Crime in the Suites http://t.co/HQ6s1oWLYz – Summary of #CBT#FATCA and acknowledgment that #Americansabroad renouncing citizenship is bad
— U.S. Citizen Abroad (@USCitizenAbroad) March 28, 2014
This is an interesting article that includes:
Some may think that 3,000 people renouncing their citizenship is a drop in the bucket, nothing to sneeze at, and small potatoes. The number of renouncers doesn’t compare to the 1 million who are legally immigrating to the U.S. every year. “Goodbye and good riddance,” some have commented.
But the trend is more troubling than it may appear. By raw numbers, the U.S. may be averaging a 997,000 surplus in immigrants versus emigrants, but Uncle Sam’s tax roll will not reflect the same surplus. The people who are renouncing their citizenship tend to be on the wealthier side. Not all are Eduardo Saverins (the Facebook co-founder who emigrated to Singapore “for business reasons” i.e. to reduce his tax liability). But expatriates are undergoing the pains of renunciation because they have greater than average networths and they see the writing on the U.S. budget deficit’s wall (many surmise that FATCA is an attempt to curb the deficit). The people who are immigrating to the U.S. tend to be those who are looking for opportunity, education, etc. They are bringing wallets full of hope, not gold. And when you recognize that the top 1 percent of American earners pay about 37 percent of all the federal taxes, a few thousand on the wealthier side become statistically significant.
A very popular phrase bandied about by politicians is that you can tell the health of the nation by the number of people who want to come and stay. That immigration reform is an issue, to many, means we have a good thing going here in the U.S. that others want to be a part of. But when the nation’s wealthy start opting out of the American dream, when they start thinking our borders as made of kryptonite, it’s time to pause and reflect.
@The_Animal, I have noticed that some of the most expressively angry Brockers, have a personal history of abuse. Maybe thinking of that as preparation for this, might not be a bad way of looking at the past.
Actually, Shadow Raider – ” So if the “top 1%” left the US and took their wealth with them, the tax revenue would decrease about 30%. That part is true.”
There would be more of a fiscal impact in the fact that each one of these “wealthy” or more likely than not to be also job creators. With them uprooting and moving taking their business with them, there will be more people on the breadline and thus using up resource and not contributing to the US economy (the employees who would then be jobless – at least until they were able to find a new job). This would have an impact that is immediately felt above and beyond the 30%.
Let’s say for instance a guy who runs a factory hiring 150 people decides that he would prefer to emigrate to Canada because he feels that Obamacare and the requirement of businesses to fund healthcare for their employees is going to put him out of business. So he fires his 150 people who all have to go on UI until such time as they find alternate work. There’s the loss of 150 people’s income taxes. There’s the drain on the overtaxed Unemployment Insurance system until such time as these 150 people find new work. Now imagine that 40% of those who expatriate from the United States are not individuals but job creators. See how that adds up to a significant impact on the US tax base far above the 30% quoted?
Thanks, I think, Whitekat ~insert smiley-face~ 🙂
None of the journalists covering this story get the fact that relinquishments/renunciations are simply the very small tip of a very big iceberg. The number of one million potential US persons in Canada is not an exaggeration – you can very easily get to that number from immigration statistics alone without having to go very far into assumptions re number of 1st generation dual citizens, etc. And Canada is just one of many outlets for post-war US migration. The seven to eight million aggregate number that State uses is a pretty good estimate. The simple fact is that only a relative handful actually have passports that are current and still less file tax returns. The number I saw from a Treasury study in the 90’s was about a quarter million. We are talking about something like 5% of people actually being “above board” and visible. Some of these are getting CLN’s or renouncing, but many, many more or unwilling to take even that step and risk provoking the IRS to demanding exit taxes, FBAR fines and the like. Numerically, the vast majority of expats are simply turning their back – they are not getting CLN’s and they are not getting passports (or renewing them) etc. Collections and filings showed only a relatively minor spike per the stats I saw. Millions are simply turning their back – voluntarily or because they feel it was forced on them, but the loss to the US is certainly in the MILLIONS of people. I think everyone here knows that, but the repetition of that figure of 3,000 per year irks me – it is a pale reflection of what is really going on.
@animal… Sorry you had to deal with one of these people. In fact I found out years later that the one I had known was diagnosed in their early 20’s as “anti social personality disorder” found out through a person who was not supposed to tell me that and thank god for it because even though I knew this person was completely out of whack, I didn’t have a name to place on it.
The U.S. and the way they keep attempting to make up be down and black be white just reminded me of that experience. I am a MUCH wiser human being these days. Yes, gas lighting indeed. “FATCA is wonderful! It’s about getting super rich tax cheats! If you are against that you are crazy! What’s wrong with YOU! Sure there are people being harmed…they MUST be tax cheats if they are harmed! What’s wrong with you!” and “Once there was a bright shining land called America and everything they did was justified because they said so, give them your tired, your poor, your hungry…they have to attack others who are evil, that is their god given right because no one else can do it. And everyone they attack is for a good reason which sometimes is a secret because we are so good we don’t want to burn your mind with our reasons so we sacrifice ourselves to save the world, look how shining we are, an example to the world…everyone loves our FATCA” sounds like cult speak..And then there is the word salad language you get to learn which I can spot a thousand miles away.
