‘Scary’: Why US expats are tossing their citizenships – and it’s not just Trump

This story is part of the November 2 edition of Good Weekend.See all 10 stories.

It’s a handful of days until the US election. Expat Americans thirst for news on the presidential race. But there’s one group who wants nothing to do with next Tuesday’s vote; those who plan to, are in the process of, or have already renounced their US citizenship. And there are more of them than you might think, particularly in an election year like this one – involving Donald J. Trump.

For Americans who want to stop being American, it’s a big deal to renounce their citizenship. Philosophically and nationalistically, but also practically. Why do they do it? I speak to a dozen, some on the record, most on background, some on the record at first and then freaking out. It’s not so much about Trump or even his presidential rival Kamala Harris (although for some, it is). It’s about what America has become.

“In the US, the gap between Republicans and Democrats gets wider and wider. I resented the direction it was moving in,” says Dan Moffet, 51, a credit ratings executive born and bred in Atlanta, Georgia, who has called Australia home since 2016 and renounced his US citizenship in 2022. “Here [in Australia], everyone crowds towards the centre.”

For others, it’s shhhh about tax – because, as the University of Melbourne law professor Miranda Stewart explains, the US taxes on a citizenship basis, meaning Americans living abroad can be taxed by the IRS (Internal Revenue Service, the US version of the Australian Taxation Office), whereas Australia, like pretty much the rest of the world, taxes on a residence basis. That means American citizens working in Australia might end up paying tax in both countries. Sure, the US and Australia have a treaty where you get some credit for what you pay if you live here. But it’s complicated, and in the US, almost everything is taxable, including the family home and superannuation (also known as a 401K or pension plan in the US). And the US still has a federal “death tax”, albeit for estates currently worth a minimum of $US13.61 million (about $20 million). If you don’t sort out what’s owed and fill in the myriad forms properly, the IRS will treat you as a hostile citizen.

Becoming un-American, though, is a mire: paperwork, involvement with the IRS, specialist lawyers, money – so much money – and the dreaded exit interview. As one would-be renouncer tells me, her final straw was when the IRS wanted to know what her very Australian, always Australian, partner earned in Australia. In her view, it was none of Uncle Sam’s business. Indeed, I’ve never met a group of citizens so terrified of the tax man. “The IRS is scary,” says one, happy to speak to me so long as I never utter her name in public.

For others, the anxiety stems from the chaos of their own paperwork as a result of trying to keep track of tax across two hemispheres and meet onerous filing requirements. One entrepreneur with an Australia-based business says he’s meticulous but still ends up having to pay tax to the US on things that are tax-free here. There’s one US tax especially for non-US residents, and the acronym reveals everything you need to know about the IRS mindset. It’s called GILTI.

Would-be renouncers say everyone in WhatsApp groups or online forums discussing relinquishing US citizenship is worried about tax. Have they got it right? Have they understood the rules? Are they about to receive a demand out of the blue?

There’s a lot of chat about how expensive it is to renounce and some hyperbole about possible extra scrutiny when visiting the US after doing so. “I still have many family members there,” says one, “so I don’t want to risk a situation where I’m unable to get there during an emergency.”

Dan Moffet and Eddie the cavoodle in the Sydney flat he shares with his husband. “I now take for granted that I live in a place where I never feel unsafe.”Credit: Wolter Peeters

Dan Moffet grew up in Atlanta; dad in the military, mum a sonographer, three older siblings. A financial systems manager for an American credit ratings agency, he arrived in Australia for work in 2016. He met, fell in love with and then married Zac Underwood, 38, who works in financial services. He sits on a grey leather couch in the gorgeous modern apartment he shares with Underwood and their three-year-old cavoodle, Eddie, as he tells me his story. He wears a soft, dark V-neck sweater. Oops. Not sweater. Jumper. He
definitely calls them jumpers now. The top of Sydney Harbour Bridge is visible through the window, as is Garden Island, where Australia’s navy fleet comes and goes, reminding Moffet of his dad, 22 years in the forces. The view also includes the local dog park, otherwise known as the Domain, where he and Underwood take Eddie each day. A map on the wall depicts the area as it was in the 1900s, a gift from his husband’s mum. It was a love note of sorts to them both: This is where you are now.

In the weeks running up to the 2016 election, when the audio of Trump saying he’d “grab [women] by the pussy” was leaked, Moffet was confident that Americans would never vote in anyone so vile. “I was like, ‘He’s finished,’ ” he says. ” ‘There’s no way the US would ever elect somebody like that to be president. No way.’ ” They did. Then came January 6, 2021, when Trump supporters stormed the Capitol. “As an American, it was absolutely horrifying. It was just like, how can a president be encouraging people to subvert the electoral process? What I found the most troubling was the number of his supporters who will just believe anything and will act on it.”

