AJ wrote this in response to a post created yesterday by Swiss Pinoy. Swiss Pinoy’s post, “Stated in honor of FATCA: ‘You [Americans] disgust me’,” was sparked by a comment on the CNN news site, in which an American inside the US stated, “You people disgust me” referring to US citizens abroad. That person’s comment prompted AJ to write the following:
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I decided to write this and get a few things off my chest. This is almost too long for a comment though. Is there any way to have it on the main page as a guest post? Feel free to share.
A letter to America from the son of an American
Several million US citizens live in other countries. Some are there as students, some are doing a stint abroad for an American company, and others have married a foreigner and decided to stay abroad with their spouse. Some Americans abroad, like London mayor Boris Johnson never even lived in the US, but were simply born there while their parents were temporarily working in the US. Others, like me, weren’t even born in America, but are American because one of our parents passed on their citizenship to us. Americans abroad are now in a moment of acute crisis, and I want to take a moment to talk about us and expats in general.
1. Expats are good for America
Just as it’s great for America to have talented immigrants move into the country, it’s just as great having talented Americans move out. My dad moved to Europe in the 70s working for a US company, selling US made products. Later on, he married my European mother and I was born a few years later. After a while, he got a new job and he opened up his own small business on the side importing and selling ‘made in USA’ hats in Europe. In his small way, he created jobs in America and lowered the trade deficit.
He became part of the local community, and acting as an unofficial ambassador to his country, and helped a few people go the US on vacation and spend their tourist money in US cities and national parks.
He died a few years ago, and though his death was very sad for us, at least he didn’t have to see his country turn against him and treat him as a potential tax cheat
2. Expats have to compete with other expats from other countries
Lets stick with my dad for this hypothetical example. Lets say a German expat lives in the same town as my dad, and is trying to sell ‘Made in Germany’ hats. His business (simplified) is:
import product (10$) => mark up for himself (5$) => Pay local taxes (4$). Total price 19$
My dad in the same situation:
import product (10$) => mark up for himself (5$) => Pay local taxes (4$) => pay US taxes (3$). Total price 22$
Both products cost the same to make, and both expats are making the same amount of money, but the American hat is more expensive. Maybe in the case selling hats this wont make a big difference, but what about on the larger marketplace? Multiply this small example for every American company and you see why America makes so few products these days. Americans need to compete, and we as Americans are doing everything in our power to hinder them on the global market. This is why when country A and country B enter into a free trade agreement, both countries benefit, but when the US enters a free trade agreement, only the other country benefits, and America suffers. The game is rigged to America’s disadvantage, and it’s a disadvantage we’ve foolishly imposed on ourselves.
3. Not every American expat chose to leave
I was born in Europe, and have never lived anywhere else. Thanks to my dad though, I’m also a US citizen. I didn’t choose to be American, but the birth lottery made me a citizen of a country I don’t live in. And that’s ok, and I’m not unique in that respect. The US is full of people just like me. For example, many in the US have Irish ancestry, and a few even have Irish passports as well as their US passport. Does Ireland treat these people with suspicion, and assume they are taking advantage of America’s lower tax rate to escape Irish taxes? Does Ireland force them to pay up, or renounce their passports?
Like I said in the beginning, having expats abroad is a good thing, even if these expats have almost no link to the ‘homeland’ any more and don’t plan on ever returning.
For Ireland, having all these ‘Irish’ people in America is great! Irish culture is celebrated and promoted, people travel to Ireland and spend their money there, and last but not least (wink), the Guinness brewery makes money selling their product to all the Irish bars in America. And this costs the Irish government nothing!
What about me, the European with American ancestry? When I was a kid, I thought it was great being half American. We used to visit my grandparents, and bring back things like root beer and peanut butter. My mother once made pumpkin pie for me to take to school, and this was something that none of the other kids had ever tasted. I told my friends about how great it was visiting my grandparents and what a great country America is.
Now, things have changed. The banks here have started treating me and my family like criminals and lepers. The accounts I inherited from my father were unceremoniously closed, and to open up a new account I must first sign a waiver giving up my constitutional privacy rights, so the bank can send all my information to the IRS various US government agencies. A small volunteer group I’m in was looking for a new treasurer, but I had to decline. Had I accepted, I would have to disclose the charities accounts to the IRS, and the bank would likely not want the regulatory nightmare of having a US person for such a small account balance. No employer here would be foolish enough to hire an American for a job that would give them authority over any bank account.
