Don’t believe the hype about expat Americans ditching their passports,
by Tim Fernholz.
Often “journalists” will write about those who renounce their citizenship without ever speaking to someone who has renounced. They react in anger at a perceived threat: filthy rich ungrateful Americans ditching the most precious citizenship in the world. Tim Fernholz is no exception. But I challenged him and he responded that I should have people email him at tim@qz.com .
@IsaacBrockSoc @FedupUSExpat please, ask them to e-mail me at tim@qz.com
— Tim Fernholz (@TimFernholz) February 13, 2015
Where do you start with someone like him? He looks like a kid.
When speaking with journalists, one has to realize that they cannot be experts on the issue that concerns you. So speak patiently and consider yourself their teacher on the issue, and you have to start at a basic level–you are providing a primer (“primer” = first beginner textbook level)–assuming that the journalist is not versed in the basic terminology that is required to be able to discuss the subject on an undergraduate level.
I find it bizarre that he presumes to know what U.S. citizens abroad are like. And the use of apostrophes around ‘accidental’ was really annoying. There really are people who don’t know they are American citizens. I have met some of them.
@Publius:
U.S. senator Ted Cruz says he thought he shed his Canadian citizenship, until he read a news article saying he was still a Canadian citizen. It can happen both ways. If Kenya passes a law saying President Obama is a Kenyan citizen because his father was born there, should President Obama have to comply with Kenyan income tax and FBAR laws?
@Petros, perhaps some Brockers should collaborate on a “FATCA and CBT for DUMMIES” book.
@WhiteKat: dummies=journalists?
@Petros, not JUST journalists – ALL the dummies, especially the one’s we vote for.
Including the dummies that brought FATCA in.
Ferholtz really is passing ignorant. Very sad. Yet he gets to be a “journalist”.
Let’s do our own survey:
Which is a bigger threat to your survival as an American abroad?
A) ISIS
B) the US government
Thanks, Petros. I sent an email, starting with…
I am one of many who have *ditched* their US passports, alot differently / easier than your US Senator Ted Cruz was able to do to *ditch* his Canadian citizenship). If the US has the anomaly of citizenship-based taxation law and its consequences, surely it should also have a CLAIM to US citizenship for those born *Accidental Americans* when such a person is an adult and with requisite mental capacity to make such an important decision.
@Calgary,
Agreed, so long as it is explained to the person claiming US citizenship that citizenship comes with TAXATION ON ALL MONIES EARNED ANYWHERE NO MATTER WHERE SAID CITIZEN RESIDES.
Lots of dual citizens thought they were ‘lucky’, and had no reason NOT to want legal US citizenship status(whether they actively claimed it or not), until they realized what that actually entailed – i.e. CBT.
Absolutely, WhiteKat. Full disclosure before anyone assumes a US citizenship with all of its responsibilities and consequences, including citizenship-based taxation. As far as I’m concerned, I did not *register* my son as a US birth abroad. I know now that meant diddly squat and did NOT mean he was not a US-defined US citizen — never a CLAIM to it, only an automatic *gift* with strings attached. He has lived his life in Canada as a Canadian. His mom was not too smart about it all, but she and her then husband (his dad, now deceased) did choose to become Canadians with the warning when we did that we would lose our US citizenship. It’s apparent I / we didn’t think or not think about the citizenship of our children. We assumed — and ASS U ME makes an ass out of you and me, proven once again. Not many parents, including my son’s, would have chosen this for their children.
Every so-called *Accidental American* no matter how they got that designation should be able to make an informed decision, including with requisite mental capacity — as we now know the gift of a US citizenship (if one thinks of it in that way — I certainly did not) is a trap for our children, tax-wise. If they want to choose to CLAIM all of that and the perceived perks that go along with it, it should be their decision as an adult and their well thought-out and then duly-processed claim to it or the *citizenship* should not be in force, NULL AND VOID unless claimed. Of course, if it were residence-based taxation the US had instead of CBT, none of that would matter.
With CBT, to be fair, in my opinion:
– An OPT-IN to US citizenship if you were born with the facts to make a claim to it.
– Not, an OPT-OUT, as Accidental Americans are all experiencing now — with a small segment, because of some *mental incapacity* ENTRAPPED with no way out for any amount of money spent.
There is also all of the inequity that some can fly under the radar more easily than others. And, if they can, great — go for it / this is war. But, shouldn’t it be a more equitable level playing field for all? The game is rigged.
How to start out with a journalist like that ?
Well, you have to start out with him, not with your /our experience
Tell him that if he was sent abroad to work for a better salary he would probably accept, right ?
Then ask him: Do you know you probably won’t be able to open up a bank account ? You’ll have to pay expensive fees to tax lawyers to fill out your tax forms. You’ll have no oppurtunity to save money for retirement.
