When a slave owner allows a slave to buy back his freedom, he must consider the economic loss to himself. Thus, he may consider the price of manumission to equal the future potential profit that he could make from the labour that the slave provides to him. In this way of thinking, it is clear that $2350 renunciation fee is still pretty cheap. Since the US federal government profits from the US citizen–because in the Internal Revenue Code a US citizen is by definition a taxpayer. It is therefore only right that the US government should try to recover its real costs in losing a taxpayer citizen.
The average taxpayer pays every year about $11,000 in federal taxes, and over the course of 50 year working career that would be a total of $550,000. Of course, if you take the US State Department at its word, the actual cost of processing a US renunciation is $2350, so the true cost of full manumision/renunciation really should be $552,350–but in that light $2350 is merely a rounding error. It may be of interest to know that the citizenship application fees are much less than the renunciation fee (see Why It Costs Immigrants $680 to Apply for Naturalization: Critics argue that the fee is too high, discouraging green card-holders from becoming full-fledged citizens). So I don’t actually believe John Kerry’s State Department when it says that the $2350 fee actually reflects the true cost. Logically, it should cost more bureaucratically to investigate a citizenship application thoroughly than to rubber stamp a citizenship renunciation.
The true cost of renunciation is the staff overhead for the five minutes that it takes for a Consular Official to receive the renunciant’s oath of renunciation and about ten minutes of paperwork (filling out the CLN, putting the Consular stamp on it, and handing it to the renunciant). All of the other processes involved in renunciation are the makings of the State Department’s own C.Y.A., and I don’t see why a renunciant should have to cover Kerry’s endlessly waffling bureaucracy. Being very jaded, I believe that the State Department is lying about the costs. I believe their reason for charging $2350 is that they can. US Consulates are booked up for months at a time for renunciation appointments. The $2350 fee hasn’t seemed to cause unhappy citizens to cancel their appointments. This kind of price setting is called in economics, the “Law of Supply and Demand”. The State Department has a complete monopoly on the supply of the product, Certificate of Nationality (CLN), and there is great demand for it, thanks to citizenship-based taxation and FATCA. So essentially, they can keep raising the price until people stop calling for appointments. It is when there are no more bookings for renunciation that the State Department will have set the price of manumission too high for the remaining US citizens, who will prefer remaining in slavery rather than paying for their freedom. Or perhaps, disgruntled citizens will no longer be able to cover the cost of manumission–already some are complaining that they cannot afford $2350.
Now everyone needs to remember that if they commit a relinquishing act, quite outside the purview of the State Department, they can just simply obtain a CLN by informing the Consulate that they are no longer a US citizen (at least for now there is no fee). However, if you are unable claim a relinquishing act, think of the $2350 as a small price to pay for your freedom. In essence, the United States sees a renunciation as an act of freeing yourself from perpetual tax slavery. It greatly angers the US government–the same as slave owners become angry with runaway slaves. Therefore, this trend of increasing the fee for renunciation has only just started. Before 2011, the fee for renunciation was zero. Then the State Department started charging $450. Now, in 2014 it is $2350. But I say that $2350 is a small price, when some of the cross-border accounts charge over $2000 to do simple US tax returns. At the current rate of fee increase (522% every 3 years), we can expect that by the year 2017, the cost of renunciation will be $12,275. So get your freedom now while it is still well below cost. If you want an investor’s explanation of this, consider Benjamin Graham, The Intelligent Investor. If manumission costs $2350 while it is worth $550,000, it is a value investment.