The number of Americans who renounced their citizenship in favor of a foreign country hit an all-time high in 2020: 6,707, a 237% increase over 2019.
Between the lines: While the numbers are down this year, that's probably because many U.S. embassies and consulates remain closed for COVID-19, and taking this grave step requires taking an oath in front of a State Department officer.
Why it matters: The people who flee tend to be ultra-wealthy, and many of them are seeking to reduce their tax burden. New tax and estate measures proposed by the Biden administration could, if implemented, accelerate this trend.
The big picture: Only the U.S. and Eritrea tax people based on citizenship rather than residency. For most countries, if you are a citizen but don’t reside there, you aren’t taxed in that country.
Where it stands: The IRS publishes a quarterly list of the names of people who have renounced their citizenship or given up their green cards.
What they're saying: David Lesperance, an international tax lawyer based in Poland who specializes in helping people renounce U.S. citizenship, says that with coronavirus shutting down interviews for renunciation, the next lists will only contain relinquished green card holders, who can do it by mail.
Be smart: The State Department strongly discourages people from severing themselves from the protections and privileges that U.S. citizenship affords (and that so many migrants, Dreamers and others are seeking to obtain).
The bottom line: President Biden has proposed raising the top capital gains tax to 43.4%, and while it's unclear whether that will pass, it did prompt a lot of calls to Lesperance from people wanting to find out which foreign countries might grant them citizenship.
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