More than 3,000 Americans renounced their US citizenship or long-term residency in 2014, a new record, according to the US Department of Treasury.
The number of US citizens who gave up their citizenship last year reached 3,415, a 14 percent increase from the 3,000, who did so in the previous year, which was also a record.
Many experts believe the trend is accelerating due to the US government’s enforcement of a tax law that requires American citizens living abroad to file tax applications and pay taxes on overseas income.
“Many Americans abroad are finding that retaining their ties is not worth the cost and hassle of complying with the US tax laws,” Andrew Mitchel, a lawyer in Centerbrook, Conn. who tallies the lists of names released quarterly by the Treasury Department, told the Wall Street Journal.
The recent surge is tied to a 2010 law that gives the US Internal Revenue Service (IRS) unprecedented access to US citizens’ foreign bank accounts. For decades tax laws were rarely enforced, but scrutiny of Americans abroad is intensifying because of the country’s budget deficit that spiked after the Great Recession.
The campaign was intended to target American taxpayers who hide assets in secret foreign accounts in order to pay less taxes, but it also complicated the financial lives of an estimated 7 million US citizens living abroad.
The US is one of the very few countries that taxes its citizens wherever they live in the world.
More than 10,000 Americans living abroad have given up their passports during the last five years.
“If they have no real desire to work or live here, then the question for them is: What’s the point?” said Stephen Flott, a tax attorney in Arlington, Virginia. “For those who feel no real affinity to the US, it’s a no-brainer.”
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