Americans Renouncing Citizenship at Record Highs
The number of Americans renouncing their citizenship rose to a new record of 5,411 last year, up 26% from Y 2015, according to the latest government data.
The Big Q: Why?
The Big A: It all goes back to the Civil War, and to a tax meant to deter potential draft dodgers from leaving the US. Now, the goal is to make sure that all of the income of US citizens, whether they live and work in the US or not, is reported to the Internal Revenue Service.
The rules got trickier in Y 2010, when, in an effort to cut down on tax evasion, the Obama Administration on the hunt for “fat cat” tax evaders, decided that the Foreign Account Tax Compliance Act (FACTA) be made into law.
It says in essence that foreign institutions aka banks and brokerage houses, holding assets for US citizens had to report the accounts or withhold a 30% tax on them if the information wasn’t provided. That led some foreign banks to shy away from opening accounts for US expats.
The Trump Administration has indicated that it is mulling rescinding the law.