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Although the US State Department cannot say exactly how many Americans left the country and are currently living abroad, the estimated number is around 9 million people, and it continues to grow.
Since 2009, thousands of people have been renouncing their US citizenship. In 2020, more than 6,000 nationals gave up their American passports. Quite obviously, all of them had to acquire or already acquired a new passport abroad.
We at Wealthy Expat also see the tendency of more and more American millionaires and billionaires, tech entrepreneurs, celebrities, and other wealthy and successful people to apply for residency or citizenship in foreign countries.
Several decades ago, the United States was among the most popular places to move to, and the so-called American Dream was so desirable.
There were plenty of jobs and opportunities in lots of cities across the States. Such values as equity, liberty, human rights, and democracy were the top priority in the country.
Success, prosperity, and higher social status were easier to achieve through hard work following the tenets of a capitalist society.
People living or coming to the US were given the chance to live a better and richer life despite their circumstances of birth or initial social status.
The poll conducted in 2020 by YouGov showed that almost 60% of adult Americans think the American Dream is hardly attainable or unattainable for them. Moreover, 9% said that there is no such thing as the American Dream at all.
The rejection of this concept is especially distinctive among the younger generation respondents. Almost 70% of Millennials believe that the American Dream is only somewhat attainable, unattainable, or completely deny the idea of it.
The US passport grants many opportunities and can open almost any door. However, if you own a business or have achieved much success, you know that diversification and having a “plan B” option are essential to protect your assets and achievements.
However, creating a backup plan is not the only reason wealthy Americans want to get their hands on a second passport or become residents of a different country. Here are 7 main factors why US nationals move abroad and become foreign citizens:
This one is probably the most prominent of all. Only two countries in the world tax their citizens based on their citizen status: Eritrea and the United States. So, a relatively small and one of the least developed countries in Africa and the biggest and one of the most developed economies in the world are on par in this regard.
People in the US pay lifelong taxes to the government irrespective of their resident status, i.e., wherever you live, you have to give your money away to the US. But while in Eritrea, people pay a flat tax rate of 2%, in the United States, you must pay as much as usual residents.
Since the country has a progressive tax, wealthy American individuals end up losing up to 37% of their income. Add property, capital gains, dividends, gifts, estates, sales, and other taxes to this, and you will have to get rid of about half of your wealth.
Even if you do not live or have anything in the US, you are still levied a federal income tax. Plus, it concerns not only the US passport holders but also those who fall into the US person category and are only considered to be residents.
Often, you are not only subject to citizenship-based taxation but also have to disclose your other assets to the US government, including foreign accounts.
Such taxation policy led to the outbound migration of Americans to other countries. Some of them move to Latin America to stay in the same time zone close to their relatives who still live in the United States, Mexico being the most popular option. Others opt for farther destinations and go to the UAE or other low-tax Gulf Countries.
In recent years, an increasing number of US nationals have become dissatisfied with the local government and its policy. What is remarkable is that people view the government as toxic wherever they stand on the political spectrum.
According to a poll conducted by Gallup, Americans’ trust and confidence in the government remains low and, in many cases, is decreasing by the year. More than 60% of people in the US do not trust the federal government's handling of international problems.
Handling domestic problems is also not the strong side of the US government, according to the respondents, because lately, the trust rates rarely went above 35%.
Americans' confidence in state institutions such as the military, police, medical services, banks, public schools, and others has been falling during the last 3 years.
For example, public confidence in the police was at 51% in 2021 and decreased to 43% in 2023.
Public schools have not been gaining trust among US citizens as well. More than 70% are not confident in those educational institutions.
The criminal justice system experienced one of the lowest levels of Americans’ confidence – only 17% in 2023 compared to 20% in 2021.
Wealthy Americans also share the growing dissatisfaction with government actions and relocate to other countries looking for the best second passport options.
As it has been mentioned in the previous part, the confidence in US public schools evaporated, and there is a reason for that.
The ability to write and read are among the basic yet most essential skills anyone should have. Usually, people gain those skills while being children at school.
Literacy helps people stay updated on current events in their own country and globally. It is also crucial to convey your thoughts and ideas clearly, communicate effectively, understand complex concepts, and, most importantly, process and analyze information.
Unfortunately, according to the Barbara Bush Foundation data, around 130 million US adults lack literacy proficiency. More than 54% of the population between 16 and 74 y.o. are not literate enough for the modern world and read below the equivalent of a sixth-grade level.
Let’s face it: the American education system is broken. Many schools lack the funding to provide appropriate resources to children. Others struggle to pay teachers reasonable wages to reward them for their hard work. And if you are a parent, all the mentioned facts must be enough to worry about.
Even though wealthy individuals can afford a good private school for their children, it will not help the whole nation to stay well-educated. Children of common Americans often have no choice but to attend a public school. The quality of education there remains rather low based on the population’s low confidence in those institutions and the lack of literacy among more than half of adult Americans.
This is an actual crisis that can lead to drastic results for the whole country in the future, turning it into a retarded nation. And no one would be likely to invest or grow their business in a country lagging behind.
How do we appraise healthcare? It is simple: most often, we look at the life expectancy rate. The better medical treatment a person gets, the longer they live.
When the healthcare system in a country is effective, accessible, and affordable, the population is healthier, and older people feel better and live longer.
