There's been another round of Drudge-linked articles about how record numbers of Americans are giving up U.S. citizenship out of frustration over new tax laws requiring financial cavity-searches on the estimated 6 million U.S. expatriates. Bloomberg Businessweek brings the stats:
Americans renouncing U.S. citizenship surged sixfold in the second quarter from a year earlier as the government prepares to introduce tougher asset-disclosure rules.
Expatriates giving up their nationality at U.S. embassies climbed to 1,131 in the three months through June from 189 in the year-earlier period, according to Federal Register figures published today. That brought the first-half total to 1,810 compared with 235 for the whole of 2008.
The cause? An intrusive, unprecedented, and greedy little 2010 law we've been bellyaching about here for a while now: The Foreign Account Tax Compliance Act, or FATCA. This piece of revenue-scrounging legislative dogspit turns foreign financial institutions into tax-collectors for the IRS, foreign companies who hire Americans into compliance machines, and foreign-living Americans into mattress investors scared of their own shadow. More Bloomberg Businessweek:
The additional compliance costs for companies to ensure that Americans they hire are filing the correct U.S. tax returns and asset-declaration forms are at least $5,000 per person, said [Matthew] Ledvina, [a U.S. tax lawyer at Anaford AG in Zurich].
For individuals, the costs are also rising. Getting a mortgage or acquiring life insurance is becoming almost impossible for American citizens living overseas, Ledvina said.
"With increased U.S. tax reporting, U.S. accounting costs alone are around $2,000 per year for a U.S. citizen residing abroad," the tax lawyer said. "Adding factors, such as difficulty in finding a bank to accept a U.S. citizen as a client, it is difficult to justify keeping the U.S. citizenship for those who reside permanently abroad."
The Wall Street Journal also has a piece out on the topic, including the also-predictable anecdotal evidence that rich expatriates are just writing checks to pay off Uncle Sam, while the non-moneybags have to make real choices about whether being American is worth it:
"My decision was less about the actual amount of taxes I had to pay, and more about the system," said one investment banker, who renounced his U.S. citizenship and is now a Hong Kong citizen. "I'm not an ultrawealthy dude. It was the hassle with all the paperwork."