I spent last summer in America. One day listening to NPR, I heard an amazing story on American expats renouncing their US citizenship. Here are some choice quotes on the phenomenon:
More American Expatriates Give Up Citizenship (NY Times):
Amid mounting frustration over taxation and banking problems, small but growing numbers of overseas Americans are taking the weighty step of renouncing their citizenship …
There were 235 renunciations in 2008 and 743 [in 2009]. Waiting periods to meet with consular officers to formalize renunciations have grown …
I didn’t know that, as an American, I have to pay taxes on what I earn here. Obviously I pay for income I generate Stateside with an extensive list of tax calculators and estimators, but it was news to me that I have to pay taxes on teaching English down here. It sounds outrageous, and it is, that I have to pay taxes on the one million pesos or so a month I make teaching English in Colombia.
Here’s another choice quote from the NY Times piece:
American expats have long complained that the United States is the only industrialized country to tax citizens on income earned abroad.
A major point of the NPR story was that it discourages Americans to branch out of our own borders. In a globalized world, that doesn’t make for a competitive nation.
As it becomes more difficult for Americans to live and work abroad, it will become harder for American companies to compete.
Fortunately there’s a movement to reverse this backwards ass policy. These quotes from the Wall Street Journal piece, Taxes on Overseas Income Take Center Stage at House Hearing:
U.S. multinationals pressed their case for exempting all foreign profits from U.S. tax at a Thursday House hearing, as a congressional debate over corporate taxes got off to a contentious start.
This article focuses more on American corporations’ earnings, not individuals’, but it’s the same concept. American firms are put at a disadvantage against foreign competition.
“We’re not talking about a tax break. What we’re talking about is paying the same as our foreign-based competition,” [Proctor & Gamble CEO Robert] McDonald said …
“Clearly, the tax code is too complex, too costly, and takes too much time to comply with,” [MI Republican Congressman David] Camp said. “I don’t think this can be, nor should it be, a partisan exercise” …
Democrats and Republicans on the panel were in agreement Thursday that the tax code is too complicated and needs to be simplified.
Even if you’re anti-corporate or anti-big business, you have to recognize that American companies losing out to foreign competition will result in less American jobs. Look at the American auto industry.
Here’s another piece on the subject in TIME, Why More U.S. Expatriates Are Turning In Their Passports:
502 expatriates renounced U.S. citizenship or permanent residency in the fourth quarter of 2009 — more than double the number of expatriations in all of 2008. And these figures don’t include the hundreds — some experts say thousands — of applications languishing in various U.S. consulates and embassies around the world, waiting to be processed. While a small number of Americans hand in their passports each year for political reasons, the new surge in permanent expatriations is mainly because of taxes …
The U.S. is the only industrialized nation that taxes its overseas citizens, subjecting them to taxation in both their country of citizenship and country of residence.
I doubt Americans in Colombia or anywhere in Latin America are renouncing their citizenship. I bet it’s happening in countries like UK, Australia, Switzerland, etc. But still…
I’m proud of being American, and I’m proud of my country. But there are still things that make me wonder what the hell is wrong with those people. What do you think? What could possibly be the argument for taxing money I make here?
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