Taxed Too Much? Record number of Americans giving up citizenship

By Brian Booker     May 9, 2015 in Politics

An increasing number of Americans are deciding to renounce their citizenship and turn in their passports. The home of the brave and land of the free simply isn't that attractive to an increasing number of people.

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Through the first quarter of 2015 1,337 Americans have already renounced their citizenship. To put that into perspective, only 231 citizens renounced their citizenship through the entire year of 2008.

In 2014, a record number of Americans, some 3,415, decided to renounce their citizenship. It was the largest number of renunciations on record. In 2013 an even 3,000 people renounced, up from 933 in 2012.

With 1,337 Americans having already renounced, the total this year has already reached 40% of last year's record breaking year. This suggests that the US could be on track to set a new record this year.

So why are more and more Americans deciding to renounce their citizenship? The biggest issue seems to be taxes. The United States is one of only a few countries that tax income from abroad.

Technically, an American citizenship can't renounce his or her citizenship to avoid taxes, but that just means the person turning in their passport has to cite another excuse.

Not only does that put Americans on the hook for potentially higher taxes, it also forces them to have to go through the headache of filing immensely complicated returns.

Critics already charge that the American tax code is among the most complex in the world, and recent changes will make it even more complex for expats. Many expats complain of paying thousands of dollars to have professionals file their returns.

The foreign account tax compliance act, for example, has increased the reporting requirements of Americans living abroad. The aim of the bill was to catch and crack down on wealthy tax cheats. It compels both Americans and banks to report information.

In practice, many of the people being swept up in the bill are not particularly rich, and likely won't even owe taxes. Regardless, the complications are so serious that some banks have even begun to kick out American account holders.

There are some 7.6 million Americans living abroad.