
Record number of Americans dump U.S. passports - StreamBright
http://money.cnn.com/2016/02/08/news/americans-citizenship-renunciation/
======
dragonwriter
4,279 out of ~319,000,000 may be a "record number", but its so small as to be
negligible.

~~~
officialchicken
Yes, as absolute numbers. But how many of those are "high net worth"
individuals, who may (or may not) contribute considerably more in taxes each
year than the average tax payer? I believe, "Is there an exodus of people with
access to large amounts of capital", is the real question with various long-
term implications.

~~~
scottwhudson
It's also worth noting that more and more American students are moving to
Europe for free university and staying for the jobs. It wouldn't surprise me
at all if this demographic begins to explain the increase in the US exodus, at
least partially. Student debt can be a scary thing.

[http://www.nbcnews.com/news/world/why-american-students-
are-...](http://www.nbcnews.com/news/world/why-american-students-are-flocking-
germany-staying-n515961)

~~~
dalke
In looking at recent history, it's well worth remembering all of the Americans
who emigrated to Canada and Europe to avoid the Vietnam draft. Many stayed.

It's very unlikely that the uptick in expatriation is due to a recent increase
in the number of US students enrolled overseas. It takes 6-8 years of
residency to get German citizenship, and while I don't know the details for
Germany, in Sweden that excludes residency as a student.

~~~
klipt
> It takes 6-8 years of residency to get German citizenship

That doesn't sound any slower than the US - it'll probably take me around 8
years of post-student residency to become a US citizen (3 on H1-B, then 5 on a
green card - and bear in mind it's much faster for me than for someone born in
India or China, who face massively backlogged green card quotas).

A lot of people fixate on citizenship, but permanent residency is 99% as good
as citizenship. Ask any green card holder, they'll tell you the real challenge
is getting the green card. The subsequent 5 year wait for US citizenship is
gravy by comparison.

~~~
dalke
We're talking about expatriation. It's difficult to live as a stateless
person. You really want to have citizenship in another country before giving
up US citizenship.

While permanent residency might be a possible substitute, the lack of any
citizenship will likely make it more difficult to travel to another country,
and there may be legal problems should you have a child as a stateless mother.

~~~
klipt
True, assuming you're not a dual citizen to start off. Some of the Americans
moving to Europe might already have a European citizenship by descent
(although not necessarily of the country they end up settling in).

------
rurban
"tired of dealing with complicated tax paperwork headache" really? This your
spin on the only other country besides Ethopia which does double taxation on
its citizens? Shame on CNN

~~~
_delirium
There's no double-taxation, since you can 100% deduct any foreign taxes paid.
I paid no U.S. tax in the years I lived in Denmark for this reason; I wasn't
double-taxed. Since the U.S. has one of the lower federal tax rates of
developed countries, and expats don't have to pay state or local taxes, really
only people who live in tax havens end up having to pay U.S. taxes (by raw
number, I would guess the largest number are expat oil-company employees
living in one of the low-tax gulf states). So it mainly boils down to a tax
headache, which is significant. I didn't pay any U.S. tax, but I had to file a
whole bunch of documents.

~~~
davidw
> you can 100% deduct any foreign taxes paid.

That's not correct, actually. It's 100% up to some number that's fairly high
for a European salary.

And like you say, it's a big hassle.

~~~
_delirium
Are you thinking of the Foreign Earned Income Exclusion? That one lets you
exclude foreign income up to $100k from even being computed for U.S. income
purposes. But the Foreign Tax Credit, which lets you take a 1-for-1 credit of
foreign taxes actually paid against U.S. taxes owed, has no maximum. The
distinction only really matters if you're in a country which has lower taxes
than your U.S. federal tax rate. If, like me, you're in a country with higher
taxes, the Foreign Tax Credit completely wipes out your U.S. tax liability
with no maximum.

~~~
davidw
Ah, right. See, it's not all that simple, and like you write elsewhere, you
need a competent accountant.

