The US is almost unique in the world in taxing based on citizenship rather than residency
The swearing in of new citizens often makes news in the US, especially if it happens in unusual circumstances such as one party’s national convention. Much less reported are the many citizenship renunciations by Americans, and the travails leading up to these life decisions. Almost all those giving up their US nationality are expats. And for each renouncer going through the ordeal, there are countless others thinking about it.
By the best estimates, renunciations have been rising since 2010, when the Obama administration passed the notorious Foreign Account Tax Compliance Act , inflicting misery on US expats everywhere. In 2014, the government raised the renunciation fee from $450 to $2,350. Undeterred, expats kept at it. The US bureaucracy then indirectly slowed the pace with red tape in the first three Trump years. But we’re back on trend in 2020.
. It’s also uniquely parochial in being unable or unwilling to distinguish between, say, a rich American living stateside and stashing money offshore and, for example, a middle-class American married to a German and teaching elementary school in Berlin. The hell starts with that conflation. Worse, the EU then started passing laws with bureaucratically sublime names such as MiFID II and PRIIPs that imposed new rules on everything from mutual funds to life insurance. This scared the US banks and brokers of American expats living in Europe, so they also started kicking out their customers with foreign addresses. Many Americans overseas are financially marooned.
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