TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, May 7, 2015

Number of Americans Renouncing Their U.S. Citizenship Hits Yet Another All-Time High

International Tax Blog, The Exodus Continues (2015 1st Quarter Published Expatriates):

Today the Treasury Department published the names of individuals who renounced their U.S. citizenship or terminated their long-term U.S. residency (“expatriated”) during the first quarter of 2015. The number of published expatriates for the quarter was 1,335. This is the highest quarterly number of published expatriates ever.

Expat

The data released today follows two consecutive years where new records were set for the number of expatriates.  In 2013, there were 2,999 published expatriates, and in 2014 there were 3,415 published expatriates.

Update:

https://taxprof.typepad.com/taxprof_blog/2015/05/number-of-americans-renouncing-their-us-citizenship-.html

Tax | Permalink

Comments

1335 does not sound like a large number, except it represents a significant increase over previous years. A more important data point is not available in this number: how many are entrepreneurs and managers? This would tell us a lot more about our reverse brain drain.

Posted by: F | May 8, 2015 6:23:44 AM

My U.S. citizen sister-in-law, who has lived in Switzerland most of her life and is married to a Swiss man, tells me that the new IRS rules and massive paperwork dumped on expats, not to mention the fact that not only does she have to now pay U.S. income taxes, but now her Swiss husband has to pay U.S. income taxes as well, is the driving force behind these increasing numbers. The vast majority of the people renouncing are people who already live in foreign countries and have decided it's just not worth the cost and hassle to remain a U.S. citizen, since they never plan to return anyway.

My sister-in-law decided not to renounce because after you do that you cannot return to the U.S. without a special short-term visa for business or legal purposes only.

Posted by: Ed B. | May 8, 2015 7:26:44 AM

I think people are reading too much into this. When I was working in London on US tax compliance, I found that the people raising this issue fell into one or two groups -- "accidental Americans" who were born in the US to parents temporarily in the US and long term expats who married a local and had not lived in the US for years. In both cases, the world wide income tax filing requirement was the reason.

Posted by: Anthony | May 8, 2015 7:30:57 AM

I wish these numbers showed capital flight. Ultimately what should concern the US is capital leaving this country. As soon as there is significant capital flight, I am certain that the tax structure will change to lure these people back.

Posted by: rocinante3d | May 8, 2015 8:13:19 AM

I am curious to know; Are they expats who having established a life elsewhere are not going to return or are they people feed-up with the situation and so are going somewhere else? And if that is the driver where these people going?

Posted by: Rich | May 8, 2015 8:55:07 AM

@F,

How many are entrepreneurs and managers who renounced to reap a capital gains windfall in a nation where there are minimal or no capital gains taxes, a la Eduardo Saverin moving to Singapore and renouncing his citizenship when Facebook went public? The bitter irony being that he and his parents successfully claimed asylum in the US when he was ten or so, fearing that as a scion of wealthy parents, he was a prime kidnapping target in their native Brazil.

Posted by: Unemployed Northeastern | May 8, 2015 9:24:16 AM

"My sister-in-law decided not to renounce because after you do that you cannot return to the U.S. without a special short-term visa for business or legal purposes only."

This is incorrect information, and I doubt that your supposition that people are renouncing only to avoid paperwork hassles for their spouses has any more support in the facts. In actual fact, renouncers can visit the USA on the exact same terms as any other citizen of their (new) home country. If your sister renounced, she would enter the USA visa-free as a tourist under the visa waiver program in which Switzerland is included. Unfortunately for the US, most renouncers are those tired of being soaked by the excessive and unreasonable taxes in the United States -- effectively the highest in the world -- and whom have realized that there exist many highly pleasant and less taxing places to live in the world.

Posted by: Mak | May 8, 2015 9:40:28 AM

I think it is primarily the tax laws including the onerous requirement to file on trusts and bank accounts that Obama’s tax-cheat Secretary of the Treasury instituted that are causing the increasing incidence of revocations of US citizenship. I’ve been an ex-pat since the day after Saddam Hussein invaded Kuwait, and I’ve never earned enough to pay US taxes, but I am still required to submit a tax filing every year. Since the Byzantine new laws were introduced under Obama, my tax accountant fees have skyrocketed. What was just a tax-deductible loss when I had a decent income is now, when I am semi-retired, a significant bite out of my very small income.

Truthfully, I do not understand why I cannot file a simple affidavit that my income is not at a level to require me to pay taxes in the US. That would save me the cost of an accountant (last year that was $CAN 1600 – mostly for the US filing; this year I have been quoted $AUS 400-500 for a US filing). The new laws are supposed to be aimed at taking money from high-income earners that would be required to pay taxes under existing laws, but this tax year my income will be below the poverty line, yet I will have to fork out a high percentage of my income for the filing (yeah, I could try to do it myself, but every time I tried before I had problems and the IRS provides no meaningful support). If I lie, well then the IRS can come after me.

So, why do I retain my US citizenship? Well, one reason is that I love the US and think its Constitution is the best available. The Bill of Rights is a perfect example of this – neither Canada (where I was a long-time resident) nor Australia (where I am also a citizen) has a deeper understanding of the truths that should be ‘self-evident’ (even if that quote is from the Declaration of Independence and the Bill of Rights had to be added to the Constitution). A second reason is that my family is still in the US and I might want to visit them. A third reason is that I am proud to be an American and have no wish whatsoever to appear to reject the US (no matter who the President might be). Well, that is how I used to feel; but in a practical sense, I may have to decide to pay the fee and formally renounce my citizenship. If so, then the US will gain nothing except the fee and will incur the expense of yet another alienated former citizen.

Posted by: Dave | May 8, 2015 10:12:20 AM