Americans Renounce Citizenship to Escape IRS

An increasing number of Americans are living abroad and handing in their passports to escape the IRS.

Earlier this month it was reported that the number of Americans renouncing their citizenship increased sixfold in the second quarter compared to last year. According to The Wall Street Journal, more Americans renounced their citizenship in the first two quarters of 2013 than the whole of 2012 combined. The increase comes ahead of a July 2014 deadline (which has been moved back six months) imposed by an absurd piece of legislation called the Foreign Account Tax Compliance Act (FATCA), which compels foreign financial institutions to disclose the holdings of their American customers to American authorities as part of the U.S. government's latest attempt to crack down on Americans who avoid taxes by keeping assets abroad.  

Of course, American authorities can’t legally force a foreign entity to do anything. However, they can threaten to impose a 30 percent withholding tax on income from American sources on a foreign financial institution if those institutions don’t comply with the U.S. Treasury Department’s demands, thereby turning foreign businesses into an IRS enforcement tool. The recent news of the huge increase in the number of Americans renouncing their citizenship is only the latest reminder of not only the arrogance of the IRS but also of the fact that American tax laws place an unreasonable burden on American who live abroad.

One of the most notable instances of an American renouncing his citizenship is Eduardo Saverin, the Brazilian-born co-founder of Facebook, who has lived in Singapore since 2009. Ahead of Facebook’s IPO Saverin renounced his American citizenship, although Saverin denied that his decision was based on economic incentives. Saverin’s decision upset some legislators on Capitol Hill, and prompted Sen. Chuck Schumer (D-N.Y.) and some of his colleagues to sponsor a bill, which died in committee, called the Ex-PATRIOT Act, which would have punished Americans who chose to make the rational decision to take legal means to move assets and wealth abroad in an attempt to hand over less money to the government. One of the most objectionable parts of Schumer’s Ex-PATRIOT Act is its title. While perhaps a clever backronym, the implication that you must be somehow unpatriotic for living abroad or for choosing to take legal means to lower your tax bill is disrespectful and symptomatic of a worrying attitude towards the relationship between citizens and their government.   

What may come as a shock to many Americans is that the U.S. is one of the only countries in the world that taxes its citizens who live abroad. This issue was made painfully aware to me when I moved back to the United States in January 2012 from the U.K.

Paying U.S. tax is and will continue to be a major issue for my family. Among my three siblings, my parents, and myself there are three nationalities represented. All of us are American citizens, some of us are New Zealand citizens, and some of us are British. Only one of these countries requires that each of us submit a tax return every year until we die: the United States.

Perhaps I have an unusual sentimentality attached to my American citizenship because it is something I earned, having become an American citizen in 2009 after a process that is itself a subject worthy of its own article. I am very happy that I am an American and I feel very privileged and lucky to be allowed to live in the U.S. However, this does not mean that I would not reconsider my citizenship if I left the U.S. (at the moment unlikely) and the American authorities decided to hound me every year for the rest of my life.

It’s astonishing that the American government would punish some of the world’s most patriotic people by making them choose between their citizenship and the headache that comes with trying to be compliant with awful laws like FATCA. The requirements imposed by FATCA on foreign financial institutions and the punishments that come with non-compliance mean that sometimes foreign banks don't let Americans open accounts at all.

Instead of seeking to punish Americans who make rational economic decisions, American legislators should perhaps consider how absurd U.S. tax laws are compared with other developed nations. Why not make it so that U.S. taxes are based on residency, not citizenship? While such a move would bring the U.S. in line with other wealthy countries, it would not be conducive to the goal of legislators who passed legislation like FATCA, which is to squeeze every American for whatever money they might owe in order to help finance our overspending government. Reassuringly, even with the growing reach of the IRS there is still something, albeit regrettable, that Americans can do to keep their own money; namely, renounce their citizenship.

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  • CE||

    Stop trying to reason with criminals. Escape if you can.

  • ||

    It still baffles me how Americans don't seem to compute that tax cheat runs the IRS - Geithner still runs that immoral organization right?

    What a totalitarian miscreant Schumer is.

