The newly published names of individuals who renounced their U.S. citizenship or terminated long-term U.S. residency is up, with 576 for the quarter and 1,577 so far this year.
The growing trend is an indictment of what is happening in this country for some but for others it is just a way to save money.
The tally was 2,999 for all of 2013, a 221% increase over the 932 who left in 2012.
The Treasury Department is required to publish a quarterly list, a kind of public outing putting Americans on notice of who relinquished their rights.
The law was changed in 2004, so tax consequences do not hinge on why one leaves.
But that could change. After Facebook co-founder Eduardo Saverin departed permanently for Singapore with his IPO riches, there was an angry backlash.
Mr. Saverin’s fly-away prompted such outrage that Senators Chuck Schumer and Bob Casey introduced a bill to double the exit tax to 30% for anyone leaving the U.S. for tax reasons.
Most expats are motivated primarily by factors such as family and convenience. Complex or costly taxes can sway a decision but are often only one factor. Many now find America’s global income tax compliance and disclosure laws inconvenient or even oppressive.
For U.S. persons living and working in foreign countries, it is almost a given that they must report and pay tax where they live. But they must also continue to file taxes in the U.S. based on their worldwide income. Claiming foreign tax credit on one’s U.S. returns generally does not eliminate all double taxes.
U.S. taxes are complex, and enforcement fears are palpable. Moreover, the annual foreign bank account reports known as FBARs carry civil and even criminal penalties. Civil penalties alone can quickly consume the balance of an account. And then there is FATCA, which requires filing an annual Form 8938 once foreign assets reach a threshold.
Yet the real teeth of FATCA is reporting and disclosure by foreign banks, the systematic turning over of American names by foreign banks all over the world. Even Russia and China have signed on, as have over 70 countries. Many foreign banks simply do not want American account holders, period.
To leave America you generally must prove 5 years of U.S. tax compliance. If you have a net worth greater than $2 million or average annual net income tax for the 5 previous years of $155,000 or more (that’s tax, not income), you pay an exit tax.
It is a capital gain tax as if you sold your property when you left. At least there’s an exemption of $680,000. to