Why does the United States government treat its expatriates so badly?

Dec 9, 2023

By Roger Livingston

Several months ago I attended the Japan Day fair at the city museum on Benigno Malo and talked to one of the Japanese-Ecuadorian vendors. He told me about all the support the Japanese government offers its citizens living overseas.

He explained that Japan considers its expats ambassadors for Japanese culture in the countries they live. There is a government office that works with the Japanese embassy in Quito to make sure expats have the support they need in such issues as travel visas, health care, and legal services. He can even get an emergency loan from the government. He is not taxed on income earned in Ecuador and has no financial reporting requirements. Once a year, he files a short online form reporting that he is still living overseas and is doing well.

The conversation led me to the question: Why does the U.S. government treat its expats so badly?

The U.S. is one of only two countries in the world that taxes its citizens on income earned overseas. Whereas the other one, tiny Eritrea in east Africa, charges a flat 2% fee on income earned abroad, the U.S. applies the same rate as for U.S. residents, up to 40%.

Yes, I know there are ways around the requirement, but the paperwork makes it impractical for most foreign residents.

Instead of filing a report that we are doing and fine (thank you), we are required to report on how much money we have in our overseas bank accounts, even if it is only $10,000, and our overseas bank is required by the U.S. government, in some cases, to report on us to the U.S. IRS.

What really bothers me is the attitude in the U.S. that we are somehow traitors to our country for leaving, and people who should be regarded with high suspicion. This was reflected four years ago when two congressmen proposed legislation to strip us of our voting rights, put us on special overseas persons lists, and require us to provide a detailed explanation of why we choose to live in another country. In 2019, there was even a proposal to take away our full citizenship, putting us instead in a “conditional citizen” category. Although such proposals are unlikely to become law any time soon, they enjoy minority support in the U.S. Congress from politicians as diverse as Ted Cruz and Chuck Schumer.

Until the 1970s, U.S. citizens residing abroad could not be employed by U.S. embassies because of a perceived “security threat” and possible “double allegiance”. When France established its social benefits system in the mid-1950s, U.S. citizens who benefited from it were considered to be paid by a foreign country. Vestiges of these policies remain in place today.

So why this mean-spirited attitude?

In my opinion, it’s the grassroots ignorance of most U.S. citizens about the rest of the world. This ignorance, which turns quickly to suspicion, is reflected by the country’s politicians, many of whom know better but have to engage in demagoguery to get elected.

Judging from the current U.S. political cycle, there appears to be no sign of this ignorance abating any time soon.

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