Why Are Wealthy People Renouncing American Citizenship?
Over the past few years, you may have seen the news that many wealthy people are leaving the United States for good. They didn’t make these decisions overnight – something must be bugging the rich to make them abandon their motherland and start a new life outside the country.
There are many reasons wealthy people are renouncing American citizenship, most of which are based on living a better life and protecting their wealth.
Since this topic is one of the most popular nowadays, we are here to explain why US citizens decide to take this step and what good it brings them. The States may offer the American dream, but the reality is far from perfect.
Number of wealthy people in the US
The population of the United States keeps increasing, with over 330 million people currently residing in any part of the States. Out of 330 million, more than 21 million people are wealthy (millionaires), and a percentage are even billionaires.
To put things into perspective, more than 6% of US citizens are wealthy.
The United States is the wealthiest country in the world, with the highest percentage of affluent people. Since that is the case, new regulations not in favor of the rich came into existence, causing them to renounce their American citizenship.
How many of them are renouncing citizenship?
Now that we know how many wealthy American citizens are there, the question is how many of them have decided to renounce their citizenship and move abroad.
The number of people moving away kept increasing with new regulations and laws. Thus, in the past several years, the percentage of people renouncing their citizenship has increased by more than 100%. There’s even the possibility of this percentage growing higher.
In 2020, the number of wealthy people moving away was record-breaking; over 6,000 people renounced their American citizenship. That may not seem significant, but in the years prior, the number was a lot smaller (around 1,000 people each year). Let’s see what is causing this issue.
High taxes are a big problem
During the COVID-19 pandemic and various other global issues came inflation. The price of everything we see on the shelves increased significantly, and so did the taxes.
The IRS (Internal Revenue Service) has announced that inflation won’t only affect the prices of goods and services but also taxes. That said, wealthy people will have to pay higher taxes than ever.
Wealthy people with an income of over $500,000 will have to pay a fixed tax of around $170,000, plus a 37% tax for the excess if people still have over $500,000.
This tax percentage is the highest in the world, and wealthy people don’t want to give more than a third of their wealth to the state. That is why wealthy Americans are deciding to renounce their citizenship and move to countries with lower tax rates.
According to the wealthy, tax in the United States is the most significant problem. Many countries, such as Monaco, don’t request a tax, except for a 1% tax when it comes to the annual rate (which is minuscule compared to the US taxes). Many American citizens choose this country as their future home.
However, there are other reasons Americans are renouncing their citizenship; the prices of properties may be another factor influencing their decision.
Since wealthy people usually depend on a specific location (mostly larger cities), they might want to purchase a property in the preferred location. A square foot in the United States may be the priciest in the world, especially in larger cities such as New York.
That said, wealthy people see that they can get more for less money, so they decide to renounce their American citizenship and move to a country with more to offer.
Some of the wealthiest people in the United States have managed to find strategies that will allow them not to pay taxes at all or to pay a small percentage of their wealth for tax purposes.
However, that shouldn’t happen, and there should be another solution. Every citizen should be equal and pay the same tax rate that won’t significantly affect their wealth.
One of the solutions is lowering the tax rate and making it the same for every household. If the people of the US unite and start protesting against such cruel systems, they might be able to lower the tax rates.
This step might require time, but it might be the only solution to the growing problem in the United States. Instead of fleeing your country, you should fight for it and make your American dream come true.
The United States is the wealthiest country on Earth, with the largest number of rich people. However, this fact may change soon since the most affluent have decided to renounce their citizenship due to high tax rates.
That is not the only problem that concerns the wealthy; the fact that they can have a better life outside the US borders is another thing to consider. However, they might fight the laws and create a country they will be happy to live in if all of them unite.