Record Number of Americans Renounce Citizenship 2 Years in a Row

A record number of individuals renounced their American citizenship or residency in 2014, according to the Treasury Department – a total of 3,415 people. This number is 14% higher than last year, which was also a record year that clocked in 2,999 new expatriates. While there is no definite way to know why these numbers are ramping up, analysts are pretty sure it’s because the United States extended its draconian tax reporting requirements internationally a few years ago.

You can watch a video from the Wall Street Journal below explaining the phenomenon and the sorts of people leaving the United States. The key takeaway is that the number of expatriates surged after Congress passed the Foreign Account Tax Compliance Act (FATCA) in 2010. FATCA just took affect last year, and it forces foreign banks to report the income of their US account holders. CNBC explains the unintended consequences of this law:

It may sound wonky. But the act requires foreign banks to reveal any Americans with accounts over $50,000. Banks that don’t comply could be frozen out of US markets. And Americans overseas—even those who never lived in the US or have a tangential connection here—are now under far more pressure to file detailed tax returns and pay US taxes on their overseas income.

The program was designed to catch more wealthy overseas tax cheats. But one of its unintended consequences is that those Americans are simply giving up on being Americans.”

A survey conducted by HSBC includes some interesting statistics on global expats (not just Americans). Here are the top five reasons expats cited for renouncing their country.

It is interesting to note that the majority of them are economic factors. We wonder if “boosting earning potential” could simply mean for some people, “paying less in tax.”

One final note about the HSBC survey. China is home to the highest earning expatriates in the world. That’s right. If you want to get away from the US’ increasingly burdensome tax laws and earn a bunch of money, it’s time to head East. China isn’t just gobbling up the world’s gold, it may be attracting some of the top, free-thinking talent as well.

In 2009 there was a case involving a Swiss bank, UBS. In the wake of that case, the US has ramped up a campaign to try and track down information about undeclared foreign accounts. In the years since that, the number of people who are giving up their citizenship or their green card status has ramped up pretty steadily. In the years before the case, it way maybe a few hundred a year…”

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