by Ryan Vagabundo
With hundreds of millions of people climbing all over each other to get into the United States each year, why on Earth would any natural-born citizen throw away their right to live here?
There are a number of scenarios where this move makes sense, and most of them revolve around taxation, though some people are simply so dismayed about the country's political condition they want to hit the "eject" button.
Leaving the U.S. just because you don't like taxes is usually a dumb idea, because you're going to be paying taxes to some entity in some form no matter where you go. Sometimes the tax burden assessed by the United States government is at such a degree that the costs of expatriation are a much more affordable alternative in the long run, however.
One extreme example at the federal level would be an estate tax on an inheritance greater than $5 million where exclusions and credits don't apply, which would sap 40% of that amount simply for leaving it to children. People who aren't as wealthy usually get hit harder at the state level, however, especially in states that have regressive tax schemes that actually take a higher percentage of income the lower down the economic spectrum you go (such as Washington and Pennsylvania).
This is especially true if you are planning to live outside the United States indefinitely anyway. No matter where you are in the world, the country requires you to pay and file income tax every year, even if you have no plans to return to avail yourself of its services.
Professional investors want as much cash on hand as possible, and they would really prefer not to have to factor taxes into their investment moves. For example, the 15% tax on dividends, and the income tax requirement on selling stock that has been held for less than one year.
Even if an American citizen abroad is comfortable with the amount of money they are being taxed, the requirement to continue filing every year while out of the country means either an added expense and trouble of hiring an accountant in their host country, or the time sink and risk of doing the filing themselves.
United States citizens are sometimes viewed in a negative light or have their rights restricted in other countries. This nearly always has nothing to do with them personally, it's a reflection on something their government has done. For example, when Bush was re-elected, many American college students studying abroad found their romantic lives took a sudden and sharp nosedive.
For a more serious (and broadly applicable) example, the Foreign Account Tax Compliance Act requires every bank in the world to report the account information of its American clients to the American government or be subject to a 30% withholding tax on their income. Given how difficult this is for many banks to successfully comply with, some have taken the measure of simply not allowing American citizens to open accounts with them.
For terrorists looking to kidnap someone for cash or execute someone to make a political statement, an American citizen is the grand prize. Not having any association with the United States takes a lot of unwanted attention off of those who travel through or live in areas where terrorists are known to operate.
This is the sticky part of the equation. Unless you already have citizenship established elsewhere, the ability to expatriate usually comes down to two things: family or money.
The traditional method is to either show that your parents or grandparents are residents of the country you want citizenship in, or to marry a citizen of that country. The rules surrounding both of these things vary from country to country, but the process still generally takes years even if you have a slam-dunk case.
The other option is faster, but frankly, it's only for the wealthy. You can become an "economic citizen" of a handful of small countries by making a substantial investment that improves the country's welfare or economic development. The minimum investments are hefty, ranging from $200,000 in Grenada to a cool $2,875,000 in Cyprus. This method allows those who can afford it to obtain citizenship (and a passport) in as little as three months, however.
Dominica and St. Kitts-Nevis are the favored destinations of those who take this route, as they do not tax income generated outside the country, nor do they have any inheritance tax. Their passports also offer visa-free entry to many countries. Citizenship in Malta or Cyprus gives one the ability to live and work throughout the European Union, however.
There's nothing stopping you from doing so, at least for four months out of each year. You can stay longer than that, but longer stays may subject you to the taxation you presumably left to avoid in the first place.
Those who have made up their mind to expatriate must formally renounce their citizenship at a consulate or embassy. This usually requires a waiting period, however, and it can take months to get an appointment in the larger and more popular cities. You'll also need to have your second passport on hand.