Brain Drain – Wealthy Fleeing America or Expatriate Boom

The IRS has a quarterly publication of individuals that have chosen to expatriate – the purpose being to publicly shame them and discourage others from making the same decision. 

It’s a pretty low-class move… but what else do you expect from a bunch of government bureaucrats

True to form, their incompetence prevents them from even compiling an accurate list of expatriates. About 30% of the clients I’ve helped expatriate never got published on the naughty list.

In 2018, it was reported that 3,981 individuals renounced their citizenship – a significant decrease from the high of 5,411 individuals in 2016.

But don’t let those numbers fool you.

As the saying goes… there are lies, damned lies, and government statistics.

Reality of Expatriate

The real number of expatriations per year is likely between 50,000 and 100,000.

There are two methods to give up your US citizenship: renunciation and relinquishment. The number published by the IRS only includes renunciations from what I can tell. The total number of relinquishments goes unreported.

A colleague of mine has helped many US citizens expatriate at the embassy in the Bahamas. An official there estimated that they process about 1,000 expatriations a year.

Imagine how many people are getting processed in places like London and Dubai where the embassy staff is probably three to four times the size. 

My clients regularly need to wait several months before certain embassies can schedule them for an expatriation meeting. 

But it’s never stopped them from completing the expatriation process.

The individuals shedding their US citizenships are bright, creative, and entrepreneurial. They’re unafraid to take the road less traveled. You know, exactly the kind of people that a country should be courting.

America is doing the opposite. As a result, it’s currently experiencing a significant brain drain. 

The bleeding could be stopped quickly if the US acted like every other country on earth (with the exceptions of Eritrea and Myanmar) by only taxing citizens when they reside within its borders. 

But don’t hold your breath – there are no signs of the US changing its global income tax scheme any time soon.

 

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