Record number of Americans dump U.S. passports

http://money.cnn.com/2016/02/08/news/americans-citizenship-renunciation/

by StreamBright • 10 years ago

56 100 10 years ago

money.cnn.com

hellbanner2• 10 years ago

"But it's illegal to give up U.S. status to dodge paying a tax bill -- and doing so doesn't mean authorities won't come looking for back taxes." .. how exactly would that be pursued?

raattgift• 10 years ago

Extradition.

thisone• 10 years ago

the process of renouncing citizenship involves proving you're up to date on your taxes.

hellbanner2• 10 years ago

META: can someone please explain HN's upvote algorithm ?New account, 3 points and frontpage. Earlier one of HN staff said that accounts that posted high-ranking content got upvoted faster. Now I'm wondering if the upvotes are weighted by who gives them?

fabulist4• 10 years ago

Yes, they are.

striking• 10 years ago

Source?

rurban2• 10 years ago

"tired of dealing with complicated tax paperwork headache" really? This your spin on the only other country besides Ethopia which does double taxation on its citizens? Shame on CNN

pigscantfly• 10 years ago

The other country is Eritrea, actually (neighbors and in a state of frozen conflict with Ethiopia but different country).

rurban2• 10 years ago

Ouch, sorry. You are right. I mixed it up

_delirium5• 10 years ago

There's no double-taxation, since you can 100% deduct any foreign taxes paid. I paid no U.S. tax in the years I lived in Denmark for this reason; I wasn't double-taxed. Since the U.S. has one of the lower federal tax rates of developed countries, and expats don't have to pay state or local taxes, really only people who live in tax havens end up having to pay U.S. taxes (by raw number, I would guess the largest number are expat oil-company employees living in one of the low-tax gulf states). So it mainly boils down to a tax headache, which is significant. I didn't pay any U.S. tax, but I had to file a whole bunch of documents.

davidw6• 10 years ago

you can 100% deduct any foreign taxes paid.

That's not correct, actually. It's 100% up to some number that's fairly high for a European salary.

And like you say, it's a big hassle.

whubr• 10 years ago

This is true for regular income tax etc but you can still get stung on capital gains. See, e.g http://m.taxesforexpats.com/articles/expat-tax-rules/capital...

I'm not an ex pat, but I have dual citizenship. I've never lived or earned money in the US but I still have to offer my income and declare my bank balances to the IRS every year - the principle is enough to make me want to return my passport, never mind the paperwork.

anothermouse• 10 years ago

You're wrong, and while it might seem harsh, I'm going to have to say you just don't know what you're talking about.

My non working US wife has completely jeopardised my family's financial well being, purely through being american. She has been out of the country for 10 years, and she would be expected to pay 125% of our life savings as for over 5 years our joint bank account held the deposit for our house? She has no income, and didn't file. No FBAR -> 25% of the balance in fines per year for 5 years == 125%.

An incredible number of american's come out of the woodwork saying "there is no problem", because it wasn't hard for them. You don't prove a negative result with one data point!

cm21873• 10 years ago

If you read the article, one of the main reason for switching isn't tax return complexity, but because oversea banks ditch US clients out of fear of US fines. It's difficult in these days and age to live in a country without access to banking.

cm21873• 10 years ago

By the way if you click on the link to the story about US citizens being ditched by banks, there is a guy complaining of having been ditched by Barclays. That bank just got a new CEO who happens to be american and who was based in the US. I would be curious to know if a branch manager told him to fuck off too...

mikeyouse2• 10 years ago

This article is posted every single year without fail[1], the number of people giving up passports is absolutely inconsequential. This number is further minimized since the US has one of the lowest tax rates to begin with, so the vast majority of dual-citizens owe 0 in additional tax.

[1] https://www.google.com/#q=site:https:%2F%2Fnews.ycombinator....

I'm not sure what the benefit to these repeated articles is.. Anti-tax fervor? Some country-specific PR?

hapless2• 10 years ago

In 2015, they completed the phase-in of new reporting requirements for ex-pats. Some of which are quite onerous.

Among other things, you will need special banking services in your new home country, because foreign banks do not necessarily make FACTA reports for all accounts. Some won't even open accounts for Americans.

ics• 10 years ago

Additionally the fee to renounce is now $2,350 which is almost 5x what it was before.

ma2rten3• 10 years ago

The vast majority of dual-citizens owe 0 in additional tax.

That's not the point. It's about all the paperwork you have to do. I live in the US, but I am not sure I would want to become a US citizen for this reason.

parennoob• 10 years ago

It's about all the paperwork you have to do.

I'm curious -- is there actual paperwork, or is it possible to do it electronically? If yes, why aren't there programs that do it for you? Would like to hear comments from a US expat.