For instance, part of the US-Italy tax treaty says that as a US person working
as an independent contractor in Italy, I needed to pay into Social Security
rather than the Italian equivalent. I'm not sure I would have figured that one
out on my own.

~~~
dalke
Same here. My US accountant told me about the paperwork I needed to get to
tell the IRS that I was covered under the US/Sweden totalization agreement for
Social Security.

Ha! And
[https://www.ssa.gov/international/agreements_overview.html#&...](https://www.ssa.gov/international/agreements_overview.html#&a0=5)
has a special exception _just for Italy_ :

> Italian Agreement An Exception

> The agreement with Italy represents a departure from other U.S. agreements
> in that it does not include a detached-worker rule. As in other agreements,
> its basic coverage criterion is the territoriality rule. Coverage for
> expatriate workers, however, is based principally on the worker's
> nationality. If a U.S. citizen who is employed or self-employed in Italy
> would be covered by U.S. Social Security absent the agreement, he or she
> will remain covered under the U.S. program and be exempt from Italian
> coverage and contributions.

------
hapless
Renouncing your U.S. citizenship for tax reasons technically makes you
ineligible to enter the United States for any other reason. It is potentially
a cause for denial on any class of visa.

I wonder how many of these ex-pats realize that they may never be able to
visit again...

~~~
jtheory
Note to self: if I renounce my US citizenship, do NOT check the box saying
"I'm doing this for tax reasons".

Seriously, this is apparently real law, but according to a "citation needed"
bit in wikipedia, has never been enforced.

> The 1996 law included a provision to bar entry to any individual "who
> officially renounces United States citizenship and who is determined by the
> Attorney General to have renounced United States citizenship for the purpose
> of avoiding taxation by the United States."[47] There is no known case of
> this provision, known as the Reed Amendment, having ever been
> enforced.[citation needed]

------
xbmcuser
I don't understand one thing about us tax law. US corporations avoid paying
taxes by using forieng subsidiaries where as Americans are still taxed despite
the fact that they are not even living in the US.

------
mikeyouse
This article is posted every single year without fail[1], the number of people
giving up passports is absolutely inconsequential. This number is further
minimized since the US has one of the lowest tax rates to begin with, so the
vast majority of dual-citizens owe 0 in additional tax.

[1] -
[https://www.google.com/#q=site:https:%2F%2Fnews.ycombinator....](https://www.google.com/#q=site:https:%2F%2Fnews.ycombinator.com%2F+americans+passport)

I'm not sure what the benefit to these repeated articles is.. Anti-tax fervor?
Some country-specific PR?

~~~
hapless
In 2015, they completed the phase-in of new reporting requirements for ex-
pats. Some of which are quite onerous.

Among other things, you will need special banking services in your new home
country, because foreign banks do not necessarily make FACTA reports for all
accounts. Some won't even open accounts for Americans.

~~~
ics
Additionally the fee to renounce is now $2,350 which is almost 5x what it was
before.

~~~
brbsix
I think $2,350 is the least of anyone's concern when renouncing their
citizenship, particularly if they're wealthy. There are massive exit taxes if
you follow the letter of the law.

------
joolze
God, that graph with the disappearing data is annoying.

"Hey guys, what's a great way to show time-series, numerical data in a concise
and easy to understand way?"

"How about a movie, Bob?"

------
whybroke
The conjecture by CNN that it is primarily about taxes is not only unfounded
but absurd.

Far more Americans immigrate to feel freer, safer, better protected, for a
higher quality of life or for a richer culture. Anecdotally, I alone know four
Americans who permanently immigrated to Europe. None for tax reasons.

~~~
thieving_magpie
I'd say it's conjecture that "far more Americans immigrate to feel freer,
safer, better protected".

Where's that source? Where are they going that's "freer" and "safer". I'm not
saying there aren't areas that are more free, however the hell you define
that. There might even be safer places, although that's a ridiculous
generalization of the United States. It's all relative to your race, religion,
location, economic situation. That sounds absurd.

~~~
davidw
The homicide rate in the US is certainly higher than many places in Europe:

[https://en.wikipedia.org/wiki/List_of_countries_by_intention...](https://en.wikipedia.org/wiki/List_of_countries_by_intentional_homicide_rate)

That wasn't the chief reason I lived there though.

The health care system in the US is a godawful mess.

OTOH, the US is a pretty wealthy place with lots of good stuff going on. I'm
sure everyone has their own reasons.

~~~
thieving_magpie
The homicide rate is higher than Europe, if that's really the gold standard
for you. As you know, the US is a pretty big place. We don't get a lot of
murders out here in Montana.

Healthcare's a pain, sure.

