3 Types Of People Giving Up Their US Passport

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A reporter from the mainstream press contacted me recently asking if I could introduce him to an American who has given up his (or her) citizenship. The reporter is doing a story on the growing number Americans expatriating and wanted a firsthand story to tell.

Unfortunately, none of the people I know who have expatriated are willing to be interviewed.

It’s not that they are hiding anything. They are simply private people, which is one of the reasons they no longer wanted to be U.S. citizens.

Giving up the citizenship of the country where you were born and raised isn’t an easy thing for most people. There’s an emotional component to this that can’t be ignored in many cases. However, part of the growing crowd of Americans opting to give up their U.S. passports (or right to them) is dual citizens who hold U.S. citizenship simply by virtue of having an American parent or because they were born in the United States to non-Americans. Many of these “Americans” have never lived in the United States or maybe lived there only as small children.

I have a friend who was born in the United States but who also has citizenship from each of his parents’ home countries. He lived in the United States only until the age of 3, yet, because he was born on U.S. soil, he is saddled with U.S. citizenship.

Some would say that’s a blessing. Indeed, it’s the reason many illegal immigrants fight to make their way on to the U.S. soil pregnant…so their children can have U.S. citizenship at birth. My friend, though, has no intention of living in the United States, and his other two passports allow him to travel most of the world visa-free. So, when he reached the age of majority (18), he went down to the U.S. embassy where he lives and turned in his passport.

The reason was simple, and it wasn’t because he didn’t want to pay U.S. taxes. He wouldn’t owe any U.S. taxes anyway. He pays tax on his income in his home country and could use this as a credit against potential U.S. income tax. He didn’t want to be an American not to save on tax but to save on tax filings. He didn’t want to be burdened by all the tax paperwork required of American citizens. And he didn’t want to have to worry about inadvertently running afoul of all the IRS filing requirements. The potential penalties are big.

This story is playing itself out in bigger and bigger numbers as Americans living outside the United States are becoming more and more aware of their tax filing requirements as U.S. citizens, even if they have never lived or worked in the United States. They may not ever even have applied for U.S. passports. Technically, they’re U.S. citizens…and they’ve got to file and report along with the rest of us.

A large part of the growing volume of people formally expatriating from the United States falls into this “accidental citizen” category. Another category of expatriating Americans is made up of those who have been living overseas for extended periods. These folks have married overseas, have families, and often have obtained second passports through naturalization. This group of Americans has no intention of ever moving back to the United States, but they’ve kept their U.S. citizenship over the years for sentimental reasons. They’ve sent in their tax returns showing they owe zero or very little tax to the IRS each year…and they’ve paid tax-preparers big bucks over the years for the privilege.

These people are fed up. The cost of keeping their U.S. citizenship has become too much. As filing and reporting requirements continue to expand, the cost of complying with them each year does, too. Why pay someone hundreds or thousands of dollars a year to tell the IRS you don’t owe it any money…and, now, to report on all your foreign assets, to boot?

The other group of people giving up their U.S. passports in growing numbers is the one making mainstream news headlines…and the type of person the reporter was hoping to find to interview. People in this category are giving up their citizenship because they are tired of being over-taxed or tired of being over-surveilled.

This is the category of people that the U.S. powers that be should be concerned about leaving the country, because these folks have both money and smarts.

The numbers to date have been small…negligible. But they are growing, and I predict they will increase dramatically over the coming decade.

Meantime, nobody (understandably) wants to talk about it.

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About Author

Lief Simon

Lief Simon has lived and worked on five continents and traveled to more than 60 countries. In his long career as a global property investor, Lief has also managed multimillion-dollar portfolios of rental properties, for others and for himself. He offers advice on international diversification in his twice-weekly Offshore Living Letter and monthly Simon Letter dispatches.