Laura Saunders weighs in: Should you renounce your U.S. citizenship

If this has already been posted, sorry for the duplication. This whole issue is starting to get traction. More than 200 comments so far. Looks like a good article.

 

 

 

 

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64 thoughts on “Laura Saunders weighs in: Should you renounce your U.S. citizenship

  1. BTW… Laura Saunders has been on my email list for a long time. Here is her email address if anyone wants to write her personally and thank her for bringing the subject to the MSM attention:

    laura.saunders@wsj.com

  2. Sent to Laura Sanders
    “The overwhelming majority of people who make it rich in America, whether they’ve been here 12 generations or they’re immigrants, stay here, and they live up to their responsibilities,” Schumer told Bloomberg Television on Thursday. “About 10,000 people in the last 10 years have renounced their citizenship. Not a single one has been penalized.”

    Article 15. (signed and ratified by the USA)

    (1) Everyone has the right to a nationality.
    (2) No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.
    http://www.un.org/en/documents/udhr/index.shtml#a15

  3. “Not a single one has been penalized.” Exactly, because they have done nothing wrong. Renouncing citizenship is not a crime, it’s like a termination of a contract according to the rules. What on Earth is Chuck Schumer thinking when he says such things?

  4. Note that Schumer proposes to punish people for giving up citizenship, not prevent them from doing so. That is an important difference, up front at least.

    In the end, I believe, Congress will close the vise so hard on US citizens that giving up nationality will become painful to the point of not being desirable. However they can still point to article 15 and claim they are not preventing anyone from doing so.

  5. @Wellington, I understand your logic, but the name of Schumer’s bill is “Expatriation Prevention (…) Act”. He really wants to prevent people from renouncing US citizenship by punishing them if they do so, as if it were a crime. Taxes are a pretext.

  6. @Wellington “Note that Schumer proposes to punish people for giving up citizenship, not prevent them from doing so. That is an important difference, up front at least.”

    Sorry. Not seeing it. The fine for running a red light exists to dissuade people from running red lights. The Schumer “fine” for renouncing exists to dissuade people from renouncing.

    I’m with you on the second paragraph, though. The US is moving inexorably towards a position where if you can get out with the shirt on your back, they’ll see that as enough to satisfy the UDHR. And common decency be damned. HEART and FATCA began the process. The Ex-PATRIOT is merely the next step. (And goodness, how I hate these sophomoric names congress tortures the English language to produce.)

  7. They can call laws what they want, but this one does not make it illegal to renounce. A better title would be, “Expatriation Deterrence Act.” The US has not crossed the line yet to make it illegal to renounce (I suspect they never will, otherwise this would be a true human rights violation).

    In parallel, Congress constantly increases the pain and costs for expatriating corporations but legally they still can move overseas. Many choose not to, though, because the regulations make it tough for them to survive as a going concern, should they do so.

  8. @Watcher

    Yes the names are indeed creative (and sophomoric).

    Please point me to the section of the Ex-Patriot Act stating it is illegal to renounce (which would go against Article 15 cited above).

    My only point is that, over time, Congress will simply increase the pain to the point where far fewer (or maybe no one) renounces. But this is not the same as promulgating a law making it illegal to renounce.

  9. @Wellington: “Please point me to the section of the Ex-Patriot Act stating it is illegal to renounce (which would go against Article 15 cited above).”

    Touché. (Actually, I haven’t looked, but I won’t doubt it’s absent!).

    A philosophical question, I suppose, is when does a tax become a fine? Some taxes walk like a fine, and quack like a fine. I wonder how the outcomes would differ if Schumer really introduced a fine rather than a “tax” (aside from no longer being able to claim that the US is “free”). I can’t see a difference beyond semantics; maybe that’s just me. Tax law is congress’s Swiss Army knife.

  10. @Watcher
    Hey just pointing out the differences!
    I’m not a lawyer but I have renounced so I’ve given all this a bit of thought. Good question on the semantics between “tax” and “fine.” I wish I knew.