I wonder if there's an opportunity in simplifying this. I'm guessing most expats would rather pay, say $50 for a company to do this paperwork on their behalf? Or do H&R / Intuit have that market cornered as well?

topspin• 10 years ago

It's reported every year because the number is growing rapidly and it's a recent phenomena. Who are these people? Is the US losing exceptionally accomplished citizens for tax reasons? I'd like to know because if so then it isn't inconsequential. Sorry if it bothers you that this prompts people to be critical of these tax and seizure laws, but I'd rather know what's going on than be ignorant because reporting it discomfits you.

gamblor956• 10 years ago

"Growing rapidly" is very easy when it's a very small number. I actually deal in this area for a living, and I have significantly more individual clients coming into the US then leaving (100+ vs none over the past 3 years), so I say to those who want out: good riddance.

fabulist4• 10 years ago

This article is posted every single year without fail[1]

This article reports its publication date as:

February 8, 2016: 9:27 AM ET

You seem to be confusing it with this one:

http://www.wsj.com/articles/americans-pay-your-taxes-or-lose...

Edit: Naturally, this doesn't invalidate what you're saying, this is just a clarification.

mikeyouse2• 10 years ago

I was trying to avoid digging up the old ones.. but here are some previous examples;

2012 - https://news.ycombinator.com/item?id=3850929

2014 - https://news.ycombinator.com/item?id=8368174

2015 - https://news.ycombinator.com/item?id=10379308

But if you look at say, CNBC or Fortune, a nearly identical article is composed every year (or more) without fail.

https://www.google.com/#q=site:cnbc.com+taxes+renouncing+us+...

It's an exceptionally narrow topic that gets an outsized focus, maybe because it highlights a wider narrative? Otherwise I'm at a loss why anyone would care.

gozur887• 10 years ago

...the number of people giving up passports is absolutely inconsequential. This number is further minimized since the US has one of the lowest tax rates to begin with, so the vast majority of dual-citizens owe 0 in additional tax.

Right... so these two points might be related, as the people renouncing might be the people who do owe additional tax. Personally, I would feel a bit put out if I'd permanently moved to another country and had Uncle Sam looking to take a piece of my income.

dalke13• 10 years ago

What you wrote makes no sense. Renouncing citizenship does not remove the legal obligation to pay owed taxes. Quoting http://travel.state.gov/content/travel/en/legal-consideratio... :

Persons who wish to renounce U.S. citizenship should be aware of the fact that renunciation of U.S. citizenship may have no effect whatsoever on his or her U.S. tax or military service obligations (contact the Internal Revenue Service or U.S. Selective Service for more information). In addition, the act of renouncing U.S. citizenship does not allow persons to avoid possible prosecution for crimes which they may have committed in the United States, or escape the repayment of financial obligations previously incurred in the United States or incurred as United States citizens abroad.

CyberDildonics2• 10 years ago

US has one of the lowest tax rates to begin with

What are you basing that on? Hong Kong and Singapore (where Eduardo Saverin became a citizen to avoid paying 1 Billion USD in taxes from his Facebook windfall) have taxes in the %11 range.

hapless2• 10 years ago

Renouncing your U.S. citizenship for tax reasons technically makes you ineligible to enter the United States for any other reason. It is potentially a cause for denial on any class of visa.

I wonder how many of these ex-pats realize that they may never be able to visit again...

gozur887• 10 years ago

Is it a cause for denial in and of itself, or does it just mean that you apply for a visa like other nationals of the country in which you reside? And how do they know you renounced "for tax reasons"?

equalarrow• 10 years ago

Ironic when you think about how this country was founded on tax revolt. Seems like a completely silly law.

jtheory2• 10 years ago

Note to self: if I renounce my US citizenship, do NOT check the box saying "I'm doing this for tax reasons".

Seriously, this is apparently real law, but according to a "citation needed" bit in wikipedia, has never been enforced.

The 1996 law included a provision to bar entry to any individual "who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States."[47] There is no known case of this provision, known as the Reed Amendment, having ever been enforced.[citation needed]

JoeAltmaier2• 10 years ago

The US sets a record for issuing passports every year. Logically, the number not renewed ("dumped") would be higher every year.

ma2rten3• 10 years ago

This is talking about giving up your citizenship, not about passport renewal.

JoeAltmaier2• 10 years ago

See first comment.

dragonwriter• 10 years ago

4,279 out of ~319,000,000 may be a "record number", but its so small as to be negligible.

fabulist4• 10 years ago

The author is arguing that the rate at which it was increasing (18x between 2008 and 2015) and the persistence of the trend (every year for the past three years) as well as that the most major contributing factor (tax law) is unlikely to change made this newsworthy, not the proportion of the population.

