A recent article published by The Local highlights why a growing number of Americans, both living in the United States and abroad, are choosing to renounce their citizenship and relocate elsewhere due to mounting frustration over the U.S President’s new fiscal measures and tax policies, which are rapidly adding pressure about sustaining the rising cost of living. According to statistics, 52% of Americans are already contemplating relocation outside the States, from Europe to Australia and New Zealand, with a number of renunciations that is three times higher than in the 70s.
This trend reflects the subtle unraveling of the American economic framework, characterized by persistent inflation and confusing U.S tax obligations imposed on expats. This is why Olivier Wagner (founder of the tax firm 1040 Abroad) says that for multiple U.S residents the current fiscal challenges are the last straw, pushing them to make the leap and depart. What once was a symbolic act of protest has now become a financial necessity. According to experts, many Americans reject the United States’ intrusive fiscal policy, which forces its citizens to file annual tax returns regardless of where they currently live.
This obligation often results in dual tax filings (in the States and in the country of residence), with rare exemptions under IRS rules. Consequently, these have placed a burden on the American middle class living across the globe, but mostly the ‘accidental Americans’, a group of people who were born in the U.S or have American roots, but have never lived here. Often unaware of their tax obligations, from reporting overseas investments to disclosing foreign accounts (if the value exceeds $10,000), they face multiple legal fees and compliance issues. Surely a key factor that is pushing part of the U.S community to give up their American passports and relocate far away.
In the end, it is clear that Americans are being drawn to the West’s favorable tax environments and visa free-stays, from Albania to Portugal and Spain, that are becoming havens for expats with tax incentives, affordable real estate market, and appealing lifestyle.