    I agree that these politicians really want to keep the revenue flowing and will use all weapons at their disposal to “dissuade” us from leaving. If it were up to Schumer, I am sure he would craft a law to make it illegal to do so; but he won’t go there because he’s shrewd about the blowback. Like any good politician though he knows where to probe against all the fine lines of decency, propriety, and legality. He’s using the Saverin Affair to coast on the “eat the rich” sentiment. I’m sure other politicians will jump on board.

  11. @watcher, “names congress tortures the English language to produce”…too funny! Coming soon to American dictionaries: T’reason defined by “tax reason”.

  12. She’s talking about this Expatriot-Act like it’s a done deal. Bottom line: US doesn’t want tax slaves leaving the plantation. FATCA confirms that because they could have made it flexible for long-term residents overseas but they didn’t. Shocker!

  13. Wanting to be seen supporting a popular measure (49% oppose renouncing citizenship, according to Laura Saunder’s infographic) and wanting to get reelected are truly “bipartisan” desires.

  14. This is only getting worse. I’m thinking about contacting Bill Alexander, he is no longer in Congress but still politically active. Would that be a good idea?

  15. @Shadow Raider, Bill Alexander was involved in supporing legislation to replace Citizenship with residence-based taxation when he was still in Congress.

    I was told by a person who used to be on is staff that his introduction and support for this legislation is what cost him his re-election. His opponent successfully used this against him by emphasizing that he was more interested in “Americian deserters” than he was in the issues that were important to his own constituents I think he is now an attorney based in Washington, DC.

  16. The morale of the story:

    RENOUNCE or RELINQUISH now while you still can!

    The next step may be to deny former citizens CLNs.

    And why would they stop there?

  17. Start doing some research on Congresswoman Marcy Kaptur of Ohio. She is going to have a problem soon when her constituents find out about her having a meeting with a prominent renounciated citizen in her office. Will post details tonight.

  18. @Tim

    Just another indication of ex-pats’ pariah status among Americans. Members of congress are afraid to touch us.

    Schumer and Casey know this and smell blood; that’s why they’re attacking and using Severin as a stalking horse.

  19. Congresswoman Kaptur, a Democrat constituents are going to find out because
    myself and IBS are going to let them know
    about it this evening at which point she can either denounce the Schumer legislation or be a complete hypocrite. I have pictures of the meeting to with Kaptur having a big smile on her face.

  20. I’m willing to bet Mr. Saverin renounced to terminate the need to file FBARs and FATCA and all that other non-sense. There are probably investments he wanted to make that are no longer available to US citizens thanks to FATCA and the banks all rejecting Americans.

    Is streamlining your tax filings to simplify your life and eliminate extraneous privacy-violating paperwork considered renouncing for tax reasons? The savings on the tax money is just a big fat BONUS (if they exist–I think his accountants most likely got the true value of FB right and that FB is going to crash as evidenced by the market makers having to prop the stock up to keep it at the $38/share opening price!)

  21. I’m sure all the cross-border specialized accountants, financial planners and tax attorneys must be rubbing their hands with glee, knowing full-well that this recent turn of events will result in permanent citizenship-based taxation….as there will be no escape from Fatca and the IRS, business will boom for them and they’ll be able to charge even higher professional fees as they’ll realise we have no other choice. The stakes will be too high.

    On the other hand, minnow expats who quietly comply will probably be pretty much left alone; the IRS will instead harrass and hunt down expats who’ve renounced and the wealthy. But they’ll still be waving their club.

    I now definitely feel that it would be too risky for me to renounce because of all my PFIC and FBAR issues…I regret that I hadn’t taken British citizenship much sooner and could have relinquished….Had I done so , I wouldn’t be trapped in this huge mess. I have lost all my ambitions and incentive. We are heading into an Orwellian society.

    What I fear now is that at some point in the future, US income taxes could go far higher than the UK’s and could be stuck with impossibly high tax bills. It will mean that I will always have to pay the higher of either country’s taxes.

    From what I gather, the only people who could safely renounce are those with virtually no assets and/or those who never need to visit the US ever again. They have us over a barrel.

  22. Yep, the sad thing is that I imagine something akin to the Six Sigma system. But how much training do you have to have to pick out a “US Person”? Makes me sick….

