Benjamin Franklin once famously wrote that there are only two things certain in life: death and taxes. For American citizens, this is especially true.

The American tax-net extends far beyond the country’s borders and applies to Americans who are living abroad, even those who have not been in the United States for decades.

The United States is one of only two countries in the entire world with a global taxation policy, the other being the East African country, Eritrea.

Most countries operate on a residency-based taxation system, meaning that people owe taxes to the country where they physically reside.

For example, if a UK citizen living in Dubai resided in the UAE for more than 183 days, they would pay tax according to the UAE’s tax code, not the UK’s.

While the IRS does offer a “foreign earned income exclusion” of up to $120,000 per year, any income beyond this threshold faces double taxation, meaning that an individual must pay taxes to both the country they reside in and the United States. Americans abroad must file an annual tax return if their income exceeds the filing threshold, which is $13,850 for single individuals in 2024.

For many Americans living abroad, this means that their American citizenship is more of a liability than an asset. According to Forbes, from 2005 to 2009, less than 2,500 Americans gave up their citizenship, whereas from 2010 to 2020, the number was a staggering 36,840. 

One of the reasons for the increased number of renunciations was the implementation of FATCA, the Foreign Tax Compliance Act, in 2010. This Act requires individuals to report their foreign assets to the IRS if they exceed a certain threshold and that foreign banks report the identities and values of bank accounts owned by U.S. citizens.

Even former British Prime Minister Boris Johnson gave up his US citizenship in 2016, stating that it was outrageous to tax American citizens “everywhere, no matter what.”

A 2024 survey by Greenback Expat Tax Services reveals that nearly 1 in 3 American expats plan to renounce their US citizenship. This number has increased significantly in just one year, from 20 percent in 2023 to 30 percent in 2024.

An additional 37 percent of expats “might consider” giving up their US citizenship, meaning that nearly 70 percent of American expats consider their citizenship to be problematic in some way.

The study also asked those considering renunciation what was their primary reason, and “the burden of managing/filing US taxes” was cited most often.

Adam Smith stated in The Wealth of Nations that taxes should be paid “in proportion to the revenue which they respectively enjoy under the protection of the state.” When Americans live abroad, especially for decades, they are, by and large, not beneficiaries of American public services. They should not be expected to contribute to a system in which they no longer participate.

The U.S. passport is one of the strongest passports in the world. It allows Americans to visit 188 countries without a visa. The Henley Passport Index currently ranks it as the 8th best passport in the world.

To give up such a powerful passport is not a small sacrifice and individuals would only endure such an extensive bureaucratic and financial process if the current global taxation policies were truly bothersome.

For nearly a decade, from 2014 to 2023, the fee for renouncing US citizenship was $2,350 until the State Department announced recently that it was cutting the fee to $450. 

Perhaps this lower fee will entail more renunciations, but the fact that the number of people giving up their citizenship jumped during the period with higher fees indicates that for Americans who want to escape the burden of U.S. tax laws, the price doesn’t matter.

The United States was founded on the principle of freedom. Expats who have left the U.S. have made the decision to live abroad and they should be granted the freedom to do so without a permanent financial ball and chain.