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“Inside Washington” will equip you to do just that … with reports on the nation’s leaders and the decisions they’re considering … or have already made. We’ll examine the implications for the nation, and call you to specific prayer for those needs.
So Long, Uncle Sam
Why are record numbers of Americans giving up their citizenship?
By Gigi Cook
2016 looks to be a record-setter for people turning in their passports and renouncing their U.S. citizenship. Yet those A-list celebrities, threatening to leave the country if Donald Trump was elected president, all seem to be present and accounted for. If it’s not the "Not My President" crowd heading for the door, who is leaving America and why?
In 2009, 742 people relinquished their privileges and obligations as U.S. citizens. That number has slowly risen, taking a couple giant leaps in the last few years, reaching a record 4,279 in 2015. And this year is on track to possibly break that record. In one decade, the number of people per year voluntarily leaving the U.S.A. has taken a fifteen-fold increase.
As part of the Health Insurance Accountability Act in 1996, the Treasury Department began collecting expatriation information. Obligated to publish the information, a list of names of those leaving is printed quarterly; but no reasons are given for the exit. A bit of observation and piecing together of facts, however, presents one consistent reason most give up their citizenship – the U.S. Tax System.
The specific set of laws challenging Americans’ choosing to live abroad is known as FACTA, the Foreign Account Tax Compliance Act. Since its becoming law in 2010, U.S. citizens began to face stringent requirements for annually reporting to the IRS on their foreign assets for taxation purposes.
Taxing individuals on the basis of citizenship, rather than place of residence is not a standard practice in the world. Only one other country does it, Eritrea. Eight million U.S. citizens, even those living long-term outside the country, face onerous reporting and payment obligations and compliance with highly complicated regulations.
While designed to catch those taking advantage of foreign tax havens, FATCA has spun off additional requirements prompting some foreign banks to stop doing business with "local" Americans completely, and, in some cases, preventing them from merely opening a checking account.
According to cross-border tax attorney Max Reed, he consults with an average of two Americans per week on the possibility of renouncing their citizenship for tax purposes. He says, "a lot of them are tired of the hassle and expense of complying with rules."
For those thinking they can leave the country, ignore the laws and claim ignorance, the penalties are stiff. They start at $10K per bank account and if the IRS believes non-payment was a deliberate act to escape paying taxes, the penalty will be the greater of either 100K or half the value of the account.
Under the current structure, even after the decision to leave is made, the process can still be expensive and difficult. The fee to renounce citizenship has increased from $450 in 2014 to $2,350 currently. Additionally, five years of back taxes must be paid as well as any other debts owed to the United States before one can even make an appointment with the U.S. consulate to formally untie their nationalism.
One specific class of citizens leaving the U.S. also faces a one-time fee if the individual has $2 million or more in assets. The tax is known as the "Billionaires Amendment." It was designed for those at odds with the tax laws—people like Facebook co-founder, Eduardo Saverin, who claims his decision to renounce his citizenship had nothing to do with the company's $104 billion IPO in 2012.
Most of the media hype about leaving the U.S.A. to become a citizen of the world is pointless when one considers the financial quagmire it triggers. Even those saying they will scoot across the border and just live in Canada gain no benefit if President-elect Trump follows through on his campaign promise to drop the highest tax rate to 33 percent. Those considering moving to Britain will immediately lose with their top rate at 45 percent. Spain and Italy, both mentioned by A-listers as a possible new home make high earners pay 45 per cent and 43 per cent respectively. South Africa, another destination mentioned by stars on the move, has a top rate of 41 percent.
Recently a Hilltop poll reported 25 percent of Americans would consider leaving the U.S. if Donald Trump was elected. Over the next few years, changes in governmental regulations like taxes may get bristly but likely no more bristly than life under Roman rule when Paul addressed believers in Christ: Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed. (Romans 13:7)
Today people of faith can pray:
- American citizens will unite in their desire to support a new administration.
- Citizenship in America will be offered with judicial fairness to all who qualify.
- God will give America’s next administration wisdom in modifying tax laws.
Gigi Cook's work has been featured in major radio markets, media publications and corporate leadership programs. She is a writer, speaker, and program facilitator with a Master’s Degree in psychology. Residing in Salt Lake City, Gigi enjoys her family, her work, and restoring American antiques.
The following expressions and comments are from our members and do not necessarily represent or reflect the biblical, world views or opinions of the Presidential Prayer Team
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