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Thursday, March 10, 2011

Number of U.S. Expatriates Doubled in 2010

Andrew Mitchel reports that the number of individuals renouncing their U.S. citizenship (or terminating their long-term U.S. permanent residency) and expatriating from the U.S. more than doubled in 2010:

Expat chart3_1

http://taxprof.typepad.com/taxprof_blog/2011/03/number-of-us-.html

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Tracked on Mar 10, 2011 9:18:27 AM

Comments

where do they go. i've often thought of leaving before the government really starts picking our pockets to pay for the debt

Posted by: tbrady | Mar 10, 2011 7:53:52 AM

Only 1,534 people? That seems awfully low. I know it's doubled, but it's doubled from almost no one to nearly no one. Considering there are some 10-15 million people here illegally, losing 1500 legal residents don't seem like much of an offsetting number

Posted by: Ben | Mar 10, 2011 7:58:01 AM

In a country of 300 million it is not a large number. More interesting would be if it is possible to know roughly how wealthy are those who renounced their citizenship and or permanent residence status and how many were ex-pats who got tired of being double taxed or children of ex-pats who never resided in the US.

Posted by: cubanbob | Mar 10, 2011 7:59:48 AM

Sadly, this is mainly the fault of our tax-grubbing Congress. Leftists complain about US military hegemony but love to have financial hegemony via tax treaties and information sharing agreements. Then there is the taxation of world-wide income.

Further, now that Congress requires non-US brokerage firms to implement expensive and onerous reporting for their US Person clients, foreign firms such as Brewing Dolphin and Charles Stanley in the UK refuse to accept accounts from US Persons. So, of course anyone who wants to invest outside of the US has an incentive to remove himself from US jurisdiction.

Instead of cherishing financial liberty, Congress seems hell-bent on slowly destroying it. Then they are surprised when people stop using the US Dollar for their transactions.


Posted by: theBuckWheat | Mar 10, 2011 8:11:56 AM

The baby boomers have finally come of age, and have started retiring. How much of this uptick is from retirees looking for a more economical retirement?

Posted by: Steve S. | Mar 10, 2011 8:25:59 AM

I wonder where they went?

Posted by: Jane | Mar 10, 2011 8:46:40 AM

I'd be curious where they are going. I'd guess Canada, Australia, Switzerland, UK, Germany, and France.

Posted by: The Masked Defender | Mar 10, 2011 8:48:28 AM

Not only is there a pretty big difference between the two, the even larger subcategory would be "dual nationalities".
A subcagory previously banned, but now seemimgly encouraged.
Likewise it would be interesting to see what countries are they emigrating to.

Posted by: Jhn1 | Mar 10, 2011 8:48:44 AM

Spiffy.

Posted by: CG | Mar 10, 2011 8:49:24 AM

1,534 out of 360 million! Really something to be concerned about! NOT!

Posted by: Larry Dreadon | Mar 10, 2011 8:49:28 AM

...and taking their fortunes and capital with them...

Posted by: Dandapani | Mar 10, 2011 8:59:22 AM

I find it rather annoying that they meld together departing green card holders and those renoucing citizenship, as the latter are far more likely to be doing so for tax reasons. GC holders may depart for a wide variety of reasons, including better job opps in their home country vs. the US than before, a desire to return to birth homes, family events back home, or even re-expatriation to another foreign country.

Posted by: Seerak | Mar 10, 2011 8:59:35 AM

Does it say where they were going?

Posted by: Jon | Mar 10, 2011 8:59:45 AM

I also would like to know where they are going, but also I would be interested in their income level. I.e., are they going to some tax haven and taking their wealth with them?

Many years ago a friend's mother had been from Greece and had green card but never became a citizen. If I remember right she also renounced and when t back to Greece but that was to retire. She was only middle class here but lived like a Queen there. But that was 35 years ago.

Posted by: Rich | Mar 10, 2011 9:18:55 AM

Funny how the MSM made a big deal of this in 2005 after Bush beat Kerry...

Posted by: jetty | Mar 10, 2011 9:23:28 AM

I used to work for a semiconductor company and many of our Indian and Chinese engineers who had become citizens in order to work in the U.S. renounced their citizenship upon retiring and returned home to the country of their births.
In a conversation I had with one he never intended to remain in the U.S. or as a citizen.

