Many wealthy American people are renouncing their U.S. citizenship
Understand why so many people are giving up on their American citizenship, while so many others dream about getting one.
A record amount of people are ditching their American citizenship: understand this phenomenon
Have you heard that a good slice of people that are wealthy in America are renouncing their citizenship, as they don’t want to be American anymore? Let’s see the numbers and understand why this is happening.
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The 2020s are a succession of unusual events. Major paradigm shifts and the intensification of globalization processes are making changes happen on a larger scale. In this post, we will explain why something so specific is happening.
Why are wealthy people renouncing American citizenship?
The main reason specialists are perceiving this increase in the numbers is that this group of people urge to escape the tax policies implemented in the U.S.
Many of these wealthy people don’t live in the U.S anymore. So, they are ditching their American citizenship to avoid paying taxes in a country they don’t live in. But why does this happens?
Usually, federal governments will charge taxes based on residency. That’s not the case with the U.S. You’ll pay taxes based on your citizenship, regardless of where you live.
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How do the international sanitary events impact this?
Certainly, the pandemic has changed a lot of things all over the world. This impacted the migration of people and the progress of bureaucratic processes. In times of uncertainty, many people have decided to radically change their lives.
The confrontation with the finitude of life caused a very big change in mindset. Many people who had suppressed plans to change their lives realized that they should do so as soon as possible. After all, you never know when a virus will close borders and cause social chaos. It can delay the progress of all kinds of processes for years.
Another explanation for the increase in numbers is just the backlog of administrative processes caused by quarantine restrictions. With fewer people available to work and increased protective measures, the processes went in slow motion for nearly two years.
Currently, with the pandemic becoming milder and things slowly returning to normal, many processes were passed around the same time, causing this spike in the chart.
But the pandemic itself also made richer people who were able to move do so in search of better living conditions. This is because many do not agree with the way the United States has dealt with the issue of quarantine, social isolation, use of public resources, and vaccination policy.
Does this increase in numbers have some impact on the economy?
Even with this high number of people giving up on their American citizenship, there are still many more people wanting to become American citizens. People wait for years in the bureaucratic line to get this ID and passport.
The Biden administration said they would increase taxes on wealthy people to finance infrastructure improvements for all American people. This could mean extra hundreds of thousands of dollars for each of these rich people.
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But so far that’s been just a promise, and no effective or meaningful change in taxes has been made. Just in case, some people are already giving up their citizenship.
Also, the U.S. passport has lost some of its prestige in the last two years. But that’s not a statistical reason why wealthy people would be renouncing their American citizenship.
Hoes does this renouncing of the citizenship process work?
Well, one does not simply walk away from its responsibilities as a citizen by throwing their passport in the trash bin. Actually, it’s a process as bureaucratic as getting citizenship.
First, there is a fee of $2,350 for this process. This is a flat rate, so you’ll have to pay it even if you’re poor. Of course, for the ultra-wealthy, that’s nothing but one less champagne bottle.
But you’ll also have to solve all of your tax debts. Any type of administrative pending that appears in the systems of the federal government will be charged. If you own a business, you need to settle all your debts and meet the administrative schedule.
And since you will no longer be a US citizen, you will no longer be able to profit from assets that are in the country. You will have to give this up along with your citizenship.
Finally, it is also necessary to undergo a resignation interview, as well as the interview to acquire citizenship. It is necessary to verify that you are not being coerced in any way to do this and that you are aware of your actions and the consequences of your request.
Where are the wealthy ex-Americans going?
As said before, many of them already lived abroad. So it’s not like they’re actually leaving the U.S, as they’re not there already. Some have chosen to stay permanently in other countries, as they perceive a life quality improvement.
Many of them live in Europe, especially in the most developed countries with better quality of life. Even though many of these countries already charge considerably high taxes, their citizens feel the positive impact of it being invested in the cities. Excellent infrastructure, very low rates of violence, and top health services.
There is also a high movement of people wanting to go to Canada. Which ironically looks something like the movement of people wanting to move from Mexico to the USA.
Is it a good deal for wealthy people to be renouncing American citizenship?
This is a question that’s not easy to answer, and many and many lawyers who are experts in immigration and citizenship processes are confused about this trend.
After all, why are some people renouncing citizenship that is sorely desired by thousands of people? Will it be a good deal?
Some lawyers consider it a risky move, because even with many flaws, the US is still an extremely powerful country, and being an American citizen can guarantee you benefits.
However, each person’s perception of value can change according to their priorities in life. Globalization is confronting us with different cultures and lifestyles.
So renouncing American citizenship is looking advantageous to the wealthiest people in the country. But it is still not possible to know the impact of this decision, both on the lives of these people and on the country’s economic situation.
Now that you know why wealthy people are renouncing American citizenship, did you know that airlines are having trouble meeting demand this summer? Check the link below to learn more.
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