Thanks for the tips, yeah the global taxation is in fact one of the reasons we’re moving in this direction, because all the earnings we acquire from our import-export work in the Mediterranean and elsewhere still gets taxed at outrageous levels in the US. The US is the only country that does this, and the system is so burdensome and punishment-oriented that even the most honest taxpayers get shafted by it. The banks overseas have to comply with the reporting demands and pestering from the US, and it’s so costly to them that some will close the accounts of Americans based there. We’d also heard of the exit tax and have no illusions about it, it’s just that in light of the outrages from the US worldwide taxation system, we’re starting to think it’s worth it to renounce our passports and be done with it.
It’s interesting that even the liberal Democrats we work with overseas absolutely hate the US global taxation scheme, and it’s one of the things that Romney stupidly ignored in his campaign- he would’ve gotten 90% or more of the vote from returning expats, exporters and anyone else working in international trade, if he’d bothered to put more emphasis on improving this universally hated, unfair and preposterous global taxation. That (along with the legal thievery of US divorce laws) is one of those rare things when you can really find almost universal consensus across ideology lines, since it’s so plainly ignorant of the working realities of American expats, so atrociously disproportionate and so damaging to otherwise well-meaning, hard-working and productive people. We’re not even using services in the US when we work aboard, not using any of the roads, foodstuff inspection, libraries, police or fire services, we’re working in a different country. And most of us aren’t billionaires with Swiss bank accounts, we’re hard-working and prosperous but still usually upper-middle class or so. What justification is there then, to tax us so viciously, take such a punishing stance and all but force us to lose our foreign accounts in overseas banks? It’s obvious common sense that global taxation of US citizens is an outrage, which is why no other country does it.
While on the surface it is aimed at the Robert Vesco/Marc Rich types, there seems to be a constituency that considers expats to be economic traitors to the USA, and this has no problem passing laws like FATCA and expanding the powers of the IRS.
And this constituency does not consist of liberal Democrats.
It’s worse if the country you are expatriating to has a tax treaty with the US. Basically, those countries act as local IRS offices, with even casinos reporting winnings to the IRS just as they do to their local revenue offices.
I cannot strongly caution enough, however, to consider all ramifications of surrendering that citizenship. For all the faults of anything else, the US is still the most powerful international player in the known universe. Giving up those rights and protections is a major, major decision and not at all to be taken lightly or rashly.