biggest issue for some of the people renouncing citizenship.
The second issue also mentioned in the article is reporting of bank accounts containing more than $10k.
Final bad news for US entrepreneurs abroad is that your startup might be classified as a Controlled Foreign Corporation, which in theory could lead to it being taxed in the US. These rules are so complex they make my head hurt just thinking of them. This PDF seems to explain it fairly well:
"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?
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."
"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-t...
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.
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...
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.
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.
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.
Even though I get awesome healthcare and other social services from Austria.
Basically, it's the world's shittiest deal.
Anything over the $91,500 gets taxed as if earned in the normal US tax bracket. So if you happen to be running a successful business abroad, get ready to pay the US dearly.