Smart TaxesSmart Taxes

Record number of Americans give up citizenship

Increase isn't necessarily driven by wealthy citizens trying to escape taxes, experts say.

By MSN Money producer Feb 12, 2014 2:37PM

Paper airplane made of money © Tetra Images/CorbisBy Robert Frank, CNBC

While Washington is focused on immigration, tax experts are focused on the opposite issue: a surge in Americans moving out.  

Last year, a record 2,999 Americans gave up their citizenship or terminated their long-term U.S. residency, according to new data from the U.S. Treasury Department. That was more than three times the number in 2012, and greater than the combined totals for 2011 and 2012.  

Many will look at these numbers and say they are proof that America's high taxes are chasing Americans overseas. After all, many of the expatriates who have been named are wealthy or high earners -- like Facebook billionaire Eduardo Saverin or pop star Tina Turner. 

But tax experts say it would be wrong to imply that the soaring number of expatriates are driven by wealthy Americans looking to avoid taxes.  

"We do not believe that the primary reason for the increase in expatriations is for political purposes or for individuals to reduce taxes," said Andrew Mitchel, an international tax attorney who has studied the expatriate numbers closely in recent years, in his blog.  

Instead, he said there are three other reasons for the recent increases in the number of expatriations: 

  1. Increased awareness of new tax filing laws. Many people with U.S. passports who live permanently overseas have been unaware of the rules requiring all citizens to file tax returns. The UBS tax scandal and crackdown on Americans with overseas assets has made more people aware of the requirement. And they have simply given up their citizenship rather than comply.
  2. Growing compliance burden. A new law, known as the Foreign Account Tax Compliance Act, was enacted in 2010 and may soon require foreign financial institutions to report to the Internal Revenue Service accounts held by U.S. taxpayers. Mitchel said some banks are simply closing the accounts of U.S. clients as a result.
  3. Big penalties. The standard penalty for unintentionally failing to file a tax return is $10,000. But the penalty for intentionally failing to file is far more. Mitchel gives the example of an individual who has retired overseas with savings of $1 million in a foreign bank account. If they've intentionally failed to file for four years, the penalty could be $2 million.

So yes, the IRS is clearly on the minds of Americans giving up their citizenship. But it's not because taxes have gone up. It's because the requirement to file a return -- no matter where you live or what you do -- has become far more stringent.

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Feb 12, 2014 3:33PM
More Americans are leaving this country because this country is going to hell in a hand basket!!!
Feb 12, 2014 3:34PM
We used to proudly wear the white hat, and although corruption has and always will be in existence, we somewhat respected the Constitution and the law.  Unfortunately, the United States is not what it used to be.  Moving to a peaceful, neutral country, where you've not made enemies around the whole world, including your own citizenry, does not sound like such a bad proposition.
Feb 12, 2014 3:56PM
It's also the disenchantment with US policies being shoved down their throats.  Many people don't believe what Hollywood and the liberal media push (ex. - gay rights, anti-gun, illegal aliens getting tuition, etc.) and they are tired of paying taxes (especially while National debt continues to climb) to a government that no longer represents the majority, but instead pushes for the minority and they spend, spend spend... and all the while the Constitution continues to be weakened.
Feb 12, 2014 4:19PM
If Obamacare exempts illegal aliens from mandatory health insurance and still gives them free health care, I will leave too, become a citizen of another country, and come back as an illegal alien. Then I will have free health care.
Feb 12, 2014 3:29PM
With obama and his policies who is surprised? It will grow....
Feb 12, 2014 3:50PM
if not for granddaughters I would be out of here, tired of the entitlement mentality and the freeloaders called democrats  
Feb 12, 2014 5:23PM
No real shocker.  When illegal immigrants can protest at the Washington Memorial, but our heroic veterans are blockaded out...   Something is TERRIBLY wrong    Or when some raving lunatic runs into a building screaming JIHAD and shoots innocent people...and its labled workplace violence NOT an act of terror....  Something is TERRIBLY wrong.  When our "president" consistently and blatantly LIES to us    Something is TERRIBLY wrong.  

