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Record number of wealthy Americans dropped US citizenship in 2020: IRS figures

Thursday, 05 August 2021 9:32 PM [ Last Update: Thursday, 05 August 2021 9:32 PM ]

The number of rich US citizens renouncing their citizenship in favor of another country hit a record high last year, figures from the IRS show. (File photo)

The number of rich US citizens renouncing their citizenship in favor of another country hit a record high last year, figures from the IRS show.

The agency publishes a quarterly report giving a list of Americans with over $2m in assets who have renounced their citizenship or given up their green cards and according to its latest figures, 6,707 people took one of these steps in 2020.

The United States normally taxes people based on citizenship wherever they are in the world. Since the law requires richer expatriate Americans to report the value of some assets overseas, the incentives at work encourage them to look for another less expensive nationality.

The Foreign Account Tax Compliance Act (FATCA) is the legislation that covers Americans’ assets abroad. It was passed in 2010 to clamp down on non-compliance by Americans storing their assets in foreign accounts.

According to the law, foreign financial institutions must report on these accounts, while certain account holders themselves are also required to declare their assets.

Although the intention behind FATCA was to crack down on individual tax evasion and sniff out more sinister instances of financial manipulation, it has proved arduous for people beyond the obvious targets.

And as reported by The Connexion, the legislation applies to people who have American citizenship since they were born on American soil even if they have never lived, worked or maintained assets there.

According to the website, nearly 40,000 people in France alone are afflicted in this way, and at the same time, attempts are being made to obtain some kind of relief from the US government.

Numerous Americans, during the last several US elections, have expressed an interest in fleeing to Canada in response to the results and the state of politics more generally.

And although the impact on the shape of the American electorate has so far been insignificant, there was a detectable uptick in American applications for Canadian permanent residency after Donald Trump took office in 2017.

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