Rather than deal with the complexities of U.S. tax law, Americans living overseas are increasingly renouncing their citizenship in order to avoid paying their income taxes.
According to National Taxpayer Advocate Nina E. Olson, approximately 4,000 people gave up their citizenship from fiscal year 2005 to FY 2010. Renunciations increased sharply within the past three years, from 146 in FY 2008 to 1,534 in FY 2010. And during the first two quarters of FY 2011 alone, 1,024 Americans ditched their citizenship.
The advocate’s report cites two reasons for the renunciations. First, many taxpayers abroad say they are confused “by the complex legal and reporting requirements they face and are overwhelmed by the prospect of having to comply with them.”
For someone who considered emigration the last time it was fashionable (the 1970′s,) I find this interesting. But now our government, supposedly run by “sophisticated” people who have displaced the “provincial unwashed” in seats of power, have responded by making it difficult for people to do the ultimate statement of cosmopolitan living. They have done this both in the way foreign income is taxed and in the Byzantine reporting requirements. (The latter, BTW, is a serious issue for those of us who stay, and one that Congress refuses to address in all of the back and forth over taxes.) This barring the exits is largely intended to avoid two things: tax evasion and capital flight. (Sounds like old Latin America to me!)
But people are getting out. It used to be that “Love it or leave it!” was the ultimate conservative battle cry. Will we now just take the second part to heart for ourselves? We’ll see…