This is a post that I wrote a few months ago for the Flophouse but never published. I guess I was feeling pretty desperate at the time and figured no one was listening so I put it aside. Given some of the comments I’ve read recently at U.S. and Canadian media websites, I decided to go ahead and post it at Isaac Brock. I know the folks here already know all this but the folks at home are still confused about who we are and just what the heck we are doing “over there.”. This is my experience based on living in both France and Japan.
If people in the U.S. have a rather negative view of illegal aliens, they seem to have an equally unflattering view of Americans abroad. To be quite blunt we are commonly characterized as rich tax cheats. Here are a few choice quotations from our elected representatives:
“If you’ve gotten your riches from America, you should pay your fair share of taxes. These expatriates are really like economic Benedict Arnolds.”
– Leslie Samuels, Assistant Secretary for tax policy, U.S. Department of the Treasury
“I hope that one day we will just publish the names of people that America has given so much to and that they care so little about that citizenship that they would flee in order to avoid taxes.”
– Rep. Charles Rangel (Dem., NY)
Ouch! As someone who makes considerably less money than the people cited above, who did pay American taxes in 2010 on top of her rather heavy French taxes, and who considers herself to be a very loyal American, that sort of rhetoric really hurts. The idea that I would “flee” the U.S. so I could have the privilege of paying higher taxes in France? That is just unbelievably funny.
If I may make a modest suggestion? Perhaps the people in Washington, D.C. should get out of their comfortable chairs and their plush offices and come out and talk to some of us and see for themselves how we live and what we are doing abroad. I think they would find it enlightening because what they would see in most cases are Americans working regular jobs and raising families just like Americans back home.
Hard data is nearly impossible to come by but, in my experience in Japan and France, Americans abroad tend to be concentrated in certain sectors like:
Arts and Entertainment – Musicians, for example, who are sharing American culture with the French by playing American music (blues, rock, jazz) in large and small towns all around France.
Education – This may be the largest group of Americans working in foreign countries. American are heavily concentrated in education: English as a Second Language programs, for example, or in English-speaking private and public schools and universities.
Retirees – These are Americans on fixed incomes who are trying to stretch their pensions by living abroad. In some cases they are former American military personnel who are married to locals and have decided to settle in the spouse’s country.
Subsidiaries of American Companies – These folks are sent by their American companies to work with subsidiaries in order to maintain a home office presence abroad. Their numbers are actually diminishing – the tax laws in the U.S. means that these folks risk double taxation and companies are finding it very expensive to send these people abroad. My personal experience has been that local people are very happy about this because it means more jobs for them as the Americans get sent home for cost reasons. And, frankly, as much as they may like Americans personally, the locals find it more comfortable doing business with less oversight from the parent company in the U.S.
And let’s not forget the American spouses of foreign nationals. When I first arrived in France in 1989 most Americans I met were women and most were full-time wives and mothers. That has dramatically changed in the last few years. American women are marrying French but they are not willing to give up their careers when they come to France. De-skilled and struggling to learn the language and integrate into the culture, many of them pick up work as translators, secretaries, English tutors and other low-paying jobs until they can speak French well enough to pursue work commensurate with their education and their ambitions. I’m also meeting more American men who have chosen to join their French wives in France as opposed to living in the U.S.
Last time I looked people in education or the arts are not extravagantly paid unless they happen to be stars and I can assure you that most of us are not that by any stretch of the imagination. As for the retirees, whether they are collecting Social Security or a military pension, they are on fixed incomes and are hardly “economic Benedict Arnolds.”
The Americans I know here in France are mostly middle or lower income and live in apartments or studios that even low-income Americans back home would consider modest. I even know one woman who taught English in France for many years and is now on disability following some serious medical problems – her income is a couple hundred euros a month and she lives in subsidized housing.
I’d like to invite our elected representatives or anyone running for public office on the state or federal level in the U.S. to come and talk to us. Remember there are over 6 million Americans abroad, many of us do vote and the large American expatriate communities are in some pretty interesting places: Mexico, Germany, Japan, UK, France…
Because, damn it, we are your constituents. And if you are going to make gross generalizations about how rich and disloyal we ostensibly are, I’d like you to have the courage to come here and say so directly to us in person.
@Mach7 I had the opposite advice. I was told to claim as many deductions as possible so if I was the subject of an audit and they found areas where they claimed taxable income I would have some extra coverage.