This wasn’t the America he knew. His parents were devoted Republicans and this wasn’t the America they knew, either. In 2016, unlike most of his family, Moffet had voted for Hillary Clinton. “Look how that worked out.” In 2020, he felt that the options were so bad, he didn’t even vote.

‘I feel fortunate I had the opportunity to get away from the US political system.’

Dan Moffet

It was not long after the Capitol riots, amid news Tennessee planned to ban public drag shows, that Moffet decided he would become un-American. He was a perfect candidate for renunciation. His bookkeeping was conscientious (So tidy! Even with a dog!), taking some of the sting out of the daunting process, and he liked it – loved it – here. What he loves is what frustrates many locals: the rush by politicians to the middle. Moffet says many Americans are centrist in their views but the politicians representing them propel them to extremes. It took him a while to get the hang of what we do here, the whole, ah, compulsory voting thing. “But I feel fortunate I had the opportunity to get away from the US political system,” he says. Still, the process made him pause. “I’m basically giving up part of my identity.”

What brings migrants to Australia? Those from conflict zones might be grateful. My parents arrived from what we now call a refugee camp and were ecstatic. As a girl, though, I couldn’t believe they picked Australia over America. Did they not recognise where the fun was? Mostly we think about weather, the landscape; when we get serious, the standard of living. Sure we love our elections, mainly democracy sausages, but we take it all for granted.

But seriously. The politics? Ours seem stuck. Except when it matters, Moffet reminds me. A horrific event, such as the 1996 Port Arthur shootings, happens and political rivals unite to make change. “In the US, someone gets shot and the answer is, ‘Everyone go out and buy a gun.’ How is the answer to gun violence more guns? It doesn’t make sense.”

Last year, he and Underwood returned to the US to visit family and friends. Late one night in downtown San Francisco, he ducked out for takeaway. He suddenly remembered he had to be wary of his surroundings. “I now take for granted that I live in a place where I never feel unsafe. It’s just like, ‘OK, I need to take a moment every once in a while and just appreciate that.’ It is quite different.”

Moffet (right) with his husband Zac Underwood. The pair met and have settled in Sydney.Credit: Wolter Peeters

He still has a sense of pride in his home country – and misses the American barbecue. “The smoked meats, the pork shoulder, ribs, brisket, low, slow, smoky compared to just throwing meat on the barbie.” You can hear the longing in his voice. “America has done amazing things: made amazing discoveries, amazing developments and contributions to the world. And in that sense, there is a sense of pride and stuff like that, but it’s balanced with the reality of what’s happening there and disillusionment with that. Again, I think that just coming to Australia and kind of coming to understand the way of life here and the politics, it just appealed to me more.”

If you are sick of being Australian, it’s easy to opt out. First, make sure you have another nation that wants you. Then follow the steps on the Department of Home Affairs website. Put together your documents and supply hard copies as and when required. No worries. Three hundred bucks. Done. Good luck to you and your family. Maybe the public servants who deal with those giving up their Australianness think to themselves, “See ya. Wouldn’t want to be ya.” But there’s no obvious contempt.

God forbid you try to stop being American. Not even God: Uncle Sam. Renouncer after renouncer says the exit interview, conducted by consular officials all over the world, runs to a pattern. Here’s the kind of questions you might be asked: Are you doing this under duress? Do you really understand what you are doing? Are you sure? Are you being forced into doing this against your own free will? You can tell me. Then there’s the subtext. Are you out of your goddamn mind? You know, I can shred this ridiculous application of yours. Just give me the sign. (Mind you, you won’t get back the thousands of dollars you’ve spent getting this far.) These bureaucrats remind you that you’re giving up your links to American exceptionalism. Are you sure you want to do that?

Pennsylvania-born, Calgary-based Alexander Marino is an expert in international tax planning and a director at Moodys Tax. He and his Georgia-born wife have six children aged two to six, all with dual US-Canadian citizenship. I was directed to him by a grateful renouncer who said Marino had navigated her complex tax affairs. Cost her “a bomb”, she said, but worth it.

It’s an election year and he’s inundated with requests for help. He holds webinars, conducts interviews, generally works non-stop to help people leave their American citizenship behind. Marino says his firm handles 1200 to 1400 renouncers a year, more than a third of whom live in Australia. As he says, if you are an American citizen, you’re subject to tax almost as if you’re living there. “In fact, worse, because once you have non-US assets, the rules are even worse because you’ve crossed imaginary lines. The IRS would prefer you to have an LLC in Nevada, not a Pty Ltd in Perth.”

