Record number of Americans renounce citizenship to escape tax laws and surveillance

(NaturalNews) It's not a huge number, but it is growing nonetheless -- the number of Americans renouncing their citizenship, many because of byzantine, outmoded laws and increasingly oppressive government.

As reported by CNBC, "While politicians are focused on all the foreigners who want to become Americans, perhaps they should consider all the Americans who are becoming foreigners."

Specifically, the news network reported recently, citing Andrew Mitchel at the International Tax Blog, a record number of 3,415 Americans renounced their citizenship in 2014, according to the most up-to-date information from the Treasury Department.

That figure was up from 2,999 in 2013 and more than triple the number since 2012.

Although only one part of the burgeoning phenomenon, many of those renouncing citizenship have done so for tax reasons. The major policy change driving more Americans to give up their citizenship is the FATCA, or the Foreign Account Tax Compliant Act.

"Heavy-handed"

As CNBC further reported:

It may sound wonky. But the act requires foreign banks to reveal any Americans with accounts over $50,000. Banks that don't comply could be frozen out of U.S. markets. And Americans overseas--even those who never lived in the U.S. or have a tangential connection here--are now under far more pressure to file detailed tax returns and pay U.S. taxes on their overseas income.

The legislation was passed to ensure that Uncle Sam got his pound of silver from every American, and in particular Americans of some wealth who live overseas and might be inclined to deny the Treasury. But the law has had the unintended consequence of forcing more Americans living abroad to simply drop their U.S. citizenship.

In December, Jonathan Tepper, a founder of Variant Perception, a macroeconomic research company, and co-author of Endgame: The End of the Debt SuperCycle and How It Changes Everything, wrote in The New York Times that he, too, was surrendering his U.S. passport -- but not because he is wealthy and trying to "cheat" Uncle Sam.

He wrote:

But most, like me, are not tycoons. We're responding to the burden and cost of onerous financial reporting and tax filing requirements that are neither fair nor just. (Living and working in London, I pay higher taxes, to Britain, than I would in New York.)

Some 7.6 million Americans live abroad -- expats would be the 13th most populous state, if we were a state. Many are overseas temporarily, for work or study. But many others marry foreigners, start companies or have long-term overseas assignments. We are just like ordinary Americans -- except that we lack representation.

He further notes that America is one of two countries (the other is tiny Eritrea) that taxes its citizens on earnings no matter where they live. So American ex-pats living abroad have to pay taxes to the host country and then have to file again with the IRS.

"No taxation without representation"

Now, while the IRS does not tax the first $97,000 of foreign earnings and, in most cases, also does not double-tax the same income, ex-pats who don't wind up owing U.S. taxes nevertheless often have to pay out thousands of dollars to accountants anyway because the tax laws are intentionally complex.

The extraterritorial grasp at income taxes stems from the Civil War, when the federal government sought to prevent Americans from running off to Britain just to avoid taxes. But the law has only gotten more complex.

Tepper says FATCA is so onerous that it costs U.S. banks $800 million a year alone, just to implement. And if foreign banks don't disclose Americans' assets, they face a 30-percent withholding tax levied by the U.S. government.

The Economist calls the law "heavy-handed, inequitable and hypocritical."

"The challenges facing expat Americans abroad would disappear if the United States taxed and regulated only those who lived in America," Tepper wrote. "Sadly, American politicians don't care about Americans living abroad. It is easier to demonize us as tax dodgers than to fix irrational policies that no longer make sense in an interconnected world. The founders agreed on 'no taxation without representation.' Why can't Congress?"

Sources:

http://www.cnbc.com

http://www.nytimes.com

http://www.economist.com