Obama has an odd definition of recovery.
While the commander in chief may exhibit an odd delight in his numerous TV appearances by taking "credit" for the near record stock market, the pre-revision Q2 GDP boost, or a wage-less job recovery driven by a surge in part-time jobs, the reality is that as we showed yesterday, living standards for the vast majority of the population have continued to deteriorate.
But one place where Obama's track record leaves nothing open to interpretation, is in the number of Americans renouncing U.S. citizenship. According to the latest data released by the Federal Register, the number of US citizens who no longer want to be, stayed near an all-time high in the first half of the year before rules that make it harder to hide assets from tax authorities came into force.
It is unclear just who are these Americans willing to pay substantial amounts of money to expatriate, but it is safe to assume that many of them are of the "0.01%" persuasion, ironically the same social group who has, on the surface, benefited the most from Obama's, pardon, Bernanke's policies over the past 6 years.
According to Bloomberg, some 1,577 people gave up their nationality at U.S. embassies in the six months through June. While that’s a 13 percent decline from the year-earlier period, it’s only the second time there’s been a reading of more than 1,500, according to Bloomberg News calculations based on records starting in 1998.
Tougher asset-disclosure rules effective as of July 1 under the Foreign Account Tax Compliance Act, or Fatca, prompted 576 of the estimated 6 million Americans living overseas to give up their passports in the second quarter. The appeal of U.S. citizenship for expatriates faded as more than 100 Swiss banks turn over data on American clients to avoid prosecution for helping tax evaders.
“Fatca and the Swiss bank disclosure program has intensified the search for U.S. nationals beyond all measure,” said Matthew Ledvina, a U.S. tax lawyer at Anaford AG in Zurich. “It’s shocking the levels of due diligence they are going through to ensure they have cleaned house.”
Are the citizenship deniers all tax evaders? Not all, but most of them, yes.
The U.S., the only Organization for Economic Cooperation and Development nation that taxes citizens wherever they reside, stepped up the search for tax dodgers after UBS AG (UBSN) paid a $780 million penalty in 2009 and handed over data on about 4,700 accounts. Shunned by Swiss and German banks and with Fatca looming, almost 9,000 Americans living overseas gave up their passports over the past five years.
Fatca requires U.S. financial institutions to impose a 30 percent withholding tax on payments made to foreign banks that don’t agree to identify and provide information on U.S. account holders. It allows the U.S. to scoop up data from more than 77,000 institutions and 80 governments about its citizens’ overseas financial activities.
In establishing the 2010 Fatca law, Congress and President Barack Obama in effect threatened to cut off banks and other companies from easy access to the U.S. market if they didn’t pass along such information. It was projected to generate $8.7 billion over 10 years, according to the congressional Joint Committee on Taxation.
But the most direct impact of US tax policy on the richest Americans is this: "More than two-thirds of 400 U.S. expatriates surveyed in November by Zurich-based deVere Group said they had considered giving up their passports."
Losing your US passport does not come cheap mind you: "Americans with a net worth exceeding $2 million and an average income tax of at least $157,000 over the previous five years must pay an exit tax on unrealized capital gains when they renounce U.S. citizenship."
Which also happens to be a number that is not a concern to all those intent on becoming citizens of... anywhere else.
So for all those who adamantly claimed that Obama's tax policy would not result in major defections of America's uber wealthy - people who will now no longer pay any US taxes whatsoever - we present a chart showing the number of Americans who have expatriated in the past decade.
Congratulations president Obama, because this is certainly one chart which goes from the bottom left to the upper right you can take full credit for.