Another year, another record number of Americans willing to not only pay the $2,350 fee, but also appear in the US Treasury’s “name of shame” list published every, quarter which reveals all the now-former US citizens who have decided to hand over their US passport back to Uncle Sam and expatriate.
According to the latest US Treasury report, a record 4,279 individuals decided to give up their citizenship in 2015, up 864 from the previous full year record of 3,415, and up a stunning 560% from the peak hit during the Bush administration years. The latest Treasury report contains the names of the 1,058 former US citizens and permanent residents who gave up their passports in the period from September to December.
Below is a recent chart of showing the number of US expats over the past 10 years:
As Forbes adds, while clearly showing a troubling trend in the soaring number of expats, the published list is also 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 citizenship.
The main cause for the massive increase in renunciations is believed to be the Foreign Accounts Tax Compliance Act (FATCA), which came into force in 2010. The law imposes harsh penalties for non-compliance, even if people aren’t dodging it on purpose, Andrew Mitchel, an international lawyer who analyzes IRS data, told the Wall Street Journal.
FATCA has ramped up worldwide and requires an annual Form 8938 filing if foreign assets meet a threshold. Foreign banks are sufficiently worried about keeping the IRS happy that many simply do not want American account holders. Still, leaving America can be costly. To exit, you generally must prove 5 years of IRS tax compliance. Plus, if you have a net worth greater than $2 million or have average annual net income tax for the 5 previous years of $160,000 or more, you can pay an exit tax.
“An increasing number of Americans appear to believe that having a US passport or long-term residency isn’t worth the hassle and cost of complying with US tax laws,” Mitchel said.
At the time, President Obama hailed the law as a “global standard” in countering tax evasion. It was passed by Congress in the wake of a scandal involving UBS AG bank, following disclosures made by banker–turned-whistleblower Bradley Birkenfeld in 2009. He testified that UBS had enabled its American customers to defraud the US tax authorities. The revelations forced UBS to admit it had encouraged illegal financial activity and was obliged to pay a staggering $547 million to settle the case.
Ironically, until the recent disclosure by Bloomberg following up on our own reporting about US tax havens such as Reno, Nevada which have been converted by financial olligarch families like the Rothschilds into their own personal tax evasion backyards, little did the world know just how far US hypocricy could stretch, in that while Obama was destroying tax havens around the globe and especially in Switzerland with FATCA et al, the president was quietly converting the US into the world’s biggest hot money and tax-laundering haven in the world.
Finally, while we showed the past decade of US expats above, few charts do the topic of US citizenship renunciation justice, like the one shown below, courtesy of Andrew Mitchel.
For those curious, this is what the Federal Register’s “name shame” list looks like.