Taxes

Record Number of Americans Renounce Citizenship in 2014

Terrible tax law produces predicted results

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Wait, is that Obama? Confused. |||

From CNN Money:

The number of Americans choosing to give up their passports hit a record 3,415 last year, up 14% from 2013, and 15 times more than in 2008, when only 231 people renounced their citizenship.

Experts say the recent surge is coming from expats who no longer want to deal with complicated tax paperwork, a burden that has only gotten worse in recent years.

Unlike most countries, the U.S. taxes all citizens on income, no matter where it is earned or where they live. The mountain of paperwork can be so complicated that expats are often forced to fork over high fees to hire an accountant[.]

The main driver chasing our citizens away is the authoritarianly named Foreign Account Tax Compliance Act (FATCA), a gruesome bit of government money-grubbing of which Reason has written about plenty over the years. If you have more than $10,000 parked overseas, you have to disclose each and every account to the IRS, including the maximum value it had in the previous year, or face ruinous fines and even jail time. Foreign financial institutions, meanwhile, are deputized by FATCA to work as IRS tax collectors, which they obviously would rather not do, so many banks simply put up a "do not serve Americans" sign, which is a major pain in the ass for the 7 million or so Yanks living abroad. As Shikha Dalmia observed this week, the Obama administration's approach toward runaway Americans (individual and corporate) is to further tighten the noose, which will only increase the number of defections.

Why would politicians knowingly harm their fellow Americans for what amounts to a trivial payoff in collections? Same reason a dog licks its naughty bits. Expats wield no political power, and all things being equal, the government prefers destroying financial privacy. The Republican National Committee one year ago approved a Sen. Rand Paul-led resolution to repeal FATCA; one of many indicators of whether the party will ever be worth a tinker's damn will be if it plops a FATCA repeal onto President Barack Obama's desk.