February 10, 2017 by hotminnie
Record Amount of Individuals Are Dropping Their American Citizenship
A record number of individuals renounced their American citizenship in 2016, mostly due to a law passed under the Obama administration.
5,411 individuals abandoned their citizenship this past year, a 26 percent increase from 2015. These numbers of renounced citizenship are at an all time high because of the 2010 law called the Foreign Account Tax Compliance, according to an analysis from Bloomberg.
It all goes back to the Civil War, and to a tax meant to deter potential draft dodgers from leaving the U.S. Today, the goal is to make sure that all of the income of U.S. citizens, whether they live and work in the U.S. or not, is reported to the Internal Revenue Service.
The rules got trickier in 2010, when, in an effort to cut down on tax evasion, the Foreign Account Tax Compliance Act (fabulously, Fatca, for short) was passed into law. It basically said foreign institutions holding assets for U.S. citizens had to report the accounts or withhold a 30 percent tax on them if the information wasn’t provided. That led some foreign banks to shy away from opening accounts for expats.
The law increased the penalties for unreported foreign transactions or holdings, pushing many individuals with dual citizenship from other countries to drop their American citizenship status.
Among those who renounced their citizenship was Boris Johnson, the former mayor of London and current UK Secretary of State for Foreign and Commonwealth Affairs. Johnson was born in the United States and lived in New York City until he was five years old. He previously complained on record about having to pay U.S. taxes even though he had not lived in the United States for many years.