You’ve heard of an ‘aha’ moment (when you have an epiphany about something). But there’s also a “Wow” moment and an “Are you serious moment?” and then there’s that “damnnn” moment.
Well, I had one of those “damnnn” moments earlier this month when I read that President Obama had signed into law a bill that will allow the U.S. State Department to deny or revoke a passport to a “seriously” delinquent taxpayer.
Seriously indebted is defined in the Fixing America’s Surface Transportation Act (FAST Act) as someone owing $50,000 or more to the IRS. Now, $50,000 can be racked up pretty quickly with interest and penalties. Essentially what it means is that if an American citizen who lives overseas (pay attention my Austrian and Ghanaian and Caribbean American friends), and you have not paid or have under-paid in taxes and now owe back taxes and the State Department gets wind of it, you may have your passport revoked, or may not be able to get one at all. Doesn’t matter how long you have lived outside of the United States. The fact is that if you are a citizen of the U.S., you are required to file taxes for the rest of your life – whether you owe or not.
This last fact is so serious that a record 1,335 Americans gave up their U.S. citizenship in the first quarter of this year. In 2014, according to a report on CNN, 3,415 Americans renounced citizenship, a figure that is 15 times higher than in 2008. And the State Department is estimating that a whopping 5,986 Americans will give up their citizenship in 2015. Wow! And really it’s a double Wow since the cost of giving up your citizenship rose from just over $200 in 2012 to $450 in 2013 to $2,350 today, a 422 per cent increase since 2013. Damnnn!
This difficult decision to give up one’s U.S. passport is not taken lightly. And it’s not in order to avoid paying taxes exactly, but tax forms have been even more onerous – and expensive, at an average cost of $500 (and many pay way more than that), whether you owe or not – since the introduction of more strenuous tax laws such as the Foreign Account Tax Compliance Act (FATCA).
FATCA calls on Americans to disclose bank accounts with more than $10,000 in them and requires foreign banks to name all foreign accounts held by Americans. This request of foreign banks has caused some to stop opening accounts for Americans and to close those that have been banking with them for years because the cost of reporting this information to the United States is huge. Imagine living and working in a country where you can’t have a bank account.
The U.S. government says these new tax laws are intended to trap tax dodgers. But what about American students studying abroad and artists-in-residence abroad or just those who happened to marry a foreigner and are living abroad? It’s most likely that the vast majority of them are not trying to hide billions in a Swiss bank account.
Most Americans are living abroad because of love, or work or simply because they have fallen deeply for another country’s landscape and way of life.
I know first-hand how oppressive and expensive filing taxes can be as an American living abroad. And I am a firm believer that if you benefit from the American system and all that comes with being an American, then you, of course, should pay taxes. But I also believe that the benefits and assistance afforded to Americans abroad pales in comparison to what is expected of them by the U.S. government. I also don’t take lightly that Americans who have lived in, let’s say, London for 40 years still have to pay taxes on their worldwide income. Why?
The other question is whether it’s right for the government to enact a law that essentially restricts movement based on owing a tax bill?
While you ponder that, consider this other important law that has long been in effect: Men, or women (let’s not discriminate here), who owe back child support of $2,500 or more can also be denied a passport under U.S. law.
And believe me, the U.S.’s arm reaches far! My family and friends in The Bahamas tell me that if a Bahamian woman has a baby in the United States and neglects to pay the hospital bill, her visa can be revoked. Revoked. Those exact numbers on how many Bahamian women have babies in Miami are not readily available, anecdotal evidence indicates that dozens, if not hundreds, do so each year.
This Bahamian issue led to a big discussion among my Bahamian friends recently who took the issue a step farther by asking whether a child born in Miami whose father is Bahamian and who neglects to pay child support can also have his or her visa revoked.
No matter how you slice it, the United States will get paid. So you will either have to live with the fact that you cannot return to your home country before paying the $50,000-plus or if you live in the U.S., you can’t go on that dream honeymoon to Barbados – even if you win it in a lottery.
Now, that’s an “aha” moment.
Alison Bethel McKenzie alibethel@aol.com is a veteran newspaper editor and former executive director of the International Press Institute in Vienna, Austria
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