Interesting article that accurately explains WHY people are renouncing US citizenship – AKA #citizide: "COMMENTARY: U.S. citizenship is not as coveted as it once was – National" | https://t.co/r5V8GeCTh7 https://t.co/WRVgZ3ZijC
— U.S. Citizen Abroad (@USCitizenAbroad) September 12, 2020
The above tweet references the article written by Brett Goodin. Although not entirely free of technical errors (let’s not point out the errors in the comments to this post), the article debunks the absurd suggestions that individuals are renouncing for political reasons or because of the coronavirus.
Mr. Goodin writes that:
While many liberal Americans threatened to move abroad after Trump’s election in 2016, rising renunciations are not directly attributable to any particular election result. The trend began in 2013, mid-way through the Obama administration. That year about 3,000 Americans suddenly gave up their passports – three times more than usual.
Nor are people fleeing the U.S. because of the coronavirus. The paperwork for the 5,315 renunciations completed so far this year began long before COVID-19 ravaged the country and made Americans global pariahs.
In fact, most Americans giving up their U.S. passport already live abroad and hold another citizenship. In surveys and testimonials, these people say they’re dropping their U.S. citizenship because American anti-money laundering and counter-terrorism regulations make it too onerous and expensive to keep.
In 2010, Congress passed the Foreign Account Tax Compliance Act, which requires foreign financial institutions to report assets held abroad by U.S. citizens and green card holders. The law, intended to identify the non-U.S. assets of all taxpayers, also ended up strengthening a 1970 anti-money laundering law, the Foreign Bank Account Report, which requires citizens to declare all foreign assets to the U.S. Treasury Department.
Together, these two regulations represent a major burden for low-income and middle-income expatriates. Until 2010, they could basically ignore or remain ignorant of the Foreign Bank Account Report because there was little chance the U.S. government would discover their non-compliance.
They weren’t avoiding taxes. Of the roughly 9 million U.S. citizens living abroad, most don’t earn enough to owe Uncle Sam a dollar. Only expatriates who make over $107,600 in foreign income are required to pay U.S. taxes.