The Obama administration has been setting a number of records. Some of the records they have set they wish never happened like the record number of gun sales in each of the last four years. Obama’s anti-gun efforts have been a boon to gun and ammunition sales.
However, most of the records set by the Obama administration have not been so positive. One of those records is the number of Americans that are leaving the country and renouncing their citizenship. Last year, that number hit a record of 2,999 expatriates. In the third quarter of 2013, there were 560 people leaving the country and in the third quarter this year that number has increased to 776 citizenship renouncements. At the present rate of citizen departures this year, it seems that the number of expatriates will top 3,000 for the first time in history.
So why are more Americans leaving their country and citizenship behind? At first you may think that they are flocking to Syria to join ISIS, but that is not the number one reason for the departures.
According to a recent report, the number one reason for the record number of people leaving America and citizenship behind is Obama tax policies. It seems that almost everything Obama does involves some sort of tax increase or new tax regulation that makes it harder for Americans to keep their hard earned money.
One of the key tax policies driving people away is the Foreign Account Tax Compliance Act that was passed by the all Democratic Congress in 2010 and implemented in July of this year. Per the Treasury Department website:
“FATCA was enacted in 2010 by Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.”
First of all, I want to know what legal jurisdiction the US government has to force foreign banks to comply with a US law? If they don’t comply with FATCA, any accounts of $50,000 or more identified by the IRS in foreign banks that are not reported can face a 30% surcharge, which is a fancy way of saying a penalty tax, like many of us will pay for not having health insurance.
This affects the approximately 6.3 million Americans currently working abroad and paying US taxes on their earnings. Marylouise Serrato, Executive Director of American Citizens Abroad referred to a recent poll that revealed 12.7% of those Americans working abroad have had their applications for financial services denied by the foreign banks and many are due to FATCA. Commenting on the issue, Serrato stated:
“The problem is not paying taxes or not wanting to pay taxes, the problem is that they’re having an inability to find financial providers and people who are still willing to deal with them as American citizens.”
Another tax issue that is causing a record number of citizenship renouncements involves what are being referred to as ‘accidental Americans.’ These are people that were born in the US but have lived most of their lives in other countries, especially Canada. According to the US tax code, if you were born here and are still a citizen it doesn’t matter where you live or work, you are required to pay US taxes. The Obama administration started cracking down on the many Americans living and working in Canada, forcing them to pay US taxes in addition to their Canadian taxes. This is causing a number of them to renounce their American citizenship to avoid paying double taxes on everything they earn.
The report cites the case of one man who was born in the US and taken to Canada shortly after his birth. He never realized that he had US citizenship until 2011 when he tried to enter the US from Canada. He was told that he needed an American passport to re-enter the US since he was born here. After that incident, the man learned that he could file and pay back taxes for the last five years he worked in Canada or renounce his US citizenship.
Rather than pay thousands of dollars in accounting fees and taxes, he is in the process of renouncing his US citizenship. He has been working on this for over a year and still has not been officially removed as a US citizen. The State Department has also informed him that he will have to pay a $2,350 processing fee. The fee was only $450 prior to September 2014, but since it has taken over a year, he will now have to pay the new exorbitantly high fee.
There is no doubt that the Obama administration has been one of the most tax happy administrations in history. It reminds me of the many burdensome taxes that the British imposed on the colonists that helped lead to the Revolutionary War. The people were fed up with all of the taxes and regulations back then and many are getting that way today. Instead of trying to mount a rebellion against our government, a growing number of Americans are opting to renounce their citizenship. In part, I can’t blame them.