According to the Internal Revenue Service, around 1,800 people have given up US citizenship during the fist half of this year. This is more than the number of people who renounced US citizenship, in the year 2012. In 2012, 1,000 people gave up citizenship. Many give up their citizenship to avoid paying taxes.
Wealthy Americans and US Green Card holders are moving to Asia. They are now thinking about giving up US citizenship and their Green Cards in order to avoid paying taxes. The Foreign Account Tax Compliance Act requires foreign institutions to report all assets owned by US citizens. This act has been made in order to recoup the taxes that the Americans, who are living abroad, fail to pay.
Governments of several foreign countries including Switzerland have reached agreements with the United States and they are in favor of the Foreign Account Tax Compliance Act. This law would require foreign banks to disclose information about their account holders with the IRS. Experts say that if the government had implemented this act in 2009, it would have blocked more than $8.5 billion in tax evasion over a ten year period.
Democrats focused on famous expatriates like Eduardo Saverin, the co-founder of Facebook and implemented this act. Eduardo Saverin renounced US citizenship in 2011 and is now living in Singapore. He did so in order to save more than $100 million in taxes.
Sen. Charles Schumer along with few other Democrats introduced a bill targeting wealthy US citizens living abroad and who are renouncing their citizenship. Their bill would require such US citizens to pay more taxes and would also prevent them from returning to America.
According to Robert Keats, a financial planner, more than 90% of the US citizens renounce citizenship as they are being advised to do so by non-US accountants who are unaware of the implications. US citizens fail to understand that abandoning US citizenship will leave them with many restrictions. If they understand the implications, they would not give up their citizenship.