Regarding Renunciation

Why would you ever do it? Let me count the ways. [The Rude Awakening] October 28, 2022 [WEBSITE]( | [UNSUBSCRIBE]( Regarding Renunciation - Walt B. asks a good question: why would you renounce your birth country's citizenship? - With American (and Eritrean) citizenship, it’s far more straightforward to answer. - Trigger warning: you may not like the answer. [IMPORTANT: Reader, here’s the link.]( Here’s your new link: [secure link for You]( Jim can barely contain his excitement. He can’t wait to tell you about his newest reveal… …and what it could mean for YOUR financial future. Go here now: [secure link for You]( [Click Here To Learn More]( [Sean Ring] SEAN RING Dear Reader, Happy Friday! It’s been a wonderful week and a bit with my friends Trav and Marty visiting. Trav went home on Sunday, but I’ve got to drive Marty to the airport tomorrow. So, Marty and I do one more day of driving around Il Piemonte and then relax today with a drop of something cheerful. My bet is a delicious bottle of Barbera… I’ll spare you the charts today, as we’ve got our Monthly Asset Class Report due next Tuesday. It’ll read like a horror novel! If you’ve seen the messes with Credit Suisse, Snapchat, Amazon, and Meta, you know why. So today, I’ll address a great question from the mailbag and reorganize a fuller answer. The question from Walt B. is this: You did not address one obvious question: why did you renounce your American citizenship? I get that you like Italy and being a global citizen of the world, but why? What was the event that triggered that response; because frankly, a large part of your readership (and income stream I imagine) derived from the U.S. I am not understanding why you would "renounce" your citizenship from your birth country. Regards, Walt B. Walt, thanks for this. I’ve written my reasons before, but not recently. And you have a right to know why if I’m talking about it so much! So here we go. Most Shouldn’t Do It First, let me say that renunciation isn’t for everyone. I remember saying to a crowd at a conference, “If you have grandkids in America, don’t do it.” I’d add a large family, a big business, or a second passport from a spit of land in the Caribbean. I think those “advisors” who suggest renunciation when you’ve only got, say, a passport from Domenica aren’t acting as fiduciaries. They’re trying to make a quick buck. My situation was different. Because I partied my ass off at Villanova, I knew I had to add something special to my CV to get into a top 25 MBA program in the States. Getting international experience was a great way to accomplish that. I asked for and got a transfer to London for two years. I was 24 years old at the time. But something happened. I loved, loved, loved London. And I realized I could attend London Business School at night while working for my bank. So I ended up staying for ten years and skipping the MBA, which I now know stands for Mediocre But Ambitious. (I got a Master’s in Finance instead.) Now, let’s talk about my tax situation over there. Citizenship-based Taxation As you know, America has the most asinine tax system in the world. And if you think it’s stupid for America-based citizens, you should see it for ex-pats. Here’s why: if you pay less tax in your host country than you would’ve in America had you been employed there, you have to “top-up” your taxes to the IRS even though you don’t live in America. For example, let’s say I paid the British pound equivalent of $35,000 in taxes to His Majesty’s Revenue and Customs. (HMRC is the British IRS, and just as nasty.) If my US tax liability would have been $40,000, I’d have to cut the IRS a $5,000 check - even if I didn’t set foot in the US the entire year. That’s citizenship-based taxation. And it sucks. Only the US and Eritrea work on this tax system. Most European countries work on residency-based taxation. That means you pay taxes to your home government on your worldwide income (regardless of where it was derived) if and only if you live in your home country. A Brit who lives in the US only pays US tax. While they live and work in the US, they don’t pay, nor do they have to file, anything in the UK. That’s why most Europeans never even consider renouncing their citizenship. I got my British citizenship and passport in 2006. Since I was a dual US-UK citizen and UK taxes were higher, I only had to cut the IRS a check twice in the ten years I lived in the UK. And if I recall correctly, both times the amount was under $2,000, so I didn’t care much. And then, I moved to Singapore in 2009. The Singapore Government did something amazing at the time. Since the crash was so bad, the SG government reduced the top rate of tax for everyone - everyone! - to 8%. In essence, they