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Thread: Americans Renouncing Citizenship increase 66%

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    Default Americans Renouncing Citizenship increase 66%

    -Submitted by Simon Black via Sovereign Man blog -


    (snip)"A massive 1,131 individuals renounced their US citizenship last quarter, according to data that has yet to be officially released (though I was able to procure an advanced copy).

    This is a HUGE jump.

    Compared to the same quarter last year in which 188 people renounced their US citizenship, this year’s number is over SIX TIMES higher.

    Not to mention, it's 66.5% higher than last quarter's 679 renunciations.

    This brings the total number of renunciations so far this year to 1,810.

    While still embryonic, it's difficult to ignore this trend– more and more people are starting to renounce their US citizenship.

    After all, the number of people who renounced citizenship this past quarter is roughly the same as the number of people who renounced for the previous four quarters COMBINED
    .

    This movement shouldn't be that surprising for a species that began as nomadic hunter gatherers, or for a society that was founded by foreigner settlers in search of a better life.

    Yet, in a rather anomalous twist, the emotional ties we have for our passports are incredibly strong.

    It doesn’t matter where you’re from - the United States, Sweden, New Zealand, or Venezuela... many people all over the world are inculcated from birth with a sense that their country is ‘better’ than all the others.

    We grow up with the songs, the flag waving, and the parades until the concept of motherland becomes deeply rooted in our emotional cores.

    Not to mention, when so many of our friends and neighbors unquestionably fall in line, it’s a powerful social reinforcement that only strengthens the bond.

    We come to view our nationalities rather ironically as a big piece of our core individuality. I am an American. I am a Canadian. I am an Austrian. Instead of - I am a human being.

    It has taken decades... centuries even... to reach this point. So the fact that more and more people are making the gut-wrenching decision to ditch their US passports is truly a powerful trend.

    So what’s driving it? Taxes... and the search for liberty.

    For many, their tax bills constitute a financial breaking point. Particularly for people who spend most of their time outside of the United States and are constantly hamstrung by worldwide taxation and information disclosures, the burden for many of them has just become too much to bear.

    The US government figured this out some years ago and began charging an exit tax to certain high income / high net worth expatriates seeking to renounce.

    This applies to anyone whose average US tax liability over the last five years was about $150,000 (the equivalent of roughly $500,000 in taxable income in 2012 dollars), and/or has a net worth of at least $2 million on the date of expatriation. Curiously this net worth figure does not adjust with inflation.

    The ironic thing is that in the "Act of July 27, 1868", the United States Congress declared that "the right of expatriation is a natural and inherent right of all people, indispensable to the enjoyment of the rights of life, liberty, and the pursuit of happiness."

    Yet I would expect that as the number of expatriates continue to grow, this exit tax will become more and more onerous as the government tries to trap people, and their wealth, in the country.[/b]



    I'm not sure what to 'make' of this development. 1130 US citizens permanently removing themselves ( and their money ) from the USA over the course of the last three months doesn't sound like a whole lot in the grand scheme of things. And certainly, there are very few dancers or camgirls who A. have consistently earned $ 1/2 million per year, and/or B. have built a nest egg worth $ 2 million, who would be directly affected by this trend.

    However, it is highly probable that the 1130 US citizens who did renounce their citizenship and leave the country over the course of the past three months DID have incomes exceeding $ 1/2 million a year and assets worth $2 million. These are the type of guys who can afford to drop thousands of dollars in upscale strip clubs without batting an eye. These are also the types of guys who had each paid $150,000+ per year in income taxes ... an amount arguably equal to the total amount of income taxes paid by 100 Americans working at $30k-$40k per year jobs. So, in essence, the US economy would have to add 113,000 new $30-$40k per year jobs just to make up for the income tax revenues lost by these 1,130 high earning Americans becoming 'former' Americans.

    Even more disturbing is the fact that becoming an expatriate, and being in a position to renounce US citizenship thus US taxes, cannot be done on the 'spur of the moment'. Before the person can renounce US citizenship safely, they must first obtain citizenship in another country - a process which can take up to 5 years. Personally speaking, I still have 2 years to go in my quest for obtaining citizenship 'way south of the border'. Thus it's possible that, as the author pointed out, the statistics on expatriation we're now seeing are just the 'tip of the iceberg'.

    Thoughts ?

