For some Americans, the United States isn’t the land of opportunity.
The Department of Treasury released a quarterly list of expats who have relinquished their rights as American citizens, and this latest one shows that it’s a growing trend. Despite the thousands of immigrants looking for refuge between our borders, plenty of Americans are finding reasons to sever their American ties.
This growth is record breaking, with 577 Americans relinquishing their citizenship this quarter, and a total of 1,577 so far this year (with five more months to go). 2013 wasn’t any better. 3,000 Americans gave up citizenship, which was a 221% increase from the previous year, when 932 people renounced their citizenship. It should be noted that these numbers only include individuals that have reported themselves to the Treasury Department. There is still an uncounted amount of expat Americans who have flown under the radar.
So why is this happening?
A good reason for this massive exodus is our tax system. Workers in the European Union are required to pay taxes to the government of the country in which they work. If a European company employees Americans, those American workers are not exempt from European taxes. They are also not exempt from American taxes. Americans working in Europe (and for that matter, anywhere in the world) have double the payments, double the headache. It looks like it’s no longer the filthy rich running away to save money; people from all walks of life are doing it too.
Banks are another issue – many foreign banks don’t want to deal with U.S. tax laws, and therefore U.S. clientele. Limited banking options make it harder for Americans living overseas.
Leaving America isn’t cheap. You need to prove at least five years of tax compliance, and if you have a high net worth (more than $2 million) you have to pay an exit tax. There are certainly many costs involved in leaving (financially and socially) but it’s not stopping people from doing so, and it’s hard to tell if it ever will.