EXTERNAL REVENUE SERVICE

The Economist reports that “”The number of Americans giving up their passports has shot up, from less than 1,000 a year in the late 2000s to a record 3,415 in 2014.”

One of the main reasons has to do with aggressive efforts to collect taxes from Americans who earn money outside America: “A new spur is the Foreign Account Tax Compliance Act (FATCA) of 2010, which makes it a lot harder for Americans overseas to get (or keep) bank accounts, pensions and mortgages, because foreign financial firms don’t want the administrative hassles that FATCA throws up. The law also increases filing requirements for citizens—and thus stokes fears that honest mistakes will be punished.”

The article reports on one particularly egregious instance: “A neighbour of this correspondent, who was born in America but moved to Britain as a child, recently received a huge bill from the IRS, out of the blue, for many years of unfiled taxes. He had not realised that he owed anything; he had always paid taxes promptly in Britain. The IRS was so aggressive that he feared he might lose his technology business; he even discussed divorce with his wife as a way to shield their assets. In the end, he settled for a six-figure sum. He, too, has since renounced his citizenship.”