US expats renounce citizenship in droves, but it’s because of tax, not Trump
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The swearing in of new citizens often makes news in the US, especially if it happens in unusual circumstances such as one party’s national convention. Much less reported are the many citizenship renunciations by Americans, and the travails leading up to these life decisions. Almost all those giving up their US nationality are expats. And for each renouncer going through the ordeal, there are countless others thinking about it. Why?
One recent press release in particular has caused quite a stir. It suggested that, after “a steep decline” in recent years, renunciations in the first half of 2020 soared to 5,816, more than twice as many as gave up their passport in all of 2019. The implication, as reported breathlessly in the US media, was that expats, already fed up with President Donald Trump, finally despaired over his mishandling of Covid-19 and quit. Other factors were cited as merely secondary.
But these renunciation numbers are notoriously flawed. They’re based on a list of names of renouncers published every quarter by the Internal Revenue Service — experts call this a form of “doxxing.” That list lags in time and jumbles data. In reality, most embassies and consulates stopped making renunciation appointments around March, owing to the pandemic. And the dip in prior years, according to experts, was due to backlogs and underreporting.
By the best estimates, renunciations have been rising since 2010, when the Obama administration passed the notorious Foreign Account Tax Compliance Act (Fatca), inflicting misery on US expats everywhere. In 2014, the government raised the renunciation fee from $450 to $2,350. Undeterred, expats kept at it. The US bureaucracy then indirectly slowed the pace with red tape in the first three Trump years. But we’re back on trend in 2020.
Now, it may be true that most expats aren’t crazy about Trump. Americans abroad tend to be cosmopolitan professionals, often married to foreigners or following international career paths. Watching their home country in their host nation’s news, or talking about it at local dinner parties, has stopped being fun. The images occasionally evoke a banana republic succumbing to pestilence while arming for civil war.
But that’s clearly not the reason so many expats have been trying to drop their nationality for the past decade. Instead, as I described in 2019, it’s the nightmare of US tax and financial reporting, in which any accounts or assets deemed in Washington, DC ...
One recent press release in particular has caused quite a stir. It suggested that, after “a steep decline” in recent years, renunciations in the first half of 2020 soared to 5,816, more than twice as many as gave up their passport in all of 2019. The implication, as reported breathlessly in the US media, was that expats, already fed up with President Donald Trump, finally despaired over his mishandling of Covid-19 and quit. Other factors were cited as merely secondary.
But these renunciation numbers are notoriously flawed. They’re based on a list of names of renouncers published every quarter by the Internal Revenue Service — experts call this a form of “doxxing.” That list lags in time and jumbles data. In reality, most embassies and consulates stopped making renunciation appointments around March, owing to the pandemic. And the dip in prior years, according to experts, was due to backlogs and underreporting.
By the best estimates, renunciations have been rising since 2010, when the Obama administration passed the notorious Foreign Account Tax Compliance Act (Fatca), inflicting misery on US expats everywhere. In 2014, the government raised the renunciation fee from $450 to $2,350. Undeterred, expats kept at it. The US bureaucracy then indirectly slowed the pace with red tape in the first three Trump years. But we’re back on trend in 2020.
Now, it may be true that most expats aren’t crazy about Trump. Americans abroad tend to be cosmopolitan professionals, often married to foreigners or following international career paths. Watching their home country in their host nation’s news, or talking about it at local dinner parties, has stopped being fun. The images occasionally evoke a banana republic succumbing to pestilence while arming for civil war.
But that’s clearly not the reason so many expats have been trying to drop their nationality for the past decade. Instead, as I described in 2019, it’s the nightmare of US tax and financial reporting, in which any accounts or assets deemed in Washington, DC ...