More Americans last year than ever before renounced their citizenship, according to government statistics. Experts don’t believe it’s a political protest, however, but more likely a strategy to stop paying U.S. taxes.
One major surprise among the people ditching their U.S. citizenship in 2016? Brexit champion and British Foreign Secretary Boris Johnson, who was born in New York, notes Bloomberg. The former dual citizen groused in 2014 that it was “absolutely outrageous” that he had to pay U.S. taxes on the sale of his London home.
A record 5,411 individuals gave up their American standing in 2016, a 26 percent jump over the previous year.
The last four years have been record years. The number of Americans denouncing their citizenship leaped after 2010, according to Treasury Department data, which was the same year that the Foreign Account Tax Compliance Act was signed.
Unlike in most countries, American citizens are required to declare their income to the IRS and pay taxes to the U.S. no matter where they live in the world (though taxes paid to a foreign country by Americans living abroad usually count as a credit against an IRS bill). But the new law cracked down on tax dodging and required banks or other institutions holding American assets or money to either declare them to the U.S. tax man or face a stiff penalty. The law was enacted following scandalous claims that the Swiss bank UBS had helped Americans hide massive amounts of funds from the IRS.
The number of Americans renouncing their citizenship is “increasing at an exponential rate,” Andrew Mitchel, who has been tracking the data, told USA Today. Before the tougher law, Mitchel’s historical comparisons showed that from 1998 through 2009, the number ranged from just 231 a year to 762.
Now foreign banks are “basically acting as the police to flush these U.S. citizens out of the bushes so the IRS can see them,” Mitchel said. “That’s when people start to realize, ‘Oh, I’m not filing and I should be filing.’” Or simply stop being a citizen.
There may be just a bit of a “Donald Trump factor,” however. Nearly half of Americans who renounced their citizenship last year did so in the last quarter.