Note to Congress – Please do not force me to give up my US citizenship

by Rhodri C. Williams

Its been a year and a half since my cri-de-coeur about the double-filing (and occasional double-taxation) burden that the US – alone among all other countries in the world but Eritrea – places on its citizens abroad. At the time I wrote it, the best case scenario was for me to find a discreet way to back report some information no one had ever bothered to tell me to forward report before and then get on with it. Meaning?

Well. Continue the annual Springtime circus of spending 48 hours in a pointless and dispiriting clinch with 1040 supplements seemingly written by pedantic Klingons. Maybe hand it all over to a tax lawyer so that I could spend USD 2,000 per year for the purposes of verifying I owed nothing to the US over and over again in grammatically impeccable Klingon. Keep a weather eye on the incoherent calls for reform of this incoherence until it got to be time for the kids to make a decision. Meaning?

I’ve bent over backwards to be sure that my kids, growing up Sweden, will always have a home in the US. From day one, Dr. Seuss has been right there alongside Pippi Longstocking and transatlantic flights represent perhaps our second biggest household cost after the mortgage. But as the little guys approach the age of independent incomes, the IRS is waiting too, a lifetime of pointless Springtime anxiety clutched in its hot little hands.

So while it always seemed self-evident that I would no sooner give up my US passport than I would the nose on my face, the kids were definitely going to have the benefit of an informed choice in the matter. But that all changed with the FATCA, an astonishingly blithe raft of garbled global overreach. With banks worldwide now annually forced to disclose all information on ‘US persons’ holding accounts with them, my individual decision to stand and let the kids eventually decide on jumping became irrelevant. Meaning?

Meaning that the US decision to unleash FATCA on the world has taken the decision out of my hands. My citizenship and that of my children is literally now in the hands of the Swedish banking system, on whom the US Congress has placed the entire cost of compliance with its dogs breakfast legislation. Should the Swedish banks jointly decide that the cost of hosting US persons is too high, then they will cast us out and we will have no decision to make. We will not jump. We will be pushed.

Is this idle speculation or unconsidered hysteria? No. Axa bank in France just took this decision, derailing the lives of thousands of ‘US persons’ there, some of whom, as pointed out by the indispensible Victoria Ferauge, did not even have reason to know they were US persons. My bank here in Sweden might take a different approach. Or it might not. Other banks might take me in. Or not. If not, good luck to me and the kids. Sweden is a bureaucratic society, and loss of my bank accounts would roll out a chain reaction of inconvenience and potential disaster that I do not care to even consider.

If and when I get the letter, I do not see any other option than to apply for Swedish citizenship and renounce my US citizenship – and presumably that of my children. I can live with a little inconvenience and arbitrariness, if that is the cost of maintaining the link with my ancestral home. But I can’t live in the 21st century without bank accounts.

I don’t know if anyone in the US particularly cares about whether me and my little flock in distant Scandinavia remain part of their community or not. But does that justify allowing foreign banks to take the decision for me?

12 responses to “Note to Congress – Please do not force me to give up my US citizenship

  1. This is indeed disaster legislation. And you hit the nail on the head: the cost of compliance is squarely on the foreign banks. Expats really need a lobby in Washington.

  2. I urge you to try to get this published in The Hill.

  3. Hi Nicholas and Blaze, thanks for your comments!

    I have had some very heavy traffic to this post and very good feedback, both from you two and by email. But I’m afraid I’m disappointed. In response to a suggestion that I might publish this piece as a Swedish language op-ed, I said I wanted to sit back a little and let the blogosphere play its fact-checking function. I think deep down I was hoping against hope that some expert would come out of the woodwork and say “no, you got it all wrong, you really don’t have to worry, because ….”

    Three days on, I am both relieved and profoundly disturbed to say that all the experts I have talked to have complimented me on the piece itself and expressed their personal sympathies for my situation. So if my blog post was a form of denial posing as resignation, I suppose I really just have to resign myself now. And try to get informed about what Swedish banks are likely to do, if I can find the time. As I put it in an email to a relative who had trouble figuring out why FATCA and whether I was stressed:

    “Its post 9-11 methods attached to hysteria about Swiss bank accounts. Most of which were held by US citizens living in the US, I might add. Anyway, its kind of beyond stress at this point. Its really resignation. My citizenship status has been placed in the hands of some Swedish bank executives by Congressional fiat and there is really nothing I can do about it.”

    And in a note to a colleague, I tried to put a good spin on it, saying I was “counting on the Swedish banks being willing to take more responsibility for the welfare of US citizens than the US Congress appears willing to be.” Maybe that is a bit too resigned and I suppose I should try to get this in the Hill and spread it around. On the other hand, one of my best-informed interlocutors commented with the following:

    “It is sad that it is coming to this. I guess there is some hope that the law will get scaled back in the wake of the GOP call for its repeal, but it’s hard to be sanguine about Congress getting anything done these days. I am keeping my ears open for a lawsuit, which would have a small chance of success but could bring more attention to FATCA’s unintended consequences.”

  4. I am really sorry to hear about your situation. Unfortunately, many are in this position. My wife has recently renounced US citizenship. It took her almost 2 years to come to the conclusion that there was simply no alternative and that things were likely to get worse rather than better. This isn’t going to end well ……

  5. Thanks Hogwarts,

    I think there are a lot of us that managed to pick our way through the snap enforcement craziness of the last few years and kid ourselves that we were out of the woods. But FATCA leaning on all of our local banks puts us right out in the cold again. May I ask what the ‘final straw’ was for your wife?