In his mind citizenship was simply another requirement he needed to obtain in order to be considered for better paying jobs.

I suspect the rising numbers of people renouncing their citizenship reflect the growth of engineers the U.S. needed in the late 80's and 90's.

Posted by: RetiredE9 | Mar 10, 2011 9:24:08 AM

I plan to go to Malta

Posted by: Vejadu | Mar 10, 2011 9:24:45 AM

I wouldn't assume everyone is running from taxes - there are many people my age who can't find jobs here and can't afford their student loans. I don't necessarily think it's right, but you hear, "Leave the country - the US standard of living is terrible, and you're never going to make a living here" frequently among recent law school graduates. And it has nothing to do with taxes; it's about low wages and high debt levels because of student loans (at least among the people I know no one has credit card debt or a mortgage).

Posted by: Liz | Mar 10, 2011 9:35:00 AM

Please tell me that Alec Baldwin, Sean Penn or Charlie Sheen were among them!

Posted by: Dan Maloney | Mar 10, 2011 9:48:39 AM

Two factors:

1) The explosion of wealth since the 70s that has created a lot of fortunes people would prefer to avoid taxes on (to the extent law allows).

2) The enormous number of financially successful people now residing here, thanks especially to the 1965 immigration act, who have no particular loyalty to, or emotional ties to, the US. 2010 is exactly 45 years after the law's passage, and a growing number of people who came here under that law are at or near retirement age.

1,534 is a small number compared to the population of ~310 million, but it is more than double the number of any prior year since at least 2004, and I would expect it only to grow, especially as it becomes clear that fixing the deficit will require higher taxes. I would not be surprised if the number soon reached 10,000, or even 100,000.

Posted by: WJ | Mar 10, 2011 10:20:01 AM

Add Taiwan, Korea, maybe Hong Kong, too, as people who immigrated for work and also their children's education now return home to countries that have come a long way since the time they left.

Posted by: NPJacques | Mar 10, 2011 10:34:25 AM

From personal experience.

First the answer to Steve S's question - a big fat at least two. We were able to retire several years before the Big Financial Bang. It was already clear where the Welfare State - or Special Interest State, if you will - model of government, which has taken over the U.S., was headed - collapse.

Second, the answer to Jane and the Masked Defender - Central America. Why go to another high tax country approaching the same Welfare State cliff, such as the ones you mention? Because of special visas for retirees, we pay no - repeat, no - income, wealth or property taxes, only a sales/VAT tax on a cost of living well below the U.S. Because of our already almost zero tax liability here, we have not renounced our citizenship and grudgingly pay the Fed Income Tax. Such a drastic step as renouncing citizenship is not necessary in many cases.

For those whose interest has been sparked by this blog post, get educated about the opportunities and learn some passable Spanish. To me, it is almost inevitable that the number of U.S. citizens and former permanent residents relocating overseas - especially Central America - will begin to explode in the coming decade as the Boomers are forced to seek low tax and cost of living environments.

Posted by: boqueronman | Mar 10, 2011 10:43:00 AM

"Tax expatriation" includes both former U.S. citizens and long time green card holders. The latter often return home for retirement and 2010 probably forced a lot into retirement.

Also, in 2008 the U.S. switched to an exit tax instead of 10-year look back period for tax expatriates. 2010 depressed assets and maybe people accelerated their exit tax (similar to the reason people converted IRAs into Roth IRAs in 2010).

I wonder if the 1534 number matches the number of people who gave notice of termination of residency to the Department of Homeland Security. Both steps are necessary to expatriate.

I expect a lot of people expatriate without complying with the formal process (illegal emigrants!) so the number is larger.

Posted by: Guy in the Veal Calf Office | Mar 10, 2011 10:44:22 AM

The US charges income tax even if the US citizen lives abroad. This is absurd.

The easiest way out of this, if you are a hedge fund manager, movie star, etc. who can live anywhere and make your money :

Go to Canada. Become a Canadian citizen (3 years). And THEN move to Hong Kong or Singapore or Dubai, where you will pay little or no income tax as a Canadian citizen. Canada does not charge income tax on citizens living overseas.

