Did you know that only a limited few countries in the world have citizenship based tax laws, and currently the United States of America seems to be the most punitive as it continues to tax all its citizens equally on all worldwide income regardless of where they live on the planet. I would query the claim of treating all citizens equally though, as to an outsider like me it certainly seems to be a system that is inherently unfair.
The USA’s citizenship based tax system is apparently an archaic remnant of the American Civil War, and for it to remain in place today instead of moving to a more equitable residency based tax system creates huge problems for those US citizens who choose to permamantly live and work abroad. In fact it has all become so problematic in recent years that some US citizens living abroad feel they have no option but to relinquish their US citizenship, however upsetting that may be to them.
And before anyone gets up in arms about these perceived ‘traitors’ being unpatriotic and not paying their dues, please be aware this is not at all about lack of patriotism or devious tax evasion, but it is about unfairness and a general lack of understanding of what is involved and exactly what is being asked of them. Americans abroad already pay taxes where they live, according to the laws in their country of residence. So to have the onerous financial obligations and burdens of dealing with the tax requirements of two countries with very different tax laws is simply too much for many longterm. Many of these ex-US citizens feel that it is not they who have given up on their country, but their country that has effectively given up on them.
I am a Brit married to an American who has lived in the UK since childhood. He went through school here, has always worked here and only here, owns a property here, has married here, has made a family here. He has been a dual US/UK citizen for decades. And it really upsets me that we have to spend so much time and money preparing multiple US tax forms to be filed every year by law just to show he does not have to pay any US tax. It must cost the American Government way more in administration costs dealing with the reams of paperwork than can ever be gained in limited taxes owed.
We’re not talking about one or two basic tax forms here, either, and no, it can’t be done online from outside the US. We have to pay someone here in the UK who understands the system and is accredited to complete the bewildering array of paperwork that makes up our annual US tax return, and it is not at all cheap to find such expertise outside of the US. To add insult to injury, in order for my husband to claim any legitimate allowances for being married rather than single, as a ‘Non-Resident Alien Spouse’ I would have to be included in my husband’s tax return.
So no – just no, on point of principle that’s never happening. I mean, I’m British, I don’t live in America, have never lived in America and have absolutely no desire ever to do so – and so my personal financial affairs here in the UK are none of the American Government’s damned business. Additionally, as every single bank account my husband has is based here in the UK where we live, he also has to e-file details of all these ‘foreign’ accounts to the financial crimes enforcement agency annually to prove he is not ‘offshore’ money-laundering: To prove he is not a criminal, as if it is an offence to be American yet live permanantly outside of America.
And to top it all, the current US President proudly boasts of how little tax he pays, or his company pays, and his smugness encourages others in the USA to think it is clever to be like minded and screw the system from the inside, pay as little as possible, sneakily skim off a few extra bucks here and there, or whatever it takes. But for thousands of everyday Americans strugging abroad to meet obsessively obtuse tax requirements, chance would be a fine thing with so much extra suspicion and intrusive scrutiny falling on their own personal financial accounting to a level that would be completely alien and unacceptable to any US resident.
There’s a lot about America as a country I just don’t understand. Keep your gun laws with your second amendment rights if you must, although personally I feel that where a slow-loading musket may once have been a reasonably legitimate arm to bear in your own personal defence way-back-when, to my mind a modern semi-automatic assault rifle is a thoroughly unsuitable weapon for everyday use. Keep your multiple mass shootings, I don’t care if you want to continue to kill each other en masse, it is your constitutional right, after all.
But please, PLEASE sort out your archaic citizen based tax laws, change them to residency based like every other country in the free world and help your fellow countrymen abroad who are all potentially positive ambassadors of their country of birth feel proud to be, and stay, patriotic American citizens til the day they die…