@Roger, I wouldn’t be surprised if I receive a correspdance audit since I had complicated taxation on my foreign mutual funds. Oh well 😛
I would have thought though that they will be concentrating on wealthier expats, as such audits are more likely to produce extra revenue. However, I also believe that they will conduct random, very thorough audits for those of even modest means to show they mean business and that the IRS is after EVERYONE.
@Victoria,
I think my Accountant looked at it from a perspective of “not owing” tax to the IRS as to avoid any penalty structure.
He also stated a couple of things…
1. that it would cost me more money to have him continuously tabulate in order to get a hefty return.
2. The main objective of this exercise is to ensure you are tax zero.
3. Don’t give the IRS any reason to start looking at your returns closely if you are asking for thousands of dollars in return.
4. If a question or audit ever came up, we have additional items we could use to offset any money owing.
I am not sure about this one….but someone told me that the IRS would not send you a refund anyway as you did not generate any money south of the border (?)
@Roger, amazing case about Hong Kong. It baffles me to no end how the US goes to such length enforce this “citizenship” based taxation model overseas. I’m a small fish (for now), but I want to be completely free before I could trigger any of their “exit taxes”.
Even some of the laws like the “Death Tax” shocks foreigners. A least now this is so high that it won’t even get close to affecting me. But people still can’t understand why you would have to pay the government after someone dies. I think they see the government benefitting from misfortune.
For anyone who thinks Brazil is a tax haven, there are 86 taxes in Brazil: http://www.portaltributario.com.br/tributos.htm
Some of these taxes, people don’t pay “directly” because businesses pay. But there is no escape because the taxes are built into the price of the of the products that everyone consumes. And there are many “consumption-related” taxes that people pay. They say that 40% of the GDP based on taxes.
@Roger, and had I *known* that Brazil was going to be such a highly-taxed expensive country to live in, I think I would have gone to Panama or some cheaper country. But I’m happy with the way things turned out here.
Now I have to play by the Brazilian rules since I live here. Brasil + the stuff from the USA– no way! I can only handle Brasilian requirements.
Eric,
In many countries US consulates are located on the premises and within the US embassy. Since Hong Kong was still under UK control at the time my daughter went there, there was no US Embassy in Hong Kong. I honestly was not aware that counsulates were not considered as sovereign territory of their home country, but am aware that many consulates are in offices in buildings that have many different commercial tenants.
There have been claims by other expats that they did indeed receive refunds from the IRS!
@Roger
While not well known to non residents of Ottawa or non Canadians perhaps most Embassies to Canada in Ottawa are located in commerical office buildings(US is an exception) unlike in Washington for example where almost all have their own premises in the Embassy Row District. To be fair many important Canadian government offices such as those of the Department of Finance on O’Connor Street are in “commerical” office buildings(I believe Finance Canada has the whole building or almost all of it). Here is a link below to the Google Streetview.
http://maps.google.com/maps?hl=en&gs_upl=9660l10072l3l10511l1l1l0l0l0l0l104l104l0.1l1l0&bav=on.2,or.r_gc.r_pw.,cf.osb&biw=1311&bih=549&wrapid=tlif132738090230210&q=140+O’Connor+Street+Ottawa,+Ontario+K1A+0G5&um=1&ie=UTF-8&hq=&hnear=0x4cce05ab37e5e0f7:0x47b9f1fa5a6fb2f1,140+O’Connor+St,+Ottawa,+ON+K1A+0G5,+Canada&gl=us&ei=0zkeT9z1LIeftwf1ot1U&sa=X&oi=geocode_result&ct=title&resnum=1&ved=0CB4Q8gEwAA
Real impressive if you look to your left having a gas station and vacant lot across the street from a G8/G7 Finance Ministy building.
@Eric Thank you for the link to Kirsten Gilibrand’s visit to Europe. Since I wrote the post I’ve been talking to someone from one of the US political parties (I’m trying to quit their organization and they are trying to convince me that they are working on it) and she pointed out that US reps do sometimes visit expat communities (there was one who visited Paris not too long ago). As far as I can tell these seem to be “stealth” visits because, as you pointed out and the article shows, they get vilified when they get back to the homeland for “sipping champagne” with trendy jetsetters.
Fallows is absolutely right – we have a serious image problem. I even saw some comments on one thread on a site that questioned the legitimacy of American Citizens Abroad because they are based in Switzerland. How can we take seriously an organization located in the homeland of tax evasion? the person asked. Perception is reality.
