Collateral Damage

By Global Tax Weekly

Something has gone very wrong somewhere when an American passport, historically that most prized of possessions, is considered a curse rather than a blessing. But the statistics don’t lie: the Treasury Department’s own figures show just over 1,000 people handed back their passports or their green cards in the first quarter of 2014, an increase of almost 50 percent compared with Q1 2013. And this is no freak either, because these numbers have been steadily rising for the past two or three years. What these raw figures don’t tell us is why people are turning their backs on America in increasing numbers, and there could be any number of reasons, political or practical. However, let’s face it, most of us are thinking it: tax is the reason. But more specifically FATCA, which went into full force (almost) on July 1. A survey by the De Vere Group would seem to verify anecdotal evidence that FATCA is behind the jump in the number of Americans renouncing their citizenship. When set against a US expat population of around 6.3m, and an overall US population of almost 320m, the numbers taking foreign citizenship are small however, and the majority of Americans might wish them good riddance anyway if they are so determined to avoid their tax obligations that they would rather become a Costa Rican, a Panamanian, or a Singaporean. Perhaps attitudes might be a little different if there was more widespread awareness of FATCA, “the worst law that most Americans have never heard of” as that anti-FATCA campaign group calls it. Still, only a small fraction is going to be affected by it, so why should they care? Which is presumably one of the reasons why FATCA sneaked in under the radar in the first place.

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