AARO survey: More than a third say they've 'considered' renouncing; banking, finance issues cited
- By staff writer
- News
A survey of more than 400 U.S. expats has found that more than a third, or 34%, have considered renouncing their U.S. citizenships, with those saying they've considered it most often citing "issues" having to do with U.S. brokerage accounts as well U.S. and local banking issues as their main reasons.
In fact, what emerges clearly from the results of the survey, carried out last October and November by the Association of Americans Resident Overseas (AARO), is a direct association between problems having to do with financial services and serious thought being given by the survey respondents to renunciation, according to Doris Speer, the Paris-based AARO board member who carried out the survey, with input from other AARO executives.
Speer, pictured left, said some 440 expats were surveyed online, "of whom 337 were AARO members", and that it was done in order "to aid us in our advocacy efforts."
The respondents learned about the survey from a variety of places (including the AXFNJ), as well as AARO's website, Facebook and LinkedIn pages; and from various expat American groups, she added.
According to a summary of the report's findings, which may be viewed and downloaded from the AARO website, "a whopping 68% of [those who have considered renouncing also] believe that their vote does not count, as compared to 45%" of the rest of the American expats surveyed.
Retired expats are also far less likely to consider renouncing than those who are still of working age, the survey finds, with 65% of the retirees saying they've not thought about handing back their passports, compared with half of those who are still employed (see table, left).
Those more-prone-to-thoughts-of-renouncing respondents also tended to view the U.S. voting process generally as being "more complex" than their disinclined-to-renounce counterparts do, by a ratio of almost 2:1, the summary of the survey's results points out.
"But, the real issues for them are in the areas of banking and tax, where renouncers have experienced far more difficulties than the others.
"More renouncers (or their spouses) lose potential employment, and/or suffer closure of bank or brokerage accounts (in each case, by 14% to 20%), due to tax reporting and bank regulatory issues.
"Many renouncers tell us that they are double taxed (69%, as opposed to 49% [of those who say they've not considered renouncing], and that they have lost the tax advantages of their foreign retirement accounts.
"They also find U.S. reporting requirements to be complex."
One respondent said they had chosen to "earn less in order not to have to be doule-taxed," the AARO summary of the survey's findings reveals, while another respondent mentioned the American historical concept of "no taxation without representation," and then "expressed the hope that the U.S. would eventually realize that citizenship-based taxation unfairly imposes tax on Americans who move overseas to follow the "American tradition of immigration for what they perceived to be a better life" – and were not set on "fiscal evasion."
And yet they don't do it...
As the AARO summary of its findings then points out, "almost all" of the survey's respondents have, thus far at least, not renounced, in spite of a third of them saying they've thought about it.
"Why not? We asked you to tell us why," the AARO summary continues, before sharing the following table. (Many respondents listed more than one reason): Says the AARO summary: "Although a few [respondents] are committed to renunciation, and cited practical reasons for its delay (such as 'waiting for my 2nd passport,' or 'they have suspended the service during the pandemic'), the vast majority will likely never renounce, due to the insurmountability of their reasons not to.
"These reasons could be put into three 'buckets': 'Financial/tax,' 'emotional' and 'connection to the US.'
"Besides the exit tax, tax/financial reasons for not renouncing range from 'my taxes are lower because of the tax treaty' to 'I expect an inheritance from family members in the US.'
"Several [said they] believed that they would lose pension income.
"Many [appeared] emotional about why they couldn’t do it", giving such reasons as "'because it breaks my heart,' and 'because it’s my country.'
"[Said one] person: 'I feel I cannot give up something which is part of my identity, even though it costs me a staggering amount of money.'"
Summing up the responses, the AARO summary of the findings noted that "by far, most [of the would-be] renouncers have a strong connection to the U.S.; [and] the common perception is that, after renunciation, they could not easily visit the U.S., nor move back to take care of elderly family members."
Perhaps surprisingly, the summary notes, not many of the respondents – just 8% – expressed concerns "about the stigma of renouncing."
The AARO findings on expats' thoughts on renunciation, based on last year's "Advocacy Survey," is one of a series of such pieces that AARO has posted on its website. As reported here last month, these have thus far included an overview on the report's findings, and may be found by clicking here.
Founded 47 years ago
AARO was founded in 1973 by Phyllis Michaux and a group of other Americans resident in Paris, who were concerned about the way they thought (even then) that the U.S. government treated its citizens abroad.
Today the volunteer-run advocacy organization claims to have members in some 46 countries around the world, and combines research into issues that significantly affect the lives of overseas Americans – such as this latest survey – with keeping its members informed on these issues, while at the same time advocating on behalf of its members on such issues as taxation, citizenship, Social Security and Medicare.
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