In all fairness to the folks in the homeland, we’ve been very quiet for a very long time. We tend not to say much (it’s been live and let live for years) and we’ve never made much of an attempt to correct these misconceptions. And now here we are and everything we say is filtered through gross stereotypes held by people in the homeland. This is going to be an uphill battle, folks.
I completely agree. ACA would be more effective if they moved their headquarters to perhaps London which is perceived as being a higher tax regime.
Mona,
ACA is a volunteer organization which is in Geneva because that is where the volunteers who started happened to live. It has no source funds other its modest annual dues, and voluntary contributions it receves. It is registered in Swizerland as a non-profit organization, but since it is located outside of and not registered with the IRS as a US non-profit charitable organization, contributions by US citizens are not deductible for US tax purposes.
Taxes are at the top of its agenda these days but it is deeply involved in many other issues which affect US citizens living, working and retired abroad. With its volunteer staff living in Geneva where they work to make a living, pulling up roots and relocating to London really would not be very practical. I’ve been an ACA member from the beginning, which was in the same timeframe as when I returned to the US from Brazil when I took a real tax clubbing as a result of the Tax Reform Act of 1976.
Yet another category of expats – and certainly not rich tax evaders – missionaries. I’m one and quite probably one of our 3 kids will end up living here (France) as she’s grown up here though she was born in the States (like the others).
We’re PROBABLY here for life and we’re starting to feel the negative feelings from State-siders and of course the dual taxation joys! Definitely hard to be an American in a global village.
@David, you know I didn’t even think of that but, once you pointed it out, it makes total sense. Please, if you have a moment to give more information about missionaries and what impact this is having on them, I’d really love to to hear you experiences.
@Victoria, One world about missionaries: if they have children that attend private schools taught in English, which many of them do in the larger cities in South American at least, the tuition they may be reimbursed in considered as taxable income by the IRS. Such private schools are generally very good, but they can be very expensive. The American School in Rio de Janeiro for example, costs about $40,000 per year per student. We maintain contact with our Baptist missionary friends in Brazil from the days when we lived there in the 1970s, and I understand they have had to seek less expensive education in English for their children because of the cost and the US tax on reimbursements.
When we lived there my wife taught at the American School in Rio so we got a 50% discount on tuition which ended up costing me about $8,000 per year for our 4 kids total. Much less expensive then. The US dollar has continued to ndepreciate dramatically in Brazil.
@Roger, that is fascinating. English language schools here in France are equally pricey. For us it wasn’t even a possibility until we found a French public high school that has a French/German/English program:
http://thefranco-americanflophouse.blogspot.fr/2011/09/bi-lingual-education-lycee-de.html
Only people I’ve ever met here who could afford the tuition at one of these private schools are people on contract to a company. But I see fewer and fewer of these people these days. Also more and more of the American immigrant women I know here are working. That has some interesting implications for this and future Americans born abroad. If they go to local public schools then they won’t learn much about US history or politics and they won’t start taking English classes until fairly late (starts at the high school level here). In my experience this wasn’t a big deal so long as the American parent (usually the mom) picked up the slack and tutored the kids at home. That is happening less and less. I have met children of US parents or bi-national couples here who can barely speak English and do not read or write in that language.
Does this matter? Well, I suppose it depends on where you sit but these kids are US citizens with the right in many cases to participate in the American political community (i.e. vote) so one might think this would be of more than passing interest to homelanders…
@victoria, the prime consideration for US expats when we lived in Brazil 35 years ago was that their children would be qualified to enter a US college or University upon graduation from High School. The American School in Rio, both then and now, has a curriculum which qualifies is graduates for entrance into US, European and Brazilian universities. It is a top notch school. Our two older children has 2 years of HS French. The teachers were supplied by the Aliance Francais, and spoke neither English or Portuguese in the classes. Texts used were from France. It was total immersion and one of our daughters, who later worked for a Big 5 accounting firm in Venezuela, as one of her assignments served at the interpreter for French petroleum companies in their negotiations with the Venezuelan government. Her Spanish fluency came from our earlier days in Peru and the fact that we took our Peruvian maid with us when we moved to Brazil so our kids would not forget their Spanish.
Victoria, bilingual, or English-only schools here are extremely expensive. They don’t even exist where I live. My wife has a friend that is paying something like R$ 1.500/month for her son in the state of São Paulo. That’s something like US $750/month. And I think it’s only 4 (FOUR) hours a day, like most Brazilian schools. That’s a lot of money here, or really anywhere for that matter.
