As an immigration lawyer, I am very fortunate to work every day with people from all over the world and from vastly different backgrounds. I do this while representing people in removal proceedings, in deferred action applications, and all manner of work visa petitions. For a clear majority of these people, there is one ultimate goal: US citizenship. For many, acquiring US citizenship is a lifelong and closely-held ambition, emotionally bound up with the process of leaving their home country and establishing a life here in the US. For others, it is a matter of convenience—allowing them the freedom to remain outside the US for extended periods of time without worrying about being found to abandon their permanent resident (Green Card) status, or to petition for family members from abroad to immigrate to the United States.
Read moreNew York Times: "Why I'm Giving Up My Passport"
Jonathan Tepper is giving up his US passport. The founder of Variant Perception, a macroeconomic research company, has spent most of his life abroad, but as an American citizen he is still required to fulfill "onerous financial reporting and tax filing requirements that are neither fair nor just." Mr. Tepper is scheduled for an "in-person final loss of citizenship appointment" at the US Embassy early next year. He will keep his British passport, obtained in 2012. With the renunciation of his US citizenship, he will join the 3,000 Americans who gave up their citizenship last year, a number that is expected to grow this year and next, even as the cost for renunciation of citizenship has increased dramatically from $450 to $2,350.
The reason, Mr. Tepper explains, is the unusual US tax laws that apply to American citizens and companies no matter where they are physically located. He notes that America is the "only country (except, arguably, Eritrea) that taxes all of its citizens on worldwide income rather than where the income is earned. Expatriate Americans have to pay taxes once, wherever they live, and then file again in the United States." Even if no taxes are owed (the IRS doesn't tax the first $97,600 of foreign earnings), many expatriates must pay thousands of dollars to accountants to navigate the complicated rules.
The US government has been taxing Americans living abroad since the Civil War, when it did so to prevent Americans from fleeing to Britain to avoid taxes. The recent Foreign Tax Account Compliance Act, which requires foreign financial institutions to report certain assets held by American clients or face severe penalties, has led to the refusal of many foreign institutions to take on American clients and arguably to the upsurge in Americans renouncing their US citizenship.
Mr. Tapper writes: "The founders agreed on 'no taxation without representation.' Why can't Congress?"
State Department: Huge Fee Increase for Renunciation of US Citizenship
Effective September 12, 2014, the State Department is adjusting the processing fees for certain nonimmigrant and immigrant visa applications, special visa services, and certain citizenship services fees; most dramatically, the fee for renouncing US citizenship is increasing significantly from $450 to $2,350. The reason for these changes, as the US Embassy in London explains, is to reflect the true cost of providing the service:
The Fiscal Year 2012 Cost of Service Model update reflected that documenting a U.S. citizen’s renunciation of citizenship is extremely costly, requiring U.S. consular officers overseas to spend substantial amounts of time to accept, process, and adjudicate cases. For example, consular officers must confirm that the potential renunciant fully understands and intends the consequences of renunciation, including losing the right to reside in the United States without documentation as an alien. This fee was first introduced in 2010 and was initially set below true cost.
Many are pointing out the huge increase in the renunciation fee coincides with the record number of Americans living abroad who are renouncing their citizenship and a five-year campaign by the Internal Revenue Service to track down tax evasion by Americans hiding money overseas, which has led to "increasingly onerous tax-filing requirements" for "many middle-income Americans living abroad who pay taxes in their host country and say they weren’t trying to dodge U.S. taxes."
On the upside: the fee for E-1, E-2, and E-3 visa applicants is decreasing from $270 to $205.