“I am not the President. Instead, I hold an even higher office, that of citizen of the United States”– Martin Sheen
It is an incontestable fact that the United States, in spite of all of its faults, remains the greatest country in the world. As such many crave its citizenship. The words of the former California governor Arnold Schwarzenegger is a testament to the pride associated with American citizenship – “As long as I live, I will never forget that day 21 years ago when I raised my hand and took the oath of citizenship. Do you know how proud I was? I was so proud that I walked around with an American flag around my shoulders all day long.”
I can definitely relate to the euphoric moment of the governor. I came to the United States in 2004 through the Diversity Visa Program which welcomes 50,000 immigrants into the US every year. Five years after been in the States, I was lawfully grafted into the community of dignified American citizens through the process of naturalization.
Attaining American citizenship was a big deal to me, and after all of this time it still remains big because for the first time ever I was a citizen of a country. This gift of citizenship was a historic moment in my life because my parents were born as subjects of the British empire. And while I was born in Nigeria, I was never a citizen of Nigeria because citizenship in Nigeria is for a select few—the elites, stupendously rich individuals through corruption of course, political juggernauts, and the highly placed spiritual leaders.
In this light, the recent mass renunciations of American citizenship by former Americans living all over the world has caused me to reflect and think about the reasons behind this disturbing trend. As I began to research this issue, I have found that the American government is somewhat responsible. The current tax law in America is based on U.S. citizenship, in that as a U.S. citizen you are required to pay tax on your earnings regardless of whether you live in the U.S. or somewhere else. According to the Federal Register, 1,130 US citizens living abroad have already renounced their citizenship due to the new legislation called “The Foreign Accounts Tax Compliance Act” (Fatca) which takes effect next July. The law requires that all financial institutions around the world report directly all the assets and incomes of any US citizen with more than $50,000 to the United States Internal Revenue Service (IRS). And banks that risk the noncompliance of (Fatca) could have 30% of their dividends and interest payments withheld by the US government for their failure to comply.
Although, I understand the reasoning behind the (Fatca) legislation, it is an attempt by the US government to recover an estimated $100 billion it loses every year in unpaid taxes on US citizens’ assets abroad. However, I believe that the law has to be balanced for a couple of reasons. For starters, making a particular law for the purpose of targeting a subset of the population is unethical. Secondly, tax law shouldn’t be a matter of citizenship but a matter of physical residence. As it is now US citizens are taxed as citizens regardless of where they live.
The law has already caused many to renounce their citizenship, and as it will cause many more to do the same due to the insufferable consequences of the law on ordinary US citizens abroad. Although the law is specifically targeting billionaires living abroad, many ordinary US citizens both natural born and naturalized living abroad are equally giving up their passports. One such person is Ruth Freeborn, a former United States citizen who lives in Canada with her Canadian husband. Because she herself does not earn an income, the new law would force her to pay taxes on what her husband earns. Eduardo Saverin, one of the Facebook’s four co-founders, also renounced his citizenship last year for tax reasons and currently lives in Singapore.
The same government that encourages US citizenship for people like me through the process of naturalization, shouldn’t introduce legislation that turns people away. It just seems counterproductive. If the government continues to go down this road, it could lead to people renouncing their citizenship en masse. Such actions will have an adverse affect on the American economy, which ironically is what the government is trying to avoid.