English courses, on the other hand, are on every street corner. At first I thought it was the schools; that nobody learned due to deficient methodologies. Then after having 4-5 years of watching the situation very closely, I came to the conclusion that it’s the really the students.
What’s impressive to me, at least, is the huge difference in 2nd language abilities of the Portuguese -versus- the Brazilians. I don’t have hard statistics, but my own experience living in both countries for many years: most Portuguese my age (35) and younger speak English fairly well, and this is usually correlated to higher education. But some actually speak fluent English and they have just a high school education. I also used to work with people that are now in their 50s and 60s that spoke English very well too.
Brazilians on the other hand, generally don’t speak English. What’s even crazier is that there are tons of opportunities for good English speakers here, but the Brazilians just don’t try to capitalise on this. Why, I have no idea…. laziness I suspect.
oh, I re-read my comments. I was talking about a Brazilian school that says they are “English only”. That’s not the American or British school.
Although for you Canadians, I DID see some sort of advertisement for a Canadian school for kids (pre-high school). I don’t know if it’s REALLY Canadian, or just some enterprising Brazilian that lived in Canada, came back, and wanted to start a company here.
@Victoria.
I would have the same comments here in the US regarding the price of the international school in the city where I live. It would cost $10K plus per kid (we have 2; 2 and 5 years old) per year, something that would be really difficult to afford. I wish I could.
I speak only French to them, and they understand everything, but answer back in English. I wish my wife would make more efforts to practice the language so we could speak only French at home. She learned in high school, but doesn’t want to speak.
I have friends (who are both Belgian), who do that, and the kids are perfectly bilingual. It’s amazing to hear them switch language!
Do you speak French or English to your kids? Being on the same situation on the other side of the ocean, do you have any advice on raising our kids so they’re bilingual?
Thanks!
I am so glad that we made sure that our kids were fluent in the languages of the countries where we lived. All four of them have native fluency in English, Spanish and Portuguese, plus two of them speak fluent French and Italian (having taken the latter in the university), and use these laguages daily in their work. One of these also lived in worked in Hong Kong for 6 years and does well in Cantonese, although not with native fluency. She also taught herself Russian with tapes and has traveled there to use it. It sure opens horizons for them. The more languages you know the easier it is to learn one more.
@Roger: Your children are very blessed to have had the amazing life and experiences they have had–thanks to you. That has opened so many doors to them. That is such a contrast to that of most Americans.
@Blaze, thank you. When we moved from Rio de Janeiro to Miami my 6th grade son quickly discovered that it was unwise to reveal t school that he understood, let alone spoke Spanish or Portuguese. Why? Because it made him wide open for bullying for being a “foreigner.” In Brazil kids who spoke more than one language were looked up to but in Miami they were shunned by classmates. But he lived through that initial shock. That is part of the cultural difference between the US and most other countries where knowing additional languages is an asset.
@Roger, I was seeing the same thing 20 years ago here in France. US university was a real driver back then. Less so these days and it seems to have a lot to do with the cost. Given that most French (and other EU) universities have very nice exchange programs with US universities you can have the “beurre” and the “l’argent du beurre” without going into debt. 🙂 Your kids were in very good hands with the Alliance Francaise teachers. Really outstanding language training.
@geeeez, wow that is not cheap. What really bothers me about the cost is that, as Roger’s example shows, learning other languages well is a ticket to the globalization game. English is just one possibility – my younger Frenchling came back from Japan with a burning desire to conginue learning Japanese which she can now read and speak fairly well. But the classes at school were not enough – Japanese is not an EU language and thus doesn’t really have the same funding as Spanish or German. Since she is an enterprising sort she asked her Kendo sensei for a tutor and he sent her straight to his mother (a native speaker). It was the perfect solution.
@Christophe, I was in exactly the same situation. Today the Frenchling use both French and English with equal ease but it took a lot of effort. I have a whole page at the Flophouse devoted to this and I’m planning to write more as the younger Frenchling has her Bac this year and next: http://thefranco-americanflophouse.blogspot.fr/p/how-to-raise-frenchlings.html. The posts that might interest you the most are “How to Raise Frenchlings” (one of the very first post I wrote) and “A Cross-cultural Canticle from a Red, White and Blue Mother.” Also if you want to talk more about it, feel free to send me an email: v_ferauge@yahoo.com. In a nutshell we used the OPOL method (one parent, one language) but it wasn’t enough. Making that stick AND making sure they could read, write and speak English fluently took a lot of persistence especially since I worked and they went to the public schools here.