If this has already been posted, sorry for the duplication. This whole issue is starting to get traction. More than 200 comments so far. Looks like a good article.
US citizenship = a tax on life online.wsj.com/article/SB1000… Choice for #americansabroad: 1. US citizenship 2: A “high tax” life without #FBAR #FATCA
— U.S. Citizen Abroad (@USCitizenAbroad) May 20, 2012
@Tim
Just another indication of ex-pats’ pariah status among Americans. Members of congress are afraid to touch us.
Schumer and Casey know this and smell blood; that’s why they’re attacking and using Severin as a stalking horse.
Congresswoman Kaptur, a Democrat constituents are going to find out because
myself and IBS are going to let them know
about it this evening at which point she can either denounce the Schumer legislation or be a complete hypocrite. I have pictures of the meeting to with Kaptur having a big smile on her face.
@Em, hysterical in a macabre kind of way. thanks.
I’m willing to bet Mr. Saverin renounced to terminate the need to file FBARs and FATCA and all that other non-sense. There are probably investments he wanted to make that are no longer available to US citizens thanks to FATCA and the banks all rejecting Americans.
Is streamlining your tax filings to simplify your life and eliminate extraneous privacy-violating paperwork considered renouncing for tax reasons? The savings on the tax money is just a big fat BONUS (if they exist–I think his accountants most likely got the true value of FB right and that FB is going to crash as evidenced by the market makers having to prop the stock up to keep it at the $38/share opening price!)
I’m sure all the cross-border specialized accountants, financial planners and tax attorneys must be rubbing their hands with glee, knowing full-well that this recent turn of events will result in permanent citizenship-based taxation….as there will be no escape from Fatca and the IRS, business will boom for them and they’ll be able to charge even higher professional fees as they’ll realise we have no other choice. The stakes will be too high.
On the other hand, minnow expats who quietly comply will probably be pretty much left alone; the IRS will instead harrass and hunt down expats who’ve renounced and the wealthy. But they’ll still be waving their club.
I now definitely feel that it would be too risky for me to renounce because of all my PFIC and FBAR issues…I regret that I hadn’t taken British citizenship much sooner and could have relinquished….Had I done so , I wouldn’t be trapped in this huge mess. I have lost all my ambitions and incentive. We are heading into an Orwellian society.
What I fear now is that at some point in the future, US income taxes could go far higher than the UK’s and could be stuck with impossibly high tax bills. It will mean that I will always have to pay the higher of either country’s taxes.
From what I gather, the only people who could safely renounce are those with virtually no assets and/or those who never need to visit the US ever again. They have us over a barrel.
@Monalisa
You are correct. Below is an article on the new market for FATCA compliance specialists. They will make a lot of money from this.
http://blogs.wsj.com/corruption-currents/2012/05/01/fatca-creating-a-compliance-gold-rush/
Yep, the sad thing is that I imagine something akin to the Six Sigma system. But how much training do you have to have to pick out a “US Person”? Makes me sick….
It is indeed sickening but also means more job opportunities. But one good thing that will result from this is that I believe that honestly compliant expat minnows will be treated more gently by the IRS. They’ll focus on the wealthy and especially anyone who renounces going forward because they will want to severely punish them with the 30% capital gain taxes on all their assets as I understand it…the world has gone mad.
I also believe that it could be legally risky to overtly discuss perceived benifits of renouncing because it could be looked upon as treasonous or even terrorist activity. It may sound absurd but it seems increasingly dangerous in the current climate. Very sad days indeed.
Mona, treasonous is if you sold State Secrets to a foreign government. I don’t think renouncing is treasonous, especially when the Treasury Department told MarkPineTree to consider renouncing his citizenship….
Mona, have you tried contacting your local MP? For the past few months I’ve been having an ongoing conversation with mine about the tribulations of dual US/UK citizens living in the UK. Now he understands the issue he’s become quite sympathetic, and going to take up the issue with the Treasury, with an option on the Home Office also.
Why not try the same? The more noise we make, the more the UK govt has to sit up and take notice. You’re a UK citizen, and you vote. And the UK govt is not as dismissive of its voters as the US.
I agree but the point I’m making is there is a growing mainstream attitude in America that people who renounce are essentially traitors…
@Watcher, yes, I will try contacting him again but didn’t get any rrsponse last year, etc.
Mona, keep trying. Go in person to a “surgery”, or otherwise request a personal chat. Copy in other MPs who should know about this. There is no reason to lurk in shadows. In my experience, your MP will likely be outraged with what you have to put up with. That’s the first step towards real change. I don’t think there’s a lot of hope in waiting for the US to change its approach. That means insisting on our home country govt’s protection from the damaging effects of US laws.