Every year I have to fill out IRS forms and a treasury form (FBAR) that threatens me with a minimum penalty of 10’000$ if I make a mistake. Being American or associated with one is now so bad, that most of my American friends are either renouncing, or moving back. Some people in my situation, but who never knew about having to file taxes to one of their parent’s home countries are being treated like criminals, and fear arrest if they ever visit America. A European friend even cancelled her wedding to an American once she discovered the tax consequences for her and her family. I, and many others, feel betrayed by America.
Some people talk to me about wanting to emigrate to America. Once they find out what it means to be a US taxpayer, most reconsider though. If they were to work in the US for a few years, then decide to move back home, they would still be US taxpayers until they renounce their Green Card, and this might include a prohibitively expensive Exit Tax.
Congress decreed in 2010 that every bank in the world must report to the IRS, or face consequences (FATCA). Imagine if France decreed that every American bank must report to the French tax service, or be shut out of the European market. America would take that as an act of war!
4. What does America expect of its expats?
I sometimes wonder. Americans abroad are for the most part proud of their heritage, and for the most part promote American interests in one way or another. No we’re being told to either come home, or stop complaining and renounce. Fine. It looks like that is exactly what is happening anyway. But who is going to sell American stuff abroad? And when people start badmouthing America, do you think the ex-US citizen is going to stand up for her?
Do we want Americans to be like Soviet citizens who had to renounce their citizenship when leaving the country?
What do you expect of me? I never lived in the US, and I’m not about to uproot my life and live there. I thought my US passport was token of my heritage, and symbolises where a part of me came from. It gave me the right to freely travel to my father’s home country, and say ‘I am an American’. It meant that when I found a small (and overpriced) can of root beer in a speciality shop in Europe, I spent that little bit extra to be reminded of those trips to my grandparents when I was young.
What should I do? Leave my friends and family and go live in the US? Quietly surrender and file taxes to two countries for the rest of my life, with my bank sending all my private account data to a foreign country? Or accept that America was a part of my father’s life, but not of mine, and renounce my US citizenship.
With the exception of backward dictatorships, no other country forces this kind of decision on their citizens. America needs to wake up and take steps to save what is left of her diaspora before it’s too late.
Tax Avoidance has until now been lawful — Tax Evasion is not. The two terms are merging, by whose strategy?
http://www.moodysgartner.com/morality-and-tax/
Great letter AJ! Being an ‘accidental’ born in USA to foreign parents, and having left as a small child, I identify with the once-held feeling of being lucky and special for having a US birthplace. It is sad that this has been replaced with a feeling of being cursed and persecuted.
I hope you have shared this letter with others, particularly those in the ‘homeland’. It is impossible to read it and not get it, unless you have the mind of a moron or the empathy of a rock.
@WhiteKat
I shared on my FB ..
My friend in Germany, commented on it. With a tom petty video — Don’t back down. LOL.
I wrote him that is IBS song.
Here is the version he sent.
@northernstar, Cool! Collective minds are thinking alike everywhere, not just in Canada!
@NorthernStar, At least they can’t take Trooper’s ‘Raise a Little Hell!’ away from us Canadians eh?
@WhiteKat no…they can’t and The Guess Who’s American Woman.
I am old that one was popular when I first came to Canada. Somehow I associate that song when I came up to Canada the first time..on a Greyhound bus, and I can see Hamilton as we passed by…Was surprised that was not Toronto…When I think of that vision I hear the Guess Whoo singing that song. so weird. because I came up a few months before the song was out.
@WhiteKat
I thought the link to the lyrics would be good to show all of us.
http://songmeanings.com/songs/view/3530822107858505611/
excerpt;
Nobody’s going to help you
You’ve just got to stand up alone
And dig in your heels
And see how it feels
To raise a little Hell of your own
Raise a little Hell
If you don’t like
What you got
Why don’t you change it
If your world is all screwed up
Rearrange it
Raise a little Hell
The solution to your problem is simple: Turn in your passport and renounce your American citizenship.
OR
Stop whining that the advantages you appear to have by keeping your citizenship cost you.
Your choice.
@AnaximanderQC – oh no, you didn’t…
@ AnaximanderQC ..pls give your inputs on the~~95% of innocent USPs abroad who are not compliant …………….how should they renounce to avoid being covered expats and why should they pay tribute for services they are 99% likely not to receive. would love to hear yr views.
@AnaximanderQC
what advantages do I get after living 44 years in Canada…and becoming a citizen a few decades ago and now the IRS wants my bank to keep me out. I HAVE relinquished when I became a citizen but the IRS still wants to consider me an American person . and have my bank report on me.
@AnaximanderQC
What do you know about renouncing US citizenship? Please let us know that you grasp every aspect of the procedure.
What are the advantages we “appear” to be having?
