This post appeared on the RenounceUScitizenship blog.
Why I'm Giving Up My Passport http://t.co/c6EdyxZR3T – AKA why it's impossible for #Americansabroad to live under U.S. laws @Jtepper2
— U.S. Citizen Abroad (@USCitizenAbroad) December 8, 2014
The above tweet references an op-ed that appeared in the December 7, New York Times. The “Op-Ed” was interesting, well written and didn’t add any new insights or information. I then researched who this person is. He is a highly accomplished author, fund manager in London. In fact I intend to read at least one of his books.
Q. Does the U.S. really want to lose citizens of this calibre?
A. They don’t care and they don’t care that they don’t care.
“Stupid is as stupid does.”
This sentiment is confirmed in:
Homelander explains why #Americansabroad are not real Americans http://t.co/IBwErsNu1k – I guess t follows that they should not pay taxes
— U.S. Citizen Abroad (@USCitizenAbroad) December 8, 2014
In the words of this Homelander:
I think the real question is what makes you an American. If you don’t live here and feel no responsibility for supporting the country, why would anyone care if you decide to renounce your citizenship? There are plenty of people in the world who WANT to be Americans. Many of them come here, contribute to the country and want to become citizens. Those are the real Americans, not the folks who inherited the moniker but seem to think they have no responsibility for the contributing anything to the country.
The “op-ed” by Mr. Tepper includes:
The I.R.S. doesn’t tax the first $97,600 of foreign earnings, and usually doesn’t double-tax the same income. So most expatriates owe no money to the I.R.S. each year — and yet many of us have to pay thousands of dollars to accountants because the rules are so hard to follow.
The extraterritorial reach of the income tax dates from the Civil War, when the government wanted to prevent Americans from fleeing to Britain to avoid taxes. This outdated and harmful relic has only gotten worse.
It’s one thing if a New Yorker creates a shell entity in the Cayman Islands to evade taxes. It’s another if an American who has spent most of his life overseas, as I have, creates a legitimate company. The I.R.S. doesn’t care about the distinction. Under a 1962 law, it treats the two companies I’ve started as “controlled foreign corporations,” subject to detailed regulatory requirements, though a majority of our employees and clients are foreigners.
Moreover, if you are an American, you can’t invest in foreign mutual funds without paying punitive tax rates. This is a blatantly protectionist measure for American funds, but it also makes saving for retirement very difficult.
Renunciations of citizenship have soared because of a 2010 law, the Foreign Tax Account Compliance Act, which requires foreign financial institutions to report assets held by American clients or face a 30 percent withholding tax. In response, many foreign banks will no longer take American clients and are terminating existing accounts. The Economist says this “heavy-handed, inequitable and hypocritical” law will cost American banks alone $800 million a year to implement. Moreover, the magazine reported, “seasoned tax dodgers are not so naïve as to hold money in their own names.”
Most of us who are overseas long term simply accept the status quo. Some may fear that renouncing their citizenship will put a bull’s-eye on their back with the I.R.S., even if they’ve complied with all laws. It does not help that members of Congress occasionally threaten to bar any Americans who renounce from ever visiting the United States again.
Like many Americans, I didn’t choose to grow up abroad. My father is from New York, and my mother, who died in 2012, was from North Carolina. They moved abroad for work in the 1970s, and ended up in a poor neighborhood in Madrid, where they ran drug rehabilitation centers. I went to an American school in Spain and recited the Pledge of Allegiance each morning. Except for two years in childhood, four years at college in North Carolina, and two years in New York, I’ve lived overseas all my life. At 38, I’ve voted in only one American election and I don’t have much connection to the United States. Almost all my friends are cultural mutts — people with hybrid backgrounds, for whom nationality isn’t the most important part of their identity. If America makes it so difficult to be American, I’ll happily just be British.
The challenges facing expat Americans abroad would disappear if the United States taxed and regulated only those who lived in America. Sadly, American politicians don’t care about Americans living abroad. It is easier to demonize us as tax dodgers than to fix irrational policies that no longer make sense in an interconnected world. The founders agreed on “no taxation without representation.” Why can’t Congress?
Why I’m Giving Up My Passport
“It’s 1 thing if a New Yorker creates a shell entity in the Cayman Islands to evade taxes. It’s another if an American who spent his life overseas, creates a legitimate company. The IRS doesn’t care about the distinction” Jonathan Tepper, Variant Perception Founder.
Starts out great, but with let down discussion.
Didn’t see your comments on the “media” thread, bubblebustin, but I’ll leave mine here:
This US Immigration attorney definitely does not get the Johnathan Tepper message regarding “Accidental Americans”
To the Editor of the New York Times re the Jonathan Tepper opinion piece
Philadelphia columnist and lawyer Christine Flowers tells a man renouncing his citizenship for tax reasons to just go, already.
Read more at http://www.phillymag.com/news/2014/12/15/christine-flowers-defends-u-s-citizenship-new-york-times/#MRq7c3SuZj1x3Mv9.99
…and Philadelphia Magazine: Philadelphia columnist and lawyer Christine Flowers tells a man renouncing his citizenship for tax reasons to just go, already.
I hope Ms Flowers is properly advising her immigration clients on their requirements in having a US green card or nationality, as in this “Indian American” article: http://economictimes.indiatimes.com/news/economy/finance/indian-americans-global-assets-under-tax-lens-india-may-soon-become-a-signatory-to-us-law/articleshow/45516236.cms.
Ms. Feldman, would you like your US income subjected to the taxes of your grandparents countries of national origin — Russia, Austria and Poland? Can you see the hypocrisy?
Trying to keep things going in the Twittersphere…
@No_FATCA: @nytopinion @WSJ @JohnKerry US expats are renouncing US citizenship in record numbers due to FATCA, CBT. What are your thoughts Sec. Kerry?
@No_FATCA: @nytopinion @JohnKerry @jtepper2 Fine NYT piece by JTepper on plight of expats. Plz interview Mr Kerry for response. http://t.co/B6CeqwAndK
@BC Doc, I provided some further info for your kids on Irish Citizenship and how to tie the knot in getting rid of the gum on the shoe
@George– Awesome. Got it– thanks!
@BC Doc, the Irish registration post age 18 is pretty slick to get the gum off the shoes.
Think of it this way………….you gave your children the virus at birth but you are also giving them the anti-viral at age 18. Not many dads get to do that…..
Make sure they pay the registration fee as well so that it shows 100% they did this themselves, individually, at age 18 plus and the cherry on the sundae is it was on their credit/debit card or money order that they “purchased.” As in do not use your plastic or personal cheque. 😉
Regarding shell corporations, it looks like Americans do not necessarily need to get on a plane to set up shell corporations. I ran across this fairly recent book in which three academic researchers, at least two of them American, posed as wheeler dealers looking to set up prohibited anonymous shell corporations. In the U.S., the rate of compliance with the law was actually lower than in many countries that receive the tax haven label. The compliance rate of Delaware was a mere 6%, which was lower than just about anywhere on their maps. In other words, if the U.S. wants to catch out ‘bad guys’ it really doesn’t need to scour the ends of the earth. A short drive up the interstate will do.