U.S. citizenship: no choice but to renounce


My three children are accidental Americans. If you were to ask them, they would tell you they are Belgian.  They learned some of the American customs and traditions from me so understand it as part of their ancestry- but it is not their identity.  Furthermore, they are Belgian and European Union citizens – so what makes them American? Any child born in the US/its territories or to at least one parent holding US citizenship, no matter the place of birth, automatically becomes a US citizen.  That means all those “war babies” born to US soldiers and foreign mothers are US citizens. If they didn't renounce, so are their children and grandchildren. After WWII, these children grew up and lived their lives outside the USA. Many didn't know they even had US citizenship, as not all soldiers made it home. For some, their father was merely a name on a birth certificate. Not all mothers and their children immigrated to the USA after the war – so what does their citizenship represent?

Is it an accident of birth, or something more?

Many don't realize that the U.S. is the only country that actively practices citizenship-based taxation.  Our Congress has passed extraterritorial legislation that applies to all its citizens no matter where they may live. If you hold US citizenship, you must file US tax returns and comply with its laws or face the penalties. Ignorance is not a valid excuse for violation.

Remember those “war babies” mentioned above? They are suddenly finding themselves presented with penalties for not filing US taxes, even though they were unaware of the US law and how it applied to them. Due to an accident of birth, they are finding their pension savings taken with no benefit in return from the United States Government.  They have effectively been subject to taxation without representation.

The past 18 years have seen changes in legislation that have unintentionally harmed innocent Americans living abroad. Americans who have made their homes permanently overseas have written and called various congressional representatives to address these issues, but our petitions were met with silence. During election years, candidates might listen or make promises. But once the election is over, those promises are long forgotten. It seems all we get is more punitive legislation towards American citizens living abroad, hidden in bills that have not been fully read before being passed.

The Foreign Account Tax Compliance Act (FATCA) was the first. The cost of compliance by foreign financial institutions and employers to report information on US citizens has made accommodating Americans abroad undesirable. Retirement and savings accounts, mortgages, and loans are often unavailable to US citizens living in foreign countries. Even opening a savings account for a baby to save for his/her university has become ever increasingly difficult to do for an individual with dual American citizenship.

The latest “tax reform bill” also contained some really nasty surprises for American citizens living abroad and accidental Americans. Two of these “reforms” are The Transition Tax  (especially cruel in that it is retroactive to 1986) and Global Intangible Low Tax Income (GILTI). Initially, the target of these taxes were large corporations that had been holding large sums of money/assets in offshore accounts avoiding US tax to repatriate it – the large corporations were granted Territorial Taxation for Corporations (TTFC) and lower tax rates.  

But if an American living outside the US should have a foreign tax-deferred retirement account in the country of residence, the whole value of the account is treated the same as those offshore holdings by large corporations. Often, the only way to afford to pay the US tax is to withdraw money from the account. That leaves U.S. citizens abroad to have to pay tax on the withdrawn amount in their home country and potentially US tax again at income tax filing time.

For any American citizen living outside the US who owns a small business, the whole value of that business is subject to this tax. Often they have put all their economic resources into building and growing these businesses. In order for them to comply it means bankruptcy.  For the individual citizen, there's no Territorial Tax For Individuals (TTFI) or reduced tax rates.

Until 2010, renunciation of US citizenship was free, but the State Department introduced a $450 fee and increased it to $2,350 per person in 2014. The reason given for the renunciation fee has been to cover “costs” but they have never clarified exactly what these costs entailed. In almost every country in the world, renunciation is either free or costs less than $100.

Two of my children have high functioning autism. My son will need some assistance once we are gone, but otherwise, both he and his sister will be able to work and live independently. I didn't really have too many worries, as Belgium has government provided assistance and safeguards in place for those with special needs. But that assistance will be considered passive income subject to US tax, so instead of having peace of mind, every day brings more stress and worry about the future of my children.

Fearing the next nightmare legislation, the time has come to renounce our US citizenship.  The total cost for my children to renounce will be $7,050. My son and daughter are hoping to be able to find summer jobs to help with the costs.  As their parent, I cannot renounce on their behalf and we still don't know if our autistic children will be considered competent enough to renounce. My son was competent enough to register for the Selective Service and would have had to serve if called upon by the US government.

For my children and other accidental Americans, renunciation is the price they are forced to pay to shed a citizenship from a country they never called home. For them, their home and national pride is the country in which they were born and live.

It's time for my fellow Americans to stand up for all of us who have been without a voice. Let your representatives know you support TTFI. That you believe that all Americans are entitled to the inalienable rights of life, liberty and the pursuit of happiness – no matter where they live.