The One Percent Deports Itself

The number of people renouncing their U.S. citizenship is higher than ever.

Now that new provisions in the Foreign Account Tax Compliance Act have gone into effect, the feds are reining in tax dodgers living abroad. But many of these super-wealthy people who would be forced to pony up more in tax payments are choosing to sever ties with their country of birth instead.

Many of these individuals lead nomadic, season-driven lives. Their choice of where to live at any one time is based on that location’s climate, their children’s education, tax constraints, or which of their friends they want to lunch with on any particular day. When one has such a global outlook, paying taxes to something as archaic as a nation-state can be easily ignored. Bloomberg was among the first to report on this story:

About 1,780 expatriates gave up their nationality at U.S. embassies last year, up from 235 in 2008, according to Andy Sundberg, secretary of Geneva’s Overseas American Academy, citing figures from the government’s Federal Register. The embassy in Bern, the Swiss capital, redeployed staff to clear a backlog as Americans queued to relinquish their passports.

Renouncing their citizenship does not cost much to these global elites, who can achieve statelessness rather quickly:

During a 10-minute renunciation ceremony in a booth with bullet-proof glass windows, embassy staff ask exiting Americans whether they are acting voluntarily and understand the implications of giving up their passports. They pay a fee of $450 to renounce and may incur an “exit tax” on unrealized capital gains if their assets exceed $2 million or their average annual U.S. tax bill is more than $151,000 during the past five years.

The Obama administration deserves some credit for putting a scare into the expatriate tax-dodging class. But it can certainly still do more for the taxpayers facing deportation.

The number of immigrants being deported from the United States is also at an all-time high. After last year’s much-celebrated announcement of a new discretion policy by Immigration and Customs Enforcement (ICE), advocates have seen dissappointing results. ICE has reviewed 219,554 pending cases, but only 16,544 (or 7.5 percent) were identified as amenable for prosecutorial discretion as of April 16, 2012. They have only closed 2,722 cases, according to figures released by ICE (pdf).

The status quo of post-recession America shows a government that’s slighted by some of the richest members of its citizenry, while wistfully ignoring the plight of millions yearning for the full opportunity to become Americans.