Quoted in TIME Magazine about expatriation
Yeah I’m internet famous. Or something.
I was interviewed for an article that was published in TIME Magazine, Why More U.S. Expatriates Are Turning in Their Passports. Thanks, Helena for this.
Our experience is that we are getting a lot of people who are looking to bail out of the United States. By far the majority of those are permanent residents — green card holders. But a significant and growing minority consists of people who are U.S. citizens.
Included in the “I want to give up my U.S. citizenship” category are people who acquired citizenship through naturalization. Those people have an easy landing place if they give up their U.S. citizenship — their original home country.
But for the first time in my career, I am seeing a decent number of people who were born in the United States and have no other ties to other countries. These people have a big job ahead of them to acquire a second citizenship before relinquishing their U.S. passport. Yet they are methodically working through the action steps needed.
These people almost always cite taxation as one of the reasons for their decision. Both the political changes we are seeing and the enforcement attitude of the IRS cause them to consider the drastic step of leaving the United States permanently.
You can denigrate them all you want. Call them names. Mock them. But if you look with an open and nonjudgmental mind at what you see, there are some questions that pop up:
- Why are really smart, entrepeneurial immigrants — Ph.Ds, executives, etc. — now willing to leave the United States permanently? Is this good for the United States?
- Why are plain old ordinary people willing to consider this radical step?
- Is this statistical noise or should we pay attention to these — and related — issues?
Phil,
That people are formally reliquishing citizenship at a higher pace than before is a statistical fact – but, in my view, not a particularly significant one. The increase expressed as a percentage appears huge but the absolute numbers remain miniscule. Moreover, the database itself (IRC §6039G) is one of relatively recent origin having sprung to life in 1996 in the same legislation that created the notion of a “Long Term Permanent Resident”.
One of the least emphasized facts about America is the flip-side of the “Ellis Island Story”. That deeply moving (to me, anyway) narrative focuses on those intrepid souls who risked all and abandoned everything familiar to them to try and build a new life in America.
The flip side, of course, is the story of millions and millions of those immigrants – and their children – who left America and returned to the country they came from. Their motives for leaving were/are just as mixed as those who elected to stay: business success, business failure, good times, bad times, etc, etc.
I am no expert on the checkered legal history of how one obtained or lost US nationality in the past but under present law it is a very difficult thing to lose accidentally. In the old days – or so I’m told – you could lose it unconsciously, e.g. by being married to the wrong person at the wrong time or simply by living too long “off the reservation”.
Nowadays you have to fill out a peck of forms and swear disallegiance before a US Vice Consul somewhere to lose your citizenship. Only those who take this formal and public step get their name published on the quarterly list of your fellow ex-Americans and thereby add grist to the statistical mill.
A sizable number of US citizens or permanent residents living abroad who, exasperated with America’s expensive, profoundly silly – and largely unenforced – insistence on tax and “information reporting” requirements on its non-resident citizens and LPRs, simply engage in what I call “passive expatriation”. This involves simply not bothering to waste their time and money (and the US government’s, for that matter) filling in and filing forms that nobody – including the IRS – has any use for, much less wants. This – TOTALLY ILLEGAL AND CRIMINAL – form of “expatriation” is far more common than the formal sort and usually ends when – or if – the citizen/resident returns to America and/or has enough income reported on information returns to trigger a “Where is your return” letter from the IRS’s silicon-based units.
Nor do I believe that the recent statistical blip recorded IAW § 6039(G) is entirely tax related. America has lost a lot of its allure in the eyes of the world in the last 60 years. This is true not just in absolute terms but also relative to other countries. Ironically, that relative loss of attractiveness reflects the force of American ideals which have deeply influenced – and continue to influence – sizable chunks of the rest of the world for the better.
But as the song goes: “The old grey mare she ain’t what she used ta be . . . ”
BTW. Has anyone checked lately to see which side of the Canadian border is more heavily patrolled?
John “Still filling out forms” Nolan
Frankfurt am Main
Thanks for the comment, John. As usual there is much insight there.
The “passive expatriation” mode is by FAR the most common one I have seen. The cost is too high for people who honestly try — and fail — to do the right thing. Tax penalties give draconian a whole new meaning.
And as you note, tax considerations are only one of the many factors that influence a person to give up a green card or renounce citizenship.
Phil
Hi Phil,
I am the one who write the article. Yup, I plead guilty.
While I usually forget an article as soon as it’s printed and move on to the next one (such as the fickle nature of journalism), this one I cannot shake off. Not only was it the No. 1 Most read and Emailed story on Time.com for more than a week, but it was also picked up on numerous blogs and forums (I guess you really ARE famous…) because the subject matter seems to strike a chord. Not only among Americans overseas, but those in the US as well – most of whom had no clue about the tax burdens their compatriots who live abroad have to bear. While there’s no relief in sight (from what I hear – don’t quote me on this:), maybe the raising of the awareness will be the first step toward a more equitable system.
Hey, I am supposed to remain neutral. So that’s all I am gonna say.
Thanks for the comment, Helena.
Not only is there no relief in sight, but in fact the tide is flowing the other direction in terms of politics (See Sen. Lieberman’s execrable, shamelessly self-serving, and callously acronymed (?) (!) “Terrorist Expatriation Act”) and tax policy (see the HIRE Act which demonstrates the strategy of “If your current laws are obtuse and carry horrific penalties and you can’t enforce them, well, the solution obviously is to make them more difficult to understand and increase the penalties.”)
Ah, but I do not judge.
It was a pleasure working with you on the article. All the best.
Phil.