I don’t agree with this article. Taxes and money are not the most important thing in the world (as everyone knows down to their core), and likewise U.S. citizens abroad are valuable to the U.S. for more reasons than their potential to generate revenue.
Feeling forced down the path of renunciation as I have, I feel that the U.S. is losing a lot of potential in me and my future children – I may not be Einstein, but I am a good mind with knowledge of a long family history of defending America and America’s rights (going back to writing the Declaration – yes, my ancestors were part of that story, though I am sure many can claim this through simple fact of inter-generational growth). More immediately, America is losing someone with interest in making the world a better place (and yes, also in the U.S.), and with a wider perspective than most Americans, stuck within their borders as they tend to be. This is a good thing – respecting differences, but recognising the benefits of other ways of doing things.
Sadly, I see a country that is going the other direction – it is becoming increasingly “American” – more insular, set in its ways, and prone to extreme viewpoints and hijacking of issues by a quasi-patriotic, often religiously fanatical, laissez-faire radicals.
And what I mean, and what bothers me about, American becoming so doggedly “American”, is that like many of the big issues in the U.S. (gun control, abortion, WMDs, homeland security, etc.), this is an outrageously hypocritical standpoint.
America has long been pushing economic globalisation with itself as the economic powerhouse, but culturally and in its treatment of its own citizens, it wishes to remain insular. It is crazy nonsense!
@Black Poplar, you make some very good points. I agree I do not think the U.S. understands what it is doing and what it will lose when Americans abroad feel forced into the position to renounce. It’s NOT all about money. Americans abroad serve as free good will ambassadors who do far, far better work than any government official could do. We participate in the daily lives of citizens in foreign nations. We reach out to them in ways the government cannot. They are losing that and so, so much more.
Not only losing goodwill ambassadors, but gaining embittered and hostile adversaries, many of whom will never spend another dollar in the US.
Again, simply perpetuates the myth that most people renouncing/relinquishing are more wealthy than average Joe Public. The fact is most actually are Joe Public, fed up with trying to keep their heads above water while filing annual US returns every year. They aren’t wealthy, but are finding the several thousand bucks a year needed to pay tax preparers to file, what is often a zero return, simply too onerous to continue doing.
It would be interesting to know, of those who have given up their US citizenship in the last few years, how many actually come under the definition of a covered expat. Very few I imagine. Info that can be dug out using the Freedom of Information Act? I doubt the IRS/Treasury would release it otherwise.
In 2011, more than 1,800 Americans renounced their citizenship, which was more than 2007, 2008, and 2009 combined. In 2013, that number jumped to almost 3,000, which is an all-time record. The number of American citizens wanting to renounce their citizenship is so high in Switzerland there is a waiting list (reported as 18-months long).
Some may think that 3,000 people renouncing their citizenship is a drop in the bucket, nothing to sneeze at, and small potatoes. The number of renouncers doesn’t compare to the 1 million who are legally immigrating to the U.S. every year. “Goodbye and good riddance,” some have commented.
But the trend is more troubling than it may appear. By raw numbers, the U.S. may be averaging a 997,000 surplus in immigrants versus emigrants, but Uncle Sam’s tax roll will not reflect the same surplus. The people who are renouncing their citizenship tend to be on the wealthier side. Not all are Eduardo Saverins (the Facebook co-founder who emigrated to Singapore “for business reasons” i.e. to reduce his tax liability). But expatriates are undergoing the pains of renunciation because they have greater than average networths and they see the writing on the U.S. budget deficit’s wall (many surmise that FATCA is an attempt to curb the deficit). The people who are immigrating to the U.S. tend to be those who are looking for opportunity, education, etc. They are bringing wallets full of hope, not gold. And when you recognize that the top 1 percent of American earners pay about 37 percent of all the federal taxes, a few thousand on the wealthier side become statistically significant.
But when the nation’s wealthy start opting out of the American dream, when they start thinking our borders as made of kryptonite, it’s time to pause and reflect.
I am not sure that enough is known about renunciants to make any claims. We are all quite aware that the official lists aren’t complete and it’s probably a real mix.
They won’t all be wealthy, but they won’t all be poor either. Some will have only recently found out that the U.S. government considered them to be citizens. Some renunciants will be poor legal permanent residents who went back home after the American dream didn’t work out for them. Some will be low-income people who find the filing costs eating into their budget and sanity. Some will find that they can’t live with some aspect of the fallout, such as not getting a pension or banking, Some haven’t lived in the U.S. for decades or ever and don’t feel much of an attachment. Some will renounce simply because they are getting old and don’t want to lumber their family with the increased burden of filing if they get senile. And yes, some will be wealthy people who don’t want to pay tax to the U.S. government because they think the country is going to hell in a handbasket. I don’t think that anybody knows what the percentages are for these very different groups. The last group gets a lot of attention, but maybe for partisan reasons.
“But expatriates are undergoing the pains of renunciation because they have greater than average networths”
God, I wish that was the case with my wife. But we’re pretty much less than that by a 10 grand or so.
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