    Same crap up here only difference is Canadians have no impulse for liberty having bit the socialist line hook, line, sinker AND bait. Our motto should be "As long as we're not American."

    Progressive taxes is anything but.

    Run, Forest, Run! I say.

  • Logical 1||

    Dear Mr. Firefly,
    FYI - taxcheat Geithner was Secretary of the Treasury (his term ended in January 2013) which is actually much more powerful than head of the IRS because the SOT is the president's main policy advisor on economic matters.

    Life is NOT like a box of chocolates - we knew we were going to get fucked by this asshole, which he did by using taxpayer money to buy so-called toxic assets.

  • April06||

    Start working at home with Google! It’s by-far the best job I’ve had. Last Wednesday I got a brand new BMW since getting a check for $6474 this - 4 weeks past. I began this 8-months ago and immediately was bringing home at least $77 per hour. I work through this link, http://www.max47.com

  • Fist of Etiquette||

    ...as part of the U.S. government's latest attempt to crack down on Americans who avoid taxes by keeping assets abroad.

    It is simply unconscionable that Americans continue to refuse to be herded in the directions Washington dictates.

  • Pro Libertate||

    My preference is that I stay, and my government escapes. My family has been here longer than Leviathan has, so it can fuck off.

  • Lady Bertrum||

    I might be a flag-waving red-neck, but the idea of renouncing my citizenship is unthinkable.

  • ||

    Not to me. Fuck my citizenship. No state owns me. Nothing could please me more than having no citizenship, but unfortunately then I'd be fucked because the world operates on citizenship. So I'll take the next best thing: as many citizenships as possible.

  • Pro Libertate||

    You should set up an auction site for anarchists, where countries bid for the right to grant you citizenship: meBay.

  • Lady Bertrum||

    It's not about a state owning me or being part of a state. If no state exists in the region we call the United States, we are still culturally and traditionally American. That means something to me.

  • sarcasmic||

    “Patriotism is supporting your country all the time, and your government when it deserves it.”
    Mark Twain

  • Pro Libertate||

    "I want my country back, you son of a bitch."

  • ||

    Why? What does it mean? I am far more New Englander than I am a generic "American". Yeah, there is always local culture, of course, but why does--or should--that correspond with nationality?

  • Lady Bertrum||

    It doesn't need to correspond to nationality, and I see your point that citizenship is a status within a state. But, we're having a conversation on a site dedicated to libertarian ideas primarily between Americans. We live in a country that codified (and later raped) libertarian ideas in a founding document. While personal freedom may exist in more pragmatic forms outside the US, that's because those states are simply too weak to oppress. They would if they could. We're the place were these ideas are constantly debated intellectually(poorly and without affect).

    The U.S. is the intellectual home of libertarianism.

  • ||

    Even if it was once, it no longer is. Ideas don't really have "homes", in any case. Or if they do, it is within individuals that they make their home. Not nations. The US is too big and diverse to be quantified in that fashion.

  • Lady Bertrum||

    Hmmm. How about this: There is and has been a constant libertarian strain or thread in American culture and thought that doesn't exist anywhere else. It's a way of thinking that forms our behavior. It's an aspect of American identity and, therefore, I value my American identity.

    But to each his own. ;-)

  • sarcasmic||

    There is and has been a constant libertarian strain or thread in American culture and thought that doesn't exist anywhere else.

    And it is on its way to extinction. It's long decline began once Manifest Destiny had been achieved. Since then the descendents of the wild and free people who forged this country have become increasingly tame and domesticated.
    The concept of freedom is being transformed from the liberty to do that which is not prohibited into being free to do that which is allowed.
    "It's a free country" is giving way to "Who said you could do that?"

    Once freedom means asking permission and taking orders, then freedom indeed is slavery.

  • Cliché Bandit||

    Gamboling?

  • Gordilocks||

    THIS

  • Monty Crisco||

    "And it is on its way to extinction"

    May be true, but doesn't disprove the Lady's assertion...

  • Fist of Etiquette||

    ...as many citizenships as possible.

    I hope you get taxed into oblivion. LITERALLY.

  • Archduke Trousersenthusiast||

    Literally has lost all meaning.
    Literally.