At the extreme the UK can pass a law making it illegal for UK companies to comply with FATCA, and wave two fingers at the US. There’s a precedent. The Protection of Trading Interests Act 1980 contains “criminal sanctions for complying with certain provisions of the Helms–Burton Act whilst in the UK.” Specifically Cuba. Passed in the wake of 1970’s US extraterritorial legislation.
@walker, the UK could also pass a law making it illegal for UK residents to remit tax payments to a foreign country on income earned in the UK. If the UK and several other countries would “stand tall” on this like they have on Helms Burton, the US would get the message loud and clear that citizenship-based taxation is no longer accepted in the rest of the world.
@Roger, I understand all the principles but as I still have ties to the US, that would be a disaster for me. If that happened, I would probably have to renounce my Uk citizenship, divorce my spouse and return to America. I would then probably want to jump in front of a train, etc.
I am pragmatic and have decided to play ball. I really doubt that the US would back down and would only make life even more difficult if the UK starts getting awkwwrd…could even result in either or both countries disallowing dual citizenship. Thanks but no thanks…
@ monalisa who wrote: “I agree but the point I’m making is there is a growing mainstream attitude in America that people who renounce are essentially traitors…”
A traitor is: “One who violates his allegiance and betrays his country; one guilty of treason; one who, in breach of trust, delivers his country to an enemy, or yields up any fort or place intrusted to his defense, or surrenders an army or body of troops to the enemy, unless when vanquished; also, one who takes arms and levies war against his country; or one who aids an enemy in conquering his country.”
Traitor has a pretty precise meaning and those who renounce their US citizenship do not fall into the category of traitor — no way, no how. So regarding those Americans who would foolishly consider those who renounce their US citizenship to be traitors I could equally say, and it would be just as foolish to say it, that as a citizen of the world I consider Americans who do not renounce their US citizenship to be traitors to the world because by retaining their US citizenship they are giving support to a punitive regime which extorts payments from and threatens penalties upon innocent Americans living abroad. You simply have to ignore the cries of traitor from misguided and uninformed Americans and recognise that it’s just their ignorance showing.
@Em, I admire your principles but don’t fancy being screwed by a retrospective 30% capital gains exit tax on all my assets, especially as it would also include our home. Sorry, but no way.
On the other hand, it probably makes sense for young US citizens like Don who haven’t yet amassed significant assets. Nothng to lose, etc.
Mona, “…retrospective 30% capital gains exit tax on all my assets, especially as it would also include our home.”
How’s that? Even under Schumer’s most virulent form of Ex-PATRIOT, this retroactive capital gains applies only to US sited assets. And your home isn’t in the US (right?). Nor, IIRC, are any of your other investments. Or if they are, they’ve been place in US shares so recently that there’s minimal gain in them.
I think you’re jumping at shadows again. Aside from the notorious Reed Amendment, there’s not much I can see in either current or even proposed law that’s going to affect you (of course, I don’t know your situation intimately). The Reed Amendment is just a pure dollop of spite. But even that’s avoidable if you renounce early, that is, before making enough to be “covered”.
Congress really are first-rate idiots, aren’t they? A tenth-grader could have readily predicted the motivations that an “exit tax” would have on the soon-to-be-rich. Apparently congress could not. Hence their current whining. Well, tough cookies congress. You blew it.
@Watcher, I hadn’t realised that it was only for US-sourced gains though most of my portfolio held in Britain is still in US shares so would imagine they’d be defined as US-based. I do agree that I am a worrywort but am too scared to renounce whilst still within the early stages of a complicated QD. I’ll reconsider my options when my statutes of limitations have expired
Be careful!
http://www.theglobeandmail.com/news/world/americas/how-to-renounce-a-us-citizenship/article2111773/?from=2112388
Perhaps I’ve grown cynical about governments. I don’t know that the US (or UK for that matter) have ever been as benign as we would like to believe. It’s naive to see everything as black and white.
I’m hedging my risks by choosing to be compliant. It will mean ongoing professional costs and some double taxation but better that than being made bankrupt via vindictive penalties and permanently exiled.
I personally think that overt refusal to comply (especially if dissing the US government) is potentially suicidal. Perhaps I am not as brave as some on here but have noted over the years that I am a survivor.
@monalisa,
Re: “…the point I’m making is there is a growing mainstream attitude in America that people who renounce are essentially traitors…”
…but we have to make decisions for our lives not based on what mainstream America believes. We have to believe in ourselves and do what is correct, morally and all other ways, for us. I don’t believe that doing anything based on what the US homelanders have been brainwashed to believe in and thus crucify US persons abroad legally living our lives in other countries, is moral. I must be a model to my children and I would NEVER encourage them to do something based on anything other than their own values — I apply that to renunciation from an abusive marriage or renunciation to an abusive country. The length of our lives is limited and we must live our days most wisely for ourselves and the society we chose to live in. Again, only my two cents worth.
It strikes me as tragic that the only way to cope with being an American abroad is to no longer be American.