Many people around the world are clamoring to immigrate to the United States in hopes of becoming U.S. citizens, yet the number of people renouncing their U.S. citizenship is also on the rise. The incremental increase in the number of U.S. citizens living abroad renouncing their U.S. citizenship is most often due to tax reasons, but there are other factors as well.
In Europe, Americans Overseas, a firm specializing in U.S. tax issues, said that despite the disruption of many people’s lives by the New Crown (CCP virus) epidemic in 2020, 6,705 Americans renounced their citizenship that year, up 260 percent from 2,577 in 2019; the last significant increase in renunciations of U.S. citizenship occurred in 5,411 in 2016.
This trend in renunciations is even more alarming considering that a number of U.S. consulates abroad were closed during the year due to the epidemic and some people were unable to complete the renunciation process.
Canadian-born attorney David Lesperance, who specializes in renunciation of U.S. citizenship, noted that the main reason for Americans living abroad to renounce their citizenship is the threat of higher taxes in the United States, a country that taxes U.S. citizens around the world and requires them to file annual tax returns with the IRS even if they move abroad.
Since the Biden administration is likely to increase income tax, capital gains tax and estate tax on high income earners in the coming year, it can be said that the only way for U.S. citizens to escape from the tax net is to renounce their citizenship.
In addition to tax reasons, there are other factors, including tired of the domestic partisan battles in the U.S., concerns about increased gun violence, and fiscal imbalances. What’s more, most affluent Americans abroad recognize that they can live cushy lives even without a U.S. passport.
These people leave the United States and find that they can survive and thrive elsewhere, Lesperan said.
He said the vast majority of his clients’ families have not moved to small islands in tax havens. Instead, they migrated to Canada, the United Kingdom, Europe, New Zealand and Australia. They can continue to enjoy the same lifestyle, but support only a fraction of the taxes previously levied in the United States.
The Heritage Foundation ranked Singapore No. 1 on its Economic Freedom Index in March, followed by New Zealand, Australia and the United States at No. 20, the worst ever, so living in these developed countries may be better than in the United States.
But Lesperan also reminded Americans who are thinking of moving abroad and renouncing their citizenship to look beyond the tax aspect and to understand dual citizenship, mandatory military service, and the right to live in multiple jurisdictions, because these are the top priorities.
Recent Comments