Stephen J. Dunn

Stephen J. Dunn, Contributor

I write about taxes, law and life.

5/20/2012 @ 8:03AM |13,993 views

Relinquishing U.S. Citizenship

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At my son’s recent graduation from medical school, he was among a dozen members of the class who are active duty U.S. military. They will treat U.S. military, the military that won our country’s freedom 230 years ago, and has protected it ever since. Many of them will serve in harm’s way.

Some of the young doctors will serve on aircraft carriers. What other country has aircraft carriers? One of those aircraft carriers is the USS George Washington.

The United States is the greatest, most powerful country on the face of the earth. When the world has a serious problem, it turns to the United States to solve it. We are governed by the rule of law. Capitalism is what has made our country great. Yes, our taxes are too high, far too high. Yes, there are those who want to turn our country away from capitalism. These are hardly arguments not for relinquishing U.S. citizenship. Americans do not run from challenges. We bear down and solve them.

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  • Just a thought though, if you are permanently living in another country, i.e not America. I doubt you are that concerned with american history and your loyalty to it since you chose to go live somewhere else.

  • nhartvig nhartvig 1 year ago

    Most of what you say I agree with. But the side track on the Canadian thing and swearing allegiance to the British Monarch deserves a comment.

    Perhaps the US will always see tyranny at the end of a Red Uniform but it in fact it is; “red uniform at the end of Tyranny” and the enemy is not Britain necessarily, nor any commonwealth country, it is tyranny itself.

    Tyranny is often born of myopic thinking and forcibly inflicting that thinking on others. It can easily be said that the US itself is most or at least as much guilty of that same tyranny. Certainly Canada has not.

    While I appreciate the drum beating, flag flying, chest puffing is a build up to July 4th and celebration of the victory over the British, perhaps a better celebration would be to become a more wise, introspective and open minded country and show that we have learned, what the British failed to learn, so many years ago.

  • tbsdca tbsdca 1 year ago

    Allow me to put forth one question:
    Did Eduardo Saverin violate ANY law related to his income or investment?
    If you answer this question in the affirmative, please reference the statute and text of what law he violated.

    I put this question forward, not because I am commending his actions – nor am I condemning. But if the answer to the question is in the negative – he broke no laws – then I think we all have to pause a moment and ask ourselves what the issue is. We don’t like what he did? Why can’t he answer using the same words as Gov. Romney – All my offshore investments are legal and adhere to U.S. law.
    Ok, so maybe some of us don’t like that answer either.
    Hmmm, well who passes the laws?
    And before we answer “the bums in congress”
    And think
    Who elects Congress?
    We do.
    I appreciate (and often enjoy) reading the many and varied posts, rants, raves etc.
    Sometimes the emotions go so far that I say to myself – wow, get a therapist.

  • mjyung mjyung 1 year ago

    1. One of the key reasons the founding fathers of this country fought against the “Red coats” was “No taxations without representations”. The US citizens residing overseas does not have representations in the government.

    2. Experian, a company that owns almost 95% of all US household information, is 100% own by a British company.

    3. The British is still largest investor in US every year.

    4. Isn’t the right to association one of the basic human rights that US is always lecturing everyone?

    Things to think about

  • Wow – I’ve been reading Forbes since I was a teenager (1980′s) and I have to say I’m completely taken aback by the drivel I just read in this article. Mr. Saverin made his money in the US and, apparently, would like to keep some of it for himself and his family rather than hand it over to the jack-booted thugs who populate our government and, the IRS. I say “good for him”. By investing in Facebook early on he has helped create thousands of jobs for this country and has reaped the rewards of his investment. He ought be given a medal. Instead, this author and others would rather us think he is some kind of coward for deciding he and his family are better off financially in another country and for not feeling obliged to continue to fund the socialist agenda of our government which is slowly crushing the very liberty and entrepreneurial spirit the author purports to cherish. The author’s jingoistic perspective and flag-waving only serve to further detract from what could have been a superb article. It would have been far more revealing to discus WHY such a wildly successful investor would want to leave such a capitalist paradise as the US. Could it be we’re NOT the best choice for liberty, entrepreneurship and capitalism anymore? Try writing about that, next time.

  • I couldn’t of said it better.