Still there's no evidence that any meaningful amount of people are leaving for
the bastion of freedom that is Europe, which I find laughable. Ask an Arab
around Paris how safe they feel.

~~~
davidw
> We don't get a lot of murders out here in Montana.

Actually, statistically speaking, you do. The rate is 3.6
[https://en.wikipedia.org/wiki/List_of_U.S._states_by_homicid...](https://en.wikipedia.org/wiki/List_of_U.S._states_by_homicide_rate)
for Montana, as compared to Italy at 0.9, Germany and Spain at 0.8.

All things considered, I doubt anyone moves to Europe for that reason alone,
as there are plenty of places in the US where the numbers are fairly low.

~~~
thieving_magpie
My individual state has 2.7 more murders per 100,000 people than Germany and
suddenly I "statistically speaking" have a lot of murders in my state?

We interpret statistics differently.

~~~
dalke
The homicide rate in Montana is 4.5x higher than Germany. How is that not "a
lot of murders" by comparison?

Or, rather, what does "a lot of murders" mean to you?

~~~
thieving_magpie
Here we go again with trying to make the number seem bigger.

It's 3 murders per 100,000 people. No, that isn't a lot to me. I'm completely
fine and feel safe knowing I have a 0.000036 percent chance of being murdered
next year.

~~~
dalke
What does "a lot of murders" mean to you?

~~~
dalke
Without an answer, I'll go back to your "Ask an Arab around Paris how safe
they feel".

The 2012 homicide rate in Paris is 1.8 / 100,000, according to the "Homicide
counts and rates in the most populous city, time series 2005-2012" spreadsheet
available from linked from
[http://www.unodc.org/gsh/en/data.html](http://www.unodc.org/gsh/en/data.html)
. The total count was 41, so an overall population of 2.2 million.

To confirm,
[https://en.wikipedia.org/wiki/Demographics_of_Paris](https://en.wikipedia.org/wiki/Demographics_of_Paris)
says "The city of Paris (also called the Commune or Department of Paris) had a
population of 2,241,346 people within its administrative city limits as of
January 1, 2014".

It's hard to know the ethic breakdown of everyone who was murdered. That last
URL says there are 436,576 immigrants in the city of Paris. I'll assume 2/3rds
of those are Arabs, based on the '2011 Census Paris Region; Country/territory
of birth' chart from that page, and assume that there are no non-Arab
homicides. This is, of course, going to give a very high number compared to
the actual number:

That gives a homicide rate of 41 / (436576*2/3) = 14/100,000, compared to
Montana's 3.6.

This absurd number is still less than 4x of homicide rate in Montana.

Under your logic, an Arab in Paris should not feel unsafe due to threat of
being murdered.

Why should we think that Montana is safer for you than Paris is for an Arab?

~~~
thieving_magpie
You seem to be under the impression "safety" is defined by per capita murder
rates. Which, as you frequently point out, is 3.

3.

This isn't going anywhere, right? Let's just wrap it up.

