On Hacker News, a tech entrepreneurship community that both Phil Hodgen and I frequent, there was a discussion a couple of days ago about one entry in the Q1 2012 loss-of-citizenship list which matches the name of a well-known entrepreneur. (Edit: to clarify, I’m not talking about Eduardo Saverin, the news of whose renunciation just popped up on Bloomberg; I wrote this post before that news came out. This is about another guy, follow the first link in this post if you want to know his name).
Regardless of whether or not that name is indeed him, the news sparked some interesting comments. This should serve as a reminder to us: the Isaac Brock Society is not the only collection of people out there who object to the United States’ citizenship taxation policy. There are many others, most of whom are just going about their daily lives while trying to grin and bear it, and who may never give us “extremists” more than a passing glance — but whose overall silence should not at all be taken to imply acquiescence to this unjust state of affairs, as the mainstream media do every time when they say “1,800 renunciants is such a small number compared to the six million Americans abroad”.
I’m not going to mention the name of the alleged ex-citizen here (and I’ve replaced it with “***” below) because I’m not interested in making this post into a Google Hit for it. His identity is not really the point; if he wants to confirm it publicly, he will. If you want to learn more about the entrepreneur — who of course is not necessarily the ex-citizen mentioned in the list — you can see his website: he moved to Singapore last June. (Incidentally, when he moved, I warned him about the potential tax issues of overseas entrepreneurship). If he indeed gave up citizenship, he would almost certainly be a covered expatriate.
This is the second time in a month that this topic has come up on Hacker News; there was a discussion about CNBC’s article last month, on which Phil Hodgen left a number of relevant comments, and where I also blew up at some guy who counselled a would-be renunciant to spend “$50 and 2 hours learning TurboTax” instead. I didn’t see Phil popping up on this latest thread, but there’s some good comments from other people. First, mbesto, an American living in London, wrote:
Not sure if he reason is tax related, but I will say this…I’m not starting a company abroad without renouncing my US citizenship. I’ve been living in and out of the US for the last 4 years now and the fact that we get taxed when we are outside of the country is ludicrous to say the least. Are we really that arrogant?
mahmud (a Somali by background who used to live in Virginia but then moved to Australia) also posts a series of interesting comments, starting with:
As someone who holds three nationalities, and is 2 years away from a fourth: I look forward to the day I hold none. Beligerence of the “State” knows no bounds, I hope we can free ourselves from this regressive construct and, once again, live in this world judged by our own merit and character, beholden to none …
He then counters the common Homeland myth that American citizens living abroad get “free evacuations” and that’s why it’s so great to hold on to a U.S. passport and keep paying taxes:
The U.S. embassy has evacuated my family and we’re still paying for it. It’s not free. We could have hired a private militia and escaped to safety for 5% of what we paid the state department … Somalia 1991. [two-digit]k per person. Do the math. (I need to ask the family, I remember it being more than 30k).
For those of you who are interested in this issue, Lisa also has an interesting comment about her experience as a Swedish and American dual citizen in Egypt during the evacuations in 2011, contrasting the actions of the governments of each of her passport countries. As for mahmud, he sadly concludes:
I can’t afford not to be a U.S. citizen. I’m a non-millionaire atheist black man with a Muslim name and an American accent. My kind don’t last long in the wilderness, I will be traded by intel agencies like a baseball card.
woe (a new user who joined specifically to comment on that post) left a number of comments, including:
We can only speculate about *** but generally speaking, for a US national residing overseas who will never go to the US, holding US citizenship is more trouble than it’s worth. Look at my daughter. She was born in Europe with three nationalities, including American. Say, for the sake of argument, she spends her entire life in Europe. She will nevertheless be expected to file a tax return with the IRS every year, to possibly pay US taxes, and to file an FBAR every year should she have more than US$10,000 in the bank.
At the moment the requirement to pay US taxes generally only kicks in if your income exceeds certain thresholds, but given the lack of esteem Congress has for overseas US nationals I would not be surprised if the rules governing this became more onerous … These requirements are simply unconscionable for somebody who has never received and will never receive any services from the US government. And yet they will be imposed on her, unless she takes concrete action when she turns 18 to renounce her American citizenship – because she has US nationality, whether she likes it or not, along with the insane obligations that come with it.
US tax practice incents every permanent expatriate to drop their citizenship, regardless of net worth.
Every year around this time I stare at a stack of tax paperwork and contemplate the hours out of my life I’m about to lose to end up with a tax return that ends with “0” on the bottom line and I get sorely tempted. Every year I also wonder if it’s going to be the last with “0” on the bottom line. The foreign earned income exclusion this year is $95,100. My salary’s higher than that. So far I’m always managed to make up the difference on the foreign housing exclusion, but sooner or later I’m probably going to end up being expected to cut a check to Uncle Sam.