  23. It is indeed sickening but also means more job opportunities. But one good thing that will result from this is that I believe that honestly compliant expat minnows will be treated more gently by the IRS. They’ll focus on the wealthy and especially anyone who renounces going forward because they will want to severely punish them with the 30% capital gain taxes on all their assets as I understand it…the world has gone mad.

  24. I also believe that it could be legally risky to overtly discuss perceived benifits of renouncing because it could be looked upon as treasonous or even terrorist activity. It may sound absurd but it seems increasingly dangerous in the current climate. Very sad days indeed.

  25. Mona, treasonous is if you sold State Secrets to a foreign government. I don’t think renouncing is treasonous, especially when the Treasury Department told MarkPineTree to consider renouncing his citizenship….

  26. Mona, have you tried contacting your local MP? For the past few months I’ve been having an ongoing conversation with mine about the tribulations of dual US/UK citizens living in the UK. Now he understands the issue he’s become quite sympathetic, and going to take up the issue with the Treasury, with an option on the Home Office also.

    Why not try the same? The more noise we make, the more the UK govt has to sit up and take notice. You’re a UK citizen, and you vote. And the UK govt is not as dismissive of its voters as the US.

  27. Mona, keep trying. Go in person to a “surgery”, or otherwise request a personal chat. Copy in other MPs who should know about this. There is no reason to lurk in shadows. In my experience, your MP will likely be outraged with what you have to put up with. That’s the first step towards real change. I don’t think there’s a lot of hope in waiting for the US to change its approach. That means insisting on our home country govt’s protection from the damaging effects of US laws.

    At the extreme the UK can pass a law making it illegal for UK companies to comply with FATCA, and wave two fingers at the US. There’s a precedent. The Protection of Trading Interests Act 1980 contains “criminal sanctions for complying with certain provisions of the Helms–Burton Act whilst in the UK.” Specifically Cuba. Passed in the wake of 1970’s US extraterritorial legislation.

  28. @walker, the UK could also pass a law making it illegal for UK residents to remit tax payments to a foreign country on income earned in the UK. If the UK and several other countries would “stand tall” on this like they have on Helms Burton, the US would get the message loud and clear that citizenship-based taxation is no longer accepted in the rest of the world.

  29. @Roger, I understand all the principles but as I still have ties to the US, that would be a disaster for me. If that happened, I would probably have to renounce my Uk citizenship, divorce my spouse and return to America. I would then probably want to jump in front of a train, etc.

    I am pragmatic and have decided to play ball. I really doubt that the US would back down and would only make life even more difficult if the UK starts getting awkwwrd…could even result in either or both countries disallowing dual citizenship. Thanks but no thanks…

  30. @ monalisa who wrote: “I agree but the point I’m making is there is a growing mainstream attitude in America that people who renounce are essentially traitors…”

    A traitor is: “One who violates his allegiance and betrays his country; one guilty of treason; one who, in breach of trust, delivers his country to an enemy, or yields up any fort or place intrusted to his defense, or surrenders an army or body of troops to the enemy, unless when vanquished; also, one who takes arms and levies war against his country; or one who aids an enemy in conquering his country.”

    Traitor has a pretty precise meaning and those who renounce their US citizenship do not fall into the category of traitor — no way, no how. So regarding those Americans who would foolishly consider those who renounce their US citizenship to be traitors I could equally say, and it would be just as foolish to say it, that as a citizen of the world I consider Americans who do not renounce their US citizenship to be traitors to the world because by retaining their US citizenship they are giving support to a punitive regime which extorts payments from and threatens penalties upon innocent Americans living abroad. You simply have to ignore the cries of traitor from misguided and uninformed Americans and recognise that it’s just their ignorance showing.

  31. @Em, I admire your principles but don’t fancy being screwed by a retrospective 30% capital gains exit tax on all my assets, especially as it would also include our home. Sorry, but no way.

  32. Mona, “…retrospective 30% capital gains exit tax on all my assets, especially as it would also include our home.”

    How’s that? Even under Schumer’s most virulent form of Ex-PATRIOT, this retroactive capital gains applies only to US sited assets. And your home isn’t in the US (right?). Nor, IIRC, are any of your other investments. Or if they are, they’ve been place in US shares so recently that there’s minimal gain in them.

