Results from 2017's Greenback Tax US Expat Opinion Survey
US Expat Opinion Survey Reveals Major Dissatisfaction with Government Representation
Greenback Expat Tax Services’ annual US Expat Opinion Survey recently closed, and the results are illuminating. Of particular interest, the poll highlights expats’ increasing dissatisfaction with the US government as well as the impact that expats could have had on the 2016 presidential election.
With the aim of gathering opinions representative of the group at large and advocating for the interests of all Americans living abroad, Greenback’s 2017 survey gathered the viewpoints of 2,100+ US expats on the subjects of taxes, citizenship renunciation, government representation, the 2016 presidential election, the new administration and more.
Survey highlights and key insights
• Despite the fact that 73% of expats surveyed in 2016 said they intended to vote in the then-upcoming presidential election, only 64% reported actually having voted. Of those who didn’t vote, 36% stated it was because they didn’t feel any candidate represented their interests. This number is up significantly from 26% in 2016 and 8% in 2015.
- 28% said they don’t know how to vote while living abroad or think it’s too complex.
- 20% said they don’t feel their vote would make a difference.
- 13% said they don’t feel voting as an expat is important.
• 88% of US expats surveyed do not feel their interests are fairly represented by the US government - a 5% increase over last year.
• 66% do not feel they should be required to file US taxes while living abroad though 62% reported not owing any taxes last year (or receiving a refund).
• On the subject of citizenship renunciation, 43% are not currently considering it but wouldn’t rule it out; 19% are seriously considering it but haven’t made a decision yet; and 5% are already planning to renounce.
• 50% of the expats who are considering or planning renunciation cite the burden of US tax filing requirements as the reason - a 13% increase over 2016.
• 57% say they would support an initiative to repeal FATCA, the 2010 law that requires American taxpayers to report foreign financial accounts and offshore assets.
• 10% of respondents say they’re seeking a new bank because their foreign financial institution doesn’t want to deal with US citizens - down 2% from 2016.
US Presidential Election
64% of more than 2,100 survey respondents reported having voted in the 2016 US presidential election, though, in our 2016 survey, over 73% said they intended to vote in the then-upcoming election. Of those who didn’t vote, 36% said it was because they didn’t feel any candidate represented their interests. This number is markedly up from 26% in 2016 and 8% in 2015, which suggests that those who didn’t vote in the 2012 presidential election may have been more inclined to vote in 2016 if a candidate had made a point to address their concerns. By extension, it stands to reason that the drop in expat turnout may have had a material impact on the result of the 2016 US presidential election.
David McKeegan, co-founder of Greenback Expat Tax Services, commented, “US expats make up a significant number of the US population - to put it into perspective, the number of US expats around the world is larger than the combined populations of Washington D.C., plus the nine smallest US states. Despite that fact, they aren’t afforded the same advantages, like congressional representation or chosen electors. Their needs are consistently overlooked by our government.”
On Citizenship Renunciation
In the last quarter of 2016 - the time period coinciding with the election of Donald Trump to the US Presidency - reports have shown that nearly double the number of people renounced their citizenship as compared to the same period in 2015. This year’s Greenback survey data supports the idea that expats aren’t, in general, enamored of Donald Trump.
43% of survey respondents said though they aren’t planning to renounce their citizenship at the moment, they wouldn’t rule it out; 19% said they are seriously considering renunciation but haven’t made a decision yet; and 5% said they are planning to renounce. When asked how the result of the 2016 presidential election affected their thoughts on renouncing their US citizenship, 48% of expats surveyed said it had made them somewhat more likely to renounce and 18% named it as a major factor contributing to their decision.
50% of those expats considering or planning renunciation cited the burden of US tax filing requirements as the primary reason - up 13% from 2016 - and 21% say their decision has been motivated by disappointment with the direction of US government.
On Fair Representation
For the third year in a row, the Greenback survey found that the majority of expats do not feel their interests are fairly represented by the US government. This year, 88% expressed this sentiment - a 5% increase over last year.
The top three things that Americans living abroad would like to see addressed by the US government are:
1) The repeal of citizenship-based taxation
2) Simplification the tax filing process
3) An increase in the Foreign Earned Income Exclusion and other deductions/credits to lower tax burden
On IRS Amnesty Programs
46% of the US expats surveyed say they’ve never heard of IRS amnesty programs - the Streamlined Filing Process and the Offshore Voluntary Disclosure Program - which were put in place by the IRS to assist US taxpayers in catching up on taxes without incurring late filing or FBAR penalties. This number is up 1% since 2016 and 5% since 2015.
This is an alarming trend because, on January 1, 2016, an unprecedented law with new consequences was implemented for late tax filers. If an expat is behind on US taxes and owes more than $50,000 to the IRS, the US State Department can revoke their passport. The penalty for willfully failing to report foreign bank accounts starts at $10,000 - so, for example, if you have 5 unreported accounts, you could potentially hit the $50,000 total in a single year and lose your passport.
On Foreign Account Tax Compliance Act (FATCA)
As you may know, FATCA is a major initiative to expose US taxpayers who are concealing money overseas to avoid having to pay American taxes. FATCA requires individuals to report their offshore assets in the event that they exceed certain thresholds.
FATCA awareness appears to be slightly down from last year as 15% of expats surveyed in 2017 said they do not know what FATCA is, whereas 13% weren’t aware in 2016.
33% of expats surveyed this year said they are affected by FATCA and must file Form 8938, while 42% said they are not affected - both numbers are up 1% over 2016. 57% said they would support an initiative to repeal FATCA - up 3% over 2016.
Many thought-providing insights surfaced in this year’s US Expat Opinion Survey, but perhaps the most troubling data surfaces the drop in expat voter turnout and the potential effect that it may have had on the outcome of the 2016 US presidential election.
In addition, the data demonstrates an enduring trend toward citizenship renunciation with the new presidential administration seemingly contributing to more expats’ decision to renounce. The greater part of the expat population doesn’t feel that their interests are fairly represented by the US government, and they continue to be frustrated by the obligations of citizenship-based taxation and an burdensome tax filing process.
“This year’s survey once again reinforces the fact that only a small percentage of Americans abroad feel their needs are acknowledged and advocated for. That perception, plus the strain that comes with onerous expat tax obligations, makes renouncing citizenship a desirable option for many. Government leaders should be equally taking into account the interests of all Americans, regardless of where they’re currently living and working, not just because it’s the right thing to do - the expat voice is strong enough to sway an election. Those planning to run in 2020 would be smart to take note,” remarked McKeegan of Greenback Expat Tax Services.
This post was written by David McKeegan, co-founder of Greenback Expat Tax Services. Greenback specializes in the preparation of US expat taxes for Americans living abroad, and also offers tax prep for UK tax needs. Greenback offers straightforward pricing, a simple, hassle-free process, and CPAs and IRS Enrolled Agents who have extensive experience in the field of expat tax preparation. For more information about FBAR, expat taxes or Greenback, please visit www.greenbacktaxservices.com.