    Meanwhile, media coverage in the States has at least turned sympathetic (we are no longer reflexively dismissed as tax evading traitors for happening to live abroad) but with an air of passive sympathy that can feel a bit dismissive at this end.

    For instance, here is a good piece of reportage by NPR…

    …that describes US citizens resident in Germany being turfed out of their banks there and quotes a Swiss resident who mirrors my sense of resignation:

    “I want to be clear: It’s not about a dollar value of taxes that I don’t want to pay,” says Brian Dublin, a businessman who lives near Zurich. “It’s about the headache associated with the regulations, filing in the U.S., and then having financial institutions in the rest of the world turn me away.”

    But the conclusion of the piece is almost a bit chilling. Government officials won’t go on the record but implicitly acknowledge that driving thousands of Americans to denaturalize every year is an acceptable price for catching a few cheats (who could perfectly well be caught by far less drastic means):

    ** Officials from the Treasury Department, the State Department, the IRS and Congress spoke on background for this story. None would talk on tape.

    They all generally agree on the facts of the situation. Even so, there is very little pressure to change it. As one Senate staffer pointed out, nobody in Congress represents overseas Americans. And government officials think this law is succeeding at catching the tax cheats. That may be worth the side effect of losing a few thousand American citizens every year. **

    That, frankly, is the attitude of a government that no longer really considers me a citizen anyway, at least once I crossed the border. Or, better put, it is a fully consistent manifestation of taxation without representation. A little hard to square with our first principles.

    • Rhodri, you asked: May I ask what the ‘final straw’ was for your wife?

      If you are a US Citizen/Person and you live outside the US, to retain citizenship is to accept that you will have to consider the absurdity of US tax law at every financial decision point in your life. Buying a house, selling a house, saving for retirement, starting a business … whatever. Then you need to spend days or weeks every year gathering information, either paying expensive US tax agents or spending countless hours or days researching the filing requirements, generally to prove that you owe nothing. Then there is the need to file annual asset statements (FBAR.FATCA) where the penalty for innocent mistakes is life ruining.

      The “final straw” was the realisation that the US treats it’s expats as property and whether taxes are owed or not (usually not), they will seek to retain control over almost every aspect of your life wherever you live on planet earth. My wife renounced US citizenship so that she could live the rest of her life as a free person.

  6. Great comment Hogwarts. Yes, all that paperwork and bureaucracy every year just to prove you owe nothing. Except when you do. We had two little apartments in Toulouse as part of a French government program to provide low cost rental housing. We sold them finally and we just got killed by the capital gains on the US side. Not that we made tons of money on the sale but rather the gain was inflated when we converted to dollars and we ended up paying on the “phantom” gain from currency fluctuations. It was just incredible and frankly we can’t do that again. We just can’t afford it. So I find myself very much in the same position as your wife. A suivre….

  7. Rhodri, feel free to use my comments in whatever context you like. My wife was initially devastated by the prospect of renouncing her citizenship but, over time, came to realise that it was a very “American” thing to do – to fight for her own freedom. How sad that it is her country of birth that she has to fight to be free of. How can this country still claim to be “the land of the free”, when it treats its citizenry in this way?

    Victoria, there are so many in this position who do not realise they owe taxes. It is not justified and the French government should not allow a transfer of wealth overseas like that.

    One thing for sure is that this will be building a tremendous amount of Anti-American sentiment in the next few years. Immoral and unjust taxation has ultimately been rebelled against in the whole of human history. This time will be no exception.

  8. AtticusinCanada

    Very good points made here. I have already relinquished, I waited two years thinking congress would amend FATCA to catch tax cheats while not harming average expats. Perhaps move towards RBT. It finally became clear due to comments made by Treasury that they really didin’t care about us. FATCA caused a lot of stress in my household. My spouse is not American and he makes all of our income. It was outrageous to him that his banking information should go to another country because he married me. We’re not wealthy but, to him it was the principle of the matter. He had been following all the reports about the NSA and all this data gathering of private information doesn’t sit well. That is on top of the cost to show you don’t owe which he incurs also for having married me. I feel resentment at having to give up my citizenship but, I know I could not pass this legacy of being assumed a criminal until proven otherwise, onerous reporting costs and rules on to my kid. Enough was finally enough. Even in the NPR article the government seems to say “Oh well, losing a few thousand is okay” It’s really not okay if many of these people didn’t really want to lose their citizenship. In fact that stance is immoral. I just couldn’t deal with the expat bashing, the stress and the betrayal from them anymore. Nor the betrayal to my spouse. Whether I could bank here or not, save with my spouse the same as any other Canadian which would be hard were all factors but, this reporting of bank accounts which are not off shore to us was too much. The UBS scandal was mostly Americans living in America yet we all got targeted . That is no way to address a problem. The U.S. stubbornly refuses to go to any sort of RBT even though very good proposals for slowly implementing that have been made to them. FATCA makes zero sense for long term expats and it’s driving these renunciations. Quite simply though I don’t think the U.S. cares at all about us.

  9. Here’s a good WSJ piece on the whole imbroglio. I was in touch with the authors (I actually came to their attention via the above post) and am really happy about the broader trend this piece represents, e.g. actually getting in touch with the people affected by this and letting them say their piece:

  10. Pingback: TN mellows out at five | TerraNullius

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s