  • Anoni Moose Anoni Moose 1 year ago

    I hope a superior article – able to discuss the relative merits of the US taxation scheme WITHOUT resorting to jingoism, personal pride (Oh wow, your son serves his country. Which has aircraft carriers. Relevant how?), and the entire IRS service manual (please: keep articles concise and informative) – soon emerges on Forbes. It certainly deserves better.

    And a more specific criticism: Eduardo Saverin was born in Sao Paulo, Brazil. Should he really feel any of the same duties to ‘The Founding Fathers’ etc. as you?


    Mr. Moose:

    The article did not say that my son serves on ac aircraft carrier. Nor did it say anything about the Internal Revenue Manual.

    American is the greatest country on the face of the earth. It is not perfect–no human institution is.

    I make no apology for my patriotism.

    Steve Dunn

  • asiteuser asiteuser 1 year ago

    Mr. Dunn,

    your article started about a Brasilian US citizen who has ex-patriated to Singapore, and ended with reasons as of why US Citizens should not become Canadians and should dislike the British.

    I am baffled by what I thought started as an interesting piece and then jumped from one corner to another without any leads. Bravo to your patriotism, boo to your story telling.

    I would like to read more about what a US Citizen must do to leave the country he apparently does not feel like being bound to anymore. I would not like to read about reasons of why not to become citizens of a certain completely unrelated area of the world.

    As you have rightfully mentioned in your comment – no human institution is perfect and institutions change with time – hopefully they evolve. I would like to mention that the monarch the Brits swear allegiance to, is not the same monarch who you fought a war with hundreds of years ago. And seeing the latest wars led by your country, you are actually spitting in the face of your allies.

    I would also like to hear if citizenship is overvalued in a globalized world and why Singapore is such an attractive country to live in – what are they doing better than the countries the people moved away from in first place?

    And last but not least – if the United States are the greatest country in the world, why does it need to chase after people who are moving elsewhere.

    Best regards,
    A U

  • Anoni Moose Anoni Moose 1 year ago

    Mr Dunn:
    - Likewise, my post did not imply your son served on a carrier. Merely that he served his country. Which also happen to have aircraft carriers.
    - And regarding the IRS manual, I was merely making the point that directly quoting the actual legal documents makes for no good article.

    My post was rude and uncalled-for, I admit. But I think I pointed out some valid criticisms. Whilst I’m sorry for my tone of deliverance, I make no apology for my criticisms.

    P.S. Being a British resident myself, I’d also like to ask precisely who actually calls Washington a ‘rebel’. Don’t bother answering if it was just an individual in an off-handed remark – and if so, don’t bother masquerading it as some meaningful observation in future articles either.

  • Glen White Glen White 5 months ago

    Very interesting. One of the points that you are forgetting is that King George was unfairly taxing the colonies. Don’t kid yourself. “The great US” that you are so proud of was founded because the the colonists did not want to pay taxes to the King.

    I think that is great about your pride in your son, but you should not be so proud of US and how they are treating the Vets.

  • Peter J Reilly Peter J Reilly, Contributor 1 year ago

    I have the same emotional response that you have to the very idea of renouncing US citizenship and swearing an oath to Elizabeth II. Don’t knock Canada though. Thanks to the fugitive slave law the children of George Washington’s slaves were not safe from reenslavement until they made it to Canada.

  • A Canadian A Canadian 1 year ago

    Mr. Dunn, you wrote about the long-time Canadian resident, asking why should he pay US income tax and why should he report his assets to the US government. You avoided answering by veering off topic into the oath of allegiance that we swear to in becoming Canadian. Personally, I would like to know what you think the answers are to the questions you posed. To extend your example, assume this person has lived in Canada for 40 years, and was happy to swear allegiance to the monarchy, as Canada is his home and country. So why, simply because he was born in the US must report on the bank accounts he uses for daily living, both his and those held jointly with his wife? Why must he file income tax to the US at all (ignoring for the moment that taxes are higher in Canada and he’d owe nothing)?
    I can understand that you love your country. It may come as some surprise to you, but I love my country, as well. I am proud to be Canadian and I would not trade living in Canada for living in the United States – ever. To me, the US is a foreign country and I do not believe that any Canadian citizen should have to report on our finances or anything else, to a foreign government.
    What do you think – what is your answer to the questions you yourself posed?

  • Oooogle Oooogle 1 year ago

    It’s fine to be patriotic – personally I’m extremely proud to be British. I don’t agree with your points, but as a “redcoat” I suppose I wouldn’t.

