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:
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.