American Citizens Abroad Raises Political Stakes


Wealth Briefing, June 19, 2023

'American Citizens Abroad Raises Political Stakes'


'For years, the ACA has called for the US system of worldwide tax to move towards a more residency-based one, as is the case with the vast majority of countries. The current regime means that many expats struggle to obtain financial services when abroad.

American Citizens Abroad, an advocacy and membership group that has called for the US tax code to move to a territorial instead of worldwide basis, has launched a political action committee.

ACA said it has formed the American Citizens Abroad Political Action Committee. This will focus on members of the Americans Abroad Congressional Caucus and other House of Representatives members and senators.

'After carefully considering this step, we have concluded the community needs to ‘up its game’. The time has come to provide tangible support to members and candidates who will help US citizens abroad with real things – legislation, hearings, communications with Treasury Department and the IRS, and the like,' Marylouise Serrato, executive director, ACA, said.

In recent years, ACA has pointed out that because Americans are taxed regardless of where they live, they struggle at times to access foreign financial services because they are seen as a compliance headache. With an estimated total of 3.9 million US expats, that’s a potentially significant voting bloc but one that hasn’t got much political attention in the past. Rising taxes, political unrest and other forces have also encouraged more HNW Americans to renounce their US citizenship in recent years – still a relatively expensive and laborious process. The pressures on expats grew more severe after the passing of the US Foreign Account Taxation Compliance Act, or FATCA. (See articles here and here.

The ACA, which is based in Washington, DC, already takes part in the legislative and rule-making process by meeting decision-makers in person, testifying at hearings, submitting comments, and other activities. 

Based on 2022 figures, the ACA estimates that there are 3.9 million US citizens abroad. Also, according to the Federal Voting Assistance Program, there was an estimated 4.8 million US citizens living overseas in 2018, including government employees and government contractors, and the total number of these voting was about 2.9 million. If they were a state, they would rank 25th by population, ahead of Louisiana but below Alabama.

'We need to wake up to this fact and make our presence known in ways that members of Congress and others in practical ways will appreciate,” Jonathan Lachowitz, chairman, ACA, said. “Just complaining will not get the job done.'

Henley & Partners, a firm advising HNW individuals about moving to other countries for various reasons, said in its report on US wealth trends in 2023 that it received the most enquiries from US citizens on record in 2022 (a 447 per cent surge from 2019) when, for the first time, Americans ranked highest of all nationalities. This shows an increasing demand from Americans for mobility.

The numbers of citizenship renunciations have grown. According to Americans Overseas, a Europe-based organisation specialising in US tax preparation, a record 6,705 Americans gave up their citizenship in 2020, and that was up 260 per cent from 2019 when 2,577 US citizens did so. The rise is all the more striking considering how many US consulates were shut for much of 2020 as the pandemic raged. The previous record year for renunciations was 5,411 cases in 2016.

For so long, the US has been a beacon attracting immigrants, including HNW individuals seeking to escape high taxes, oppression and lack of opportunity. The shift towards renunciation by wealthy people takes getting used to. A list of thousands of such expatriating Americans is reported by the Federal Register.'

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