{"id":2156,"date":"2014-12-15T19:17:26","date_gmt":"2014-12-15T19:17:26","guid":{"rendered":"http:\/\/13.40.31.108\/blog\/?p=259"},"modified":"2014-12-15T19:17:26","modified_gmt":"2014-12-15T19:17:26","slug":"why-im-giving-up-my-passport","status":"publish","type":"post","link":"https:\/\/ustaxconsultants.es\/es\/why-im-giving-up-my-passport\/","title":{"rendered":"\u201cWhy I\u2019m Giving Up My Passport \u201c"},"content":{"rendered":"

Worth reading this article from the NYT, written Jonathan Tepper… with all expats\u2019 arguments and complaints that I have heard during the last cople of years<\/strong>.<\/p>\n

LONDON \u2014 The mayor of London, Boris Johnson, who was born in New York and holds both American and British passports, recently said that he would not pay a tax bill<\/a> from the United States on capital gains from the sale of his home in the London borough of Islington. Mr. Johnson pointed out that he hasn\u2019t lived in America since he was 5. He\u2019d like to renounce his citizenship, but said the process was \u201cvery difficult.\u201d<\/p>\n

It is, but I am doing it. My \u201cin-person final loss of citizenship appointment\u201d is scheduled for Jan. 14 at the United States Consulate here. My British passport, acquired in 2012, will be my only one.<\/p>\n

Some 3,000 Americans<\/a>gave up their citizenship last year<\/a>, a tiny number that\u2019s nevertheless been soaring. Yes, a few expatriates may be trying to avoid future taxes, as Senator Charles E. Schumer accused<\/a> the Facebook co-founder Eduardo Saverin of doing two years ago, when Mr. Saverin, who lives in Singapore, surrendered his passport ahead of the company\u2019s initial public offering.<\/p>\n

But most, like me, are not tycoons. We\u2019re responding to the burden and cost of onerous financial reporting and tax filing requirements<\/a> that are neither fair nor just. (Living and working in London, I pay higher taxes, to Britain, than I would in New York.)<\/p>\n

Some 7.6 million Americans<\/a> live abroad \u2014 expats would be the 13th most populous state, if we were a state. Many are overseas temporarily, for work or study. But many others marry foreigners, start companies or have long-term overseas assignments. We are just like ordinary Americans \u2014 except that we lack representation.<\/p>\n

The United States is an outlier: Its extraterritorial tax laws apply to American citizens and companies no matter where they are. We are the only country (except, arguably, Eritrea) that taxes all of its citizens on worldwide income rather than where the income is earned. Expatriate Americans have to pay taxes once, wherever they live, and then file again in the United States.<\/p>\n

The I.R.S. doesn\u2019t tax the first $97,600 of foreign earnings<\/a>, and usually doesn\u2019t double-tax the same income. So most expatriates owe no money to the I.R.S. each year \u2014 and yet many of us have to pay thousands of dollars to accountants because the rules are so hard to follow.<\/p>\n

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.<\/p>\n

It\u2019s one thing if a New Yorker creates a shell entity in the Cayman Islands to evade taxes. It\u2019s another if an American who has spent most of his life overseas, as I have, creates a legitimate company. The I.R.S. doesn\u2019t care about the distinction. Under a 1962 law, it treats the two companies I\u2019ve started as \u201ccontrolled foreign corporations,\u201d<\/a> subject to detailed regulatory requirements, though a majority of our employees and clients are foreigners.<\/p>\n

Moreover, if you are an American, you can\u2019t 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.<\/p>\n

Renunciations of citizenship have soared because of a 2010 law, the Foreign Tax Account Compliance Act<\/a>, 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 \u201cheavy-handed, inequitable and hypocritical\u201d<\/a> law will cost American banks alone $800 million a year to implement. Moreover, the magazine reported<\/a>, \u201cseasoned tax dodgers are not so na\u00efve as to hold money in their own names.\u201d<\/p>\n

Most of us who are overseas long term simply accept the status quo. Some may fear that renouncing their citizenship will put a bull\u2019s-eye on their back with the I.R.S., even if they\u2019ve complied with all laws. It does not help that members of Congress occasionally threaten<\/a> to bar any Americans who renounce from ever visiting the United States again.<\/p>\n

Like many Americans, I didn\u2019t 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<\/a>, and two years in New York, I\u2019ve lived overseas all my life. At 38, I\u2019ve voted in only one American election and I don\u2019t have much connection to the United States. Almost all my friends are cultural mutts \u2014 people with hybrid backgrounds, for whom nationality isn\u2019t the most important part of their identity. If America makes it so difficult to be American, I\u2019ll happily just be British.<\/p>\n

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\u2019t 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 \u201cno taxation without representation.\u201d Why can\u2019t Congress?<\/p>\n","protected":false},"excerpt":{"rendered":"

Worth reading this article from the NYT, written Jonathan Tepper… with all expats\u2019 arguments and complaints that I have heard during the last cople of years. LONDON \u2014 The mayor of London, Boris Johnson, who was born in New York and holds both American and British passports, recently said that he would not pay a […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[25,28,23,24],"tags":[],"class_list":["post-2156","post","type-post","status-publish","format-standard","hentry","category-fatca","category-fbar","category-irs","category-us-tax-return-1040-1040nr"],"acf":[],"_links":{"self":[{"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/posts\/2156","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/comments?post=2156"}],"version-history":[{"count":0,"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/posts\/2156\/revisions"}],"wp:attachment":[{"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/media?parent=2156"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/categories?post=2156"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ustaxconsultants.es\/es\/wp-json\/wp\/v2\/tags?post=2156"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}