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The
cost of getting rid of US citizenship has quadrupled to US$2350, up from US$450.
The changes will come into effect on September 6th and the State Department
says it is necessary to cover the real cost of processing an application to
lose citizenship.
The
price hike marks a sharp u turn from 2010 when the State Department decided on
the $450 fee “in order to lessen the impact on those who need the service and
not to discourage the utilization of the service, a development the Department
feels would be detrimental to national interests” according to RT.
Announcing
the move this week [LINK:https://www.federalregister.gov/articles/2014/08/28/2014-20516/schedule-of-fees-for-consular-services-department-of-state-and-overseas-embassies-and
], the State Department defended it the price tag saying it had to reflect the
true cost of the process.
“Demand
for the service has increased dramatically, consuming far more consular officer
time and resources. Documenting a US citizen’s renunciation of citizenship is
extremely costly, requiring American consular officers overseas to spend
substantial amounts of time to accept, process, and adjudicate cases. The
Department believes there is no public benefit or other reason for setting this
fee below cost,” wrote Under Secretary of State Patrick
Kennedy.
But
Kevyn Nightingale, a tax adviser to people who want to give up their US
citizenship, said that he could not believe the process really costs that much.
“It’s
supposed to be a cost recovery change and not a tax revenue generator. Having
watched the process with so many of my clients, I have trouble believing that
it really costs US$2,350 apiece,” he told Global News, a
Canadian news and current affairs television network.
Nightingale
pointed out that the State Department notice gives an estimate of a consular
officer’s time at $135 an hour working for 20 hours.
“That
means that they feel they’ve got almost 20 hours for each person who is
expatriating, and that seems like a lot of time to process the paperwork. I
have trouble believing that it’s 20 hours of time. This is, like most
government fees, an arbitrary amount. I don’t think you can say much more about
it,” he said.
Kennedy
says in a memo that the process involves at least “two intensive interviews”, but people who have
been through the process say the time they spend in the consulate is much less
than that.
Patricia
Moon who renounced her citizenship at the Toronto consulate in 2012 said it
took nothing like that amount of time.
“The
questions are minimal and I didn’t spend more than 15 minutes at the window
either time. It’s not intensive. They ask you: ‘Are you aware of the
ramifications of your actions?’ And ‘Are you doing this of your own accord?”
she said.
New
tax laws have seen a record number of Americans renouncing their citizenship
this year. In the first quarter only just over 1,000 Americans gave up their
nationality, according to Bloomberg News. That’s a hike from the 670 who did so
in the same time span last year, and it’s already one third of the way to
matching the total number of Americans who renounced their citizenship in 2013.
However,
a spokesperson said that the price increase was not meant as a deterrent.
“We
can’t speculate on whether the backlog for renunciation appointments will ease
as a result of the fee increase.”
Critics
have said the price increase was more than twenty times the average level in
other high income countries
In order to leave America,
citizens have to prove they’ve been paying tax for five years and if you are
worth more than US$2 million or if you’ve been paying income tax of US$157,000
or more then you have to pay an exit tax like a capital gains tax
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