Take former British prime minister Boris Johnson, whose dual citizenship, like that of so many others, was an accident; he was born to British parents working in the US. Like so many, he got sick of paying two lots of tax. That’s not gossip – in 2015, a year after he’d publicly said the US wanted to tax him on the sale of his London home (he called it “absolutely outrageous”), the then London mayor told The Sunday Times he would renounce his US citizenship. It wasn’t a good look for a politician with an eye on the prime ministership to have dual citizenship, nor for that politician to owe a foreign country a truckload of money.

US-born former British PM Boris Johnson called a US tax bill “outrageous”.Credit: WireImage

He paid up and then renounced in 2016, a bumper year in which a then record 5411 people became un-American, 26 per cent more than the previous high. The new record didn’t last long. In 2020, 6705 people renounced their US citizenship. Notably, both were presidential election years featuring Trump. (Moodys’ Marino says it’s well-documented that the real numbers are higher than the official tally.) It’s hard to tell how numbers will pan out this year, but more than 2000 people renounced in the first half of 2024. In comparison, the Department of Home Affairs says that 315 Australians renounced their citizenship last year. These people are asked why they’re renouncing but the department says it doesn’t keep track of that data.

David Smith is an associate professor at the University of Sydney, working in its US Studies Centre and the School of Social and Political Sciences. Born in Brisbane, raised in Adelaide and Sydney, where he did his undergraduate degree, he’s often on the ABC talking all things Obama, Clinton, Trump and, until recently, Biden on Biden Time, the name he gave to a regular radio segment that turned out to be remarkably prescient.

‘The US sense of national identity is bound up with who is running the country – and for some people that is harmful emotionally, particularly if that person is at odds with their conception of what it should be.’

Associate professor David Smith

He isn’t surprised to hear there’s a spike in the number of Americans who decide to renounce their citizenship in election years. He thinks some of the chat is bravado, but knows others who are dead keen. “The US sense of national identity is bound up with who is running the country – and for some people that is harmful emotionally, particularly if that person is at odds with their conception of what it should be,” he tells me. “There is a real sense the president is an embodiment of the country. This is why presidential elections become a focal point. Australians don’t have that same sense. The position of prime minister is not as stable. In the US, the president has this symbolism the PM doesn’t have in Australia.”

Smith is also not surprised that Americans want to leave their home country’s tax and bureaucracy behind. “Any government service in the US is chaotic and fragmented. Insanely complicated bureaucracies, generations behind us in Australia. It is a major area of stress for Americans. I think it often takes moving to another country to recognise what a burden is actually being placed on you.” Important transactions, he says incredulously, are still done by fax. Fax. Yes, Australia is behind on entrepreneurialism, “but the things we can take for granted provide a level of security that frees up a lot of mental energy.” Smith took his PhD at the University of Michigan but was never tempted to become American.

Associate professor David Smith says “insanely complicated (US) bureaucracies” are “a major area of stress for Americans”.Credit: The University of Sydney / Louise M Cooper

Relinquishing citizenship is a surprisingly technical task. You need a professional to file missing tax returns to the IRS, preferably one who understands how to pay tax across two jurisdictions. While it’s possible to self-file them, most people aren’t confident enough. And if there are several returns to prepare at once, you definitely need an expert. Plus, if the returns are late, you may be fined $US10,000 or part of the bill. Marino says the US provides an amnesty program on fines, if you go to them before they find you, but if the IRS says the delay was deliberate, penalties can rocket into the six figures – even if no tax is due.

Alex Marino estimates the legal bill alone to renounce can cost between $US10,000 and $US15,000 (about $15,000-$22,000), depending on the situation’s complexity. “You can blink and find yourself spending 25 grand [about $37,000] but you avoid a lifetime of double taxation,” he says.

Indeed, there are other costs beyond that legal bill. In some cases, applicants must travel to their renunciation interview. At one point, the wait time in Sydney spooled out to two years (it’s still lengthy). Those I speak to travelled to shorter queues in Bangkok, Auckland or Singapore to renounce. I asked the US embassy about wait times. Its response: “Regarding wait times in Australia, once a US citizen submits the required documents to relinquish or renounce US citizenship, the US Consulate will respond within 10-15 business days to schedule an appointment. After the appointment, the Department of State reviews each request to determine whether there’s a legal basis to approve the loss of nationality. This process may take several months or more.”

