Jonathan Tepper is giving up his US passport. The founder of Variant Perception, a macroeconomic research company, has spent most of his life abroad, but as an American citizen he is still required to fulfill "onerous financial reporting and tax filing requirements that are neither fair nor just." Mr. Tepper is scheduled for an "in-person final loss of citizenship appointment" at the US Embassy early next year. He will keep his British passport, obtained in 2012. With the renunciation of his US citizenship, he will join the 3,000 Americans who gave up their citizenship last year, a number that is expected to grow this year and next, even as the cost for renunciation of citizenship has increased dramatically from $450 to $2,350.
The reason, Mr. Tepper explains, is the unusual US tax laws that apply to American citizens and companies no matter where they are physically located. He notes that America is the "only country (except, arguably, Eritrea) that taxes all of its citizens on worldwide income rather than where the income is earned. Expatriate Americans have to pay taxes once, wherever they live, and then file again in the United States." Even if no taxes are owed (the IRS doesn't tax the first $97,600 of foreign earnings), many expatriates must pay thousands of dollars to accountants to navigate the complicated rules.
The US government has been taxing Americans living abroad since the Civil War, when it did so to prevent Americans from fleeing to Britain to avoid taxes. The recent Foreign Tax Account Compliance Act, which requires foreign financial institutions to report certain assets held by American clients or face severe penalties, has led to the refusal of many foreign institutions to take on American clients and arguably to the upsurge in Americans renouncing their US citizenship.
Mr. Tapper writes: "The founders agreed on 'no taxation without representation.' Why can't Congress?"
