Trump and taxes pushing Americans to move abroad and renounce citizenship

by Ray Clancy on January 29, 2017

The new American President Donald Trump has been ruffling feathers during his first few days in office and there have been concerns that his policies could lead to more Americans deciding to move abroad.

But it will be what Trump does with taxes that could be the deciding factors for potential expats, many of whom dream of living a more cost effective life abroad.

Donald TrumpRecent research suggests that while 1,380 Americans gave up their citizenship in three months leading up to the US election, a 172% increase on the previous quarter, more are set to do so.

Indeed, Americans are abandoning their citizenship at the second fastest rate in history. Every three months the US Government publishes the names of all Americans who give up their citizenship. The latest list, published days after the presidential election, had 63 times more names on it than the one issued as Barack Obama won his first term in the White House in 2008.

Waiting time for US expats wanting to surrender their passports at the American Embassy in London has risen from one to six months and what Trump has said on taxes is credited with making more people think not only of moving abroad but taking citizenship if their adopted country.

According to Bambridge Accountants, which specialises in handling the tax affairs of US citizens living in Britain, it has seen a spike in demand from Americans keen to renounce their citizenship. During the first nine months of 2016, it typically received just one such enquiry a week. But in October that increased to one a day and rose again when Trump won.

While the UK is home to an estimated 200,000 US expats, the trend is a global one. In the third quarter of 2016 some 1,380 Americans around the world renounced their US citizenship, a 172% increase on the preceding three months.

‘Americans tend to be patriotic people, for whom cutting ties with their homeland is a drastic and often highly emotional step. So the surge in US expats renouncing their citizenship speaks volumes about how strongly many of them feel about two things; Trump and taxes,’ said Alistair Bambridge, a senior partner at the London based firm.

‘Donald Trump’s election accelerated an existing trend of Americans renouncing their citizenship to avoid intrusive new tax rules. The reach of Uncle Sam is famously long, and US citizens must complete a US tax return every year wherever they are in the world as well as declaring any money they, their spouse or their children hold in a foreign bank account. Failure to do so can result in a $10,000 fine,’ he pointed out.

‘Such draconian rules were introduced to stop tax evasion, but for Americans who have made their home overseas they have become an expensive and unpleasant burden. Surrendering their coveted blue passports was once all but unthinkable, but for increasing numbers of US expats this has become the least painful option,’ he added.

{ 2 comments… read them below or add one }

Anthony January 29, 2017 at 1:37 pm

Absolutely CLUELESS. Trump alone would NEVER be a reason for more Americans abroad to give up their citizenship. Such a stupid assumption. Americans would never give up a passport for disagreeing with the result of an election, no matter how dumb their president is. The only reason renunciations have increased these past few years is due to the abusive, overreaching and unconstitutional tax enforcement law for Citizenship-Based-Taxation called “FATCA” – passed by Obama and a democratic congress. If anything, it’s due to Obama and the authors of such legislation. If renunciations increase in the future , probably would be due to the inaction of the government to fulfill its promises.

I can tell you as an American Abroad, as crazy as Trump may seem, the GOP specifically states on page 13 of the party platform that it supports a full repeal of FATCA and supports the establishment of residence based taxation,a system that the rest of the world utilizes except ERITREA and the USA. If anything, Trump and the Republican majority in government at the moment has been a small ray of hope for us abroad. Although, he has yet to speak on the issue which is troubling but at this moment, to assert Trump is the cause of the increase is utterly ridiculous. FATCA and the IGA’s which the world’s financial institutions are signing up with out of fear of sanction to legalize discrimination against anyone with US indica (even dual citizens in that country) is and always will be the reason of increased renunciations.

And for any Expat/ Accidental American out there that is uncertain or fearful on what to do, DO NOT give in to the fear mongering that the US tax compliance “mafia” are waging to make a profit off of you. There is a lot of misinformation being spread by people in this industry. Do your due diligence and throughly investigate your options. Talk with actual expats who are going through the same issue, take a breath and relax.

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Pat Jackson February 6, 2017 at 8:53 pm

I agree with this person’s comments. I lived in Canada for almost 40 years and had to start completing the foreign bank account report started under Obama. Canada has very reasonable taxation requirements. I have been living (returning citizen) in the States, again, for the past three years. I STILL have to complete the foreign bank account report in order to receive my retirement from Canada. I don’t have much money myself. The ceiling should at least be in the hundreds of thousands for people actually trying to hide money, not for little people like me who get a measly monthly retirement amount. Obama’s scheme punishes everybody and nets huge profits for CPAs. Initially people could fill out a short form themselves, now you have to have an accountant register to complete the FBAR reports – ridiculous!

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