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  1. The US is always a dream land of poor people in developing country like India, Sri Lanka or China. But as people in these countries are learning about destructive tax policies more and more bright or prosperous entrepreneurs preferring to take advantage of improving situations in India. Although they owe no taxes due to high taxes in their birth-nations, it is too time consuming and expensive to be compliment and threat of huge life altering penalties, if they commit an innocent mistake like FBAR.

    The US tax code grossly discriminates expats. To give couple of examples, their retirement plans and graduate tuition fee or their kids are not tax deductable (even if their kids are going to top rated universities in their native country). Now the trend is, many successful immigrants returning to India and China. This trend will be a huge loss to the USA in the future.

  2. Thanks Phil for featuring Jeff’s complaints. I also gave up my US citizenship (on Feb 28, 2011) because of HEROES 2008, passed by Democrat controlled Congress and signed by Republican Bush. Those of us at Isaac Brock see this as a bipartisan witch hunt against Americans who have decided, for whatever reason, to live overseas. In my case, I wanted to see the world, study at a foreign graduate school, and eventually lived in Canada (got married to a Canadian girl), England, Switzerland, and Canada again. It wasn’t to escape taxes, since I was still a student and not paying anything, but to learn about the rest of the world, to attain a foreign language or two, and to broaden my horizons (as they used to say). But now, the vast majority of Americans say to me when I explain that I relinquished my citizenship to protect my family from the biggest threat to their happiness, the United States government–the majority of Americans are saying, “Don’t let the door hit your ass on the way.”

    That’s right the United States government is the biggest, most real threat to my happiness: not terrorists, not robbers, not the Socialist government in Canada. None of these things compare to threats of the IRS to throw me in jail if I do not reveal to them my bank accounts–though I have never committed a real crime and I have earned all my money through legitimate sources: the IRS has expected me to waive my 4th amendment right and tell them my bank accounts. Screw that. I’m not going to make their confiscation of my wealth that easy.

    Thank you, Phil. You are one of the few who understand our predicament.

  3. All this sounds familiar, but this has trickled down to the next generation.

    When each of my daughters were born, I proudly (wouldn’t now) went to the US embassy in my home resident country and registered their births at the US embassy (was friendly looking back then, but a barbed wire fortress now), and went on to apply for their US passports. We still have the dust covered originals above my desk.

    All the US unfairness started when we found out they “needed” them (US passports) to now enter the US being US citizens. Being the cheapskate I am, I thought screw the US, they have foreign places of birth, how are “they” to know, who is the US to tell us I have to pay for passports twice. We opted to renewal only their “foreign” passports, and the US government (probably throught lack of IT) happily allowed us to visit the US and avoid the first of their “taxes” – the passport tax. Remember children’s passports only last five years. That action saved me about $1000 over the years (6 passports renewals plus travel expenses getting to the f**ck*n US embassy).

    My kids have been to the US numerous times, they know the landscape.

    Turn the clock ahead nearly a couple of decades, my kids are grown up, and they both know about the US tax situation (probably from me admittedly), and as teenagers they think US tax policy is unfair. Interestingly, my oldest daughter had a Mexican girl (who was an accident American because she was born in Texas)in her class during “high school” who renounced her US citizenship in favour in keeping her European citizenship because she did not want to be beholding to the US government for taxes. Her European-based Mexican parents encouraged her to renounce (I think her mother was a Mexican of European descent and had a Spainish passport) , but left it up to her.

    Hey….I thought every Mexican would die for a US passport and here’s one that renounced – have times really moved on. And as far as I know she is not related to Carlos Slim or has a fortune to inherit when she’s older – just an ordinary person or ordinary means.

    Now going back to my kids, their dust covered US passports are still lying on my shelf unused for many years. My oldest daughter has said if they US government ever gives her hassle, she’ll renounce. My youngest one has uttered similar threats.

