Paul L. Caron

Friday, February 5, 2016

Number Of Americans Renouncing Their U.S. Citizenship Hits All-Time High: Up 25% From 2014, 560% From Bush Administration High

International Tax Blog, New Expatriate Record for 2015 – Nearly 4,300 Expatriations:

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 fourth quarter of 2015.

The number of published expatriates for the quarter was 1,058, bringing the total number of published expatriates in 2015 to 4,279.  The total for the year breaks last year’s record number of 3,415 published expatriates. The number of expatriates for 2015 is a 25% increase over 2014 and a 42% increase over 2013 (2,999).

Expat 2

For a discussion of how the IRS compiles the data, see these posts: missing names, source of data.

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Many factors motivate expatriations, and FATCA has clearly pushed some people who were on the fence into expatriating. See my forthcoming paper on the pitfalls of citizenship taxation here:

Posted by: Ruth Mason | Feb 8, 2016 11:33:50 AM

I suspect many of you are correct about FACTA being a motivating factor. One anecdotal story I have heard concerns Holocaust reparation funds. Apparently, the non-US citizen account interest holders aren't too happy with the IRS scrutiny of their American cousins.

Bottom line, the number of expatriations, while increasing, are tiny. Moreover, I suspect the motivating factors are more nuanced than what might appear, which, of course, is why I'd love to learn more.

Posted by: Dale Spradling | Feb 8, 2016 6:10:54 AM

Income taxes whether on wages and salaries or capital gains are a huge burden, not shared by expats from other countries – whose countries leave them be when they are offshore about their offshore income. FATCA is an odious law which is hugely burdensome and offensive, and makes foreign institutions unlikely to deal easily with US expatriates. The PFIC rules are also very bad for expats interested in holding offshore mutual funds.

Posted by: jamesbbkk | Feb 7, 2016 11:26:33 PM

When you make it legal to loot the wealthy, don't be surprised if they leave the party.

Posted by: Scottie | Feb 7, 2016 10:12:23 AM

From what I hear, the primary cause for the increase is FACTA. The accounting burdens and penalties are so high for both the expat and the financial firms dealing with them that it is difficult to stay an American and function oversees. Many financial firms won't deal with American citizens overseas. For those with no intent to return to the USA, it makes a lot of sense to renounce citizenship.

Posted by: Craig | Feb 7, 2016 8:04:53 AM

The number of expatriations is still a tiny fraction of the number of immigrants to the U.S. That the absolute number is rising is not surprising. The U.S. population is rising, and there's always going to be churn. It is easier than ever for an American to be hired for an overseas job at a comparable salary. (I recently learned that a member of my high school graduating class now operates the largest auto-insurance agency in England.) Or marry a foreigner and go to live in the spouse's country. (I know two women who married foreigners and live in Europe.)

Posted by: Rich Rostrom | Feb 6, 2016 11:20:48 PM

This smells like they fear a future with Clinton/Sanders

Posted by: Neo | Feb 6, 2016 7:57:31 PM

I don't get it. How does one "renounce" their US citizenship? Do you take a cab ride to the INS office and right there under the florescent lights next to the filing cabinets and tell the bureaucrats that you no longer want to be a citizen? Then they give you a plane ticket to Canada or some other place? My luck, they would send me to China or something. Probably Syria.

Posted by: Captain Hruska Carswell, Continuance King | Feb 6, 2016 7:01:51 PM

Is this 0bama Derangement Syndrome?

Posted by: Jim | Feb 6, 2016 6:33:47 PM

If anybody is interested in doing further research in this area, feel free to contact me via Paul (Paul, I assume this is okay with you.) My idea is to do a confidential survey of attorneys who work in this area, probably through the ABA, to get their take on why their clients decided to expatriate. (For the obvious reasons, I doubt the taxpayers would be willing to answer any questions.)

My guess is income taxes are not the main trigger because you don’t have to pay income taxes on built-in gain on appreciated assets until you sell them. I suspect estate taxes and other non-tax concerns are the primary reasons US citizens decide to fly the coop. However, without empirical data, my suspicions will not buy you a cup of coffee at Starbucks.

However, as an accountant, I don’t have the stroke to get the Bar to cooperate. But, I suspect an esteemed legal tax scholar would lend more credence to the idea. Said another way, if you can open the door, I’ll do the leg work. Moreover, because I’m retired from academia, I don’t mind giving first name credit on any paper. I have reached the happy plateau in life of doing only what I want to do. (Well, I still have to take out the garage; but, hopefully you get the point.)

Posted by: Dale Spradling | Feb 6, 2016 11:08:33 AM