The fee to relinquish US citizenship

The government just raised the fee to give up US citizenship… for the third time in just a few years

Dateline: Kuala Lumpur, Malaysia

For the better part of a century, we’ve been told taxes are the price we pay for living in “civilization”.

This message has resonated throughout the big cities and small towns of most western counties, where majority-minded politicians now promise round after round of free goodies to voters in a modern bread-and-circus act.

In the most recent US Democratic Presidential debate, candidates argued with each other over what percentage of the population should receive totally free education. Answers ranged from “most” (just not Donald Trump’s kids) to “all”.

Ditto for universal health care and other government giveaways. From France to the United States, western governments have long bought influence by giving stuff to the “middle class” for free.

Meanwhile, there is one government service is far from free. In fact, the price not only keeps going up, but the definition of which services require payment of the fee.

That service is renunciation of US citizenship. As of a few months ago, it also includes relinquishment of US citizenship.

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The cost of renouncing US citizenship

Renouncing US citizenship is rather costly to begin with for most people, as it requires a second citizenship to even start the process. Some people have become stateless (ie: they renounce only to have no nationality), but that is not only dicey, but often forbidden by US embassies.

That means that, unless you have a parent or grandparent that held one of about a dozen European citizenships, you’ll either need to “buy” a passport for six- or seven-figures, OR go and camp out in another country for anywhere from 3 to 30 years, possibly incurring tax obligations.

Besides the cost of actually qualifying to renounce citizenship, the US government imposes a fee for their time and hassle. Up until several years ago, there was no fee; processing citizenship renunciation was a benefit you received from all those years paying taxes.

Several years ago, the government added a $450 fee to cover the “paperwork” involved at their US embassies. That was about five times the average of other western countries that charged a fee for renunciation, and while a bit insulting, it was reasonable.

Last year, in the wake of year after year of record high number of US citizens turning their passports back in, the government raised the fee to $2,350 – more than twenty times what any country in Europe charges.

The State Department figured they had future renunciations by the short and curlies. After all, few Germans or Polish or Brazilians renounce their citizenship because there is no reason for them to. As soon as they stop living in their home country, they stop being taxed and regulated as residents.

Only US citizens remain subject not only to US taxation, but to US regulations like OFAC. The only way to escape is to turn your passport back in, and the US government is all too happy to charge you a ransom.

Funny how Hillary Clinton complains about pharmaceutical companies “gouging” patients with high drug prices, despite spending billions of dollars in R&D each year.

Equally ironic is how Bernie Sanders is frequently bemoaning how the United States is “the only country in the free world” that doesn’t offer some random government goodie bag.

Neither of them, of course, seem upset that US persons living overseas suffer true taxation without representation. Expats have no voice in the US political process and are about as easy a punching bag for liberals as bespectacled citizens were to Pol Pot.

Now, sadly, the situation has gotten even worse

The new cost of relinquishing US citizenship

For those who didn’t wish to renounce their citizenship, there was a second option: relinquishment. Tina Turner did this but taking Swiss citizenship – something that took her well over a decade to get – with the intention of giving up her American passport.

If you look on the first page of a US passport, you’ll see that you can lose US nationality any number of ways, including pledging allegiance to a foreign state with the intent of being deprived of US citizenship.

It’s a bit of a semantics game, but it has worked for some folks. However, the US – with all of its nearly $20 trillion in debt – has caught on to yet another loophole by the “evil rich”, and has recently increased the fee for processing a citizenship relinquishment from $0 to the same $2,350 that renunciation costs.

The government explains it this way:

Currently, nationals who renounce nationality pay a fee of $2,350, while nationals who apply for documentation of relinquishment of nationality by the voluntary commission of an expatriating act with the intention to lose nationality, do not pay a fee. However the services performed in both situations are similar, requiring close and detailed case-by-case review of the factors involved in a request for a Certificate of Loss of Nationality, and both result in similar costs to the Department.

They continue…

In the past, individuals seldom requested Certificates of Loss of Nationality from the Department to document relinquishment. Although the Department was aware that an individual relinquishment service was among the most time consuming of consular services, it was rarely performed so the overall cost to the Department was low and the Department did not establish a fee.

Allow me to translate government-speak into English:

“Our country has the world’s most outrageous laws on taxes and regulation, and as we impose even more ridiculous requirements on people who don’t even live here, a lot of our most successful citizens are flying the coop.

While we claim to be a free market economy, we actually operate more like a modern-day slave plantation, and we can’t allow people to merely leave our country without taking a final pound of punitive flesh.

Sure, these citizens have likely paid tens or hundreds of thousands of dollars in taxes over their tenure within our kingdom. Some may have paid even more, and no doubt many of those tax dollars were paid by said citizens while living overseas and enjoying not a single benefit our country has to offer.

These citizens didn’t enjoy our pockmarked highways, our collapsing bridges, our last-in-the-world education system, or our sky-high medical costs.

We find it personally offensive that anyone would find the grass greener on the other side of the fence, so we’re taking our emotions out on those people like Carrie Underwood taking a baseball bat to her cheating boyfriends’ headlights.

Despite all of the money we’ve collected from these expats, we’re too cheap and angry to have a low-level embassy worker, most of whom are foreigners that barely speak English, to process a few forms and mail them to Washington, DC for archiving.

Yep, after spending these citizens’ money on wars that we lost, arming Mexican drug cartels, and giveaways to pet projects like Solyndra, we find it offensive that our citizens would expect we’d process a few pieces of paper for them for free. So instead, we will be valuing our time at $135/hour – enough to hire a CEO for a medium-sized company, but pocket change for a government worker that shows up from 9-11:30am every day.

We hope you understand, and don’t let the door hit you on the way out.

The message is clear: a government that wants to take from you will take from you at any opportunity it can get. Here in Malaysia, locals are complaining about 20% income tax rates and 6% sales tax. It’s pretty cute, actually.

But at least Malaysians are getting a taste of how government operates: it constantly gets bigger, rarely smaller. The countries that DO get smaller are the safe havens we talk about here frequently. Few western countries are in that camp, and if leaving your home country is part of your “Plan B”, then you should know they will make it harder and harder the more desperate for cash they get.

From $0 to $450 to $2,350, and from $0 to $2,350 in just a few years is the trajectory the United States is on. Your country could be next if they choose to implement the same draconian tax laws. (My money is on Canada and Australia first.)

After all, a bunch of philosophy majors need your cash to attend Arizona State so they have more time to booze and get laid, free from the worries of student loan debt.

Gain independence from your government.

Get our Freedom Seeker's Guide to Second Passports.

Andrew Henderson

Andrew Henderson

Andrew has been internationalizing since 2008, and has learned what works and what doesn't work when it comes to reducing taxes, increasing personal freedom, and creating wealth. Click here to work with him personally.
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