US Renunciation Numbers Aren't Adding Up

I've been tracking US renunciation rates for a while but lately I've been seeing numbers that don't make any sense. The Federal Register lists 1,009 Americans who have renounced their citizenship this year. Even though we still have to wait for another quarter's figures, this is still a sharp drop from last year's 1,781 total. However, the US Embassy in Switzerland claims it has processed 411 renunciation requests in that that time period. As near as I can estimate, Switzerland has somewhere between 2% to 5% of the US expat population. To imagine that they comprise over 40% of total renunciations is quite a stretch. However, it turns out that we might actually be able to reconcile these numbers.

Photo by Vince Alongi

We have an article from Fox News with the ridiculous title Americans Renouncing Citizenship at Record Levels to Protect Wealth. I won't go into detail as I've covered this in many posts before, but I've been following this issue for a long time and it's not greed driving Americans abroad, but the word "greed" makes for great headlines at the expense of expats.

So while the Fox News article has a sensationalized title, it also has one very intriguing tidbit:

As many as 8,000 US citizens are projected by immigration officials to renounce in 2012, or about 154 a week, versus 3,805 in 2011, or about 73 per week.

I want to know who those "immigration officials" are. Those renunciation numbers are far greater than the official renunciation numbers, but they're much closer to my estimate (er, guess) of four to six thousand Americans annually renouncing their citizenship. In short, the current year's renunciation data published in the Federal Register seems much lower than it should be and with only one quarter of reporting left, we have to see a threefold increase in renunciations for that quarter to beat last year's renunciation figures. This is confusing because every indicator I've come across — except for the Federal Register — suggests that renunciations are increasing.

Naturally this makes me suspicious of the Federal Register numbers. Americans abroad with whom I've spoken who've told me they're trying to renounce their US citizenship have also told me about waiting weeks and months to get appointments to do so. Consulates are claiming a backlog of renunciants jamming the system and one financial firm reports handling a 22 percent increase in this year's renunciation requests. That's rather odd given the Federal Register's reported drop in this year's renunciations. Something isn't adding up here. However, if the 8,000 renunciation number reported by Fox News is correct, than Switzerland's reported renunciations drop to around 5% — roughly proportional to the number of US expats living in Switzerland. That makes a lot more sense.

For a slightly more balanced view of the situation with US renunciants, I recommend reading this independent.co.uk article, along with its comments.

Or to see a first-hand account of the damage US law is causing US expats, read about how Victoria found herself paying $9,000 in taxes this year to the US government, despite not having lived there in over 20 years, having no assets in the US, receiving no benefits from the US government, but being taxed by the US on her French unemployment benefits.