A nonpartisan advocate for overburdened taxpayers is weighing in on reports that a growing number of overseas Americans are renouncing their citizenship to avoid taxes.
Pete Sepp of the National Taxpayers Union says most Americans do not renounce their citizenship just to avoid taxes. But statistics do show that an increasing number of them are at least considering doing so, with some of them following through.
"This is not only a consequence of high tax rates, it is a consequence of high tax complexity,” says Sepp, citing the Foreign Account Tax Compliance Act (FATCA) which he says is making it “very difficult” for Americans living abroad to cope with the tax laws.
Just for having foreign accounts, Sepp says, Americans are being treated to huge paperwork burdens, as if they were "criminals or masterminds of some offshore tax evasion scheme."
“That's a terrible shame,” says Sepp. “Americans shouldn't be chased away from our shores, or pursued when they're away from our shores, with unnecessary tax compliance burdens."
According to The Wall Street Journal, the U.S. Congress estimates that tax evasion by U.S. citizens results in losses of up to $100 billion a year.
Meanwhile, 2013 is on track to becoming a record year for people renouncing their citizenship. The purpose of FATCA is to have foreign institutions to disclose the assets of U.S. citizens living in their country.