Yahoo Finance Bye-bye, USA: Record Number Give Up Citizenship for Third Year in a Row
What do Neil Abramson and John Zurfluh have in common? Their names are the first and last to appear on a long list of former Americans and longtime residents who renounced their citizenship in the final quarter of 2015.
The men are just two of the 1,058 people who said “so long” to the United States last quarter and are among the 4,279 to do so in 2015. The information comes via a list published in the Federal Register every quarter by the U.S. Treasury Department, which must by law report those who lose citizenship.
According to an attorney cited by The Wall Street Journal, 2015 was the third year in a row in which a record number renounced their ties to the country. By contrast, in 2006, fewer than 300 people did so.
Tearing up one’s passport is a serious step, so what explains the recent wave of renunciations? The answer, in one word, is taxes.
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As the U.S. Treasury has become more aggressive about collecting taxes overseas, more people find the hassles of U.S. citizenship outweigh the benefits. These hassles include a growing reluctance among foreign banks to deal with American nationals, since doing so means the banks risk running afoul of U.S. financial reporting requirements.
For Americans abroad, the tax situation is even uglier due to the United States’ outlier policy of taxing citizens based on their nationality rather than their residency. Unlike for residents in other countries, there’s no way for Americans to fully offset the taxes they pay to foreign governments, meaning they often face double taxation.
For more on double-dipping taxation, watch:
While some Americans who renounce their citizenship fit the profile of jet-setters with Swiss bank accounts, others do not. These include many middle-class people who moved to cities like London or Toronto years ago for a job or a spouse and now are being squeezed by the U.S. Treasury to pay decades of back taxes. They face the hard choice of giving up their native citizenship or paying a tax bill that could ruin them in retirement.
While a number of candidates in the 2016 presidential primaries have proposed an overhaul of the U.S. tax code, the issue for now doesn’t appear to have any clear momentum in Congress.
Finally, the exact number of Americans renouncing their citizenship can’t be determined since the Treasury’s quarterly list includes green card holders.
See original article on Fortune.com
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