via Daily Sheeple:
A record number of individuals renounced their U.S. citizenship in 2016, according to a new report published by the Internal Revenue Service (IRS) today.
From US News:
The government agency, a bureau of the U.S. Treasury Department, publishes the names of those individuals in a list each quarter, in accordance with the Internal Revenue Code. Before 2011, less than 1,000 individuals chose to expatriate each year, according to the lists published on the Federal Register. More than 2,300 expatriated in the last quarter of 2016 alone, and this year’s total of 5,411 individuals is 26 percent more than last year’s 4,279.
The U.S. is one of a very small number of countries that tax based on nationality, not residency, which means that Americans living abroad face double taxation.
According to the tax attorneys at Andrew Mitchel LLC, who track expatriate data on their International Tax Blog, the increase in offshore penalties over the last 20 years is likely contributing to the increased incidence of expatriation.
Renunciation is the voluntary act of relinquishing one’s citizenship or nationality.
According to the U.S. Department of State website, a person who wishes to renounce their citizenship must do the following:
Appear in person before a U.S. consular or diplomatic officer, or
In a foreign country at a U.S. Embassy or Consulate
Sign an oath of renunciation
The Department warns that “a person seeking to renounce U.S. citizenship must renounce all the rights and privileges associated with such citizenship” and that “persons intending to renounce U.S. citizenship should be aware that, unless they already possess a foreign nationality, they may be rendered stateless and, thus, lack the protection of any government.” The act is irrevocable and cannot be cancelled without “successful administrative review or judicial appeal.”
Under a rarely-applied provision known as the “Reed Amendment,” U.S. officials can deny entry to any person who has renounced citizenship for tax reasons.
On a quarterly basis, the IRS is required by U.S. law to publish the names of citizens who renounce their citizenship. These names are published in the Federal Register. The regulation was created by Congress in the 1996 expatriation legislation in an attempt to “name and shame” people who renounce citizenship.
If you decide to renounce your citizenship, it will cost you. Because of the increase in the number of U.S. citizens seeking renunciation, the U.S. Department of State raised the fee for renunciation 422% – from $450 to $2,350 – which is more than 20 times the average cost in other high-income countries, reports Investopedia.
In addition, some high-income citizens may owe a type of capital gains tax called an “exit tax” (officially called an expatriation tax). This applies to renouncers whose net assets are greater than $2 million, or whose average annual income tax has been greater than about $160,000 for the last five years. Net capital gains are taxable at rates up to 23.8%. Special rules apply for pensions, trusts and accounts such as individual retirement accounts, but they are taxable, reports the Wall Street Journal. Inheritance taxes also can be steep.
In 2015, then-president Barack Obama signed the FAST Act into law, the purpose of which is to provide long-term funding for transportation projects, including new highways. But it also includes a provision that allows the State Department to revoke the passports of delinquent taxpayers. The implications of this are more far-reaching than one may realize:
Having one’s passport revoked potentially limits more than just international travel. In some of America’s states, if a driver’s license doesn’t meet set standards they won’t be accepted by airlines for domestic flights after January 22, 2018.
Moreover, starting from October 2020, every air traveler in the US will need an ID-compliant license or another acceptable form of identification, such as a passport, for domestic flights.
There are many reasons people decide to renounce U.S. citizenship, including escape from oppressive tax laws and moral opposition to unjust laws and foreign policy.
If the U.S. continues to overburden its residents with big-government policies, it shouldn’t be surprised when more and more people opt to leave – forever.
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Contributed by Lily Dane of The Daily Sheeple.
Lily Dane is a staff writer for The Daily Sheeple. Her goal is to help people to “Wake the Flock Up!”