Karen and Frank Alpert gave up their American citizenship in June this year. They became Australian citizens 17 years ago after falling in love with Australia. Photo: Robert ShakespeareMost Americans would rather die than surrender their passports, but when Brisbane academic Karen Alpert renounced her US citizenship in Sydney with her husband and daughter she was angry.
The Californian who migrated to Australia 20 years ago wasn’t quitting because of the prospect of Republican candidate Donald Trump, although she does predict others may quit too if he is elected President.
Like thousands of Americans who are now giving up their citizenship, the Alperts were protesting at United States tax policy. Other than Eritrea, it is the only country in the world that taxes non-resident citizens – and even holders of a Green Card (alien resident permit) who are also living outside the USA – on their worldwide income, regardless of where it is earned or where they live.
This requires the estimated 200,000 Americans who live in Australia, many of whom are dual citizens, to file an annual tax return in both countries. Compliance is cumbersome: the American tax code is 74,608 pages compared with Australia’s 3657 pages. Many dual citizens who live in Australia claim the American treatment of Australian superannuation means they are effectively being taxed twice.
Until the introduction of the 2010 Foreign Account Tax Compliance Act or FATCA, the US government had no way of uncovering the earnings of the eight million Americans who live abroad. And most expatriates were unaware that they were required to file annual tax returns in both countries.
That’s changed. Now about 192 countries, including Australia, have agreed to FATCA, which obliges all banks and financial institutions to provide details of every American citizen’s bank balance and earnings. If the banks don’t oblige, they can be banned from operating in the US.
Because of FATCA more than 4500 US citizens gave up their citizenship last year, compared with 231 in the year before it was introduced. Eduardo Saverin, co-founder of Facebook, gave up his citizenship a few years ago, and others including the former mayor of London Boris Johnson – who was born in the US – have also threatened to quit in protest at the US tax policies.