Expats re-tweet B'berg editorial citing 'tax reporting nightmare' as reason for renunciation stampede
Since Monday, Expatriates around the world have been re-tweeting and otherwise sharing a Bloomberg opinion piece that clearly explains what its writer says is the reason so many Americans have been renouncing their citizenships recently: "the nightmare of American tax and financial reporting".
Although some in the American media have been "breathlessly" reporting that the recent high numbers of renunciants was due to "already fed up" with President Trump expats "finally despair[ing] over his mishandling of Covid-19", in actual fact, Bloomberg editorial writer Andreas Kluth says, the more prosaic truth is that they are simply tired of having to struggle with the current American expat financial reporting regime, "in which any accounts or assets deemed in Washington, D.C. to be 'foreign' are automatically suspect – requiring extra disclosures that can be ruinous in time, expense and peace of mind".
"The U.S. is almost unique in the world in taxing based on citizenship rather than residency," Kluth adds in his piece, which went live at 8am London time on Aug. 31, and also appears on the website of The Washington Post, (sometimes known as the hometown newspaper of the U.S. president and Congress).
The U.S. tax authorities are also, Kluth writes, "uniquely parochial in being unable or unwilling to distinguish between, say, a rich American living stateside and stashing money offshore and, for example, a middle-class American married to a German and teaching elementary school in Berlin. The hell starts with that conflation".
Kluth then goes on to explain how renunciations began to take off in the wake of the passage in 2010 of President Obama's Foreign Account Tax Compliance Act, which was aimed at wealthy Americans who had, at that time, been discovered to be stashing their wealth in undisclosed overseas bank accounts, particularly in such places as Switzerland. It's this law, he argues, that has made life increasingly difficult and pricey for America's expats.
That said, he also notes that the renunciation data usually cited by media reports of the renunciation trends is "notoriously flawed", being "based on a list of names of renouncers published every quarter by the Internal Revenue Service".
Prior to joining Bloomberg last year, Kuth had been editor-in-chief of Handelsblatt Global, the English-language online publication of the German Handelsblatt Media Group, and before that, Berlin bureau chief for The Economist magazine. He is also a dual U.S./German citizen who has "lived and worked in London, Hong Kong, California and Berlin", according to his LinkedIn profile, which also shows him as currently living in the "Berlin area" of Germany.
'Finally an accurate picture'
Among those re-tweeting Kluth's piece was Laura Snyder, the sole overseas member of a grass roots volunteer advisory organization known as the Taxpayer Advocacy Panel, which works – alongside the office of the National Taxpayer Advocate – to call the IRS's attention to issues that American taxpayers are struggling with.
In retweeting the article, Snyder added: "Finally an article that gives an accurate picture of why so many #americansabroad are committing #citizide. Thanks to @andreaskluth."
Also re-tweeting Kluth's article was Constantin Gurdgiev, a Russian economist who is based in Dublin, who called it a "great piece" and "absolutely spot on! @BarackObama FATCA & broader U.S. tax laws are absurd abominations, costing dearly in accounting fees & lost sleep."
A Bloomberg editor in New York tweeted that six-and-a-half hours after it went live, the story was "the most-read @bopinion piece so far today".
To read the story on the Bloomberg website, click here.
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