US taxation laws leading many expatriates to renounce citizenship
Friday, February 8, 2013
Many U.S. citizens choose to live and work overseas in order to further their careers. The world's increasingly globalized economy has created a steady demand for skilled professionals in countries all over the world, from the United Arab Emirates to Asia, driving demand for short term rental apartments and temporary housing in many areas. However, while many expatriates return to the U.S. after a limited period of time, more international professionals are choosing to turn their backs on the U.S. due to the country's taxation regulations, according to Time magazine.
The news source reports that increasing numbers of Americans are renouncing their citizenship status to avoid being taxed twice on incomes earned overseas. The U.S. is the only industrialized nation in the world that imposes taxes on citizens living and working overseas. Although several high profile celebrities made headlines in recent months after renouncing their citizenship, including Facebook cofounder Eduardo Saverin and pop singer Tina Turner, the majority of expatriates affected by the double taxation policy of the U.S. are middle-class workers or retirees.
Approximately 6 million U.S. citizens live and work abroad, and more than 1,800 Americans relinquished their passports in 2011. Some experts believe that this number could grow substantially in coming years, as more people tire of being taxed twice, especially those who pay high rates of tax on their income in the countries in which they live.
"I became increasingly frustrated by the necessity to file in two countries," Peter Dunn, an Alaskan native who moved to Toronto after renouncing his U.S. citizenship in 2011, told the news source. "I could not live with the abuse of America taxing me even though I could not receive any services or benefits of living in the U.S."
An expensive proposition
While the Internal Revenue Service's approach to international taxation of U.S. citizens is driving expatriates away in record numbers, choosing to live and work overseas is becoming increasingly expensive. Many cities around the world that are renowned as hotspots for international workers, such as Sydney, Australia, and Oslo, Norway, are proving expensive for many people, according to The Border Mail.
Data published in the Economist Intelligence Unit's recent Worldwide Cost of Living survey indicates that Sydney rose from the seventh most-expensive city in the world to third this year, and Melbourne climbed from eighth place to fourth, tying with Oslo. The exponential rise in the cost of living in Australian cities has surprised some analysts.
"10 years ago there were no Australian cities in the top 50 and I have not seen this sort of climb with any other cities," said Jon Copestake, the report's author, as quoted by the news source.