    There are those who will say I have influenced their opinions with negative comments about the US, to silence my critics I have told them it is up to them to decide what to do in future and don’t listen to me. If anything else the US passport gives her the opportunity to live and work in the US without having to engage the department of Homeland Security and all the crazy hoops you need to go through. I know because my cousin in the US paid thousands to get her highly educated professor husband (who teaches at a esteemed US university) who’s from a visa waiver country (not Iran or someother evil country) a green card.

    Is FATCA / FBAR / US citizenship tax policy now shifting opinion for the next generation coming up? At a time when the US needs brains to power the knowledge economy, we are letting tax rules stand in the way. If all the US can offer these brains is VC money, well money is very fluid and I suspect VC money will be available in other parts of the world sometime soon. Why should anyone want a US passport? It’s far better to take a green card, and when you feel like it’s time to say “c’est la vie” to the US go back to your home country or a region of the world with better opportunities than the US.

    A passport is different, it makes someone feel like a member of a society, makes people perhaps feel like they have an obligation to it, in short be part of the “club” with all the rights and protections that may entail.

    All a green card is just a temporary pass to go around “go” and you can leave with no strings attached later on. How many of these talented people once arrived in the US are going to come to the conclusion the US is not really that overwhelming better than the country they left? Even possessing a US passport isn’t going to change their minds.

    Politicians in the US have to realise the US is not “that good,” anymore. You can may a living, have a decent standard of living elsewhere, receive good medical treatment, and in short build the dream. The US has been successful in exporting that dream to other countries, but it seems now other countries are now doing it better than the US. The Chinese now have that “can do” attitute the US once used to have for example.

    The US has to adjust to these new realities and quick.

    Well I not going to rant further…but here are my final points.

    The Mexican girl who renounced is not rich and has nothing to protect and felt what Europe offered was enough for her in opportunities and standard of living, and said “no” to club US – what a pity. Who knows perhaps later in life she would’ve have changed her mind and maybe just maybe she would’ve have brought her skills (and her money) back to the US for the good of the US as a whole. Instead she throw it away presumingly because she saw the US passport devalued by the US government’s tax policies. The US for her wasn’t a country worth investing her “life credits” into – how many times is this story repeated across the world? With or without citizenship issues involved?

    And my final point….my brother could’ve arranged my daughter summer work in the US by arranging employment for her within his firm. Instead she has decided to work in Ireland for the summer (and she has a job). The reason was surprising. The wages in Ireland are about the same as the US she wasn’t going to make anymore money, and she doesn’t have to get involved with the IRS. In Ireland she’ll work the summer and pay any taxes on PAYE (pay as you go) and won’t be required to fill in a tax return.

    As a US citizen abroad I have to ask, what is my country of birth doing to itself? As a US parent I would’ve been proud for my daughter to spend the summer in the country of my birth? The US is now a country that is becoming isolated, living in the world of 1950, and worst of all turning off the world’s next generation over a couple of extra pennies of tax. Today’s young won’t wait for Carl Levin & Company to retire or die out, they’re making their decisions now.

    When someday inside the US when people are complaining where has the world’s talent gone, all they will have to do is look at the residence-based taxation countries – China, Europe, Australia, and in future India and others.

    The US is shooting itself in the foot or cutting off it’s nose despite its face whichever one you want to use.

  4. Thanks Phil for putting this post up for “Real Americans’ that don’t understand how the US is treating “US persons” abroad. Unfortunately, I know that few of them read these types of blogs, but hopefully this will be forwarded on to help folks “get it” with what is wrong with current US offshore jihad and it’s unique Citizenship taxation model.

    There is a good recent post on Isaac Brock which I recommend to readers as it has some very personal testimonies about the stressful emotional problems people are experiencing from all of this.

    Thanks for your continuing contribution to information sharing. It is a big help to many US expat readers, and new immigrants to America who are also trapped by the FBAR/FATCA dilemma and accounts they have back that often are shared with family members non resident in the US. What a nightmare it is for them too.

    Also for those now stuck in the OVDI, there is a good report about the Opt Out potentials.

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Tax laws change over time, and the information in this post above may be less accurate today than it was at the time of the last revision. This post is not tax advice for your specific situation. Please contact an international tax professional to get personalized advice for your situation.