Posted by: Eagle | Mar 10, 2011 11:14:22 AM

It takes more than a year to get an appointment to renounce your citizenship. You have to already be in a position to become a citizen of another country. You will pay capital gains tax on your net worth (with a $2 million exemption). So I consider this a lagging indicator; renouncing citizenship, especially for the wealthy, requires several years of planning.

Posted by: Steven | Mar 10, 2011 11:33:56 AM

I wonder if any of these individuals and/or their lawyers is aware of the HEART Act of 2008 and the creation of IRC 877A and 2801...or maybe they just plan on taking all of their friends and relatives with them...

Posted by: MJ | Mar 10, 2011 11:39:40 AM

Maybe having 1500 less whiners and complainers will at least ease the noise level a little. If you are too greedy or too tight to help pay for the mess that I am sure you helped create, then leave. Freedom is not free.

Posted by: George W | Mar 10, 2011 12:19:33 PM

Quite a number have renounced here in Hong Kong.
Top Tax rate on earned income = 16%
Tax rate on dividends = 0%
Tax rate on interest income = 0%
Tax rate on Capital Gains = 0%
Similar tax structure in Singapore.

Rumor has it that the waiting time to renounce citizenship in Hong Kong is now over 1 year to book an appointment....

SNIP:
"Because of extremely high demand, priority will be given to applicants who reside in Hong Kong or Macau."

http://hongkong.usconsulate.gov/acs_renunciation.html

Posted by: HK VOl | Mar 10, 2011 6:14:05 PM

I'm no fan of the current administration, but I'm not sure what to make of this. I've spent a fair share of the last 40 years traveling overseas, including spending nearly a year living in Indonesia. While there have been many places where I could sharply reduce my tax burden, most are places I wouldn't care to live long term (and yes, that includes Indonesia - my Indonesian wife wants me to retire there - NO WAY!). Yes, there are countries I'd like to live in - such as Switzerland and Monaco - where I could reduce my tax burden. But their cost of living is so much higher than in the USA that it's a net loss.

While taxes remain a concern, what really worries me as I approach retirement is the prospect of runaway inflation and what it would do to an otherwise carefully planned and confortable retirement.

td

Posted by: tdracer | Mar 10, 2011 9:55:31 PM

Good riddance.

Posted by: Newbern W Johnson | Mar 11, 2011 5:54:49 AM

A former head of Campbell's Soup renounced his citizenship over taxes many years ago. I avoided buying Campbell's soup because of this.

I don't intend to renounce my citizenship, although I've been tempted, not because of my current wealth, but because I don't want to be held liable for the increasing unsustainable obligations being made in my name.

I'm considering playing the lottery. If I win, I will buy the biggest island I can afford, then declare independence and form my own country. That way, if the IRS arrests me for not paying taxes, I can declare diplomatic immunity.

Posted by: Scott Hedrick | Mar 11, 2011 8:51:00 AM

Only 1,500 people does not sound like much. The key question is how much money were they making and how many jobs belonged to them? Also, a 100% increase from 2009, but a 500% increase over 2 years. As my college sadistics prof always said, liars figure and figures lie.

Posted by: Ted | Mar 11, 2011 10:37:22 AM

I expect a large number of those renouncing citizenship are entrepreneurs - the cream of the crop - the very people that create great companies and lots of jobs. They are tired of being attacked as evil and greedy, when it is actually the U.S. politicians and public sector employees who are robbing the taxpayers (including the entrepreneurs) blind.

Many Asian countries have zero cap gains (HK, Malaysia, Singapore, etc.) They understand that taxing these is an ENORMOUS negative for their countries. Zero cap gains attracts the most productive new citizens, who contribute the most to their societies, in addition to KEEPING the productive members from fleeing. Anything you tax (income, cap gains, savings) you get LESS of. Anything you subsidize (poor folk, welfare recipients, nationalized train systems, nationalized car companies, etc) you get MORE of. Only the stupiest politicians in the world levy high taxes on capital gains, thereby getting LESS of them.