  • Pro Libertate||

    If I accept Google as the arbiter of English, which I most assuredly do not. Call me when they own the OED. Fuckers.

  • kinnath||

    Literally means literally except when it means figuratively.

    We have literally achieved doublethink.

  • Ted S.||

    Its meaning has been decimated!

  • ||

    Well, since under the Five Flags Plan the US wouldn't be one of them, if I were to pursue that, I wouldn't be taxed into oblivion.

  • Fist of Etiquette||

    I think Wesley Snipes was on that plan.

  • ||

    No, that was plan 9 from outer space. Which I wish I was on.

  • Cliché Bandit||

    I see you are a loyal simon reader

  • ||

    I'm leaning more & more toward Chile...their skiing looks fucking amazing (at least this season).

  • Cliché Bandit||

    I know the owner of Portillo. I went to college with him.

  • ||

    Doooooooood!

  • Warrren||

    And the great thing about skiing in Chile is that you start on the mountaintop and end on the beach.

  • meta||

    well there is gault's gulch there, so you could live there

  • T||

    193 UN members. That's a lot of passports to keep track of...

  • stateless||

    Stateless is also possible, I've been stateless for nearly two years now, the only complication is travel but I've already seen the world.

    Having residency somewhere is a good idea before going stateless.

  • XM||

    You mean I might "not" be a flag waving redneck.

  • Alan||

    I love what America used to be, but my country is committing crimes against me on a daily basis. The relevant question is why do battered wives (or husbands) stay with their abusers?

  • Lady Bertrum||

    Keep your eye on the market today. Dow off by 220 points, S&P down 23. 10y bond spiking. Gold and Silver looking stronger. Soro is said to be shorting the S&P.

    Market is very weird today.

  • kinnath||

    Walmart said "oh shit, 2nd quarter sucked", and the market started to slide.

    How many times exactly can a dead cat bounce?

  • Almanian!||

    Depends how the height from which it has been dropped, its level of decomposition, the surface onto which it is dropped, and The Bernank Factor (an unquantifiable quanitity of Quantitative Easing or Restricting But Almost Never Restricting that depends on Fuck You, That's Why).

  • Night Elf Mohawk||

    How will Peanut Butter know which cock to suck if Soros shorts the Glorious Recovery?

  • Archduke Trousersenthusiast||

    You know who else renounced their citizenship?

  • WTF||

    Barry Soetoro?

  • Pro Libertate||

    Ooooh, oooh, I know this! Some Austrian. Um, Wolfgang Puck?

  • bmp1701||

    Superman?

  • Pro Libertate||

    Is it renouncing when your planet blows up? I mean, what's he going to be citizen of, some hunks of kryptonite?

  • ||

    Superman holds dual citizenship.

  • ||

    The amount of cluelessness this government possesses is breath taking. Atlas Shrugged is playing out right before our eyes and they appear to have no idea why or what it means.

  • Invisible Finger||

    If they had an idea why, it wouldn't be playing out. It's not like arrogance, ignorance, and ego are rare traits on this land mass.

  • Ann N||

    knowing why/what is different from avoiding it.

    if you could siphon off the wealth of the USA for your family, KNOWING its a sinking ship and that civilization was about to collapse in the near future, would you do it?

    with that wealth you could buy security and resources, or a way to escape.

    even if survival wasnt your goal, and you just wanted to live high on the hog, would you delay the downfall and deprive yourself of ill gotten gain?

    its a hard question.

  • XM||

    Treason season comes early ever year, it seems.

    Remember that Nathan Hale said "My only regret is that I wasn't born in the Obama years and earn enough money to pay taxes to my future government, either here or abroad. Hang my worthless ass now."

  • BakedPenguin||

    Yeah, I read that on his Wikipedia page.

  • bmp1701||

    There's more than a little bit of schadenfreude in watching Dems, usually the more likely of the two parties to style themselves as "global citizens" and whatnot, fly into paroxysms of rage at the idea of people dumping their U.S. citizenship. The HuffPo thread on this same article has about as much "Murika!" chanting as a Freeper thread on the Iraq War.

