Record Numbers Renouncing U.S. Citizenship
According to the Treasury Department, 4,279 people renounced their American citizenship in 2015. This is up 864 from the previous high of 3,415 in 2014. From 2013 to 2015, 10,693 citizens have renounced their citizenship, which is more than the 10,189 renouncements in the previous 15 years from 1998 to 2012. So why are so many more citizens renouncing their citizenship now more than ever?
One theory is the Foreign Account Tax Compliance Act (FATCA) that was passed in 2010. This act introduced reporting rules for foreign financial institutions, as well as American citizens that hold money in foreign accounts. This bill was introduced to combat tax avoidance for Americans that hold money in foreign accounts, but it also makes life more difficult for Americans that are living overseas. Since the installment of this bill in 2010, 14,940 Americans have renounced their citizenship. In 2010, the first year after the bill was put into effect, the number of citizens that renounced their citizenship doubled.
This bill makes the U.S. one of only two countries in the world that taxes their citizens on all income earned, whether they live in the U.S., or in another country. This means that American citizens working in a foreign country are taxed twice on their income. This double taxation could be one of the main reasons why citizens are choosing to renounce their citizenship now more than ever.