There are many countries that welcome the "rich" (productive class ones, anyway, not so much the hollywood idiots) with citizenships. They WANT people like that, and honor and even entice/reward them. The U.S. considers them evil, greedy, wanton, and probably criminals for doing what the country needs most (creating wealth, creating jobs, creating technology, etc). They've simply had enough of that idiocy and are going to where they are appreciated.

Posted by: Donald | Mar 11, 2011 9:08:04 PM

MJ wrote, "Maybe having 1500 less whiners and complainers will at least ease the noise level a little. If you are too greedy or too tight to help pay for the mess that I am sure you helped create, then leave. Freedom is not free."

Unfortunately Americans trying to live abroad are among the least free in the world. Only a few 3rd world dictatorships and the USA make non-residents pay income tax. In my case, I live in a low wage, low tax country in Eastern Europe. Locals can survive with low wages because they pay low taxes. However, I make low wages, but have to pay both the local low taxes and the higher US taxes. I further have to comply with 2 different tax codes, and pay for more expensive accountants in both countries. Just the extra accounting costs about 2 months of local wages. I know that supposedly I get a credit for foreign tax paid which, in theory, means I should end up paying the higher of the 2 taxes plus the extra accounting fees, but in real life I don't really get the full credit.

Furthermore, US tax laws make it tough for us to invest with local investment funds due to Passive Foreign Income laws. Also, new laws also are making it tougher to open bank and brokerage accounts. Some companies have refused me as a customer because I am American.

I love being American, but I hate what our government does to me. Despite what MJ says, I didn't create this mess, and have always paid my taxes. Freedom doesn't mean being a slave to support the government or Wall Street (which lobbied to get some of the laws making it punitive to invest in non-US funds).

Posted by: charles | Mar 12, 2011 12:22:35 AM

The US Treasury graph above is incorrect. It documents the numbers of expats by year, citing 1,534 as the 2010 US total. While the graph did not specify this, for what reason one can only shrug, these numbers need to have at least "000" added to them, making the 2010 count 1,534,000. For even one country, a quick internet search came up with this outdated number:

7 Jun 2005 ... According to the US Embassy, about 10,000 Americans live and work in Ecuador. ...www.vivatravelguides.com/.../ecuador/ecuador.../living-in-ecuador/

I spoke with a man who's been here for several years. Here's a quick estimate: 3,000 American expats in Cuenca, 2,000 in Quito, Guayaquil, and at least as many along the coast. That's 9,000 right there, in those few, though major, places.

International Living, the online/print magazine, rates Ecuador as number one in the world in terms of great places to retire. I moved here a year ago, and can vouch for the fact that hundreds of people are moving to the small village of Vilcabamba, where I live--baby boomers for sure, whole families with children and grandparents, and young adults. Many folks are here in a direct, often deeply emotional, response to the perceived and actual deterioration of many aspects of life in the US–and for the hugely decreased living expenses of course. And tiny Ecuador is just ONE place that Americans are moving to in droves. Other places south of the border and getting thousands, and this is just Latin and South America.

I work here, and I pay US taxes from here. I came here because I saw photos of the place on naturalnews.com, and was looking for a place to move to. I had never thought of anyplace south of the border. I'm happy I'm here. It's like 1950s US, where folks work hard, are very family oriented, grow their own food, are not soaked in junk food and electromagnetic energy, and so on. The intelligence level of the folks who move here is off the charts, and there is a disproportionate number of healers of all kinds. Interesting place.

Posted by: Jane Lael | Mar 12, 2011 9:46:32 AM

Charles - you seem to have confused two stats - one is the number of EXPATS - U.S. citizens who have chosen for a variety of very good reasons to no longer live in the U.S. That is the large number you quoted. Just in Cebu, Philippines, there are over 2,000 U.S. EXPATS.

The number under discussion is the number of former U.S. citizens who have chosen to renounce their citizenship and assume the citizenship of another country. There are getting to be MANY, MANY, MANY excellent reasons (more almost by the day) to do this. The microscopic number that have actually done this is a testament to how difficult this is to do. First you must have some other citizenship before you renounce your U.S. one. Unlike the hordes of illegal Cubans and Mexicans that democrats (and Bush Jr.) are intent on making into good U.S. democratic party members, other countries are not so generous with their citizenships.

