How Economic Development Weakened US Passports

Back in 1984, it was very clear that if you hadn’t been born in the US or somewhere in its sphere of influence like West Germany, you had been dealt a bad card in life.

The US was the world hegemon with an extensive international reach. If you wanted to benefit from global opportunities, it would be far easier to do so with the backing of the world’s superpower.

However, much has changed since then.

Economic development across the globe has lifted billions of people out of poverty in only the last few decades. And as countries have gotten their act together, the passport landscape has changed dramatically.

Today, the US passport is not much better than other alternatives (and, in some cases, even worse). Instead of ranking at the top of the list, it now sits in 44^th position.

This is not necessarily because the US passport has gotten any worse, though. Visa-free travel has remained largely the same for US passport holders.

The rest of the world has merely stepped up their game.

Why the US Passport Ranking Has Dropped

There’s so much more to base the strength of a passport on than simply the number of countries you can visit with it. Here are some of the reasons why the US passport isn’t quite what it used to be:

Stagnation in Visa-Free Access

While many countries have aggressively negotiated new visa-free or visa-on-arrival agreements, the US has made little progress in expanding its list of visa-free destinations. 

For example, smaller countries like the UAE have surged ahead, forming partnerships with nations in Africa, Asia and Europe to create a solid global travel network. Passports from countries like Germany offer you more travel options than the US.

While you can certainly make your way around the world on a US passport, not much has changed over the last few years, and the travel benefits aren’t all that special. 

Geopolitical Tensions

US foreign policy has sometimes led to strained relationships with other nations, which indirectly impacts its citizens’ freedom to travel. 

Unlike countries that maintain neutral stances and develop global partnerships, the US’ geopolitical approach has limited its ability to negotiate favourable travel agreements. 

And with plenty of political tension and change going on in the US, who knows what power its passport will offer in years to come?

Certainly, if his diplomatic onslaught in early 2025 is any indication, Trump’s second presidency is likely to have a major impact.

Increasing Regulations for Expats

Policies like FATCA (the Foreign Account Tax Compliance Act) place significant burdens on Americans living abroad. These policies make it harder for US citizens to enjoy the same banking and investment freedoms as other nationalities. 

This regulatory burden discourages global mobility. It also adds to the perception that the US passport is more of a liability for expats.

Emerging Competition from Other Nations

As global economic development accelerates, other countries have not only matched but, in some cases, surpassed the US in terms of passport strength. 

Countries like Japan, Singapore and South Korea are offering passports with superior travel access and fewer restrictions, creating a more competitive global landscape.

The US Tax Burden

Holding a US passport also drops you into the US tax net. This can be a major burden, as the United States is one of only two countries that use a citizenship-based taxation system.

Even if you don’t live in the US – even if you’ve never lived in the US – holding a passport means you’ll still have to file a tax return with the IRS every year. And, if the foreign-earned income exclusion isn’t enough for your situation, you’ll have to pay taxes to the US government.

This is the major reason why holding a US passport can be a burden instead of a golden opportunity.

The Impact of Economic Development

To understand how the US passport has its shine, we’ve got to look back on history.

After WWII, the United States and the Soviet Union were the main cultural centres. 

But the Soviet Union was a centrally-planned horror. Even moving from one city to another within the union often proved to be an insurmountable bureaucratic nightmare.

As such, the US was the only real option for the savvy businessman as all cultural, technological, and financial developments were in some way influenced by them (even the Soviet Union eventually started wearing blue jeans, much to their chagrin).

The world has evolved since then, and we’ve seen the emergence of other centres for both cultural and economic development that are not necessarily directly beholden to US interests, such as South Korea and Singapore.

Both countries are good trading partners and they have excellent relations with the US, but they’re independent and primarily look out for their own wellbeing. 

They will not be the next world superpower, but they have carved out a place for themselves on the world stage.

In fact, it’s unlikely that there will ever be one dominating world superpower in the future. 

There won’t even be a single ‘next big thing’ like Singapore. Instead, thanks to increasing levels of worldwide economic development, there will be many big things.

As more and more countries have enjoyed economic development, they have also begun to participate on the world stage, creating alliances and trading deals with each other, including agreements for visa-free travel that have strengthened their passports.

In the past 10 to 15 years, there has been a huge wave of visa-free travel opening for passport holders around the world. If you look back to the early 2000s, every passport was far inferior to what it is now. 

Even countries that some would consider pariahs of the global communities, like Russia (that has had sanction after sanction put on them over the years), have gone from around 50 visa-free, visa-on-arrival or eTA countries to 127 now.

The Paradigm Shift

The gap between the US and the rest of the world has narrowed. In some countries, it has even inverted and the US now has to catch up. 

The paradigm has shifted.

It no longer makes sense to focus solely on the US and Europe as a place to invest, live, and travel.

Look at places like Mexico just south of the US border and you’ll see a country with ample opportunity for development.

In 2016, when Trump was campaigning with the policy of building the wall, some would joke about wanting to get stuck on the Mexican side of the border. 

Indeed, Mexico has many of the benefits that the US has – the food, the culture, the hustle and bustle – without so many of the everyday annoyances and associated costs. 

Opportunities are all around, and those who can see them will reap the rewards.