  • ΘJΘʃ de águila||

    The Dems have joined the ranks of the "National Socialists". The Stalinists had their Iron Curtain and Gulags, the Hitler had his Death Camps, the USSA Nazis want their global "Digital Curtain" through which no one escapes.

  • canuck53||

    I have been considering renouncing my US citizenship. I am a canadian citizen and live and work in Canada. There are many people here in this position. US citizenship used, to be good when people actually wanted to live and work in the US now it is just a burden.

  • ||

    USA worse than Canada?

  • canuck53||

    Canada doesn't tax non-residents, so if I work in Asia no Canada taxes, but US will force you to pay US income tax even if you live in Singapore with 10% income tax.

    Canadian taxes in BC and Alberta are not so bad anyway compared to US. Max federal tax rate is 28% Provincial income taxes can add anywhere from 5% to 25% depending on province. Here in BC at 100K about 10% for 38% total. We have more sales and sin taxes but property taxes are gemerally much lower and health care premiums don't get taken out of my pay like they did in the US. I had like $600 a month taken out of my pay in US for health care. In Canada $0 and no copays.

    Canada is very regional and the Provinces have more power vis-a-vis the federal governemnt compared to the states in the US (esp. on economic matters) so taxes and regulations on buisiness vary wildly between provinces with Quebec probally the worst and Alberta the best with a 10% flat provincial income tax and no provincial sales tax.

  • XM||

    Canada is like 90% white, and half the people apparently speak French. So the place is way worse than the USA.

    Canada has FREE healthcare and higher minimum wage, but the all the Mexicans want to live here. I just don't get it.

    Come on, a country of that size shouldn't allow to have only 30 million people. It's ridiculous.

  • ||

    I don't get your health care scenario. We pay it through our taxes.

    It's true what you say about the provinces having more power than the states vis-a-vis the Federal government and that Quebec's finances are poor. I have friends in Alberta from Quebec and they like it there. Less tax hassles.

    XM, about 22% of the population speak French.

  • Jackand Ace||

    "...which is to squeeze every American for whatever money they might owe..."

    Duh, yeah. That's capitalism, paying money you owe. Listen, renounce your citizenship...don't let the doorknob hit you on the way out.

  • Wizard4169||

    Nope, capitalism is paying for the services you actually choose to use. Not having a gun held to your head to pay for services you don't need or want. (And if you think my "gun" is a figure of speech, just try not paying. Sooner or later, the literal gun comes out.) Demanding payment for services you don't want, need, or use ain't capitalism.

    The capitalist says, "If the costs of citizenship exceed the benefits, then screw citizenship." An authoritarian government naturally tries to restrain those who attempt to escape its "loving" embrace.

  • Jackand Ace||

    Well, here's the deal...we don't get to pick and choose what we pay for. If that was the case, there is plenty I would elect not to pay for, like crazy military interventions in Iraq.

    What we get to do is try to change policies and those in office. I am sure there are things that the US government pays for that Mr. Feeney likes. The fact that its not everything just puts him in the same group as the rest of us.

    What sets us apart, however, is that Mr. Feeney is just a whiner. He doesn't want to live here I guess, and doesn't want to pay for the privilege. Just leave...Thomas Paine had it right about sunshine patriots...Mr. Feeney would have fit right in.

  • Bgoptmst||

    After carefully skimming the story I realizd the author likes his US citizenship. Hopefully you aren't a product of public education.

  • Ann N||

    its only this way because our govt doesnt build on common ground and unite us.

    there are plenty of uses of taxes that the american ppl agree on, yet each party forcefully pushes ideas that are not universally agreed upon.

    force should be kept as rare as possible, yet obama constantly takes up the cross of controversial issues. why? its only heartache. the reason is he is a divisive asshole, not a uniter.

  • ΘJΘʃ de águila||

    JA: "My country right or wrong." "Love it or leave it." "Taxes are the price we pay the government in return for goose-stepping global warfare and the jackboot police state."

    Yeah, I get it......