Indeed the U.S. is about the only "advanced" (well, for now, give it a month or two) country that forces all of its citizens to pay full taxes on ALL worldwide income. This is insane and intolerable. It makes the U.S. one of the worst totalitarian dictatorships in the world. Is this a surprise? Look at how willing they are to use military force to "make the world safe for democracy" (mob rule). "Democracy" has little if anything to do with freedom and liberty. Perhaps it is the direct opposite of these things. The founding fathers looked at democracy and discarded it as unworkable and dangerous. There was a very good reason to make America a "constitutional republic", not a "democracy". It is U.S. politicians (all on the hard, far left) that have turned the once-free U.S. into a hard left DEMOCRACY. Many communist countries include "democracy" in their names - for very good reasons.

If it were not so bloody difficult to change citizenship (and the U.S. did not have so many spiteful, evil laws to wreak vengange on the relatives and children of those who do), there would already be MILLIONS renouncing citizenship in a country that has become so vile, so evil, so rapacious, so DISGUSTING IN EVERY WAY.

Posted by: Donald | Mar 12, 2011 7:25:05 PM

Sorry made a mistake, I was correcting the error made by Jane Lael, not Charles. Begging your pardon, Charles.

Posted by: Donald | Mar 12, 2011 7:35:20 PM

I left the US as soon as I could fire all my U.S. emloyees and shut down my U.S. operations after that disastrous 2008 election, in which more than half the people voluntarily chose an outright communist organizer, who had promsied to "Spread the Wealth Around". I have not been back since, and have no intent or desire to EVER do so. I watch the U.S. economy continue to spin into the ground at terminal velocity, watch the government take away one individual right after another, but make up new "rights" to welfare, to jobs, to the time and efforts of medical workers, etc. This idiocy is WHAT HUNDREDS OF THOUSANDS OF U.S. soliders died fighting against in Korea and Vietnam. Now the voters have given control of the U.S. government to people who openly flaunt posters of Mao Tse Tung, Fidel Castro and other prominent communists IN THEIR FEDERAL OFFICES. They gave the U.S. to the COMMUNISTS without a single shot having to be fired or one communist life lost. Is there any wonder why I and other patriotic Americans now are ASHAMED OF and DIGSUSTED BY the spectacle of what the U.S. government has become? Why they so desparately want to sever all connections to such a monstrosity? The U.S. government is now by far my worst and most powerful enenmy, and causes me more problems and grief than any other entity on earth! And yet I continue to be forced at gunpoint (try not paying your taxes volunatirly - ever heard of Ruby Ridge?) to pay tribute to these communists.

Posted by: Donald | Mar 12, 2011 7:45:11 PM

Jane,
You are correct about "Democracy" having nothing to do with freedom and liberty. I grew up in East Germany, in Berlin. East Germany was also called GDR - German DEMOCRATIC Republic.
I had no idea it was so difficult for you to change citizenship and the U.S. wreaking vengeance on relatives. That's exactly how the former East Germany operated. I renounced citizenship in 1987 and was finally allowed to leave the country in 1989 just 3 months before the wall came down. I came to the U.S. in 1991 and worked hard to make a better life. I can't believe I am witnessing what is happening to this great country. I was thinking of retiring in South America in 10 years. I will probably go sooner.

Posted by: Marion | Mar 12, 2011 8:12:33 PM

Wow! 1534 people left. And 153,400 came in across the Mexican border just last week.....

Posted by: Marty | Mar 13, 2011 6:47:57 AM

Granted, this is a tax site - but I think yall's fixation on tax burden is a little short sited.

Think "End of an Empire"....for the three people I know who gave up citizenship they were middle class and knew they were not the most buoyant rats on a sinking ship. Left for New Zealand, Australia, and Costa Rica.

It doesn't matter who is in power - the middle class illusion many folks were financing on the credit cards and refi-s is a gone and not coming back. They chose to live in places where a better quality of life is more important than the house, car, and other goodies - opposed to the third world existence with an elite handbag/SUV they were posing with.

Posted by: Martha | Mar 13, 2011 7:59:39 PM