Many Americans Renounce Citizenship, Even Before President Trump

It seems crazy to call it the ‘New Normal’, but once again, record numbers of Americans are renouncing citizenship. Every three months, the Treasury Department publicly names individuals who renounced. It is surely more about FATCA and family than politics. Still, numbers are flying, with one poll saying that 1 in 4 Americans would consider leaving if Trump is elected. Others claim they will leave if Hillary is elected.

In reality, of course, most who bristle about politics are not serious. And for those who are, they surely mean a temporary move, not a final exit. In contrast, giving up citizenship is a big deal. Yet the number of published expatriates for the first three months of 2016 was a record 1,158. In 2015, there were approximately 4,300 expatriations. Comparing present to past suggests that Americans renouncing citizenship have risen 560% from their Bush administration high. There are now 18 times as many renouncers as in 2008.

Of course, these numbers seem tiny compared to the influx of immigrants. Yet expatriations have historically been much lower, making the uptick worrisome. Moreover, the published list is incomplete, with many not counted. Surprisingly, no one seems to know exactly how big the real number is, even though the IRS and FBI both track Americans who renounce. There is no single explanation, though some renounce because of global tax reporting and FATCA. One law adding to the mix is the IRS power to revoke passports.

The reasons for renouncing can be family, tax and legal complications. Dual citizenship isn’t always possible, as this infographic from MoveHub shows. And leaving can be expensive. Some countries have no fee, but America charges $2,350 to hand in your passport. That is more than twenty times the average of other high-income countries. The U.S. government has collected about $12.6 million in fees since the fall of 2014, after hiking its fee to renounce citizenship by 422%. Some renouncers write why they gave up their U.S. citizenship.

America’s global income tax compliance and disclosure laws can be a burden, especially for U.S. persons living abroad. Like pariahs, they may be shunned because of their American status by banks abroad. Foreign banks are sufficiently worried about keeping the IRS happy that many simply do not want American account holders. Americans living and working in foreign countries must generally report and pay tax where they live. But they must also continue to file taxes in the U.S., where reporting is based on their worldwide income.

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http://www.forbes.com/sites/robertwood/2016/05/06/many-americans-renounce-citizenship-even-before-president-trump/#57f74f752b66