When faced with the prospect of a Donald Trump presidency, some Americans have threatened to leave the country, but most of that grumbling is probably just talk.
However, there is a small but growing number of Americans who are following through on a pledge to renounce their citizenship, but it’s likely for other reasons. While millions worldwide clamor for the opportunity to come to the United States to pursue the American dream, more U.S. citizens than ever are giving up their passports.
In the first three months of 2016, 1,158 Americans dumped their passports. In 2015, there were about 4,300 expatriations, a 20 percent increase over the previous year, the third record-breaking year in a row.
Why would anyone want to give up a passport that is arguably one of the most coveted in the world? Some take the drastic measure because they have deeper ties to other countries, some of which don’t allow double citizenship.
However, a complicated tax system appears to be motivating many of these defectors.
The U.S. Foreign Account Tax Compliance Act (FATCA) is global tax law enacted in 2010 after being in the works for a number of years. The law requires that banks in foreign countries disclose all Americans with accounts containing more than $50,000.
American citizens are required to pay taxes on their worldwide income, whether they live in the United States or not. For Americans living abroad, that could mean paying taxes twice, both in the country where they work and live, as well as in the United States, the country of their citizenship.
In a letter to first lady Michelle Obama published on his blog, one former citizen who gave up his passport protested the double taxation of Americans who live and work abroad.
“They are chattel. They are economic slaves,” he wrote. “Yes, no? I love being treated as a slave. I live, work, and pay taxes in Canada, yet my master needs his payment. The concept is against everything I consider American.”
And getting out isn’t cheap. While giving up your citizenship is free in some countries, the fee to extricate oneself from the United States keeps going up. At last tally, it cost $2,350 to hand in your passport and walk away.
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