In the fourth quarter of 2009, 502 U.S. citizens took an extraordinary step… they made the decision to permanently renounce citizenship in the U.S. and become expatriates.

That doesn’t seem like a large number, but it is more than double the number of all such expatriations in 2008.

Something is happening, and organizations of expatriates around the world say that it’s a growing dissatisfaction with the way the U.S. government treats citizens living abroad.

The U.S. is unique among industrialized countries in being the only one that taxes its citizens who live and work overseas, in many cases subjecting them to double taxation in both the country they reside in
and their country of citizenship.

This has a huge impact, because there are an estimated three to six million U.S. citizens currently living abroad. And they’re wondering why
the U.S. government should get a piece of income and wealth they generate outside the U.S.

Add to that the recent addition of tough rules and heavy fines involving the reporting foreign bank accounts, and the dissatisfaction among U.S. citizens living abroad is growing daily. The intention of the
regulations is supposedly catching tax cheats and uncovering illegal
terrorist money laundering, but simple mistakes or honest oversights by
otherwise law-abiding citizens can result in fines and penalties that
can evaporate life savings and ruin lives.

The new regulations also make foreign banks reluctant to deal with U.S. customers, and citizens living abroad often find that they are denied services by foreign banks simply because they are U.S. citizens
and banks don’t want to deal with the ever-increasingly labyrinth of
rules, regulations, and reporting requirements that come with U.S. customers.

Giving up U.S. citizenship is a fairly easy, but it’s irrevocable. An expatriate can’t simply change his or her mind and ask for citizenship to be reinstated. A new law also requires people renouncing citizenship
to pay an exit tax levied on worldwide income and assets.

Even given these hurdles, many people don’t see the economic sense of remaining U.S. citizens under the current tax structure, resulting in
more citizens than ever taking the extraordinary step of renouncing citizenship completely.

http://internationalliving.com/2010/04/22-renounce-citizenship/