Expatriation

I grew up in a small town full of dairy and crop farmers. I was a farm boy. So when I first told my parents I wanted to start traveling, they didn't get it. Neither did my friends.

2016 was another record-breaking year for the number of US citizens and its long-term residents expatriating, giving up their US citizenship and passport or green card.

A few weeks ago, the IRS published its quarterly “name and shame” list in the Federal Register. That’s the list federal law requires the agency...

As a US citizen or permanent resident, you are forgiven for the belief you have the right to remain silent. “Pleading the fifth” (amendment), is such common chorus in American culture, it's near cliché by now.

Expatriation – deliberately giving up your US citizenship and passport – is admittedly a touchy topic. Congressman Sam Gibbons (D-FL), referring to expatriates, spoke of “the despicable act of renouncing allegiance to the United States.”

Earlier this month, the Federal Register published its quarterly list of former US citizens and permanent residents who have “expatriated,” i.e., given up their US citizenship or permanent residence.

US citizens who expatriate – those who give up their citizenship and passport – don’t get a lot of respect.Take Facebook co-founder Eduardo Saverin, for instance. When the Brazilian-born Saverin gave up US citizenship in 2011, it led to a political witch-hunt.

One of the advantages of being around as many years as I have is a long memory. And, during my entire 30-year career, Congress has been trying to figure out the best way to help the struggling economies of the US territories: Guam, Puerto Rico, the US Virgin Islands, and the Northern Mariana Islands.

The year is 1633, and a respected old man finds himself on trial for his life. His crime? Writing a book, the product of more than 20 years of research and study.

Pop icon Tina Turner has just joined a multitude of famous – and not so famous – expats. Having recently acquired Swiss citizenship, Turner, a long-time resident of the canton of Zurich, voluntarily "relinquished" her US citizenship and passport.

According to a recent poll by research firm Rasmussen Reports, fully 9% of the U.S. population has considered "expatriation." These are truly shocking numbers—nearly one in ten Americans thinking about giving up their birthright.

As you may know, the latest quarterly statistics on "expatriation"—i.e., renunciation of U.S. citizenship—were published just a few days ago. A total of 1,130 names appeared in the latest list, which happens to be many more than any previous quarterly total, and more than the total number of expatriations reported in all of 2012.

Acquiring a passport in another country and then expatriating—giving up your U.S. citizenship and passport—is a very serious decision. If you change your mind and want to return "home" to the United States, you might not be able to.

The United States is one of only two countries (the other is Eritrea, a military dictatorship) that taxes its citizens and long-term residents, no matter where they live. Even Americans who haven't lived in the United States in decades must pay tax on their worldwide income as if you never left. What's more, they must comply with complex reporting obligations, with violations subject to draconian civil and criminal penalties.

Official IRS statistics published in the Federal Register show that the number of U.S. citizens or long-term residents losing U.S. citizenship increased from 45 in the last quarter of 2012 to 679 in the first quarter of 2013. In 2012, according to IRS expatriation statistics, 932 Americans officially expatriated.

Over the last few years, I’ve helped dozens of U.S. citizens and permanent residents (“green card” holders) give up their U.S. nationality or residence status.  This is called Expatriation.

I arrived here in the Commonwealth of Dominica earlier this week.  It's always a pleasure to come here; I go through the "residents" line at passport control and the official stamps my Dominica passport with the notation "RR" for returning resident.

Imitation is the sincerest form of flattery.  And with governments in almost every country desperately seeking new revenues, it was only a matter of time before they begin imitating the U.S. example of imposing tax on the worldwide income of it citizens.

The numbers of U.S. citizens and long-term residents "expatriating"—i.e., giving up U.S. citizenship or long-term permanent residence status—is skyrocketing. Official statistics from the IRS state that in 2011, almost 1,800 people gave up their U.S. citizenship or handed in their "Green Card" to U.S. authorities.

Brazilian-born Facebook co-founder Eduardo Saverin relinquished his U.S. citizenship late last year. As an expatriate, Saverin must pay an "exit tax" on the value of any unrealized gains in his worldwide estate, less a $636,000 exclusion for 2011. I'm not privy to billionaire Saverin's financial affairs, but I have no reason to doubt his statement that he will pay "hundreds of millions" of dollars in exit tax to the U.S. government. Some of this tax is on the pre-initial public offering (pre-IPO) value of his Facebook shares.

As a former U.S. citizen who has given up U.S. citizenship, I've visited dozens of countries using my Commonwealth of Dominica passport.

While you have an absolute right to give up your U.S. citizenship, you must make your intention to expatriate crystal-clear.

If you're a U.S. citizen or long-term permanent resident ("green card" holder), you have a unique responsibility: you must pay tax on your worldwide income, even if you live outside the United States. Not to mention capital gains tax, gift tax, and estate tax.

Chris Martenson at Chrismartenson.com recently commissioned me to write an article on expatriation to be posted on his Web site.

There are several ways that a U.S. citizen can expatriate; i.e., end their U.S. citizen status.

I've written widely in this blog about the subject of expatriation.  From a U.S. perspective, that's the act of giving up your U.S. citizenship and passport, and setting up legal residence outside the United States.

Expatriation—giving up U.S. residence and nationality, including your U.S. passport—is an admittedly radical step.  But it's the only way that a U.S. citizen or long-term resident can permanently disconnect from future tax obligations.  (For background on this and other reasons why you might want to expatriate, click here.)

The United States is the only major country that imposes tax on a citizen's worldwide income, no matter where that citizen lives.