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Off The Grid News
Home Financial

Taxes So High Americans Forced To Give Up Citizenship

by Off The Grid News Staff
in Financial
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Foreign Account Tax Compliance Act
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Foreign Account Tax Compliance Act

Income tax obligations have gotten so onerous that thousands of Americans are giving up US citizenship. Most of those considering

this step live abroad, but some might be US residents.

People are considering this once unthinkable action because of a law called the Foreign Account Tax Compliance Act, or FACTA. That law requires US citizens living outside the United States to report all the money they have in foreign accounts to the IRS. It also requires residents of the United States to report any moneys they keep overseas.

The United States is the only major power in the world that has such a requirement on its citizens. Even such undemocratic nations as China don’t try to tax the bank accounts or moneys of their citizens outside the country.

Americans Being Forced to Renounce Their Citizenship

Around 1,810 Americans have renounced their citizenship so far in 2013, Bloomberg Businessweek reported. Only 235 Americans renounced their citizenship in 2012.

It is easy to see why a US citizen living outside the country would make this drastic move; they would face double taxation. The law is particularly unfair for those who have lived outside the country for years. A person who lives in another country and doesn’t use the services of the U.S. government is being asked to pay taxes to support it.

Worse, FACTA imposes a fine up to $50,000 on anybody who doesn’t comply with this mandate. Many Americans living overseas will end up having to give up citizenship for simple economic reasons. Bloomberg reported that it can cost $2,000 for an American overseas to comply with tax requirements.

Average Americans Hurt

Many average Americans will have to give up their citizenship just to keep their jobs or stay outside the country. Contrary to popular belief, most Americans abroad are not wealthy expatriates; they’re average people, some of whom are there because they cannot find jobs in the US.

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Also affected could be missionaries and others who are living in other countries for charitable or religious reasons. Most of them are not wealthy, so they might be forced to give up citizenship to comply with their calling.

Some Americans living outside the country have found they cannot complete everyday financial transactions such as opening a bank account or buying an insurance policy. An American who worked part time in another nation and had a bank account there would have to comply with FACTA even if the account contained just a few hundred dollars.

There are some foreign banks that are refusing to let US citizens open accounts because of FACTA. In other words, some Americans abroad will have to renounce their citizenship in order to open a bank account so they can cash their paychecks.

Under FACTA, an American would have to report such everyday activities as opening a checking account or insuring a car outside the United States to the IRS. In other words, it might be impossible for Americans to live outside the US

The law could also cost some Americans jobs because it will cost $5,000 for an American corporation to file the correct tax returns for a US citizen they employ outside the country. That means many US companies will stop filling positions in foreign countries with Americans. They’ll hire Australians, British subjects, or Canadians.

Another tax law designed to penalize the rich is hurting average people. FACTA was intended to punish wealthy Americans hiding income in overseas bank accounts. There’s no evidence it is doing that, but it is hurting working people living outside the country.

Violation of Basic American Values and National Sovereignty

Forcing Americans to give up citizenship is only the tip of what is wrong with FACTA. This law is also a violation of basic American values and the sovereignty of foreign countries.

One of the main slogans of the colonists who launched the American Revolution was “No Taxation without Representation.” Taxing people who live in another country, who probably don’t vote in US elections, definitely violates that principal.

Even if those people are American citizens, they are not in the United States. One of the causes of the American Revolution was that the British government used the legal fiction that American colonists were British subjects to justify taxing them.

There’s also a serious issue of national sovereignty here. The United States government is trying to force foreign banks in foreign countries to comply with its laws. It is interfering in the internal affairs of foreign countries, including Switzerland.

A Swiss bank that tried to comply with FACTA by reporting Americans’ financial transactions would actually violate Swiss law. The US government wants citizens of a foreign country to violate their own laws in order to collect a few taxes.

We have reached a point where citizens of other countries now enjoy more freedoms than Americans do. Those citizens have the right to travel outside their nation, work, and open bank accounts; Americans don’t because of FACTA.

FACTA proves that the US government wants to be able to control and monitor its citizens wherever they are. Americans, it seems, no longer have the right to travel or conduct normal business activities abroad.

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