Edit: And I don't find it to be a moving counter argument. Additionally, I'm not sure its a good apples-to-apples comparison as the phenomenon seems to be prevalent among US ex-patriots, rather than the entire population.

Edit2: It turns out that it's hard to know how many americans live overseas[0], but it seems like 6.8 million might be a good guess. 4.2k / 6.8m is still only about .0006% though.

[0] http://www.migrationpolicy.org/article/counting-uncountable-...

toothbrush• 10 years ago

ex-patriots

Nitpick: the word you're looking for is “expatriates”. Although this one made me smile :).

officialchicken• 10 years ago

Yes, as absolute numbers. But how many of those are "high net worth" individuals, who may (or may not) contribute considerably more in taxes each year than the average tax payer? I believe, "Is there an exodus of people with access to large amounts of capital", is the real question with various long-term implications.

scottwhudson• 10 years ago

It's also worth noting that more and more American students are moving to Europe for free university and staying for the jobs. It wouldn't surprise me at all if this demographic begins to explain the increase in the US exodus, at least partially. Student debt can be a scary thing.

http://www.nbcnews.com/news/world/why-american-students-are-...

st3v3r• 10 years ago

"who may (or may not) contribute considerably more in taxes each year than the average tax payer?"

Likely not. If they're so angry at paying taxes to the country that helped them build their wealth, they're likely already employing several other ways to cheat on taxes.

kafkaesq2• 10 years ago

No number of "refuseniks" is negligible for a country whose political system has inculcated its citizens -- perhaps more successfully than any on Earth[1] -- that theirs is not just the "best" country in the world, but, in polite terms, the Best Motherfucken Country In The Whole Goddamn World (further expletives deleted) -- such that while OK, they might want to go live somewhere for a while (or even permanently) -- no one in their right mind would even think of revoking their permanent Right of Return to this, the Greatest, Freest, Proudest Nation The World Has Ever Seen, Known or Dreamt Of.

[1] For any length of time; so not comparing to, say, the National Socialist bubble in Germany, 1933-1945.

joolze• 10 years ago

God, that graph with the disappearing data is annoying.

"Hey guys, what's a great way to show time-series, numerical data in a concise and easy to understand way?"

"How about a movie, Bob?"

whybroke3• 10 years ago

The conjecture by CNN that it is primarily about taxes is not only unfounded but absurd.

Far more Americans immigrate to feel freer, safer, better protected, for a higher quality of life or for a richer culture. Anecdotally, I alone know four Americans who permanently immigrated to Europe. None for tax reasons.

thieving_magpie9• 10 years ago

I'd say it's conjecture that "far more Americans immigrate to feel freer, safer, better protected".

Where's that source? Where are they going that's "freer" and "safer". I'm not saying there aren't areas that are more free, however the hell you define that. There might even be safer places, although that's a ridiculous generalization of the United States. It's all relative to your race, religion, location, economic situation. That sounds absurd.

davidw6• 10 years ago

The homicide rate in the US is certainly higher than many places in Europe:

https://en.wikipedia.org/wiki/List_of_countries_by_intention...

That wasn't the chief reason I lived there though.

The health care system in the US is a godawful mess.

OTOH, the US is a pretty wealthy place with lots of good stuff going on. I'm sure everyone has their own reasons.

whybroke3• 10 years ago

Every American I know who has lived in Holland says they felt freer. That's all I can offer on that. In Montana, you can't smoke a joint in a cafe, can't sun bathe naked on the beach, can't drink a beer walking in the park and, regarding safety, you'd be unwise to be a gay couple holding hands in town, have cancer and loose your job etc.

But feeling free and safe is subjective and the number leaving is not large. But it is vastly larger than those leaving for tax reasons is my point.

davidw6• 10 years ago

I spent most of the past 15 years in Europe, and only recently came back to the US. I probably would have been fine staying over there, but never felt particularly inclined to give up my US citizenship just because I was happy living there.

run4yourlives2• 10 years ago

Emigration != Citizenship.

People renouncing citizenship don't do so simply because they've made a life for themselves in Europe or somewhere similar (be it temporarily or semi-permanent or permanent). Being a dual citizen has many advantages. (Not the least of which is allowing the US constitution to actually apply to you as you enter the country)

People renounce their citizenship when retaining it becomes more effort than the benefit received. For instance, I'm dual Italian-Canadian, and I have no qualms about retaining my Italian passport indefinitely, even though my father was Italian and I only lived in the country for a year.

Now, should the Italian government decide they needed monthly bank statements from my Canadian accounts like the US does, making my life a nightmare of paperwork every year, I might reconsider.

kafkaesq2• 10 years ago

Right -- they take the plunge initially for completely non-financial reasons.

