3,415 people renounced their American citizenship in 2014, a 14 percent jump from 2013. According to deVere Group, a financial advisory firm, last year marked a new record for U.S. citizens giving up their passports.
CBS reported avoiding taxes were a prime motivator for people giving up citizenship because a new law makes it harder for Americans to hide their assets from authorities. Four out of five of deVere’s clents said they would consider handing in their passports to avoid the Foreign Account Tax Compliance Act, or FACTA.
FACTA requires foreign financial institutions to report the holdings of U.S. clients, or risk a 30 percent withholding tax on certain payments from the U.S.
"Treasury Department data show that a steadily growing number of individuals have been giving up their U.S. citizenship over the last few years," said deVere Group founder Nigel Green in a statement. "It can be reasonably assumed that this trend is in direct response to complying with the onerous, expensive and privacy-infringing FATCA, which finally came into effect on July 1 last year.”
The number of Americans surrendering their passports has been rising since 2010, when FACTA was enacted. The law went into full effect last year, which could account for the sharp rise in the number of people renouncing citizenship.
The U.S. is the only country that taxes its citizens on all of their income worldwide, rather than where they earned the money. Americans are exempt from taxes on the first $97,600 in earnings they report.