Record Number Of Americans Renounced U.S. Citizenship In 2014
3,415 people decided that they were sick of America in 2014 and renounced their citizenship or long-term residency in the U.S., according to a recently released list from the Department of the Treasury. The number of new expatriates is up 14 percent since 2013, is more than triple the number of 2012 and is a whopping 15 times more than 2008’s numbers, when only 231 people renounced their citizenship, says CNN.
Most of this is due to taxes, say experts. The U.S. (unlike most countries) taxes its citizens on all income earned, no matter where it’s earned or where those citizens live; the paperwork is complicated and often expensive, and in many cases, it’s easier just to renounce citizenship.
“Many Americans abroad are finding that retaining their ties is not worth the cost and hassle of complying with the U.S. tax laws,” Andrew Mitchel, a lawyer in Centerbrook, Conn., told the Wall Street Journal.
According to the WSJ, the complications began in 2009 when Swiss bank UBS admitted that it had encouraged U.S. taxpayers to hide money in Swiss bank accounts. This led to a five-year campaign against taxpayers with undeclared offshore accounts, requiring those who have hidden money to pay interest, taxes and penalties. However, this also led to more hassles for those who live abroad. The Foreign Account Tax Compliance Act, which is designed to catch tax cheats, according to CNN, requires individuals to report certain foreign assets and for banks to disclose all foreign accounts held by Americans. This is in addition to another provision that “mandates Americans to disclose foreign bank holdings worth more than $10,000.”
If a bank mistakenly neglects to report accounts held by Americans living outside the U.S., they face steep penalties, says CNN. This makes American clients less appealing to foreign banks and American citizenship less appealing to Americans living abroad.
A recent survey conducted by Amanda Klekowski von Koppenfels, a researcher at the U.K.’s University of Kent, of 1,546 U.S. citizens and former citizens living abroad found that 31 percent of participants have actively considered renouncing their U.S. citizenship and 3 percent are in the process of doing so. Many who were considering giving up citizenship cited “increasingly onerous and intrusive financial reporting requirements” as their reasons for doing so.