Only much later to the (unduly onerous and exploitive) tax issues creep up on them -- for many in the rudest (and most painful) way.

mauvejames• 10 years ago

I'm looking at moving to the US in the near future, and some of the implications of the tax system are pretty startling.

For example, I have contributed to a small retirement plan which grows tax free here in the UK, and the US/UK tax treaty ensures that it will continue to grow tax-free once I've moved. So far, so good. However, there is a body of professional opinion stating that such plans count as a "foreign grantor trust" under US law, which has specific reporting requirements that the plan itself is required to comply with, and I am penalised if it fails to do so. The penalty scale starts at $10,000 and goes up from there.

Of course, this body of opinion is being pushed by tax advisors who have a vested interest in both making things as complicated as possible, and who are inclined to a conservative view of the law given their responsibilities to their clients. The IRS hasn't clearly stated one way or another whether UK pension plans are subject to this reporting -- but have specifically exempted the Canadian equivalent.

This is just one frustration of several: becoming a US resident will force me to close some of my financial accounts with institutions which want to avoid FATCA hassles, I'll be limited in which investment choices I can make, and when I eventually take my pension benefits the US will claim tax on the tax-free lump the UK provides if I'm still a resident or have taken citizenship.

For those who have emigrated permanently -- or who acquired US citizenship at birth without ever living there -- I can well understand why even those without significant income or assets would want to renounce their citizenship.

wwalser• 10 years ago

I'll speak up since I'm an American living over seas and I feel like several of the comments currently ranking highly on the page either miss the point or make factually inaccurate statements. Note that if they miss the point, it's very unlikely that they choose to miss the point. More likely they have been misinformed by poorly constructed articles like this one.

I was born in the US but have been living and making most of my income over seas for five years. I'm actually relocating back to the US in two weeks (yey, welcome back :D). On the one hand I'm sad to leave the place that I currently live since, for me, it's better in nearly every way than most US cities. It's cleaner, I've lived well without a car, walked/cycled significantly more and I've visited nearly every crevice of this city and never felt unsafe due to a combination of cultural and legal differences. I pay slightly higher taxes than I would in the states. On the other hand, I'm very excited about having less paper work to do for a few years.

That's all context for my view: For me, it's not about the amount of money I pay in taxes. I'd call myself upper middle class so far as income goes and I've not had to pay US tax for the past five years. I will have to this year because of some options that I exercises but generally I'm happy to pay US tax.

The burden, the thing that's made me consider renouncing, is the reporting. Let's start with the basics, I have to do my taxes in two places. This involves finding an accountant both in the US and over seas who is capable of doing taxes for someone who is a special type of tax resident. Every accountant will say that they are competent but I have found their claims mostly unfounded. One can pay someone who specializes but that always involves paying a significant premium.

In addition to doing taxes in two places I also have to fill out a separate form listing all assets worth > $10k and in which I have >= 50% ownership. This includes bank accounts, houses and any other investments. This is particularly onerous when one marries to a non-US resident. Suddenly the US government knows a lot about them. Do they have any bank accounts with more that $10k in them? Do they own any property? Any investments? Because if they do, by most countries standard you probably suddenly own 50% of it.

On top of all of that, as of 2015 I also have to ensure that my bank does a specific type of reporting. I'm lucky in that where I am Americans are numerous enough to make this worthwhile for the banks but this is not the case everywhere. Some banks in foreign countries have started refusing US customers.

Comparing the number of people renouncing citizenship to the total population of the US misses the point. It's better to compare against the number of americans living and working over seas. From a quick search around the internet the number of expats looks to be ~7M. It's still a very small fraction and not something that I expect law makers to pay attention to. The reason I think this comparison makes sense is because it is worthwhile to consider whether or not we want to keep connections to our diaspora. The issue from a governance perspective doesn't seem to be a loss of tax revenue but instead a non-reversible export of talent. In a flat world I have doubts about the US's ability to maintain expertise in all of the area that will fuel future economies. That being the case, I think it would be good for the US to make it simple and straightforward for Americans to go to other places where they can become experts and return home for further work.

I don't expect the US's policy to change. In fact, if the number of people renouncing continues growing more rapid I wouldn't be surprised to see the US use more aggressive rent seeking measures. This seems obvious given recent additions to the reporting requirements placed on expats and higher fees associated with renouncing.

xbmcuser• 10 years ago

I don't understand one thing about us tax law. US corporations avoid paying taxes by using forieng subsidiaries where as Americans are still taxed despite the fact that they are not even living in the US.

Record number of Americans dump U.S. passports

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