Would You Give Up Your US Passport?

Do you ever get so angry with the US government that you feel like giving up your citizenship?

But if push ever came to shove, would you actually do it?

A recent article in The New York Times interviewed ex-Americans who had renounced their citizenship. Some said they did it because they didn’t want to be associated with the country as it is right now.

As a lifelong expat and the citizen of a second country—the prerequisite for giving up US citizenship—the thought of becoming an ex-American has crossed my mind, too.

Yet, I’m still carrying my blue US passport—with no plans to give it back.

Part of my rationale is pragmatic. If I tried to travel to Europe on a South African passport, I’d need months and a mountain of paperwork to get a visa. With a US passport, I just get on a plane and go.

I’d also need to jump through multiple hoops to travel to the US itself, where my aging parents live. (As a citizen of South Africa, a country which has recently experienced sour relations with the current US administration, I might not be able to get a visa at all.) Compared to the importance of being able to visit them at a moment’s notice, politics is inconsequential.

And there are of course financial consequences which must be considered…

As I’ve explained before, Americans are unique in that they are liable for income tax on their global income, even if they no longer live in the country or earn their money there. To make matters worse, Congress has passed laws that follow Americans around the world. They can make it difficult for us to get banking and investment services, even if we’ve lived in a foreign country most of our lives.

If I had two gazillion dollars and didn’t want to hand over one of those gazillions to the IRS, expatriation would probably make sense. But even then, I’d be hit with an exit tax of such severity that it’d hardly be worth it.

But for us mortals, expatriation doesn’t help our tax situation. If you’re still working, like I am, you can get practically a 100% exemption on all US income tax. But if you’re retired and living on Social Security and private retirement funds, those would be taxed even if you gave up your US citizenship.

Either way there’s not a lot of tax benefit to giving up US citizenship.

There’s also a philosophical element at work.

Citizenship is a matter of chance. I happen to have been born in the US to American parents. Compared to, say, someone born on the same day as me in a less developed, third-world country, I’m extraordinarily lucky. Fate made me an American, not politicians in Washington DC.

After all, the United States is bigger than the government of the day. It’s the world’s longest-running democracy based on membership of a political community, not ancestry. Even though I live on the other side of the world, I’m still a part of that community, and that gives me the right to speak my mind about what’s happening inside of it. I won’t let passing politicians push me out of it.

On the other hand, if I were an “accidental American”—someone who acquired US citizenship by birth but never lived there—I’d more likely be open to renouncing US citizenship. Boris Johnson, the ex-British Prime Minister, once got a bill from the IRS claiming part of the capital gains from the sale of a townhouse in London. He happened to have been born in the US when his parents were visiting and never lived in the country. If I were in that situation, I’d want to give up my US citizenship too.

The edge cases are expats like me who’ve lived so long outside the US that they no longer feel a personal connection to the country. I see no need to give up the benefits of a US passport in my own case, but that’s because I travel a lot. If I were an American who’d lived abroad most of my life and had no interest in returning to the States, I’d consider giving up US citizenship—especially if it meant I could avoid some of the tax annoyances that come with being an American.

All of which is to say that the question of whether to renounce one’s US citizenship comes down to personal preference and pragmatism. But it’s crucial you don’t make such a decision based purely on emotion… You need to be cognizant of the practical and financial consequences of such a major decision.