  • ||

    My parents left the US in 1948 (we arrived in Sydney, Aus on New Years Day, 1949, I was 15 months old). My father never filed a US income tax return for neither the 15 years he lived in OZ nor for the 25 or so years he lived in Canada. Neither did I for the years I lived in Canada until 1979.

    It used to be that the exemption on foreign earned income simply did not affect foreign residents until recently.

    I used to think that my daughter gained a benefit fro her dual nationality but lately I'm thinking the US tax laws are such that she should renounce her US citizenship,

  • Aresen||

    Anon-bot, you didn't tell us whether your cow-orker's sister-in-law was American or Canadian, so we're not sure how her income is affected by taxes.

  • zukijia||

    First, I think that living in other countries or renounce citizenship doesn't mean that he or she is unpatriotic. Paying tax is one of the very ways to repay your country. And the reason why you have to pay your tax is that you enjoy the convenience as a American. So I think that it is to some degree unfair for the people living in abroad to pay this kind of taxes.

    Secondly, if one was born in other country, not in the U.S, he or she may not have cultural root in America or may sentimentality attached to different countries. From this point, I think the IRS is just discouraging people with other culture from having a American citizenship. And this kind of practice contradict with the impression of America, which has more tolerance and liberty.

  • ezeques||

    I have rental property in Switzerland. Over the past 10 years all my bank accounts were closed in Europe, in one case stock was sold and I have no hope of opening another. How do I collect rents and pay bills?

  • stateless||

    Go stateless, I suspect you have Swiss residency and if you happen to be a U.S. citizen you can renounce without having another citizenship and having Swiss residency I believe would allow you to travel pretty easily around Europe at least.

  • Citytrekker||

    Who is renouncing their citizenship? The guy from Facebook that went to an elite US school and came up with an idea that makes money off of our culture. Guarantee 95% of ex patriots made their money off US markets. If you don't want to pay taxes then don't capitalize off of open and free markets.

  • Gorilla tactics||

    GIBMEDAT!

  • stateless||

    Eduardo Saverin also paid the U.S. expatriation tax estimated at $461 million to give up his citizenship, a deemed sale tax.

  • Alan||

    I wonder about a country that requires each of its citizens to be their own accountant, with serious penalties if they are not naturally accountants.

    This is especially true when the tax system is so ridiculously complex that even those administering it do not understand it. It simply becomes a useful pretext for abusing those whom the powerful do not like.

    Recently the IRS either made an error or deliberately targeted me retroactively, and my effective tax rate for 2010 has become about 93% of my income - which was about $36,000 for that year. I am definitely considering emigrating and renouncing my U.S. citizenship. I don't like to hang around and support people who treat me with contempt and hatred.

  • Michele Lavigne||

    The fact that many people do not want to pay more taxes and at-least want to save some extra money make people to stay away from their country and take shelter in other country.

    I believe that the tax should not be a burden on the any citizen.

  • stateless||

    One of the big problems is the U.S. requires it's citizens and other U.S. persons to view their world in USD no matter where they live, this can cause phantom capital gains very easily for U.S. citizens/persons living overseas.

    See: http://tiny.cc/uts31w

  • April06||

    i like this site

  • ibcbet||

    If no state exists in the region we call the United States, we are still culturally and traditionally American. That means something to me.

  • granite state destroyer||

    Some of our states are worse than the Feds. The Commonwealth of Massachusetts forces you to prove you are no longer a resident of the state when you move overseas or they try to keep taxing you. And no expat income exemption either. At least the US can claim they provide expats some level of services - embassies, chambers of commerce, drones to kill people who bother us, NSA data interception to stop terrorists from blowing me up, pax Americana in general - nothing I'd pay for voluntarily, but they are services - but if I live overseas the Commonwealth is doing absolutely nothing for me, why exactly am I supposed to keep paying the bureaucrats in Boston any of my earnings?

  • Larakris||

    like Thelma responded I am startled that a mother can make $6821 in a few weeks on the computer. did you look at this web sitego to this site home tab for more detail--- www.blue76.com

  • g1rlygirrrl||

    For 450,000 you can become a citizen of St. Kitts/Nevis.
    http://www.nevisstylerealty.co.....tment.html

    Citizenship by Investment ...

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