Get the picture ?
Now, how do you think us very ordinary people who are US citizens and have been lliving, working and paying our due share of taxes abroad feel about all this BS ?
The article has a flat-out statement: “Tina Turner also renounced her US citizenship for tax reasons…”
Did she tell him this? I’ve read that she had lived in Switzerland for 20 years, with her partner/husband, before renouncing. Seems to me that her life was and is in Switzerland, so no surprise that she might have wanted to simplify her life, including the paperwork. And (my guess) she would likely have ensured she was in compliance with her tax situation before renouncing. But it’s so much easier and quicker just to equate U.S. person abroad with tax cheat!
I wrote a long email to poor Tim explaining my point of view. From where I stand, over 3000 renunciations is a lot, considering everything that is needed to be ALLOWED to renounce. If the fee were only $100.00, with no income tax filing requirements, I think that number would be in the hundreds of thousands.
The US government has now given us great reason to want to rid ourselves of this burdensome citizenship. But, they have made it almost impossible for most people to do so.
Hype? So, I must declare income and pay taxes to a second country only because I had the “privilege” to be born there by my mother? Mea culpa? I pay so much more taxes over here… whatever. If the compliance rubbish was to ever be scrapped, I would go straight to the Embassy to rid myself of this imposed US citizenship (and not chosen by me). I wouldn’t waste my time emailing that Muppet; he is the essence of stupidity.
@Canoe. If one ditches their US citizenship they also walk away from their associated worldwide US tax burden. Some would therefore argue that all who get rid of their US citizenship do it for tax reasons. We all know that it is far more complex than that but journalists rarely delve into the minute details. They will always go for the quick and the sensational.
@Tim Fenholz:
“Tina Turner also renounced her US citizenship for tax reasons…”
1) Tina Turner relinquished her US citizenship upon obtaining Swiss citizenship and did not renounce it. This is well-documented.
2) Your comment about “for tax reasons” is out-of-place and possibly slanderous.
3) Some Swiss cantons have “lump-sum taxation” but only for non-Swiss citizens. Tina Turner’s eligibility for this arrangement ceased when she became a Swiss citizen but I do not know if she ever had it.
4) Canton Zurich, where she has lived since the 1990s, stopped lump-sum taxation several years ago. Note that she did not move to another canton when Canton Zurich abandoned this arrangement although, again, I do not know if she ever had it.
– Lump-sum taxation is somewhat similar to the UK’s “non-dom” tax arrangement. Possibly you know about this. A difference is that non-dom status allows a taxpayer to work in the UK.
4) Ms. Turner is generally well-regarded in Switzerland, including for her generosity. In 2014 she offered to donate funds to buy Christmas lights for her town. Previously she reportedly donated funds to buy a rescue watercraft for the community.
5) Her initial application (or pre-application) for Swiss citizenship was turned down due to insufficient integration, i.e., her German was not up to snuff. She hit the books for a year, re-applied and passed the various citizenship and language tests.
6) Regular naturalization in Switzerland requires living in the country for at least 12 years and then passing tests to show integration. Tina Turner lived in Switzerland for around 20 years before obtaining citizenship. Recently an American professor, resident in Switzerland for 39 years and who taught at the ETH, was turned down due to lack of sufficient integration. Obtaining Swiss citizenship is not a slam-dunk and it does not happen overnight.
@Tim Fenholz:
If Tina Turner is trying to optimize her taxes in Switzerland, she isn’t doing a particularly good job of it. I ran some numbers through an on-line tax calculator for her community, Küsnacht ZH, and compared it to a low tax community across Lake Zurich called Freienbach SZ. These were the assumptions:
Taxable income: CHF 10,000,000
Taxable assets: CHF 100,000,000
Married, no dependent children, no church affiliation
Calculated taxes:
Küsnacht ZH: CHF 3.917 million
Freienbach SZ: CHF 2.042 million
Conclusion: by moving across the lake to Freienbach SZ, she could cut her tax bill nearly in half.
BTW: compare the CHF 3.917 million in income and asset taxes to the top US federal income tax of 39.6% which she would pay on CHF 10,000,000 of income in the US, i.e., CHF 3.960 million, or about the same as she would pay in Küsnacht ZH. (The US doesn’t have a general asset tax so that’s irrelevant.)
Sorry, it should be Fernholz (not Fenholz).
Does he really want to hear the truth?
His profile pic makes it look like he thinks he already knows everything.
Tim Fern-hole has too steep of a learning curve to climb for me to spend time trying to privately tutor him.
He cannot even choose a sensible pair of glasses to wear. Reminds me of Bozo the Clown.
One need not delve further.
This guy simply does not get it. Typically American that probably has never seen the ocean. The American media has become very insular often reporting only reporting international news that has some sort of implications on American interests.