With David Lesperance
A contrarian expert on contingency plans for the wealthy delivers uncomfortable truths.
International law states that no government may hinder its ‘subjects’ from renouncing their citizenship. This article looks at how the US government is trying to maximize its tax income by taking hostage the dual citizens who wish to legally exercise their right to sever their future US tax status.
Since the start of COVID in March 2020, the US State Department has opted to shut down nearly all consular services, including renunciation appointments, at US missions all over the globe. This is the case even for places where COVID is well under control or that were never in lockdown.
While other countries continue to offer consular services to their citizens, US Missions (i.e. embassies and consulates) have canceled or severely restricted all consular services to US citizens – passports, registration of foreign-born children, and renunciation appointments. As the New York Times recently reported, this has caused tremendous hardship.
While many of these services are conducted on a mail-in basis in the US and could easily be done the same way abroad, renunciation requires the swearing in front of a consular officer. However, the officer stands behind a three-inch-thick glass wall. With basic precautions, there is no danger.
There is no conceivable reason that US consular services, including renunciation, cannot continue with basic precautions. Such services are some of the most important rights of a US citizen, and they have been halted for over one year. To add insult to injury, the official statement received from most US missions is “we do not know when the consular services will be possible again.” No additional information provided.
This is at a time when many countries where these US missions are located have few deaths from COVID and small numbers of current positive cases. In many countries, you can go to the gym or get a massage, but you cannot get consular services to exercise one of your most fundamental rights as a citizen – the right to vote with your feet.
The importance and urgency of the right of renunciation
There are many reasons why a US citizen might wish to exercise their fundamental right to renounce American citizenship. In many cases, a US citizen living in Europe finds it nearly impossible to open a European bank account, take out a mortgage, or open a business because the US government imposes such as burden on foreign financial institutions in having US citizen clients (thanks to the Foreign Account Tax Compliance Act “FATCA” law passed in 2010).
Indeed, America and Eritrea are the only countries on earth that tax their citizens on their worldwide income, regardless of where they live or how high the taxes they’re already paying abroad. Often, many Americans abroad must pay taxes to their country of residence as well as to Uncle Sam. Compliance with US financial regulations is another ongoing headache and cost for Americans living abroad.
It is estimated that as many as 5 million people are dual citizens of the US and another country. This is a population equivalent to a country the size of Ireland! It’s not a small constituency. Many more US citizens are now seeking second citizenships as a backup plan in case the American government goes down a legislative path with which they do not agree.
Clearly, the State Department is not telling Americans the truth.
The US government is not halting renunciation appointments and other consular services because of COVID. Rather, it appears they are trying to stem the flow of expatriation that has been building for years. The renunciation numbers are rising every year, reaching over 6,000 annually according to the latest reports.
Could it be that in their eagerness to suppress renunciation, they are making Americans who want to access other consular services also suffer?
This suppression is the continuation of a trend, where the US government is erecting barriers to renunciation:
- They have raised the fee from $0 a few years ago to $2,350 today;
- Even prior to the pandemic there was an arbitrary wait-list of many months for renunciation appointments;
- Even as pandemic lockdowns have eased in many countries, most Missions continue to slow-walk or even cancel completely the granting of appointments for renunciation and other consular services.
These numbers are underreported – there are long waitlists at most consulates.
There are real reasons to believe that the government is underreporting the number of renunciations, avoiding making waves in the media, and encouraging more citizens to renounce. Indeed, the published figures only include ‘covered expatriates’ with a net worth of over US$2m.
The hardships caused by the halting of renunciation appointments were noted as early as October 2020 and appear to be continuing to this date. A recent email and online survey of US missions in countries where vaccinated Americans are currently allowed to travel, shows that most of these missions are still claiming:
“The Embassy has temporarily suspended renunciation services, due to the worldwide pandemic situation. We are unsure as of when those appointments will be resumed.”
Some missions go further, like the US Mission in Bern, Switzerland: “Please note that we are currently unable to offer appointments for renunciations. We have a waiting list of over 400 customers and will schedule appointments in the order in which we received the requests. It may yet be some time until we will be able to offer an appointment to you.”
In 30 years, I have never seen such a blatant attempt to deny Americans this fundamental right. Since these interviews take at most an hour to complete and are done through bullet-proof glass, there is no reason why every Mission should not be scheduling interviews or have any backlog, let alone one of several hundred cases. The US Government is not sharing data on numbers for the vast majority of renouncing Americans who are not covered expatriates.
In December 2016, I filed a Freedom of Information Application (FOIA) with the US State Department in which I requested the actual numbers of those renouncing their US citizenship in each of the prior 10 years. After 46 months of repeated requests, in October 2020 the State Department finally advised me that my application would be fulfilled on April 4, 2021. That date has come and gone with no information yet provided.
On April 14, 2021 in response to my request for an update, I was advised that the date was now unilaterally pushed to Dec. 20, 2021 with no explanation given.
Dragging its feet as a matter of policy
So much for the ‘land of the free’ or ‘home of the brave’ – share the numbers, and don’t fudge them! This is a rights violation, so what should we do?
Since the act of renunciation takes under an hour, there was never a reason for such a ‘backlog’ to accumulate. The government is dragging its feet as a matter of policy. Throughout history, ‘Voting with your Feet’ was one of the most important factors influencing government policy. If policies are too draconian, citizens will leave for a more fair jurisdiction. This is an essential check on government power, and this right must be restored immediately.
- Why are US citizens leaving in record numbers?
- Why is the government hiding and obfuscating the data?
- Why is the government making it so much more difficult for US citizens to renounce?
- Why does the US government think its citizens are so gullible that they would believe that consular services such as renunciations should be halted due to COVID when all other aspects of life continue with basic precautions?
We urge the US State Department to immediately resume all consular services, including renunciation appointments; disclose the total annual renunciations, and clear the existing backlog within three months.
The post Under Cover of COVID, The US Is Preventing Citizens from Renouncing – On Purpose appeared first on Investment Migration Insider.