More renounce US citizenship but deny stereotype
Inside the long-awaited package, six pages of
government paperwork dryly affirmed Carol
Tapanila's anxious request. But when Tapanila
slipped the contents from the brown envelope, she
saw there was something more.
"We the people...." declared the script inside her
U.S. passport — now with four holes punched
through it from cover to cover. Her departure from
life as an American was stamped final on the same
page: "Bearer Expatriated Self."
With the envelope's arrival, Tapanila, a native of
upstate New York who has lived in Canada since
1969, joined a largely overlooked surge of
Americans rejecting what is, to millions, a highly
sought prize: U.S. citizenship. Last year, the U.S.
government reported a record 2,999 people
renounced citizenship or terminated permanent
residency; most are widely assumed to be driven
by a desire to avoid paying taxes on hidden
wealth.
The reality, though, is more complicated. The
government's pursuit of tax evaders among
Americans living abroad is indeed driving the jump
in abandoned citizenship, experts say. But
renouncers — whose ranks have swelled more
than five-fold from a decade ago — often contradict
the stereotype of the financial scoundrel. Many are
from very ordinary economic circumstances.
Some call themselves "accidental Americans," who
recall little of life in the U.S., but long ago
happened to be born in it. Others say they
renounced because of politics, family or personal
identity. Some say signing away citizenship was a
huge relief. Others recall being sickened by the
decision.
At the U.S. consulate in Geneva, "I talked to a man
who explained to me that I could never, ever get
my nationality back," says Donna-Lane Nelson,
whose Boston accent lingers though she's lived in
Switzerland 24 years. "It felt like a divorce. It felt
like a death. I took the second oath and I left the
consulate and I threw up."
When Americans do hear about compatriots
rejecting citizenship, it's more often people
keeping their U.S. citizenship and dropping that of
another country.
Last year, Texas Sen. Ted Cruz acknowledged the
Canadian citizenship he was born to, but said he
would renounce it. In 2012, Rep. Michele
Bachmann, R-Minnesota, saying she was "100
percent committed to our United States
Constitution," announced she was giving up Swiss
citizenship gained through marriage.
One of the few times rejected U.S. citizenship has
gotten significant ink was Facebook co-founder
Eduardo Saverin's 2011 decision to turn in his
American passport after moving to Singapore.
Saverin likely avoided millions of dollars in taxes
by doing so shortly before Facebook's initial stock
offering.
Other wealthy Americans also have relinquished
U.S. citizenship. Denise Rich, the ex-wife of
pardoned trader Marc Rich, expatriated in 2012 and
lives in London. Last fall, singer Tina Turner, a
resident of Switzerland since 1995, relinquished
her U.S. passport.
But Saverin's decision, in particular, hit a political
nerve, along with scandals surrounding UBS and
Credit Suisse, which were caught matching wealthy
Americans with offshore accounts.
In recent years, federal officials have stepped up
pursuit of potential tax evaders, using the Foreign
Account Tax Compliance Act which requires that
Americans overseas report assets to the IRS or
pay stiff penalties. Those trying to comply
complain of costly fees for accountants and
lawyers, having to report the income of non-
American spouses, and decisions by some
European banks to close accounts of U.S. citizens
or deny them loans.
But some of those surrendering citizenship say
their reasons are as much about life as about
taxes, particularly since the U.S. government does
not tax Americans abroad on their first $96,600 in
yearly income.
Decisions to renounce "are driven by a whole
range of emotional considerations. ... You've got
anger, you've got fear, you've got a strong sense
of indignation," said John Richardson, a Toronto
lawyer who advises people on expatriation. "For
many of these people, this is not a tax issue at
all."
Even some who acknowledge tax worries say
decisions to renounce are far more complicated
than a simple desire to avoid paying.
Peter Dunn, born in Chicago and raised in Alaska,
moved to Canada to pursue a graduate degree in
theology. He met his wife, Catherine, and they
made Toronto home when her work as one of the
owners of an aviation maintenance firm made her
the breadwinner.
Dunn remained an American. But he was alarmed
by a change in U.S. law requiring those with more
than $2 million in assets to pay an exit tax if they
gave up citizenship. He didn't have $2 million. But
his wife was doing well enough that he imagined
one day they could get there. The idea of the U.S.
government taxing his Canadian wife's money
didn't seem right.
"When I learned about that, I decided that to
protect my wife, I better expatriate," he says.
Corine Mauch arrived at the same decision by a
different route. Mauch was born a U.S. citizen to
Swiss parents who were college students in Iowa.
They lived in the U.S. until she was 5, then again
for two more years before she turned 11. Mauch
maintained dual citizenship even after she was
elected to Zurich's city council. But when she
became mayor, she reconsidered.
During the last American presidential election, "I
asked myself 'Where do I feel at home?' And the
answer is clear: In Zurich and in Switzerland. My
attachment to America is limited to my very early
youth," Mauch said. Double taxation was "not the
crucial factor for my decision. But I will not miss
the U.S. tax bureaucracy either."