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    Default Re: Americans Renouncing Citizenship increase 66%

    I think that when they renounce their citizenship they should be barred from ever entering the U.S. ever again under any circumstances. They just want to have their cake and eat it too, as soon as they have a serious medical problem (like cancer or something) they will be trying to apply for a visa to come back here for medical treatment.
    “Never argue with an idiot. They will only bring you down to their level and beat you with experience.”

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    Default Re: Americans Renouncing Citizenship increase 66%

    I think if it were more affordable, it would be more common. I believe the majority of expats are single with no children or married with no children. I don't how much it costs to move to another country, but it can't be cheap. These people aren't pulling out a map, closing their eyes and pointing, they don't say "This will be my new home!". These people have traveled to different locations. Lived in these areas for extended periods of time. Most likely already owning property before beginning the citizenship process. It is a big deal to make this kind of decision, and I imagine the country you are leaving and the one you are entering don't make the process simple.

    While I would love to find a new country to call home (one with a better heath system perhaps), my income keeps me here. I can't be the only one that thinks this too. I believe it would be more common/popular if it weren't so expensive and mentally exhausting. But that would be worth it all.

    I disagree with you though Safado. If someone has the means to pay cash for medical treatments, why shouldn't they get to choose the absolute best? If your insurance wouldn't cover something and you could afford to be treated by the best wouldn't you do it? That's what money can do, buy you the best of anything. Also, why shouldn't they have the right to visit their extended family? If I (for example) were to renounce and then want to see my family for the holiday, it's more cost efficient for me to fly in and visit than fly my family out.

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    Default Re: Americans Renouncing Citizenship increase 66%

    i would renounce it in a second, and just stick with my canadian..and as for health care, what is so great about american health care?? for a first world country is ranks VERY low! frighteningly low. in fact im trying to get my son canadian citizenship just in case he ever gets cancer god forbid he won't be stuck just dying because he's not a millionaire. this country is always tooted as being " the best country in the world!" just what, exactly, is so great about it? certainly not freedom anymore

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    Default Re: Americans Renouncing Citizenship increase 66%

    I can't be the only one that thinks this too. I believe it would be more common/popular if it weren't so expensive
    Expensive is a relative term. If renouncing US citizenship and expatriating saves a person $100k+ per year in income taxes, spending $50k to move amounts to 6 months worth of 'savings'. I'm not in the penalty tax bracket the article talks about, but even so living 'way south of the border' already saves me at least $30k in US income taxes per year thanks to the foreign income exclusion. So in my own case, the decision to expatriate boiled down to continuing to live and WORK in the USA, versus retiring on my investment income and never having to work again 'way south of the border'.


    my income keeps me here
    That's a very valid point ... at least for exotic dancers. Most of the popular ex-pat countries don't have anything available in the way of strip clubs that can provide respectable earnings potential by 'just dancing'. However, camming is a different story altogether. Camming from a popular ex-pat country can increase 'take home' camming income by 15-25% or more simply by legally avoiding US self-employment and income taxes. However, I would guess that a good number of the ex-pats discussed in the article have significant investment income as opposed to 'paycheck' income ... which also means that they save 15-25% or more ( up to 39.6% under new maximum tax rates for short term capital gains ) by expatriating.


    If someone has the means to pay cash for medical treatments, why shouldn't they get to choose the absolute best? If your insurance wouldn't cover something and you could afford to be treated by the best wouldn't you do it? That's what money can do, buy you the best of anything.
    In point of fact, there are lots of non-US sources for 'world class' medical care. And, surprisingly, the prices charged for procedures are usually lower than US prices. I am told that the reasons for this are A. the hospitals and clinics don't have to 'over-charge' paying patients to make up for losses experienced by providing mandatory care to patients who can't / won't pay, B. the doctors don't have to carry ridiculously expensive malpractice insurance since patients aren't allowed to sue the doctors for millions of dollars worth of 'pain and suffering' or whatever, and C. the hospital and clinic staffs don't have to spend 30% of their time wrestling with health insurance companies and gov't agencies.

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    Default Re: Americans Renouncing Citizenship increase 66%

    Quote Originally Posted by Melonie View Post
    However, camming is a different story altogether. Camming from a popular ex-pat country can increase 'take home' camming income by 15-25% or more simply by legally avoiding US self-employment and income taxes.
    There are also risks involved with camming in other countries. In some countries, it may be illegal. I remember reading about an Australian cam-girl who was arrested in Thailand for camming.

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    Default Re: Americans Renouncing Citizenship increase 66%

    This isn't political at all.
    "Well done. Here are the test results: You are a horrible person. I'm serious, that's what it says: 'A horrible person.' We weren't even testing for that."