Renouncing costs $450. Once my American tax bill hits that amount, that’s probably me making an appointment at the embassy. Let’s be clear: I haven’t set foot in the United States for ten years, and I will never move back. I hold an EU passport. I receive absolutely nothing from the United States. Being forced to file intrusive, time-consuming paperwork every year is bad enough, but having to actually pay taxes would be simply unacceptable.
And finally, the top-rated comment was written by cletus, an Australian living in New York City, who writes:
I can’t think of another developed nation that is quite so overbearing when it comes to foreign income. US citizens who haven’t been in the US for 40 years and work in other countries STILL need to report their income to the IRS (as an Australian who lives and works in the US, Australia doesn’t care about my income as one example). The reporting requirements on tax residents in the US (citizens and non-citizens) is absurd. If I fail to disclose my retirement account in Australia, established well before ever working in the US, the US government can technically imprison me and charge me a penalty of 300% of the value of that retirement account (all in the name of “fighting terrorism”).
What really doesn’t sit well with me is the presumption of criminality that exists in US law (actual and enforced). The presumption of innocence seems to be some kind of anecdote in history. I know I’ll never take up US citizenship. No thanks. I’ll stick with Australia/Britain (dual citizen) thanks. In all honesty the only reason I’m even here is because I want to see it (New York in particular) before it’s gone. The US reminds me of the crumbling, dying days of the Roman Empire.
Unfortunately, a lot of ordinary Hacker News readers weren’t really interested in the story, but came in to start the same old Remocrat vs. Depublican arguments that dominate discussions of renunciation issues on every other mainstream site. There were of course the usual stereotypical Homelander comments opposed to the idea of giving up citizenship:
run4yourlives: Every country has requirements of its citizens. A lot force you to serve in the Armed Forces. The US doesn’t do that. While I agree that the US isn’t as welcoming as it once was and has always had an onerous tax code, for foreigners it is still a huge benefit to work and do business there.
achille2: My parents sacrificed an incredible deal to come to the US. For the life of me I can’t comprehend why someone would do this. Loss of citizenship is permanent. Your kids lose it as well. Why would *** would do this to his kids.
noahc: My understanding is that ~1M a year isn’t enough to justify most people loosing their US citizenship over. However, *** isn’t exactly most people. My general sense on the issue is that money, in particular taxes, is something *** worries about.
And as cletus also points out, the story was not very heavily upvoted (only 70 upvotes, against 159 comments), and appears to have been down-modded off the front page — maybe by the people who don’t like to hear any news that the U.S. isn’t the greatest country in the world, but more likely by the people who came in and saw the usual bunch of raging idiots getting into another fight about taxes in general rather than staying on the specific topic of renunciation. Regardless, anti-emigrant sentiment is especially strong in the tech sector, where U.S. venture capitalists — who have significant trouble investing in non-U.S. ventures — try to make up for their U.S.-imposed tax handicap by instead convincing every ambitious techie that Silicon Valley is the only place in the world you could possibly want to do a startup, and if you don’t move there then clearly there’s something wrong with you.
Incidentally, while looking at an earlier Federal Register list I came across a name matching that of another famous tech guy — one who is well known to have started a new venture outside of the U.S. recently after a number of years living abroad. (Edit: to be clear, again I’m not talking about Saverin). If he did not renounce but instead remains a U.S. citizen, his new venture would be a Controlled Foreign Corporation, with all the negative implications that will have for his business partners. I’m reasonably sure the renunciant listed is him and not another guy by the same name: a name matching his wife’s name is listed in the same quarter, and neither name is very common. I don’t think I’ll mention his name publicly right now; it may be better just to leave him and his kids in peace. (Maybe I’ll e-mail and ask him, though he’s famous enough that he might never see my email).
It’s too bad, because his story is another strong counterexample to the pervasive American myth that the only land of opportunity for technology entrepreneurs is the Bay Area. But I’m sure there will be other counterexamples as well in the future, from people who are more willing to go public with their stories.
@Petros: glad to hear about the additional press/media coverage in the works. Thank you for being willing to be a public spokesperson and advocate.
@Petros: You can borrow my uniform and sword for the TV interview.
@Blaze, You must give Petros the uniform but just for the interview.. wouldn’t that be funny!
@ Blaze I don’t see how it can fit. I am THE big fat Panda.
My hunch is MSNBC will ignore but Fox News will probably do something. Perhaps on Napolitano’s show.
Adam Bilzerian put out a tweet in support.
@Petros. You may have to get an Isaac Brock suit of your own for the future. You could start with the hat?
@Em and all: Here’s some links about freezing your credit report in the U.S.
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