    I think you’re jumping at shadows again. Aside from the notorious Reed Amendment, there’s not much I can see in either current or even proposed law that’s going to affect you (of course, I don’t know your situation intimately). The Reed Amendment is just a pure dollop of spite. But even that’s avoidable if you renounce early, that is, before making enough to be “covered”.

    Congress really are first-rate idiots, aren’t they? A tenth-grader could have readily predicted the motivations that an “exit tax” would have on the soon-to-be-rich. Apparently congress could not. Hence their current whining. Well, tough cookies congress. You blew it.

  33. @Watcher, I hadn’t realised that it was only for US-sourced gains though most of my portfolio held in Britain is still in US shares so would imagine they’d be defined as US-based. I do agree that I am a worrywort but am too scared to renounce whilst still within the early stages of a complicated QD. I’ll reconsider my options when my statutes of limitations have expired

  34. Perhaps I’ve grown cynical about governments. I don’t know that the US (or UK for that matter) have ever been as benign as we would like to believe. It’s naive to see everything as black and white.

    I’m hedging my risks by choosing to be compliant. It will mean ongoing professional costs and some double taxation but better that than being made bankrupt via vindictive penalties and permanently exiled.

    I personally think that overt refusal to comply (especially if dissing the US government) is potentially suicidal. Perhaps I am not as brave as some on here but have noted over the years that I am a survivor.

  35. @monalisa,

    Re: “…the point I’m making is there is a growing mainstream attitude in America that people who renounce are essentially traitors…”

    …but we have to make decisions for our lives not based on what mainstream America believes. We have to believe in ourselves and do what is correct, morally and all other ways, for us. I don’t believe that doing anything based on what the US homelanders have been brainwashed to believe in and thus crucify US persons abroad legally living our lives in other countries, is moral. I must be a model to my children and I would NEVER encourage them to do something based on anything other than their own values — I apply that to renunciation from an abusive marriage or renunciation to an abusive country. The length of our lives is limited and we must live our days most wisely for ourselves and the society we chose to live in. Again, only my two cents worth.

  36. @bubblebustin.

    Truly tragic. What a good headline for a sane article somewhere. Thanks again for boiling it down to the basic.

  37. @JoeSmith

    Pfft. The Globe and Mail is grossly inaccurate on several counts. Example: “…an exit tax. 45 per cent on the market value of all your worldly property…”. Nope. It’s 30% on any unrealized capital gains over $600k or more. That’s quite likely a safe harbour for even relatively well off covered expats. (And if you’re over that, well, just sell before leaving and pay the normal 15% rate on realized capital gains.) Grope and Fail, well… fail. then.

    One part of the Ex-PATRIOT act overlooked, as far as I can tell, by all the press is that this “30% of future capital gains for the ten years after leaving” thing was in fact part of the pre-2008 expatriation rules. Congress swept it away with HEART in 2008, because (a) the IRS could never effectively enforce it, (b) it violates several tax treaties (not that the US would care particularly about that), (c) it’s likely unconstitutional (but then so is HEART, most likely, so plainly congress doesn’t give a hoot about that either at this point), (d) trusts and partnerships could probably get round it, and (e) even if exposed all you had to do to avoid it was just not sell stuff for ten years. Schumer and his grandstanding pals have, however, no collective memory on this, and thus are doomed to repeat their past errors.

  38. @bubblebustin: Tragic, but unfortunately it is true, unless you have almost unlimited financial resorces which very few have. And even those persons know that it is neither reasonable nor in their interest to keep paying this massive tribute to tax advisers and the IRS in order to carry a US passport. I

    am afraid that it with Senator Schumer on the war path it is going to get worse before it gets better, if it ever does.

    But I am not giving on trying to open the eyes of the seemingly blind to the realities of the massive damage they have and are still doing to the best interests of the US and its citizens living abroad. They are one in the same.

