The following is a summary of our recent interview with Mark Nestmann, which can be accessed on our site here or on iTunes here.
Record numbers of Americans are saying goodbye to the US and our next guest, international tax planning expert Mark Nestmann of the Nestmann Group, thinks this is just the beginning. In a recent FS Insider podcast, Nestmann explains why he thinks this trend will continue, including a wide-ranging discussion on tax havens, foreign investment into the U.S., and the end of cash.
As Nestmann points out, according to the official data, record numbers of Americans are renouncing their citizenship (see chart).
“I think it’s the tip of the iceberg, Nestmann said. “People might be scratching their heads and thinking, ‘my gosh – why in the world would someone take such a radical step as giving up their U.S. citizenship and passport?”
While the election of Trump may play a role for some in the years ahead, in most cases Americans are renouncing their citizenship because they already live abroad and, among the millions of those that do, complying with U.S. tax laws and filing requirements has become an absolute nightmare in recent years.
Why? First off, the U.S. is the only nation other than Eritrea to tax income of non-resident citizens, leading many expatriates to renounce their homeland rather than pay a large portion of their income to a nation that no longer provides government services to them. In addition, foreign banks and other financial institutions abroad shy away from managing accounts of non-resident Americans for fear of violating the Foreign Account Tax Compliance Act, more commonly known as FATCA laws.
Passed into law under the Obama Administration, FACTA “requires that foreign financial Institutions and certain other non-financial foreign entities report on the foreign assets held by their U.S. account holders or be subject to withholding on withholdable payments,” according to the IRS.
“Until the U.S. ends citizenship-based taxation, we’re going to see ever escalating numbers of Americans giving up citizenship and their passports,” he said.
Although Trump could eliminate some of these requirements and the Republican-dominated Congress could revoke FATCA, Nestmann does not expect to see substantial changes anytime soon.
Listen to this full interview with Mark Nestmann on our website by clicking here. Become a subscriber and gain full access to our premium weekday interviews with leading guest experts by clicking here.