    I just want to know if there’s a prize for letting you know which other counties have aircraft carriers…

  • Oooogle Oooogle 1 year ago


    I just want to know if there’s a prize for letting you know which other countries have aircraft carriers…

  • Oooogle Oooogle 1 year ago

    Countries, not counties…

  • I have to say Mr. Dunn that you are seriously misinformed on the issue of impact of IRS taxation of expats. The passages of the tax code to which you refer are but the surface of the issue. The truth about the negative impact of U.S. government extraterritorial taxation goes much deeper than you portray.
    First off we should start with the fact that U.S. extraterritorial taxation renders many of the tax laws of your land of residence null and void. U.S. tax law becomes the determiner of what investments you are allowed to make and not the investment regulations of the country under which you live. The losts opportunity returns that are involved with observing these investment restricions comes to many millions of dollars each year. I think that even you should understand the very territorial nature of tax law and how it can be harmful to the individual investor if he/she is barred from living according to the tax code under which his/her earnings and passive income is made.
    The Foreign Earned Income Exclusion Credit (FEIE), which many mainlanders are fond of pointing to as a major accomodation. is actually not meant as an accomodation but as a way for the U.S. to maintain its fictional right to tax its citizens. The FEIE is a form of Communist style income control that only expats are subject to.
    The FEIE is an arbitrary limit that is placed on the incomes of those who live outside of the States and it feeds into a false idea that the U.S. is actually exposed to income drain when its citizens work outside of the country. The truth is exactly the opposite. There is NO income drain that is suffered by the U.S. when a citizen takes up residence outside of U.S. territory. This is because the income that is earned is not earned in U.S. dollars.
    The U.S. Treasury can only suffer a loss from granting an income exclusion if the person or designated group of those who receive the exclusion are actually holders of U.S. none interest bearing debt instruments. Fiscal categories like exemptions, deductions, credits, exclusions are all different names for performing the same act which is that of shifting the tax burden of those who are account holders with the U.S. Treasury. U.S. citizens who reside abroad and earn their living under a currency other than the U.S. dollar are not account holders with the Treasury because they do not receive none interest bearing U.S. Treasury debt as a form of compensation. This means that anything that the U.S. Congress enacts as a means of moving around the nation’s tax burden is of no consequence for those who are not holders of the Treasury’s debt instruments as their means of compensation or measuring their wealth.
    To sum it up then the U.S. government can only tax, exclude, credit, exempt or grant a deduction to people who are account holders with it.
    I would recommend that you read the Tax Payer’s Advocate report of 2011 to the IRS and Congress. Nina Olson details very accurately the problems and complications that an U.S. none resident is subject to and she concludes by saying the compliance is next to impossible if your reside abroad.
    These taxation truths make it worthwhile to give up U.S. citizenship because there is no other way to build up wealth if you reside outside of the U.S.
    The U.S. has benefitted immensely over the years from the fact that the other countries of the world do not impose the same arcane tax reporting and investment restrictions on their expats as the U.S. imposes on its. In many ways the American growth story as been subsidized by all of the other counries of the world. Territorial taxation is the only fair system of taxation that is out there. Citizenship based taxation makes your citizens second class residents at home and demotes them to second class status when compared to their homeland cousins.
    Citizenship based taxation robs the treasury of other countries of their rightful tax and spending base and as such is a form of person Colonialism only without having to exercise soverignty over land or an organized, unruly poulace.

  • I would like to add for the benefit of all those out there who may think that Mr. Saverin’s 67 million dollar reduction in his tax bill is unpatriotic that tax avoidance is not a crime. The U.S. courts have never said that it is the obligation of citizens to maximize the amount of taxes that they pay nor has the payment of taxes ever been linked to one’s degree of partiotism.
    If the obligatin to maximize one’s payment of taxes were to truly be a patriotic act then many international U.S. domiciled corporations would be out of business for displaying a severe lack of patriotism. The patriotism of thos American citizens who do not pay income tax while still getting refund checks would also be put into question. Certainly the partiotism of those who are on welfare and unemployment insurance would be under scrutiny.

