What do we call citizens who live outside of their birth country?
There is a difference between an international traveler and an expat. International Traveler- an individual who periodically leaves his country of birth and
1,001 U.S. Citizens have already renounced their citizenship in 2014travels to other countries. Expat definition- An individual who makes the decisions to live, start a career, buy property, and establish himself in a country other than the one he was born in.
Why are Citizens becoming Expats?
Although the number isn't huge, the percent increase from 2012 to 2013 is. (See chart below) With an over 300% increase this begs the question: Why are people giving up their citizenship?
A few reasons why Citizens are leaving:
Since the early 1900's U.S. Citizens living and working abroad have had to pay taxes on all income. This means any foreign income is fair game for the U.S. Government since all U.S. Citizens must file taxes. In 2010 the Federal Government passed a law requiring expatriates to file all foreign financial assets, which includes such things as foreign investment interest income, foreign homes, and other foreign owned assets. Welcome to double taxation. Expats get taxed by the foreign government, and by the U.S. Government.
Increased Difficulty to Bank
With increased pressure from the U.S. Government to share banking information more and more countries are providing the IRS with account balances and information of U.S. citizens living abroad. Many times, due to the increased regulations that foreign banks must cooperate with in order to make the IRS happy, U.S. citizens encounter difficulties when banking outside of the United States. Some banks would rather shun U.S. account holders than deal with the legalese that the IRS brings down upon them.
Difficulty in getting Dual Citizenship
A U.S. citizen who voluntarily applies for citizenship with another country faces a high chance of having his/her U.S. citizenship revoked. The U.S. government shuns you from doing so, saying it may create additional problems. there are many benefits to naturalizing in a foreign country, such things as tax breaks, ease of owning assets, banking, and more. If you are an expat seeking naturalization into the country you have lived for the past 15 years, and face pressure and complications from the U.S. government for doing so what would you do?
Out of sight, out of mind. It's easier to slam, stiff penalties and unreasonable taxes on the 6.3 million U.S. Citizens living abroad than it is those living within USA's boundaries. They can't fight back as easily, they are a minority, and they face becoming ostracized if they do not comply. It's the same reasons that the 13 colonies fought for their independence from Britain hundreds of years ago.
This makes me wonder...
with the cards stacked against you, what incentives does an Expat have to remain a U.S. Citizen?