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Interestingly, it turns out that 2011 was not the highest number of renunciations on record. The year 1997 holds the record for the most US renunciations: 1,812. It appears that this is due to many Hong Kong residents giving up their US citizenship at the time Hong Kong reverted to Chinese control because China does not allow dual citizenship.
One of the names on that list of people who have renounced their citizenship is Eduardo Saverin. A Brazilian by birth, he's been an American for a little over a decade, but now lives in Singapore. However, he's also one of the founders of Facebook and Saverin renounced his US citizenship just before the Facebook IPO, a move likely to save him many millions of dollars. Unfortunately, this high-profile case overshadows the many other people who don't live in the US and are tired of being denied bank accounts, being threatened with criminal prosecution by the IRS for not knowing they were required to file Form TD F 90-22.1 with their taxes (which was never widely advertised), or simply fed up with the hassle of paying a couple of thousand dollars to prepare a tax return on which they owe no money.
I certainly can't say why most of the people on the list chose to give up their US citizenship — everything I've read has been idle speculation — but it's interesting to see this trend continue.
Not sure Andrew Mitchel's explanation is correct. Hong Kong permits dual citizenship (see here and here). In fact most people in Hong Kong in 1997 were scrambling the other way and trying to figure out how to obtain a foreign passport; these were the days when they were selling Tongan Protected Person Passports for $20k on the street.
ReplyDeleteIt looks like most of the Asian names in the 1997 list are Korean, not Chinese. South Korea passed a new version of its nationality law in 1997, but I can't really see any specific provisions in there that would have caused this. Maybe it was the tail-end of the group who gave up and went back to South Korea after losing everything in the 1992 riots, and renounced in order to resume their South Korean citizenship. (This was covered a little bit in Nancy Abelmann and John Lie's book "Blue Dreams"). I'll look into it some more and put up a blog post somewhere if I find anything interesting ...
I agree this year will probably be a record, provided people are aware of the implementation of FATCA starting in 2013.
ReplyDeleteBut once the implementation begins, I think a mad dash for the door will be the order of the day.
Been reading the comments around Saverin's renunciation. This seems to have caused quite a stir. I find it very interesting that the negative reactions tend to be along the line "he shouldn't have been able to do that and even if it is legal he is an ingrate who should be burned at the stake." :-)
ReplyDeleteWhat is interesting is that I have yet to come across a positive argument for why it would make sense (or be interesting) for someone in his situation to retain his citizenship. Is no one interested in asking what the US could have done (or didn't do) to make US residency and/or citizenship so attractive that Sevarin and others wouldn't even think of giving up that blue passport?
All other things being equal, if an investor has a choice between a 5% return and a 10% return, we'd call them stupid for not taking the 10% return. Well, until we start flag waving. I completely agree that there are significant questions not being asked here. People are too busy hyperventilating about the flag that they are not asking what could be improved.
DeleteOn a related note: ask Americans about their history and they often say "oh, I'm Irish", or German, or whatever. Does this mean they spit on their great-grandmother's grave for turning traitor to her home country?