There are second passports that can be acquired quite easily, which add between two to four new countries for visa-free travel on a yearly basis because they connect with other countries and arrange deals.

The governments of the world are slowly realising that working together is mutually beneficial. 

That in turn opens up business and leisure opportunities and allows countries to grow richer and enrich themselves with each other’s cultures. 

Because of this, having a US or a Western passport, in general, matters less today than it ever has.

US Passport Problems and Disadvantages

In some respects, a US passport can even put you at a disadvantage in the modern day, given that the US likes to control its citizens’ behaviour no matter where they live.

Because of regulations like FATCA, whereby the US government forces financial institutions that deal with US citizens to report everything, many foreign banks have outright banned them from opening a bank account.

In an ironic twist, US citizens who thought they came from the freest country on earth now have every one of their decisions carefully monitored. 

US expats often have the worst of both worlds – they still have to report taxes to the US government and they cannot freely manage their finances. 

On the other hand Mexicans banking in the US can actually treat the United States as a tax haven (structured properly, they can have 0% tax on their investments), and the government there is under no obligation to tell anyone about it, including the Mexican tax authorities.

Today, non-US citizens and residents can take advantage of all the benefits of the US investment market without any of the disadvantages that come with US citizenship.

Perhaps your US passport isn’t as valuable as you thought it was.

Not only has the rising tide of economic development raised the power of the world’s other passports, but the US is also self-sabotaging by placing serious limitations on its citizens.

The game has changed.

The era of a single nation controlling everything is over. It’s now about diversification, competition and international cooperation.

Western passports, like the US passport, are often perceived to be stronger simply because of their brand name. But if you look at them objectively, they are often not all that dissimilar from what the rest of the world is offering. 

Second Passport Opportunities to Take Advantage Of

Obtaining a second passport is easier and more beneficial than ever. So, should you consider it?

Many countries offer streamlined programs to attract foreign investment, remote workers and skilled professionals. 

These programs not only offer expanded travel options but also provide significant financial and lifestyle benefits. 

If you’re after a global ‘Plan B’, then holding a second passport is one of the best ways to access it.

We recommend you read our guide on the easiest citizenships and passports for a few ideas of where to look. For a quicker summary, here are the different options you could follow for a second passport.

Citizenship-by-Investment (CBI) Programs

Countries like St Kitts and Nevis, Dominica and Grenada offer fast-track citizenship through investment programs. 

By contributing to the local economy – typically through real estate, donations or investments in government funds – you can acquire a second passport in just a few months. 

These passports often provide visa-free access to Europe, Asia and parts of the Americas, making them a valuable tool for global mobility. They could also open up the doors to a tax-free lifestyle. 

Follow our detailed guide on citizenship by investment for more details.

Residency-by-Investment Programs

For those looking to establish a foothold in a larger country, residency-by-investment programs are an excellent option. 

Portugal’s Golden Visa, for instance, allows investors to gain residency and eventually citizenship within the EU. Other programs, like those in Panama or Mexico, offer low barriers to entry and minimal residency requirements.

Digital Nomad Visas

As remote work continues to rise, digital nomad visas have become a popular option for global citizens. 

Countries like Estonia, Croatia and Costa Rica offer long-term visas specifically for remote workers, providing an alternative to traditional second passport programs.

This route won’t lead to citizenship or a new passport, but it’s a good opportunity if you want to explore new global options.

Strategic Passport Pairings

A major benefit of second passports is that you can pick and pair them strategically. 

For example, pairing a US passport with a Caribbean passport can enhance your visa-free travel options while also reducing your tax obligations. 

Similarly, combining an EU passport with one from Asia or Latin America can open up unique opportunities for business and travel.

There’s no one passport that’s best for US citizens. Instead, the best second passport changes for each individual situation. 

Know what you want, and you can choose a passport that helps expand and improve your life.

With geopolitical landscapes constantly evolving, the best time to secure a second passport is now. Waiting too long could mean missing out on some great programs or facing stricter requirements as demand increases. 

How Economic Development Weakened US Passports: FAQs

Go Where You’re Treated Best

If you’re an unsatisfied US citizen who’s looking to relinquish the burdens of US citizenship, there are options available to you.

Moving overseas can help to reduce your tax bill, although it’s unlikely to be the full solution, thanks to the United States’ citizen-based taxation policy.

To fully escape the obligations of US citizenship, you’ll need to renounce it and hand in your US passport. This is an irreversible decision which won’t suit everyone and requires a lot of planning.

For starters, you’ll need to obtain a second citizenship to ensure you’re not stateless. You may also want to reorganise your finances to avoid a hefty exit tax bill. 

These can be lengthy, stressful processes with a lot of potential hurdles to overcome. 

That’s where Nomad Capitalist comes in. We help wealthy investors and entrepreneurs to ‘go where they’re treated best’, whether that’s by moving their investments offshore, relocating to a tax-friendly jurisdiction or seeking a new citizenship.

Our clients are paired with experts in tax, investment strategy, asset protection and immigration to create and execute a plan based on their unique goals. 

Our experts will hold your hand and even complete many of the arduous processes on your behalf to ensure no unexpected hitches ruin your plans. Click here to learn more about our holistic Nomad Capitalist plans.