Contrary to an apparently widespread belief back in the U.S. – and especially, it sometimes seems, among certain lawmakers in Washington – most American expats are not rich, and don’t live abroad in order to avoid their U.S. tax obligations, a new survey has found.
Just 33% of some 602 American expats living in 47 countries who participated in the survey said their annual household income was more than US$70,000 (£54,000, €62,570), and just 10% said they enjoyed more than US$150,000 in income a year.
Rather than to avoid tax or experience a new culture or language, meanwhile, the No. 1 reason given by the survey participants for living abroad was "love" (see pie chart, below).
The online survey, the results of which are contained in four separate reports (the links to which may be found by clicking here), was carried out between late September and early November of last year by a Paris-based American expat named Laura Snyder, who, as reported here earlier this year, was named the overseas representative for the IRS’s Taxpayer Advocacy Panel, which exists to help identify tax issues of importance to taxpayers.
Snyder conducted her research, using the open source LimeSurvey software, in association with an American expat organization that subsequently decided not to remain involved with the project.
She decided to see the project through to completion on her own, with the help of two similarly-motivated colleagues, explaining that she felt she “owed it to the 602 people who took the time and trouble to respond to the survey to find a way to put the results into the public domain.”
Snyder told the American Expat Financial News Journal this week that her report will be the subject of a presentation in early December at a conference in Prague, on the subject of diasporas. A 25-page conference paper, which examines portions of her survey data that address "the myth of the wealthy America expat," may be found by clicking here.
Results in four parts
Snyder divided up the findings of last year’s survey into a main 42-page report, containing the basic data which includes tables and graphs, some of which are pictured below. A second report, containing the comments of the survey participants, including their first-hand experiences with U.S. non-resident taxation and banking policies, was also compiled, as was a third part that is basically a case study, and finally, a fourth part that looks at the “emotional toll” the current U.S. tax regime is having on American expats, based on comments submitted by the survey’s participants.
A breakdown of the current countries of residence of those who took the survey is found on page five of Snyder's main report. It shows that 30% live in France, 12% live in Canada, and an equal percentage in the UK; and between 2 and 6% live in Australia, Italy, Ireland, the Netherlands, Switzerland Norway, Sweden, Germany, Israel and Greece.
Eleven percent of the respondents said they live in such "other" countries as Mexico.
Unlike some other recent surveys of American expats, Snyder's research included former U.S. citizens living overseas, which is to say, Americans who had renounced their citizenships.
Among some of the survey’s other key findings:
* Americans resident in Switzerland appear to suffer significantly more from U.S. tax-related issues than those living in other countries. For example, some 45% of the survey's Switzerland-resident respondents said they had had "one or more accounts closed because I am a U.S. citizen or Green Card holder", compared with 15% of the survey's average respondents. Thirty-eight percent of the Switzerland-resident respondents reported having been "refused a mortgage from a non-U.S. financial institution because I am a U.S. citizen or Green Card holder", compared with 7% of the survey's respondents overall.
* The country where the lowest-percentage of respondents reported having difficulties with FATCA – the 2010 U.S. tax evasion law that has made life more difficult for Americans abroad because it requires non-U.S. banks and financial institutions to report to the U.S. authorities on the assets they hold on behalf of any American citizens, above a certain amount – was Norway, where 50% of the survey's participants said they had "not had any experiences with respect to FATCA, it's not an issue for me".
Only 3% of the respondents resident in Switzerland said they had "not had any" such FATCA "experiences".
* The country with the greatest percentage of respondents who said they had renounced their citizenships was the United Kingdom, with some 25% of those who took the survey saying they had done so.
* Some 17% of the survey respondents living in France and Canada said they had renounced, putting those countries in second place, while the percentages in Sweden, Japan, Belgium, Australia and Swizerland ranged between 4% and 6%.
Other" countries accounted for 19% of those respondents who had renounced.
* As for the reasons those renounced survey participants gave for giving up their U.S. passports, difficulties in complying with their tax obligations was cited as the main incentive, with 42% giving it as their "principal reason". Twenty-two percent said they renounced because they had been "denied banking services." Some 2% gave the desire to "avoid paying U.S. taxes" as their reason. (See pie chart, above left.)
* More than four in five (85%) of those survey respondents who said they had renounced their U.S. citizenship said they had done so within the past five years. This corresponds to the implementation date of FATCA, even though it was signed into law in 2010, and its effects on expatriate Americans began to occur almost immediately.
* Almost one in three of those surveyed said they had not been able to open "one or more accounts" because of their being either a U.S. citizen or Green Card holder (see table, below).
Once again, the percentage of those respondents in Switzerland who reported having had problems (72%) was significantly higher than American expats living in other countries reported having experienced.
Israel seemed to be the least problematic country, followed by Italy, of those countries whose expats participated in the survey.
Snyder's U.S. Taxation and FATCA survey is the latest in a series of surveys that have been organized in recent years, in an effort to quantify the struggles American expats have been having, particularly since FATCA, and to attempt to determine the best way to address them. Among the organizations that have also conducted research in this area have been the Democrats Abroad, American Citizens Abroad Global Foundation, Americans Overseas, Greenback Expat Tax Services, and Amanda Klekowski von Koppenfels, a senior lecturer in migration and politics at the Brussels School of International Studies.
As reported here in March, the Democrats Abroad found some 97% of a cross-section of almost 10,000 American expatriates it surveyed in January and early February reported that they have been having "serious problems addressing their U.S. tax filing obligations" every year.
In July, a survey carried out by Greenback Expat Tax Services found that more than one in five U.S. expatriates reported they were "seriously considering renouncing their citizenship" as a result of the complex package of tax issues they face as a result of being an expat.
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