The US spends about 18% of its GDP on healthcare, which is more than in any other country in the world. In 2021, the government allocated $4.3 trillion for the healthcare sector.
Yet, the US scores poorly on life expectancy at birth, which was low before the pandemic and dropped even lower during and after the COVID-19 outbreak.
According to the World Bank data, in 2019, the average age people lived to was 79 years. In 2020, it dropped to 77, and in 2021 to 76.
That rate can be compared to life expectancy in such countries as Albania (76 y.o.), Iran (74 y.o.), Kosovo (77 y.o.), Mauritius (74 y.o.), or Uruguay (75 y.o.) that are less developed nations with less healthcare spendings.
While the pandemic affected countries all around the world, all the advanced economy nations still scored better than the US. For example, in 2021, an average person was expected to live until 83 years in Canada, 84 in Switzerland, 83 in Australia, and 81 in the UK. The gap with the US is visible.
However, the poor life expectancy rate is not the only thing that indicates ineffective healthcare. There are more people with multiple chronic diseases in the United States than in any other 38 OECD countries.
The obesity rate is nearly twice the OECD average: 42.8 for the US, and 25.0 being the average.
Also, Americans visit physicians much less than citizens of most other high-income nations. An average American consults a medical specialist only 4 times a year, while a person in Germany, for example, visits a physician 9.5 times annually, and in Japan, 12.4 times per year. It naturally does not mean Americans get sick less, but it can result from a low physician supply, which is below the average number in the OECD countries.
All of the facts indicate that, nevertheless, the US spends a lot of money on its healthcare it fails to work effectively.
According to the Commonwealth Fund findings, people in the US die because of physical assaults 7 times more frequently than in any other OECD country, except for New Zealand.
The rate of assault mortality in the US is at 7.4 and in New Zealand at 1.3. At the same time, it is as low as 0.2 in Japan, 0.3 in the UK, 0.4 in France, Germany and Switzerland.
The safety issue goes hand in hand with gun violence. It is one of the most serious social problems in the country that affects not only victims and their significant others but the whole population.
There have been more than 470 mass shootings, and over 25,000 Americans have been killed due to gun violence in 2023 so far. More than half of those deaths were people committing suicide. Over 1,000 among those 25,000 were teens and children.
In 2022, there were 44,310 deaths caused by gun violence. In the same year, school shootings accounted for 46.
The statistics clearly show that there are acute safety problems in the US, especially when it comes to shootings. The right to life is one of the fundamental human rights, and it is included in the US Constitution. However, the government cannot ensure Americans have this right nowadays.
Those US nationals who tend to stick to more conservative and traditional values have experienced lots of suppression from the US society lately.
A person or a group of people are frequently disfavoured and condemned in social or professional communities based on their views.
While modern law is trying to protect minorities, let people “be themselves” and express themselves freely, if your idea of self-expression seems outdated to society (i.e., the government), you will most certainly be bashed at.
Whether you are a public person, a company, or just a common American who said or did something that is allegedly a “bad thing,” according to new rules, the cancel culture will get to you to cancel you.
The negative effect of canceling can last for a couple of weeks or months or can erode credibility forever. You choose whether you speak up your truths or shut up.
Naturally, racist, sexist, or transphobic behavior or statements should not be accepted. But sometimes, in the modern US, people see a declaration of intolerance where none ever existed, merely based on their prejudice and expectations.
Public condemnation can not only affect a person's or company's reputation but can also result in loss of employment or customers, as well as significantly reduce the chances of future success.
Many wealthy Americans and entrepreneurs leave the US renouncing citizenship because they do not wish to accidentally become the target of the growing cancel culture. No one would like to lose all that they earned through hard work because someone misunderstood the wording of a sentence.
Air, water, and soil pollution have become one of the most serious issues in the 21st century, and the US is no exception.
According to the American Lung Association State of the Air report, more than 1 in 3 Americans (about 36% or 119.6 million people) live in places with low-quality air that contains particles or has ozone levels dangerous to health. Such conditions can also shorten their life expectancy.
Cities and areas in the West and Southwest of the US are the most polluted with ozone, many located in California. Among those are Visalia, Bakersfield, Fresno-Madera-Hanford, Los Angeles-Long Beach, Sacramento-Roseville, and San Jose-San Francisco-Oakland.
Apart from that, California is the most populous state in the whole country, with a population of over 39 million people, which means around 12% of Americans breathe the most polluted air.
Almost 64 million US citizens live in counties with failing grades for daily particle pollution spikes.
Air pollution is a pressing matter as it triggers health problems, such as coughing, shortness of breath, asthma attacks, worsening chronic obstructive pulmonary disease, and lung cancer. It also increases the risk of getting infected, heart attacks, metabolic disorders, preterm births, and more.
Apart from all the time-consuming paperwork, Americans have to pay the so-called exit tax. That is right. Even if you want to quit the US, revoke your citizenship, and stop paying taxes, you are still subject to one final tax.
Though not everyone must pay this tax, it is still quite unpleasant news. Some of the wealthy individuals wishing to renounce their US citizenship are required to pay the tax on unrealized capital gains.
The amount of tax can depend on the types of property and assets you own, and it is based on the “deemed sale” of your worldwide assets.
Still have questions?
Contact our expert team to learn more about residence and citizenship abroad.
We will analyze your case and find the most favorable options for you.
At Wealthy Expat, we make tax reduction and asset protection easy and fast.
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