Having stumbled upon this article, I had to check the date to see when it was printed because it seemed quite similar to the current situation today. Where have we heard this before? This suggests that there is no hope that the US government will ever learn from its mistakes:

Americans Abroad Angry About Tax Snare

Dec. 20, 1979. By R. C. Longworth. Chicago Tribune.

After living for nearly 20 years in Switzerland, Cartoonist Hank Ketcham faced the crucial choice - either return to the United States or become a Swiss citizen. Many of his American friends in Geneva were taking Swiss citizenship, but eventually the creator of Dennis the Menance returned to California.

“I had to think about Dennis,” Ketcham said at the time. “How would it look if the all-American boy had a Swiss father?”

There are two points to this story – that Dennis’ “daddy” would even consider giving up his American citizenship, and that some Americans he knew had already done so.

This is a sharp change in the history of Americans overseas. Normally, no American, no matter how expatriated he became, ever considered giving up his citizenship.

The change is traceable to one factor – a new American tax law that can raise the taxes of Americans abroad well above what they would pay at home. At the very least, the law produces extra work and confusion. At the worst, it penalizes the American or, often, the company that sent him abroad.

The evidence that Americans are increasingly becoming ex-Americans comes mostly from informal reports from abroad. The State Department says it keeps no statistics on the matter.

But Bill William, editor of the Brazil Herald and a 20-year resident of Rio de Janeiro, wrote recently that “taxes were one of many elements” that led him to take Brazilian citizenship. He is not alone, he added.

“But almost without exception, the growing number of ex-Americans deny that taxes influenced their decisions – in fear, probably, that the Internal Revenue Service would hound them for 10 years, which it reportedly can do if suspicion exists they changed nationalities to evade taxes,” he said.

No matter what they say, he said, these ex-Americans “got a big push from their own government, thanks to their country’s unique and absurd laws taxing its citizens living abroad on their incomes earned overseas.”

What bothers Americans abroad most is the fact that the United States is the only industralized nation that taxes its citizens overseas. Other nations hold to the belief that taxes are a fee for services and should be charged only to residents who actually use the local services.

The U.S. government claims that most American taxes go for U.S. defense, which also protects Americans abroad. Since this argument implies that all persons outside the Soviet block should pay American taxes, it is not taken very seriously by nonresident Americans.

Instead, they see it as the result of a home-grown misconception of life abroad – an attitude expressed by Sen. William Proxmire, D-Wis., who sneered at overseas Americans as “mink-swathed, high-living jet-setters living at the taxpayer’s expense.”

Most Americans abroad, in fact, are hard-working businessmen, teachers, or other wage slaves. They are bitter, and some are taking out their bitterness by trading in their passports.

Many American companies are bitter, too. Most companies pay tax-equalization that can add $5,000 or more to the annual upkeep of a middle-management employee. The trouble is that these allowances are taxable, too, producing an allowance-tax-allowance-tax cycle. for a top management man earning $150,000, the tax-equalization allowance could rise to $434,000, according to Business International, a research firm based in Geneva.

The result is that many are returning home – the number of Americans overseas is believed to have shrunk from 1.7 million to 1.5 million in recent years. Others, like Williamson, have stopped being Americans. And companies are replacing Americans in their overseas operations with other nationalities.

What this means, of course, is that export business that depends upon national ties is going to other nations.

“One of the indices of a great international power is the number of quality of its expatriate citizens in their international marketplace,” American lawyer William Havemore wrote from Rome. “To discourage multinational enterprises from staffing their offices with Americans is just plain stupid.”

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