Almost nine in 10 U.S. expats say they are "caught between two systems" when it comes to their banking and tax matters, according to the latest data to emerge from a major survey of more than 400 Americans who live outside of the U.S., carried out last October and November by the Association of Americans Resident Overseas (AARO).
While this finding is unlikely to surprise many American expats, the numbers nevertheless provide a dramatic statistical picture of the scale of the problems many say they face, according to Doris Speer, the Paris-based AARO member who carried out the survey, with input from other AARO executives.
Speer, pictured left, says a total of 440 expats were surveyed online, "of whom 337 were AARO members", and that the research had been done in order "to aid us in our advocacy efforts."
She said the banking and taxation findings were so extensive that she has had to split her report on them into several parts.
Among the key findings from this report summarizing the survey respondents' overall views on dealing with incompatible taxation and banking systems, which may be viewed and downloaded by clicking here:
Of the 85% who described themselves as "caught between two systems" (whom the report refers to as "the Caughts," as opposed to "the Nots"), the problems they say they suffer from include "penalizing taxation", denial of U.S. banking services, inadequate non-US investments and retirement plans, restricted employment and business opportunities, "considerable expense" to file U.S. taxes every year, and "suffering spouses."
Some 62% of the Caughts "believe that they are double-taxed, or taxed more, because of being an overseas American," with comments such as "I lose tax benefits in my country of residence" and "my country [of residence] does not have a capital gains tax, so the U.S. can apply its CGT."
As noted in an earlier report based on the survey's results, the Caughts have faced "many more issues on the U.S. side in the banking area," as U.S. banks and investment firms seek to avoid having them as clients. Such individuals "also have much more difficulty transferring funds and obtaining credit in the U.S."
Almost one in five expats reported having been "refused employment, fac[ing] restricted job options" or "were denied business opportunities because they are subject to U.S. financial requirements," with respondents leaving such comments as "try having a 'foreign corporation' and 'huge tax implications'.
'I would not ever marry anyone here'
Among the more interesting findings, given the relatively high percentage of American expats who are married to non-Americans (and "two-thirds of the married Caughts), "one third (33%) of the Caught's spouses find themselves also caught up in the U.S. system, such intrusion being for no reason other than marriage to an American.
Said one respondent, in filling out their survey form: "I would not ever marry anyone here in [removed]. I would not want to subject them to the trauma of U.S. taxation issues." Said another, who actually did marry a non-American, according to the AARO report summary: "Every year he threatens to divorce me!"
The AARO report of expats' thoughts on taxation, banking, and the difficulties they have in being "caught between two systems" " is the sixth in a series of such pieces that are based on its research of last year, and that AARO has thus far posted on its website.
As reported here last month, these have thus far included an examination of expats attitudes towards citizenship renunciation; a report on what the survey found to be expats' top concerns (FATCA, taxes and banking); and the problems many have been having, as noted above, in keeping U.S. bank and investment accounts while abroad.
All six of the AARO reports based on the survey may be found by clicking here.
Founded 47 years ago
AARO was founded in 1973 by Phyllis Michaux and a group of other Americans resident in Paris, who were concerned about the way they thought (even then) that the U.S. government treated its citizens abroad.
Today the volunteer-run advocacy organization claims to have members in some 46 countries around the world, and combines research into issues that significantly affect the lives of overseas Americans – such as this latest survey – with keeping its members informed on these issues, while at the same time advocating on behalf of its members on such issues as taxation, citizenship, Social Security and Medicare.
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