wanted the residents to spend what little money they had in the stores, not on the government. I thought it was the most fantastic thing ever! But as I was still a US citizen, I had to pay a colossal top-up. It decimated my savings account, and I was furious but didn’t renounce it yet. And then, I met Pam. Accidental Americans Pam and I only dated for a year and a half before we got married. I told her about the Accidental Americans. If you’ve never heard the term: [An Accidental American]( is someone whom US law deems to be an American citizen, but who has only a tenuous connection with that country. For example, American nationality law provides (with limited exceptions) that anyone born on US territory is a US citizen (jus soli), including those who leave as infants or young children, even if neither parent is a US citizen (as in the case of Boris Johnson until he renounced his US citizenship in 2016). It also includes children of US citizens, even if they’re born abroad. Since I worked in finance, I knew the IRS set up offices worldwide to go after these accidental Americans. Pam and I decided the only thing we could do to protect our yet-to-be-born was for me to renounce. We were married on July 3, 2011. I renounced my US passport four days later. [QUICK! Count how many pennies you see.]( Here’s why: If you missed out on making a fortune with cryptocurrencies, the recent crash has finally given you your chance to scoop up cryptos for pennies on the dollar. Literally. Because there’s a cryptocurrency quietly preparing to conquer the marketplace… and it’s trading for 96% below its all-time high. In fact… … it’s trading for the number of pennies you counted above. Get your hands on this bargain crypto while you can. [Click here to find out how to make up to an 8,788% return with crypto by 2025](. [Click Here To Learn More]( How Do I Work? Oh, it’s easy, and I’m cheaper than the equivalent American worker. And that’s not because I charge less. It’s because I’m a 1099 from abroad - the same as if you hire a kid from India on Fiverr to do your graphic design work. That means companies don’t have to pay idiotic payroll taxes if they hire me. And yes, I work for American companies. And UK companies. And many other companies. This came in especially handy when we moved to the Philippines. The Philippines has a territorial taxation system. That means income earned abroad isn’t taxable. If you’re an American living abroad, you get a foreign income exclusion of $112,000. That’s great because you only have to file, and not pay, if you earn under $112,000 from non-Philippines sources. I paid zero and didn’t have to file because all my income was from abroad, and I no longer had to worry about US taxes. Now, as an Italian citizen living in Italy, I’m taxed on my worldwide income regardless of source and pay that here. But since the Italian government passed its freelancer law in 2020, I pay nowhere near the top rate. Wrap Up If my math is correct, I’ve already saved over six figures by not being an American citizen. And if God grants me a long life that will exceed seven figures when all is said and done. Are there costs? Of course. I didn’t get to see my cousin’s kids grow up, and that’s a bummer. Most other American things are available on Netflix, YouTube, and Amazon. But I’m not in America much at all. I go to teach and to see my parents. And with my parents moving here soon, that’ll be one less reason to be in The States. One last thing: you get named and shamed on the Federal Register when you renounce. You can see my name on [this list for April 30, 2012](. (There’s always a delay in reporting.) Also on that list with me are Denise Eisenberg (songwriter and ex-wife of infamous commodities trader Marc Rich), Matt Ridley (author and businessman), Eduardo Saverin (billionaire co-founder of Facebook), and Derek Sivers (author and founder of CDBaby.com). Keeping company like that, I felt reassured. I hope that answers your question fully, Walt. Have a lovely weekend! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2022 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We allow the editors of our publications to recommend securities that they own themselves. However, our policy prohibits editors from exiting a personal trade while the recommendation to subscribers is open. In no circumstance may an editor sell a security before subscribers have a fair opportunity to exit. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. All other employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. Please read our [Privacy Statement.]( If you are having trouble receiving your Rude Awakening subscription, you can ensure its arrival in your mailbox by [whitelisting Rude Awakening.](