Sunday, August 31, 2014
U.S. Hikes Fee to Renounce Citizenship By 422%
Following up on my recent post, Record Numbers of Americans Are Renouncing Their U.S. Citizenship: Forbes, U.S. Hikes Fee To Renounce Citizenship By 422%, by Robert W. Wood:
Over the last two years, the U.S. has had a spike in expatriations. It isn’t exactly Ellis Island in reverse, but it’s more than a dribble. With global tax reporting and FATCA, the list of the individuals who renounced is up. For 2013, there was a 221% increase, with record numbers of Americans renouncing. The Treasury Department is required to publish a quarterly list, but these numbers are under-stated, some say considerably.
The presence or absence of tax motivation is no longer relevant, but that could change. After Facebook co-founder Eduardo Saverin departed for Singapore, Senators Chuck Schumer and Bob Casey introduced a bill to double the exit tax to 30% for anyone leaving the U.S. for tax reasons. That hasn’t happened, but taxes are still a big issue for many.
To leave America, you generally must prove 5 years of U.S. tax compliance. If you have a net worth greater than $2 million or average annual net income tax for the 5 previous years of $157,000 or more for 2014 (that’s tax, not income), you pay an exit tax. It is a capital gain tax as if you sold your property when you left. At least there’s an exemption of $680,000 for 2014. Long-term residents giving up a Green Card can be required to pay the tax too.
Now, the State Department interim rule just raised the fee for renunciation of U.S. citizenship to $2,350 from $450. Critics note that it’s more than twenty times the average level in other high-income countries. The State Department says it’s about demand on their services and all the extra workload they have to process people who are on their way out.
A bit of picking and choosing of numbers to made things sound dramatic. In 2013, 750 Americans renounced citizenship. That's 1/3 of 1% of the traffic through LAX (LA International Airport) on a single day. At that rate, assuming no births or deaths or in-migration, we'll run out of Americans in 4 million years.
Posted by: Theodore Seto | Aug 31, 2014 8:15:46 PM
The point is not the numbers at all. The point is people like these are now being forced to line up to renounce. http://youtu.be/9TWuO5dBYjo
Posted by: Atticus | Sep 1, 2014 12:16:41 PM