Hat tip to Franklin and Susan for this interesting article from Time.com
Chicago native Ben loves his country and is proud to be an American.
Yet the longtime resident of Melbourne has just relinquished his U.S.
citizenship. "This is not something I did lightly or happily, but I saw
no other choice," says Ben, a businessman who became an Australian
citizen two years ago.
His words resonate with another American expatriate, John, a
business owner based near Lausanne, Switzerland, who like Ben asked
that his last name be withheld for fear of alienating his family in the
U.S. "Giving up my U.S. citizenship is a genuine option," says the Ohio
native, who recently received his Swiss passport and is considering
relinquishing his American one. "I am at a breaking point — being
American costs me time [and] money, but mostly aggravation." (See 50 authentic American experiences.)
For U.S. citizens, cutting ties with their native land is a drastic and
irrevocable step. But as Overseas American Week, a lobbying effort by
expatriate-advocacy groups, convenes in Washington this week, it's one
that an increasing number of American expats are willing to take.
According to government records, 502 expatriates renounced U.S.
citizenship or permanent residency in the fourth quarter of 2009 — more
than double the number of expatriations in all of 2008. And these
figures don't include the hundreds — some experts say thousands — of
applications languishing in various U.S. consulates and embassies
around the world, waiting to be processed. While a small number of
Americans hand in their passports each year for political reasons, the
new surge in permanent expatriations is mainly because of taxes.
Considering that an estimated 3 million to 6 million Americans reside
abroad, the number of renouncements is small. But expatriate
organizations say the recent increase reflects a growing
dissatisfaction with the way the U.S. government treats its expats and
their money: the U.S. is the only industrialized nation that taxes its
overseas citizens, subjecting them to taxation in both their country of
citizenship and country of residence. (See "U.S. vs. UBS: A Fight Over Secret Swiss Bank Accounts.")
"Their income and wealth are generated largely outside the U.S., so why
does the U.S. get a slice of that?" says Phil Hodgen, a
California-based international tax attorney who helps Americans in the
expatriation process. "More and more people see no long-term benefit to
retaining U.S. citizenship."
Additionally, the U.S. government has implemented tougher rules
requiring expatriates to report any foreign bank accounts exceeding
$10,000, with stiff financial penalties for noncompliance. "This system
is widely perceived as overly complex with multiple opportunities for
accidental mistakes, and life-altering penalties for inadvertent
failures," Hodgen says.
These stringent measures were put into place to prevent Americans from
stashing undeclared assets in offshore banks, but they also make life
increasingly difficult for millions of law-abiding expatriates. "The
U.S. government creates conflict and abuses me," says business owner
John. "I feel under duress to understand and comply with laws that have
nothing to do with me and are constantly changing — almost never in my
favor." (See the best business deals of 2009.)
John says that since he moved to Europe 25 years ago, U.S. tax
regulations have become more and more burdensome. "Every time I turn
around, I get smacked in the face with some new restriction as a result
of being a U.S. citizen abroad," he says. And because the U.S.
government requires other countries to abide by its banking and
financial rules when dealing with expatriates, Americans living abroad
are often denied services because of the increasingly complex
legalities and logistics involved in serving U.S. customers. Many U.S.
expats report being turned away by banks and other institutions in
their countries of residence only because they are American, according
to American Citizens Abroad (ACA), a Geneva-based worldwide advocacy
group for expatriate U.S. citizens.
"We have become toxic citizens," says ACA founder Andy Sundberg.
Paradoxically, by relinquishing their U.S. citizenship, expats can not
only escape the financial burden of double taxation, but also
strengthen the U.S. economy, he says, adding, "It will become much
easier for these people to get a job abroad, and to set up, own and
operate private companies that can promote American exports." (See "British Citizenship: Points Off for Protest?")
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), the former citizen
receives his canceled passport in the mail. But the decision can be
difficult. "Cutting my ties with America hasn't been easy," says Ben,
who as a foreigner can now spend only 90 days a year in the U.S. "My
family and friends think I am a traitor. But the financial burden was
killing me."
We hear on this blog and other Panama websites about property seizures and sequesters etc. that cost foreigners a lot of time and money to battle. But thanks to one of my readers, he shared this interesting article about how law enforcement in the U.S. has seized over one billion dollars in 2009 often without filing charges against the citizen who's property they take. According to this report, the state is the real thief. Hat tip Mike.
Who would have thought that Panama would have huge copper and gold deposits along with black gold? According to the president, it is bubbling right out of the ground in the Darien Jungles, just like it did for Jed Clampett. If this keeps up they should be able to eliminate taxes altogether! This should be very interesting.
This fellow made a serious mistake when he decided to bring his gold coins and store them in a vault in Panama. Talk about making a really wrong turn. One man's loss is another country's gain! Hat tip to Gary.
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