  • nimvin nimvin 5 months ago

    Bravo, Ms. Hudson, for putting your finger exactly on the point of contention in Mr. Dunn’s article. Taxation without representation was the foundational grievance of the American Revolution. Therefore, the whole notion that anyone who avoids the excessive and punative taxation now suffered in the U.S. is unpatriotic is at best misguided, at worst patently absurd and downright offensive. I wonder if Mr. Dunn bothers to itemize his deductions at tax time? If so, perhaps we should question HIS patriotism.

    While I am loathe to insult Mr. Dunn’s well-intentioned patriotism (I myself have such feelings for my country), still I’m a bit surprised at Forbes’ editors for letting this one slip through for several reasons, including his tacitly implied notion that citizenship-based taxation is somehow a good thing, or at the very least, a necessary evil. In my opinion, it is neither.

  • Mr Dunn
    I am disappointed that Forbes would publish the comments you have made which could be perceived as offensive by America’s steadfast friends and allies in Canada. Your patriotism towards your country is laudable. Please show respect for the other nations of this world and their citizens. As you have indicated you are a citizen of the “greatest nation on earth” you have therefore the obligation to set an example, one which will foster sympathy and understanding amongst nations. Kindness and respect engender peace.

  • millergd millergd 1 year ago

    A disappointing article both from the writer’s attitude and poor quality advice.

    First, as noted in the comments, the “relinquishment” path remains largely untested as a vehicle for Exit Tax avoidance. Renouncing, on the other hand, is an assured way of forever avoiding U.S. taxation. Considering the IRS’ approach of casting a wide net of anybody who has ever sneezed anything America, I remain highly doubtful that relinquishment is a viable path, and have not seen any legal advice saying so. If it is, the IRS will surely determine it a loophole and close it–leaving back tax liability.

    Second, justifying the IRS’ current Taxation Without Representation regime with motherhood & apple pie patriotism arguments is asinine and absurd. The U.S. was founded by people who hated paying taxes (remember the Boston Tea Party) merely to see the revent sent overseas, and Americans overseas likewise hate the expensive and arcane U.S. tax code for the exact same reason. Your line of reasoning would have never seen an American revolution, as George Washington should have filled out his FBAR form and endorsed the Queen. (And for some reason, the Queen’s citizenship looks much more attractive these days than the combination of Uncle Sam’s Patriot Act and ex-Patriot Act Citizenship).

    I am one of many American expatriates fed up with the scary IRS tax regime that results in $2000/year accounting fees, bizarre treatment of foreign mutual, undefined views of foreign pensions, and constant threats to have even more of our hard earned foreign income taken away by a government that is duly bankrupt and unwilling to improve its books. If this is a patriotic justification, then I look forward to seeing George Orwell as our next dictator.

  • U.S. birthright citizenship and U.S. citizenship taxation affect the millions of people around the world who have American citizenship by birth or by lineage. Specifically, people who were born in the U.S., have moved abroad, are citizens by heritage, or became naturalized citizens of other countries, and live permanently outside the United States.

    To read more in-depth about the legal process of relinquishment and renunciation, please visit our firm blog at

  • Karla Jordan Karla Jordan 1 year ago

    As an American expat, living in the UK for 25 years (and who has taken UK citizenship and sworn allegiance to the Queen), I don’t believe America is the greatest nation on the face of the earth. If it were, it wouldn’t persecute housewives who choose not to live in the US and treat us like criminals. It wouldn’t allow people to die (like my sister) because none of the three jobs they work have sufficient health care (remember that the next time you’re in a diner and quibble over how much to tip your waitress. She’s poor and the US treats her like a third class citizen.)

    You, sir, need to either spend a few years outside of the US or spend some time IN the US with a pathetic excuse for health insurance.

    What you know about Great Britain could be written on the back of postage stamp. The American Revolution was 250 years ago. Get over it.

  • terry terry 11 months ago

    I am Canadian citizen, my husband is USA been living in Canada and have a small business for the past 25 yrs, now we are selling the business if we selling the company we have tax exeption in Canada up to $750 000 per person for small business.
    If we sale the asset we have to pay taxes here.

    Since we are older now, do not plan to do anymore business and not working much. Not educated.
    The problem is :he is US citizen he always declares his 1040. I just wonder how much tax does he has to pay? if there is any option?

    Thank you so much and hope you could help me solve this problem.

  • John Caplan John Caplan 7 months ago

    This article is bizarre. There are so many inconsistencies about US citizenship it brings the whole thing into question.