In the interests of balance, I talk to a couple of people who’ve lived here for a long time but have absolutely no interest in giving up their US citizenship. They love being able to vote both here and there. What about the current US derangement? They get a little prickly. One acknowledges: “Their healthcare system is a nightmare, and the older I get, the more grateful I am for Medicare. Then there’s gun violence – I still can’t believe that school shootings have become routine. And of course, there’s the Trump of it all. Rights for women, people of colour, immigrants and LGBTQIA+ individuals have been deliberately stripped away and I don’t see the conservatives backing off that agenda any time soon. Sure, we have a right wing in Australia too, but their sphere of influence and scope of damage seems a lot smaller. I feel like my vote counts for a lot more in Australia than in the US.”

In the end, though, for this person, it’s all about their roots – their roots and their fears: “My understanding is that it’s pretty complicated and expensive to renounce, and that you may attract extra scrutiny when visiting the US afterwards. I still have many family members there, so I don’t want to risk a situation where I’m unable to get there during an emergency.” Another responds: “There are a lot of things I don’t like about the US but my god, there are a lot of things I don’t like about Australia now, too.”

There’s also the simple fact that, as Paul Keating is said to have put it, we’re at the arse-end of the world, and they aren’t. That counts for a lot if you like to be where things happen – Broadway, the Super Bowl, Hollywood, Silicon Valley. Like the entrepreneurial spirit, the can-do attitude, the sheer scale and possibility of life. Like the fact that what your politicians say and do counts globally. Like being at the centre of the world.

Like Boris Johnson, Sarah Larkin was an accidental American. Her parents were expats working in New York and she just happened to be born there. Growing up in Sydney, she figured that maybe she’d use it one day despite having no familial connection with the country. She and her family were planning an overseas trip when she realised her US passport was about to expire. In the process of investigating how to renew it, she was surprised to find how much it cost to renounce citizenship. The government fee to process the paperwork alone was $US2350 (nearly $4000).

Such a lot of money; easier to just keep on keeping on. But the seed was planted. Then Larkin’s father saw a video, one in which tax consultant Alexander Marino was trumpeting the benefits of renunciation, and she started to ponder, “Is it a country where I feel I belong?”

‘To be frank, I like having reproductive rights and I don’t like gun violence.’

Sarah Larkin

Like so many others, Larkin was nervous about the consulate interview. She had heard that the questioning might include challenging her understanding because of her age (she’s 24). “Questions like, ‘How can you be sure at this age you don’t want your citizenship when you can’t really know what’s ahead of you?’ But I talked to Alex’s team about it. I asked him, ‘Is it taboo for me to mention that I don’t love the political state of the country?’ ” They told her to tell the truth about how she felt.

That’s what she did. She explained that as a young woman who has lived all over the world, “Australia has always been my home. I always feel proud to come back to the country.” Then her interviewer interrupted her: “I don’t want a picture of your Australian citizenship. I’m asking you to tell me why.” At that point, Larkin thought to herself, “If you are gonna be snarky, I’m gonna be snarky right back.” She replied: “Well to be frank, I like having reproductive rights and I don’t like gun violence.”

Logistics worker Chase Gelston considered the advantages of citizenship – and outside of being rescued by Seal Team Six, found it “totally unnecessary”.

Larkin plans to work in the field of human rights and although those jobs are more likely to come up in the US, she’s unconcerned. “At the end of the day, I never felt American. It was something that just happened to me.” Yes, she says, an American passport has its benefits, but so does an Australian one. “It’s not like a European [EU] passport, right, where it gets you a lot of advantages, obviously, for travel. It only gets you into the States. It was less and less worthwhile holding onto it. Ultimately, it’s important that your citizenship should reflect who you are and where you belong.”

Chase Gelston, 29, has just renounced, too. “I just didn’t really resonate with either of the leaders [Harris and Trump] or the politics as a whole,” he says. “Or the healthcare system. There’s so many issues with that country.” Born in Colorado Springs, he lives in Perth and works in logistics, although he’s on sabbatical in Paris while he works out what next to do with his life. His thoughts about the downside of renouncing went along these lines: “If you’re abroad and you need consular service or a Seal Team Six to come in and save you from some location, sure, great, awesome,” he says, sparking images of a Tom Cruise-style rescue. “But how many times am I going to go to a place like that? It’s just totally unnecessary.”

Renouncing cost him more than $US10,000, which sticks in his craw a bit. “I mean, how many countries do you have to pay to leave?” We speak the day after the September 10 debate between Kamala Harris and Donald Trump. I ask him if he has any regrets about not being able to vote, not being American any more. He laughs. “Did you watch the debate? No, I have no regrets at all.”

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