THE TRANSATLANTIC MAGAZINE
THE TRANSATLANTIC MAGAZINE
As Americans prepare to celebrate Independence Day, American citizens abroad have launched a new global campaign, Tax Fairness for Americans Abroad, to end tax discrimination against US citizens abroad.
Tax Fairness for Americans Abroad represents the estimated 9 million Americans living outside the country, many for many years or permanently. It is non-partisan and represents both ordinary Americans and "accidental" Americans who were born in the United States but only lived there as young children, or were born to American parents abroad. The campaign was inspired by Fabien Lehagre, President of the Association of Accidental Americans (AAA), which represents US citizens born abroad or born to non-US parents in the United States. “Being American should be a source of pride,” said Lehagre, who was born and lived in California as an infant. “Unfortunately, U.S. legislation and regulations have made being American a financial nightmare for millions of ‘accidental Americans’ living in other countries.”
Supported by individual donations, the new 501(c)(4) US non-profit organization intends to collect and share stories of expatriate Americans' experience with citizenship-based taxation (CBT) and lobby for changes in US law and regulations. More than 1,400 individual Americans abroad have already donated to the cause with small donations averaging $67.
Contrary to popular belief in the United States, the vast majority of the Americans who live abroad are ordinary Americans, no richer or poorer on average than their counterparts in the United States. Americans move abroad to study, for work, for love, for retirement or lots of other normal reasons, many for many years or even permanently. Many were born abroad or grew up outside the United States and don't even speak English.
The tax and financial discrimination against Americans abroad results from the 18th Century policy of CBT, or taxing Americans on their worldwide income – even if they already declare income in the country where they live.
CBT can be highly complex and burdensome for Americans living abroad. It requires them to navigate both the US tax code and the tax laws of the country where they live. That often means expensive professional tax advice and high compliance costs–usually for little or no US tax liability at the end of the year.
Moreover, many non-US financial institutions discriminate against Americans because of uniquely American compliance requirements. The Foreign Account Tax Compliance Act (FATCA) and Report of Foreign Bank and Financial Accounts (FBAR), for example, both impose excessive and tedious reporting and draconian and discriminatory punishments for non-compliance and should not apply to accounts in American expatriates' countries of residence. For long-term Americans residents abroad, US bank and savings accounts–if they even have any–are their only "foreign" financial accounts.