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Tags: wealthy | americans | renounce | citizenship

Ultrawealthy Americans Are Renouncing Citizenship

eric schmidt sits onstage
Former Google and then Alphabet CEO Eric Schmidt (Kevin Dietsch/Getty Images)

By    |   Thursday, 05 August 2021 10:54 AM

More Americans than ever renounced their citizenship in favor of a foreign country last year.

Axios reported that an all-time high 6,707 people gave up their U.S. citizenship in 2020. That was a 237% increase over 2019.

Considering that most people who fled were ultrawealthy seeking to reduce their tax burden, that trend could accelerate due to the Biden administration proposing an increase of the top capital gains tax to 43.4% and new estate tax measures.

For example, former Google and then Alphabet CEO Eric Schmidt has applied to become a citizen of Cyprus.

The number of people renouncing U.S. citizenship is down so far this year, likely due to many embassies and consulates remaining closed because of the COVID-19 pandemic. The process requires taking an oath in front of a State Department officer.

Only the U.S. and Eritrea, located in northeast Africa, tax people based on citizenship rather than residency. Most countries don't tax citizens who reside elsewhere.

The IRS publishes a quarterly list of the names of people who renounced their citizenship or surrendered their green cards. However, the list only includes people with global assets more than $2 million, and The Wall Street Journal discovered the list wasn't up to date.

"It’s not as if the latest quarter names that have come out are indicative of the current political environment or anything like that," Andrew Mitchel, a Connecticut-based international tax lawyer, told Axios.

Axios said the number of people renouncing U.S. citizenship began to grow in 2010, when Congress passed the Foreign Account Tax Compliance Act (FATCA), which increased reporting requirements and penalties for expatriates.

"[FACTA] kind of flushed people out of the bushes," Mitchel said. “[It] effectively deputized all the banks around the world to tattletale on U.S. citizens."

One international tax lawyer specializing in helping Americans renounce U.S. citizenship said the next list only will contain relinquished green card holders, who can do it by mail.

"There are probably 20,000 or 30,000 people who want to do this, but they can’t get the appointment," Poland’s David Lesperance told Axios. "There’s not a peak demand — the system’s capacity has peaked."

"It's a year-and-a-half to get an appointment at a Canadian embassy. Bern [Switzerland] alone has a backlog of over 300 cases."

A State Department official told Axios "we do not track 'pent-up demand' for U.S. citizenship renunciations."

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More Americans than ever renounced their citizenship in favor of a foreign country last year. An all-time high 6,707 people gave up their U.S. citizenship in 2020. That was a 237% increase over 2019...
wealthy, americans, renounce, citizenship
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2021-54-05
Thursday, 05 August 2021 10:54 AM
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