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    Default Re: Americans Renouncing Citizenship increase 66%

    Quote Originally Posted by Trem View Post
    This isn't political at all.
    “Never argue with an idiot. They will only bring you down to their level and beat you with experience.”

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    Default Re: Americans Renouncing Citizenship increase 66%

    I saw this earlier on Drudge and thought of you, Melonie!

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    Default Re: Americans Renouncing Citizenship increase 66%

    Quote Originally Posted by Aurora14 View Post
    I think if it were more affordable, it would be more common. I believe the majority of expats are single with no children or married with no children. I don't how much it costs to move to another country, but it can't be cheap. These people aren't pulling out a map, closing their eyes and pointing, they don't say "This will be my new home!". These people have traveled to different locations. Lived in these areas for extended periods of time. Most likely already owning property before beginning the citizenship process. It is a big deal to make this kind of decision, and I imagine the country you are leaving and the one you are entering don't make the process simple.
    This is exactly the reason I've postponed moving permanently back into my own country of origin. I hold duel-citizenship and can carry two passports but I'm terribly intimidated by the idea of moving out of the US with no established assets and no secured way to gain employment, once I found living arrangements. I'm certainly skilled but formally under-educated, for an ex-pat. You're right, although I've been to where I want to ultimately live, I don't own property or a small business to help me gain footing, in the long-term. Nearly all of the ex-pats I've met abroad have something in the way of assets (mostly bars/businesses) that secures their living expenses. Although Mel mentions that it could be as little as $50K, to execute the move and get settled, most people in the US who are my age don't even have $50K to start with! Saving money on taxes means nothing if you have no secured form of income, in the long run. As romantic as it sounds to pack up everything I own in two suitcases and hop the cheapest flight to Rio I can find (been there/done that, actually), I am not prepared to spend the next 5-10 years living in a favela, trying to get my shit together because I can only afford to live on $2300 Reis ($1000 USD) a month that I can get from camming sporadically. Also, I have an animal companion. He's old. I'm kinda waiting for him to pass on before I make any major life-changing arrangements.

    Quote Originally Posted by eagle2 View Post
    There are also risks involved with camming in other countries. In some countries, it may be illegal. I remember reading about an Australian cam-girl who was arrested in Thailand for camming.
    I think you're thinking of the German woman. I don't think it ever panned out that she was formerly deported, though, since the charges were "dropped" (ie: probably paid off).
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    Default Re: Americans Renouncing Citizenship increase 66%

    I saw this earlier on Drudge and thought of you, Melonie
    Actually, I started this thread before Drudge Report posted about this new info. The original 'investigator' was Simon Black, who is 'all over' matters involving ex-pats.

    Also, while the issue of dancers and camgirls expatriating has been discussed, the issue of high earning Americans expatriating ... i.e. high earning Americans who pay a lot of taxes and spend a lot in strip clubs ... has not.

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    Default Re: Americans Renouncing Citizenship increase 66%

    I hold duel-citizenship and can carry two passports
    Obviously this is the 'best of both worlds', since already having a second citizenship / passport makes it possible for a person to 'instantly' renounce their US citizenship ( thus all US tax liabilities ) with minimal consequences. Without already having a second citizenship / passport, the process of obtaining citizenship / passport from a 'new' country can take 2-5 years. Thus an American ex-pat who does not already have a second citizenship / passport must either wait those 2-5 years while living in a foreign country ( and still paying some amount of US taxes ), or run the risk of winding up a 'stateless' person which greatly restricts 'legal' ability to travel internationally.

    However, to be clear, it is NOT necessary to actually renounce US citizenship to obtain some legal US tax avoidance by expatriating. Up to $106,000 per year of income, both from active earnings such as camming as well as from passive investment earnings, is free from US income tax via the 'foreign earnings exclusion' while still holding US citizenship. This is the situation for myself, and for many of my neighboring US expats down here 'way south of the border'. However, the people referred to in Simon Black's article are likely to have annual incomes far in excess of the $106,000 per year amount ... which in turn requires that they renounce US citizenship to legally avoid US taxes on amounts greater than $106,000 per year !!!

