Exile

I used to laugh at weenies who would go on about how they would emigrate from the US if their candidate didn’t get elected. It used to make me laugh how they would think that their own cosseted, obviously comfortable, middle class lives would be affected by whomever it was the powers-that-be handpicked to be the candidate for the two big parties. As if the empty suits at the front would make a difference.

In a way, it has made a slight difference for me (but I have no illusion that my plight is not the result of bipartisan cooperation.)

I left the US in 1998 and haven’t lived there since. And for the most part, my life had been relatively untouched by the politics of the US. Until recently…

My Background

I grew up as a US Navy brat, well-steeped in Naval and US history and tradition. A poster boy for patriotism. I eventually served in the US Navy for six years, and for my own reasons, I found it easier to move to London to be with this girl I had met when I was stationed in Portugal, than to move back to the States.  The relationship didn’t work out, but I loved London more than the girl and decided to stay, and I eventually met my wife. [I had dual-citizenship thanks to my father being a war baby.]

So I was the third generation of men in my family who served the US in a military capacity. I loved the USA. I got a lump in my throat every time I heard that damned Lee Greenwood tune, and I was immensely proud of the promise of prosperity that the US held out to anyone who was willing to get on the boat and work to change their miserable lives. I was a bit of a flag-waver. (Albeit that I had established a life abroad.)

Wherein we attempt to secure a Green Card for my wife

A few years ago, I attempted to get a Green Card for my English wife so we could begin establishing residency in the States and legally bring her aging mother over with us eventually. It didn’t work out as I was told I had to have $66,000 in a bank account to cover the possibility that my wife would sponge off of the overly generous welfare state provided by the United States.

Most of my wealth was in my flexible mortgage and I started having a go at transferring money out of that into my US bank account. Fluctuating exchange rates were destroying the value of the pounds I had earned over here – I think I lost  over £1000 just from transferring money. As it looked like what little was left of my wealth was getting destroyed by the assholes running the central banks for their buddies in the investment banking world, I decided to abandon the exercise and put the money back into my mortgage.

I was a bit angry at the time, as I saw people I know getting working visas with little effort, as well as the big push to make illegal immigrants legal in the US. It felt like my country had abandoned me.

Taxes (well, tax returns and stupid forms, actually)

Ahead of this process, I had to get all my tax filing up to date. The US is the only country in the world that taxes its citizens on money earned abroad over a certain threshold. Americans abroad are required to file tax returns every year, regardless of their earnings. In my case, I have never earned money (and am likely never to earn money) above the threshold to pay taxes to the US. So it is an administrative exercise costing a bit of money to pay a tax accountant/attorney. There is also a piece of paperwork for people with bank accounts abroad called the FBAR, however, which is one of the biggest pieces of nastiness out there – there is a $10k per mistake fine for making mistakes on the paper work. After being out of the system for so long (and not “dodging” taxes, just not filling out the paperwork,) I hired a tax lawyer to get me up to date on my US filings at the time. In hindsight, applying for my wife’s green card and getting my tax form filing up to date was probably the biggest mistake I ever made, as it put me back on the bastards’ radar.

I was feeling slightly aggrieved by the whole situation. I became aware of just how unfair the system was to an American living outside the US. But then something else came along, which became the final straw for me.

FATCA

Attached to an act that is supposed to help war veterans get back to work, Congress passed a law called FATCA, which requires an additional piece of paperwork to be filled out with pretty much all the same information as the FBAR, but in a different format. The fines for getting it wrong are just as crippling.

Additionally, it adds a high level of administrative burden to banks abroad that may want to do business in the US: If the banks don’t comply with the administration of information regarding US persons with accounts, they will essentially be crippled with a withholding tax on every bit of money that passes through all of their US accounts. One estimate for the annual cost of administration puts it at $10 per account (that is, every account that a bank has, not just those of US citizens.) As a result, some banks are now beginning to refuse to do business with Americans. Swiss banks, for instance, are canceling mortgages and current accounts of Americans/US Persons who have lived there for decades.

The reporting regime kicks in next year or the year after, and I suspect the big banks here in Blighty will begin to do the same and will limit their product offerings for US persons. Which is a bitch for someone like me whose entire economic life is here in the UK. And just having to fill out all the paperwork required to tell Uncle Sam that I owe him no money would cost me between $1000 and $2000 per year, as I would have to pay a tax lawyer to do it for me. If I use last year – which was a lean year for me – as an example, it would amount to about five per cent of my post-UK tax income to pay a specialist to tell the US that I owe it no money, with no economic upside other than the avoidance of fines.

As my mother-in-law is getting on a bit, and my daughter is in high school, I have no plans to return to the US in the near- or middle-term, or now, even the long-term. Part of the problem with living abroad is that the US does not recognise tax-free savings schemes and other tools to make life more tax-efficient. And, because of money-laundering rules, thanks to the Patriot Act, I cannot have accounts in the US, without lying about my address (and having someone collect correspondence for me.) So other than the ability to have a current account and a mortgage, I am an economic non-entity in both countries: I am unable to structure my affairs in the way that fellow countrymen of both countries may, as I will be liable for tax on everything no matter what.

Wherein I Decide to Renounce My US Citizenship

And as my life for the foreseeable future is here in the UK, and as the long-term costs and risks associated with complying with US tax law (n.b., I am not dodging tax; I have never owed anything to the US government) is too much for me, I decided to renounce my US citizenship, which I did back in May of this year.

It took me over a year to decide to do it, and it was one of the hardest decisions I had to make, and although I’m sad that I had to make the decision in the first place, I’m glad it’s over. However, it is an irreversible decision.

It used to be that the selection of POTUS had very little to do with me or my personal circumstances. However, FATCA and its attendant legislations are near and dear to President Obama’s heart; unfortunately, I never saw Romney or his lot talk about repealing FATCA, so a plague on both their houses.

And since the Eduardo Saverin case has brought everyone’s attention to FATCA, many Americans are now saying that us fatcats who live abroad should be paying our “fair” share in exchange for all the benefits that extend to us as a result of being American. I predict that the ability to renounce US citizenship will become illegal under Obama now, with the so-called “liberals” saying we’re not paying our “fair” share, and the so-called “conservatives” saying we’re not sufficiently patriotic. I see life getting tougher for overseas Americans in the coming years.

For once in my life outside of America, American politics touched my personal life. And now, I am, in effect, an exile.

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5 Responses to Exile

  1. John Brown says:

    Sir,
    If you haven’t seen it yet, check out an article about what you wrote above posted yesterday in The Indy. You are not alone, American expats have had enough and the word is getting out.

    “Land of the flee: why, despite Obama’s re-election, Americans are renouncing citizenship in droves”

    http://www.independent.co.uk/voices/comment/land-of-the-flee-why-despite-obamas-reelection-americans-are-renouncing-citizenship-in-droves-8329319.html

  2. another expat says:

    Thanks for your story. I also belong to the ever increasing number of expatriates who are guilty of nothing other than having a US passport, but have been put into the situation that renouncing citizenship is the only viable alternative in order to be able to lead a normal life abroad. The USA, with its constant rhetoric of freedom, democracy, etc. has ceased to live up to its own ideals, and as you’ve also indicated, things are getting worse all the time.

  3. Pingback: The die is cast… | A Gentleman's Rapier

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