Taxes play little or no role in other decisions.
Norman Heinrichs-Gale's parents were
missionaries from Washington state who raised
him in Asia and the Middle East. In 1986, he
traveled to Austria with his American wife, and
they found work at a conference center in an
alpine valley town of 6,000. The jobs were
supposed to last a year. But the couple stayed,
sending their children to local schools.
On yearly trips to the U.S. he felt increasingly like
a stranger. "I never forget going into a grocery
store and just being stunned by my choice of
cereals," Heinrichs-Gale says. "I was stunned by
just the pace of life compared to what we have
here, stunned by the extremes of wealth and
poverty that I encountered."
There wasn't one single thing that pushed him
away. But his children wanted to attend Austrian
colleges and he and his wife wanted to vote in the
country they considered home. The family was
tired of renewing visas and work permits. And so
they signed documents giving up U.S. citizenship.
Now, one of the last vestiges of American culture
in their home is watching Seattle Seahawks games
online.
Sports played the central role in Quincy Davis III's
decision. Davis, raised in Los Angeles and Mobile,
Ala., played professional basketball in Europe after
three years as Tulane University's leading scorer.
By 2011, he was home studying to become a
firefighter when he was offered a spot on a
Taiwanese pro squad. He's since helped lead the
Pure Youth Construction team to two
championships.
When the team's owner suggested last year that
he join Taiwan's national team, Davis says he
found little motivation to keep his U.S. citizenship.
"When you think about who I am as a black guy in
the U.S., I didn't have opportunities," he says.
"You get discriminated against over there in the
South. Here everyone is so nice. They invite you
into their homes, they're so hospitable. ... There's
no crime, no guns. I can't help but love this
place."
Many others cutting their U.S. ties say tax laws
drive decisions that have nothing to do with
secreting wealth.
"I wish I were wealthy," said Nelson, who says she
takes in about $50,000 a year from pensions and
earnings from publishing an online journal
covering credit union news.
Nelson has vivid memories of growing up in the
U.S. Even after moving to Europe, she continued
sending five to 10 emails a week to members of
Congress, opposing the Iraq war and the Patriot
Act. After 15 years, she acquired Swiss citizenship
so she could vote. But she began considering
expatriation only in 2010 after a banker told her
that, because of new U.S. financial reporting laws,
it was closing the accounts of many Americans
and a mistake as minor as an overdraft could
mean the same for hers.
"How would my clients pay me?" says Nelson, who
is 71 and also an author of mystery novels.
"Where does my Social Security get deposited?
Where does my pension get deposited?"
The jump in renunciations reflects evolving views
about national identity, said Nancy L. Green, an
American professor at the L'Ecole des Hautes
Etudes en Sciences Sociales in Paris. When the
U.S. got its start, citizenship was defined by
"perpetual allegiance" — the British notion of
nationality as a birthright that could never be
changed.
American colonists rejected that to justify
becoming citizens of a newly independent country.
But changeable citizenship wasn't widely
embraced until the mass immigration of the late
1800s, says Green, a historian of migration and
expatriation.
Even then, U.S. artists and writers who moved to
Europe in the 1920s were criticized, suspected of
trying to avoid taxes. Until the 1960s, U.S.
citizenship remained a privilege the government
could take away on certain grounds. It's only since
then that U.S. citizenship has come to be viewed
as belonging to an individual, who could keep —
or surrender it — by choice.
But Carol Tapanila's life in Canada has tested that
redefinition.
Six years after Tapanila's husband lost his job at a
Boeing factory in Washington state and they
moved to Canada for work, the couple became
citizens of their new country. She says U.S.
consular officials told her that, by swearing
allegiance to Canada, she might well have lost her
American citizenship.
After retiring from a job as an administrative
assistant at an oil company in Calgary, Tapanila
began putting $125 a month into a special savings
account for her developmentally disabled son,
matched by the Canadian government. In her will,
she authorized creation of a trust fund to draw on
retirement savings and other assets to provide for
her son, who is now 40, after her death.
Tapanila says she didn't know she was required to
file U.S. tax returns until 2007, when her daughter
raised the subject. Her troubles were compounded
by her decision to apply for a U.S. passport after
a border officer told her she should have one. She
has since spent $42,000 on fees for lawyers and
accountants and paid about $2,000 in U.S. taxes,
including on funds in her son's disability savings
account.
In 2012 she turned in the passport, renouncing
U.S. citizenship to protect money saved for her
retirement and her son. Tapanila, 70, has tried and
failed to renounce U.S. citizenship on his behalf,
saying officials told her such a decision must be
made by the individual alone.
"You know, we are not rich people and we are not
tax evaders and we are not traitors and I'm more
than tired of being labeled that way," Tapanila
says.
"I'm sorry that I've given my son this burden and I
can do nothing about it ... I thought we had some
rights to go wherever we wanted to go and some
choices we could make in our lives. I thought that
was democracy. Apparently, I've got it all wrong."
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