    However, even if one isn't seriously rich, the tax advantages of expatriating ... along with the lower costs of living in most ex-pat countries ... can make a huge difference in standard of living versus the same amount of pre-tax income. For example consider a camgirl earning an average of $1000 per week - $52k per year. In the USA she will wind up paying 15% in self-employment tax plus somewhere around 10% in federal and state income tax, leaving something like $39k in after-tax income. Subtract somewhere around $800 a month for US rent leaves something like $29k in 'discretionary' income. But as an ex-pat she will get to keep the entire $52k in camming income since this income can be excluded from US tax liability plus the ex-pat country will not tax it since technically speaking the webcam host is located outside the ex-pat country. Thus subtracting something around $500 a month for ex-pat rent from the $52k leaves something like $46k in ex-pat 'discretionary' income versus just $29k in the USA.
    Last edited by Melonie; 08-11-2013 at 05:02 AM.

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    Default Re: Americans Renouncing Citizenship increase 66%

    ^^
    Yeah, I'm lucky. I walk straight through customs as a natural-born citizen so it's only a matter of establishing residence within my chosen state. I'm fortunate to have the flexibility.

    You still have to pay taxes in your country of residence, though, correct? For me, it could potentially be at a similar rate as I am currently, in the US. Brazil wants 20% of earnings reported on self-employed income, so I'm still paying taxes on my camming/earnings. I'd have to do a lot of research to pin down exactly how much money I would be saving in US taxes while paying Brazilian ones (which are high). Either way, with only $50K to my name these days, I think I'm going to have to plan a little deeper before I take the plunge.
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    Default Re: Americans Renouncing Citizenship increase 66%

    ^^^ that depends on how Brazil or any other ex-pat country defines the income received. Most would consider receiving a check from a US webcam host, a Cypriot webcam host, a UK webcam host etc., as FOREIGN income which is typically not taxed by the ex-pat country. Put another way, for most ex-pat countries, unless the person residing in that country is earning an income FROM that country ( i.e. a local business ) they will not have any 'domestic' income subject to tax. However, if a US webcam host is involved, the IRS is still going to try and tax that income even though the person is an ex-pat since the income source is still within the USA.

    From what I could find from a quick search, Brazil does try to levee an income tax on 'independent contractors' residing in Brazil. It remains to be seen what options might exist to legally 'work around' this situation, i.e establishing a 'post office box' business in a 3rd country, having webcam host checks deposited in a bank account in that 3rd country, and then transferring 'dividend' payments from that 3rd country bank account to your personal account in Brazil. Brazil apparently does not tax foreign investment income !!! This should be fairly easy to set up via a co-operative payment processing service.

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    Default Re: Americans Renouncing Citizenship increase 66%

    Quote Originally Posted by safado View Post
    You must have chaos within you to give birth to a dancing star.
    Friedrich Nietzsche

    Free your mind, and your ass will follow.
    George Clinton

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    Default Re: Americans Renouncing Citizenship increase 66%

    Quote Originally Posted by Melonie View Post

    From what I could find from a quick search, Brazil does try to levee an income tax on 'independent contractors' residing in Brazil. It remains to be seen what options might exist to legally 'work around' this situation, i.e establishing a 'post office box' business in a 3rd country, having webcam host checks deposited in a bank account in that 3rd country, and then transferring 'dividend' payments from that 3rd country bank account to your personal account in Brazil. Brazil apparently does not tax foreign investment income !!! This should be fairly easy to set up via a co-operative payment processing service.
    Yeah, that's what I found, too, and the taxes for independent contractors within the country are high! I'm still researching, though. You're right, there are always second and third party payment channels that may or may not qualify but at this point, I don't make nearly enough to invest in the venture. If I moved, I'd likely just emigrate back into the country, as a natural citizen (not exactly an "ex-pat", per se) and enter the public sector, as a civil servant and integrate into the Brazilian tax system. Anything out side that income would be taken into consideration but not my sole means of survival. Living in that country is actually pretty expensive. I'm kind of waiting for their currency inflation to go down. I've got a few years to decide.
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    Default Re: Americans Renouncing Citizenship increase 66%

    ^^^ well, for perspective, Brazil is NOT a popular ex-pat destination ... because the country's tax laws and tax rates are far less friendly than popular ex-pat countries like Panama, Singapore, Caribbean Islands, Channel Islands, etc.

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    Default Re: Americans Renouncing Citizenship increase 66%

    where did it say that the majority primarily fled so they could pay less taxes? I would gladly renounce citizenship and move to canada, australia, or parts of europe to take advantage of their health care and live in a culture that has more gun control, for example.

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    Default Re: Americans Renouncing Citizenship increase 66%

    ^^^ the locations stated in the article were countries with significantly lower tax rates, such as Singapore, Panama, etc. Canada, Western Europe etc. have effective tax rates that are equal to or higher than the US.

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