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Reported Increase in Number of US Citizenship Renunciations

Transcript of the above video:

In this video today, we are going to be discussing citizenship renunciation, specifically US citizenship renunciation. This isn’t a topic I discuss very often, not particularly because there is anything wrong with it per se, but renunciation of American citizenship is pretty rare. In my opinion there are very, very few cases where it is particularly warranted for a number of different rationales as to why it’s not warranted, but there are certain circumstances where frankly it is. Most notably there are folks that just happened to have been born in the United States and have US citizenship but have virtually no connection to the country; they were like born there because their parents were in some cases were studying in the US or their parents were working in the US briefly or something you know, they have US citizenship but they have lived abroad all their lives and they are not particularly connected to the country and one of the big issues  especially in recent years with the passage of things like FATCA, the foreign account transparency compliance act, and issues associated with tax compliance etc. and the enforcement mechanisms which have been fairly significantly improved upon in recent years or increased as far as enforcement capability, folks have just, you know, there have been more renunciations. But that being said, people seem to sensationalize this which I don’t really like. Yes, these numbers are rising but as far as raw data, as far as raw numbers, these aren’t huge amounts and it seems I have heard this same headline for years, “Americans are renouncing citizenship at a record pace”. It seems like I heard this last year, the year before and the year before that. “Third quarter numbers point to another annual high”. This comes from Bloomberg.com November 2, 2017, quoting directly, “in the third quarter of this year, 1,376 Americans renounced their US citizenship putting the annual tally on track to top 2016’s record data from the Treasury Department show. If this year’s fourth quarter mirrors that of 2016, when 2,365 people chose to expatriate, 2017’s annual tally would be 6,813; that’s a 26% rise from 2016’s total of 5,411 which was itself a 26 % jump from 2015. 

What you should probably take away from these headlines is Yes, it’s going up, as far as year on year, the numbers are rising. I think a lot of this is basically attributable, I think a lot of these folks who were born in the United States, who have relatively little connection to the country  are looking at their situation and saying “I don’t need this citizenship, okay. I don’t want, I am not connected to the country enough to really warrant me maintaining this and moreover, the cost of regulatory compliancy, of simply tax compliance, with US law and order to maintain this, it is overly burdensome and I just want to be done with it”. There are other types of people who for various reasons decide to renounce; they can be for all kinds of reasons. I am not going to get into the whys and hows of how all that works but one thing that should be noted with respect to US taxes, there are tax implications; fairly significant ones for renouncing US citizenship. I’ll get into that in another video on this channel in due course. But for now, the thing to take away from this video is “Yes, renunciations are on the rise, but I made this video because I kind of wanted to point out the numbers. The raw numbers yes, 6,000 people renounced citizenship. But that being said, I think it is currently about a million folks a year emigrate to the United States every year and I don’t  know the numbers of people that naturalize to US citizenship every year so yes those numbers are rising but I think it is somewhat a result of the more, I don’t like to use the word onerous, but the higher the threshold in dealing with ones tax compliance when you are a US citizen, especially a US citizen abroad and I think a lot of these numbers can be attributed basically to folks who have relatively little connection to the United States who are basically saying “Look the compliance, the pros and cons, the cost benefit, the cost of complying to the tax rules of being a US citizen are more than it’s worth to maintain this to me” and I think a lot of the folks you are seeing renounce are primarily folks who are, didn’t have much of a connection to the United States to begin with.