  39. @ Watcher & Monalisa My MP has a surgery on Friday and I’m going to go along to it. I’ve printed off various application forms fom the major investment houses which now make you declare that you are not a US person before investing with them, and I also found last night that Egg (where I had my savings until fairly recently) has as closed off its savings accounts to US persons – US persons being defined as any US citizen, not just those resident in the US. I’ll let you know how I get on.

  40. @scotgirl: “I also found last night that Egg … has as closed off its savings accounts to US persons…”.

    Well, so it has. Terms and Conditions, 14.2. I opened an Egg account a year or two back, and at that time they asked for your SSN if you fell under the definition of ” US person”, but didn’t blank completely. More ammunition for your meeting with your MP. FWIW Egg is probably a leading-edge case. They’re owned by Citibank, so a whopping US connection there. Doesn’t bode well, though, does it? I think it’s time to hold a few MP’s feet to the fire over this. I shall certainly keep hassling mine.

  41. @calgary, thanks. I’ve been told I’m good with the one liners. As a matter of fact I was reflecting on that the other day- I think that it is because I had an older sibling who liked to talk for me when I was a child-I could only express myself when she was breathing in so my lines had to carry impact. I also LOVE metaphors (in case you haven’t noticed 🙂 )

  42. No matter what someone decides — renounce, don’t renounce — I just want to say that it’s Spring for heaven’s sake. We should not have to obsess about senators who are “stuck on stupid” (as Peter, our Rock, stated) or any old, current and future impossible demands on our sanity coming from the IRS. No matter where we are, no matter if it is this particular day or one to come, the sun will shine, birds will sing, flowers will bloom and we should all be in the pursuit of the happiness that this planet provides, not worrying our beautiful and handsome heads about contrived, copious, complex tax regulations designed to stamp culpable on anyone who dares or innocently fails to not comply. I cannot express accurately and certainly not politically correctly how angry I am that the US government has taken it upon itself to torment innocents abroad who deserve even more than the so-called homelanders to be free of its cockamanie, out of control tax system. Wherever you are, whatever you decide to do about your US citizenship, you deserve peace of mind and the freedom to live a normal life in your chosen country of residence.

  43. @ renounceuscitizenship
    I have an opinion regarding Obama but I have no vote. My opinion is that Obamaism is a cruel joke played out upon a nation which desparately tried to escape Bushism … and failed.
    P.S. Try not to bait me too much into a PC trap … I’m easy prey. 😉

  44. I don’t know if this has been mentioned anywhere else, but I see that Laura Saunders has done another post on Renouncing issues. It is titled

    New Taxes for ‘Renouncers’?

    It was posted on the 25th of May, and I don’t see any comments on it. Guess I will have to post one.

  45. The press reported a few weeks back that some $1.03 billion in unpaid Federal taxes was owed to the IRS by Federal Employees; incluidng emploees of the IRS, Treasury Department and Congressional staffers. These are people who presumably show up for work every day.

    The question is why the IRS is not taking action to pick this low-hanging fruit from persons who walk through the front doors of Federal buildings every day rather than Congress dreaming up more ways to destroy the lives of US citizens livng abroad, including vast numbers who are not even aware they are US citrizens? This includes those who, under prior law, were “deprived” of their US citizens when they became naturaloized citizens of Canada and other countries, those born in the US whose mothers came across the northern border to give birth to their baby because they were not close enough to a Canadian hospital to make it on time and those born in Canada, or elsewhere outside of the US, to a US parent but who have never held a US passport, do not have a Social Security number and have never ever visited the US and some of which speak no English.

    Most of these don’t have any idea they are US citizens until they are confronted by a US immigration officer when trying to enter the US for a visit with a foreign passport showing their birth place as the US, or accompanying children born abroad who are informed that, because of their parent’s US citizenship they are also US citizens and have a US tax obligation they had better pay up or face serious consequences. This terrorizes them into doing so and, in many cases, results in such massive penalties being levied that their life savings are wiped out.

    And to insult to injury, Congress now wants to revoke US passports of citizens allegedly owing $50,000 or more in back taxes.

    What about taking action to colect back taxes form Federal employees, includng those who draft our tax laws for their Congressmen and Senator bosses?

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