Americans Renouncing Citizenship Heading For New High

Hundreds of Americans handed back their passports in the past three months, putting the trend on track to hit a record level for the year.

The US Treasury released data showing 1,376 Americans renounced citizenship.

Financial firm Bloomberg says that if the trend for the final quarter matches that of last year, the final tally will be a record 6,813 Americans deciding to leave the USA for good.

Last year, 2,365 people renounced citizenship in the final quarter taking the total for 2016 to 5,411 – a 26% increase on the year before.

If the trend continues, 2017 will be another 26% increase as well.

The numbers started rising with the introduction of the Foreign Account Tax Compliance Act (FATCA) was introduced in 2010 by former president Barack Obama. He designed the law to discourage offshore tax evasion by US taxpayers.

FATCA tax laws blamed for rise

FATCA demands any foreign financial institution with American customers must report the financial details of their accounts each year – but only for US residents with accounts with balances of more than $50,000. The reporting threshold rises to $200,000 for expats.

Repeal campaigners argue that the reporting limits means FATCA unfairly impacts wealthier Americans, however the US Treasury gives no reason why people renounce citizenship, so no data supporting this point exists.

The Republicans pledged to repeal FATCA in their 2016 election manifesto, but have yet to make any moves to do so, despite President Donald Trump acting to revise the US tax code.

To date, almost 300,000 foreign financial institutions have signed up to report under FATCA rules, with the Internal Revenue Service reporting the recovery of more than $10 billion in lost tax from more than 100,000 taxpayers since the law was introduced.

Anecdotal evidence from around the world suggests US expats have difficulties in opening bank accounts and borrowing money to buy a home because many foreign banks prefer to remain outside FATCA by refusing to deal with Americans.

Numbers of US citizens jumping ship since 2007

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