From the outlanders perspective …
We look in our heavy tax filing boxes. — Nope! No advantage there.
We look inside the tax information booth but nobody is there, except dicey “experts” charging big fees. — Nope! No advantage there.
We look in the closet where we keep our privacy rights but the stink of FATCA prevails. — Nope! No advantage there.
We look amongst our evacuation supplies and spot a huge potential invoice from the US government. — Nope! No advantage there.
We look at a medicare aid package but see “Do not qualify if overseas” stamped on it. — Nope! No advantage there.
We look at a manual for starting a small business but see a wad of IRS red tape wrapped around it. — Nope! No advantage there.
I hope you are beginning to see the point here, AnaximanderQC.
AnaximanderQC;
Here is the benefit of renouncing what I was not given the freedom or opportunity to choose:
– No more complex incomprehensible forms to prove yet again and again that I owe the US nothing – to be filed all my life and after my death.
– No more paying accounting fees that represent a significant percentage of my non-US income that barely meets taxable thresholds for my non-US country of residence, and which costs me exponentially more than the amount I pay to efile my own home country taxes.
– No more worrying over stupid currency conversions and illogical incomprehensible instructions and forms and multiple random deadlines.
– No more worrying over potential life altering penalties – possible even when no US tax is owed and all savings and earnings are local, legal, and already transparent to my home country tax agency.
– No more poring over every entry on a year’s worth of account statements looking for that elusive and imaginary accounting concept of the ‘highest balance on any single day in the year’ – on accounts that earn no or only very little interest – and are filled with already taxed earnings. Or earnings that are not taxable where I actually live.
– No more exposing my non-Canadian family member joint account holders to the insecurity and tender mercies of the US Dept. of Homeland Security and Patriot Act.
– No more double taxation and penalties on my Canadian registered savings and no more worrying about US double taxation on my family home if we sell it.
– Never having to submit to interrogation at my local bank about my citizenship.
– No more labouring under the US presumption before the fact that I am a money-laundering-druglord-terror-funding-tax-evading-criminal just because I live outside the US.
Ironic don’t you think, that the pain, threats, stress and insults endured by those living outside the US all originates from the US, but all the REAL tangible benefits and services I enjoy are all provided by the country where my permanent home is – where I’ve lived for decades, and already pay a full set of taxes as assessed?
Where’s your list of theoretical ‘benefits’? Bet it is pretty short and includes some ridiculous claim about being evacuated from war and disaster zones. That and being able to live and work in a country I have no desire to enter again except under duress.
@Em and Badger
You got it right!!!!! and expressed it well. I will copy these and share this post on my FB.
@ northernstar
Badger is the list master. I can almost imagine her guiding the hand of Dr. Hsu when he was compiling his 55 questions for parliament. 😉
@AnaximanderQC
LOL what “advantages” The U.S. does nothing but, bash, harass, demean and try to criminalize expats. They never have one good word to say about expats but, expect us to be good little free ambassadors for them while we live abroad.
These imaginary “advantages” you speak of? They were not there and when I found out that I was to be lumped in with criminal drug lords and so was my Canadian family, yes I relinquished.
“Whining” is all on you. We did something about what we didn’t like and took action. All you’ve done is post a “exceptional knee jerk” response on a blog.
@AnaximanderQC
Some of us occasionally wonder whether giving up American citizenship will be enough to stop the persecution. Remember what happened to Christians of Jewish descent in Nazi Germany:
“In the first generation at least, converts were often regarded with suspicion by both new and old co-religionists. But–and this is nowadays often forgotten–it was only during the Third Reich that, by declaring race and not religion as a determinant of a person’s civic identity and worth, Christians of Jewish descent were reconverted into “non-Aryans” and made subject to the same persecution as Jews, hence Jews tout court.”
from: “Five Germanys I Have Known”, Fritz Stern
http://us.macmillan.com/BookCustomPage_New.aspx?isbn=9780374530860
@AnaximanderQC
One of the disadvantages of being an American abroad is that we must report our foreign financial accounts, which are local accounts to us, to a unit of the US Treasury called the “Financial Crimes Enforcement Network”. And some homelanders wonder why Americans abroad feel that the US government has made living abroad a criminal offense:
http://bsaefiling.fincen.treas.gov/main.html
@AnaximanderQC
The US is going to have to accept the new globalized reality, and learn how to compete in the world. Its backward, and Byzantine policies are sabotaging its own future. Meanwhile, it can’t afford to shit on those that leave to seek a better future. By trying to demonize us out of hubristic spite, and taking punitive action for our daring to leave the plantation, all it’s doing is alienating its own people.