~~~
dalke
You implied they were somehow connected. We're trying to make sense of what
you wrote.

~~~
thieving_magpie
No, my implication was not to connect Montana and a Parisian of Arab descent.
The implication is that safety is a feeling and relative. There's context to
it, your upbringing, your race, your economic status, the amount of attention
your mother gave you, whatever.

I'm not interested in coming to some conclusion that X is safer than Y. So far
you're the only one I've seen struggling to understand this.

------
wwalser
I'll speak up since I'm an American living over seas and I feel like several
of the comments currently ranking highly on the page either miss the point or
make factually inaccurate statements. Note that if they miss the point, it's
very unlikely that they choose to miss the point. More likely they have been
misinformed by poorly constructed articles like this one.

I was born in the US but have been living and making most of my income over
seas for five years. I'm actually relocating back to the US in two weeks (yey,
welcome back :D). On the one hand I'm sad to leave the place that I currently
live since, for me, it's better in nearly every way than most US cities. It's
cleaner, I've lived well without a car, walked/cycled significantly more and
I've visited nearly every crevice of this city and never felt unsafe due to a
combination of cultural and legal differences. I pay slightly higher taxes
than I would in the states. On the other hand, I'm very excited about having
less paper work to do for a few years.

That's all context for my view: For me, it's not about the amount of money I
pay in taxes. I'd call myself upper middle class so far as income goes and
I've not had to pay US tax for the past five years. I will have to this year
because of some options that I exercises but generally I'm happy to pay US
tax.

The burden, the thing that's made me consider renouncing, is the reporting.
Let's start with the basics, I have to do my taxes in two places. This
involves finding an accountant both in the US and over seas who is capable of
doing taxes for someone who is a special type of tax resident. Every
accountant will say that they are competent but I have found their claims
mostly unfounded. One can pay someone who specializes but that always involves
paying a significant premium.

In addition to doing taxes in two places I also have to fill out a separate
form listing all assets worth > $10k and in which I have >= 50% ownership.
This includes bank accounts, houses and any other investments. This is
particularly onerous when one marries to a non-US resident. Suddenly the US
government knows a lot about them. Do they have any bank accounts with more
that $10k in them? Do they own any property? Any investments? Because if they
do, by most countries standard you probably suddenly own 50% of it.

On top of all of that, as of 2015 I also have to ensure that my bank does a
specific type of reporting. I'm lucky in that where I am Americans are
numerous enough to make this worthwhile for the banks but this is not the case
everywhere. Some banks in foreign countries have started refusing US
customers.

Comparing the number of people renouncing citizenship to the total population
of the US misses the point. It's better to compare against the number of
americans living and working over seas. From a quick search around the
internet the number of expats looks to be ~7M. It's still a very small
fraction and not something that I expect law makers to pay attention to. The
reason I think this comparison makes sense is because it is worthwhile to
consider whether or not we want to keep connections to our diaspora. The issue
from a governance perspective doesn't seem to be a loss of tax revenue but
instead a non-reversible export of talent. In a flat world I have doubts about
the US's ability to maintain expertise in all of the area that will fuel
future economies. That being the case, I think it would be good for the US to
make it simple and straightforward for Americans to go to other places where
they can become experts and return home for further work.

I don't expect the US's policy to change. In fact, if the number of people
renouncing continues growing more rapid I wouldn't be surprised to see the US
use more aggressive rent seeking measures. This seems obvious given recent
additions to the reporting requirements placed on expats and higher fees
associated with renouncing.

------
hellbanner
"But it's illegal to give up U.S. status to dodge paying a tax bill -- and
doing so doesn't mean authorities won't come looking for back taxes." .. how
exactly would that be pursued?

~~~
thisone
the process of renouncing citizenship involves proving you're up to date on
your taxes.

------
JoeAltmaier
The US sets a record for issuing passports every year. Logically, the number
not renewed ("dumped") would be higher every year.

~~~
ma2rten
This is talking about giving up your citizenship, not about passport renewal.

~~~
JoeAltmaier
See first comment.

------
hellbanner
META: can someone please explain HN's upvote algorithm ?New account, 3 points
and frontpage. Earlier one of HN staff said that accounts that posted high-
ranking content got upvoted faster. Now I'm wondering if the upvotes are
weighted by who gives them?

~~~
fabulist
Yes, they are.

~~~
striking
Source?

------
mauvejames
I'm looking at moving to the US in the near future, and some of the
implications of the tax system are pretty startling.

For example, I have contributed to a small retirement plan which grows tax
free here in the UK, and the US/UK tax treaty ensures that it will continue to
grow tax-free once I've moved. So far, so good. However, there is a body of
professional opinion stating that such plans count as a "foreign grantor
trust" under US law, which has specific reporting requirements that the plan
itself is required to comply with, and I am penalised if it fails to do so.
The penalty scale starts at $10,000 and goes up from there.

Of course, this body of opinion is being pushed by tax advisors who have a
vested interest in both making things as complicated as possible, and who are
inclined to a conservative view of the law given their responsibilities to
their clients. The IRS hasn't clearly stated one way or another whether UK
pension plans are subject to this reporting -- but have specifically exempted
the Canadian equivalent.

This is just one frustration of several: becoming a US resident will force me
to close some of my financial accounts with institutions which want to avoid
FATCA hassles, I'll be limited in which investment choices I can make, and
when I eventually take my pension benefits the US will claim tax on the tax-
free lump the UK provides if I'm still a resident or have taken citizenship.

For those who have emigrated permanently -- or who acquired US citizenship at
birth without ever living there -- I can well understand why even those
without significant income or assets would want to renounce their citizenship.