HUGE government and oppressive taxes..  Something is TERRIBLY wrong

Liberals.....  They just don't get it.
Feb 12, 2014 4:14PM

Thank you Mr Obama!  Nice~!  Americans are fleeing and illegals are taking over our country.  What a shame you have done to our country.

Feb 12, 2014 3:45PM
It's funny, this is the second time Yahoo has run this story. I think their reasons are BS.  The reason it is the wealthy who are leaving is because they are the ones that can afford to.  I have always loved my country and have been very proud of the freedoms we have.  I have never felt like leaving this country UNTIL the Obama administration.  The forceful, unconstitutional takeover of our country by politically correct, power hungry liberals is the reason I would leave if I could afford to.  Unfortunately, I am stuck here and just have to join the 27% of true Americans who believe an armed revolution is inevitable.
Feb 12, 2014 3:34PM
Yep good job with that 39+% tax rate.  People with money are generally smart so if they can say thousands or millions by moving, they will do it.
Feb 12, 2014 4:10PM
The funny thing is, with almost half the country paying ZERO tax, obama STILL thinks the high earning, successful US citizen don't pay their fair share.

You think it's hell now, wait until obama opens the floodgates on illegal immigrant granting them citizenship by waiving the proverbial welfare carrot in front of them, on the flipside Americans who know how to open their eyes and see the truth will be leaving in droves...

How you going to pay for all those deadbeat, welfare dregs when larger percents of the people who actually produce give up their citizenship??

Well, in two year he won;t care because after 2016 I heard he's moving back home to Kenya, (yes, we're all still waiting for that birth certificate)

A lot of those are leaving just because of Obama period.   I don't blame them one bit.  If this guy doesn't become the first dictator of the USA I will be very, very, very supprised.  With all of his mandates setting up the government so he can just walk in one day and say I am the man now.  You all do just as I say, no exceptions.  I don't think the military will stand by and let this ---------_ do this.  If I were still in the military I would fight him.  I swore that I would fight all whether foreign or domestic to keep the United States Free just as our ancestors did before us.  I expect those in the military now to do the same thing!  All of those who have died serving the USA will have died in vain if they don't do so.  Obama's best shot will be to walk away into the sunset and never return.
Feb 12, 2014 4:18PM
the country is f-'d up and only going to get worse.  I'd gladly give up my citizenship if I found the right place and had any money to move there.  I guess this is only an option for people with money - per usual.
Feb 12, 2014 4:41PM
Sadly, "We the People" have been relegated to giving inputs about "our" country on websites such as this. Oh you can call your congressman or the president and make a comment; hah, we know how effective that will be, zero. Or you can vote; nah, the same old party clones win every time. Or you could go out and protest; nah, that's right. They'll pepper spray you, or taser you, or club you with a billy. To the politicians, the people are just an annoyance. 
Feb 12, 2014 4:35PM

MSNBC News story earlier today:  "Utah company recalls 90,000 pounds of beef jerky".

How can we recall 90K pounds of beef jerky becuase it is dangerous to our people and yet we can't recall the knucklehead in the White House, who is even more dangerous?

Feb 12, 2014 3:57PM
i can't wait to move. i would like to move elsewhere. this country is getting too crazy for a young 21 year old. stuff is way too expensive. 
Feb 12, 2014 4:08PM
So what happens when all the producers leave or stop psuing everyone else in the cart?  We will find out in my lifetime.  I, for one, think we should have states where no social welfare exists.  Those states would flourish and not just because there would be no liberals.
Feb 12, 2014 4:23PM
A friend of mine is interested to move permanently to Indonesia, and it is not because of Obama or other political reason. He can't stand the absurdity health care costs in US, the overall corporate greed, and also the "me, me, me!" mentality. The weather is much nicer in Indonesia, the people are genuinely friendly, and everyone help each other out. It has crime and laden corruption, but the quality of life (i.e. having a nice, peaceful life) is much better there. If emergency health treatment is needed, you can always fly to Singapore where an appendicitis surgery cost $4,000 and up, as opposed to the $55,000 some American boy racked. 
Feb 12, 2014 4:20PM
I really don't see much difference with these reasons then the high tax reason. All Leftist love high TAXES and high REGULATIONS.
You want to know what America will look like in 20 years.............see Detroit.
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