What happens if you renounce your US citizenship like Green Day’s Billie Joe Armstrong?
The Supreme Court decision overturning Roe v Wade prompted Green Day’s Billie Joe Armstrong to say he’ll give up his US citizenship. It won’t come cheap.
Many Americans that give up their US citizenship do so to avoid what they feel are onerous American financial reporting requirements. However, more are expatriating themselves due to the political situation in the United States, with numbers going from a couple hundred in 2008 to getting close to 7,000 in 2020 according to US Treasury data.
One person who has made their choice to no longer be a citizen of the US as a political statement is Green Day front man Billie Joe Armstrong. During a concert in London Armstrong said, “I’m renouncing my citizenship,” in frustration at the Supreme Court ruling which overturned Roe v Wade. “There’s just too much stupid in the world to go back to that miserable excuse for a country.”
So what does it mean for him or any other person to renounce their US citizenship?
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“Giving up your US citizenship has consequences”
The US government website on renouncing or losing your US citizenship states that “giving up your U.S. citizenship has consequences. You should never make this decision lightly, as it can only be undone under very limited circumstances.”
When you do so you give up your rights and the responsibilities that come with being able to carry a US passport. Besides the possibility that you will need a visa to visit the US, if you don’t have citizenship in another country you run the gambit of becoming “stateless”.
Expatriation can come with a hefty tax bill
Those that wish to give up their US citizenship must contact the US Embassy or consulate in the country where you intend to live. The minimum cost will be $2,350 fee for processing the extensive expatriation request paperwork, which includes being tax compliant for the five proceeding years. There may be additional costs that apply depending on your wealth and income.
Those with assets of $2 million and above or an average salary in excess of around $165,000 over five years will have to pay an exit tax. Facebook co-founder Eduardo Saverin renounced his US citizenship shortly before the company went public, which probably cost him almost $500 million.
The move drew severe criticism at the time with calls for him, and others similarly perceived to be giving up their citizenship to avoid taxation, to be banned from entering the US in the future. According to Bloomberg estimates at the time he saved around $67 million in taxes by doing so when he did. His defenders said that Saverin was born in Brazil and had been living in Singapore for several years prior to renouncing his US citizenship.
In the case of Armstrong, should he decide to go forward with changing his citizenship to the UK, his net worth is estimated to be around $75 million which the IRS would apply capital gains tax to before he would be allowed to throw away his obligations to the US.