Lesperance & Associates is a well known law firm known for helping people understand their legitimate claim to the citizenship of certain countries. David Lesperance, the founder, is an expert at dealing with immigration and taxation issues and has years of experience in the field.

1. No, there is NOT a Slowdown in the Number
of Wealthy Americans Renouncing U.S.
Citizenship… or giving themselves this
option.
Pepperdine University Dean of Law and well-known tax blogger Paul Caron recently posted a
piece entitled: “The Number Of Americans Renouncing U.S. Citizenship Declines 62% In
Trump Administration, Following 2,200% Increase In Obama Administration”. In this blog he
claimed Professor Caron’s post was then cited by major libertarian blogger Daniel Mitchell who
continued on this theme of crediting President Trump stating In reality, neither is correct.
What are the Real Trends in Americans renouncing U.S. Citizenship?
To understand the situation it is first necessary to see a chart of the annual totals of people on
what is known as the ‘Expatriate List’:
Firstly, one must understand who is actually being counted. As noted in the pre-amble to
the most recent publication of this list:
In non-legalese this means “Covered Expatriates” only!
What are Covered Expatriates?
Covered Expatriates are Americans renouncing U.S. Citizenship or who relinquish long-term
resident alien status within specific criteria. They must have a net worth of $2 million, or a 5-
year average income tax liability exceeding $139,000, to be adjusted for inflation. They would
also qualify if they have not filed an IRS Form 8854.
This means that there are many folks who are renouncing and are not on the List because they do
not meet this definition of Covered Expatriates. Let me explain – starting with a few background
facts.
Firstly, once an individual meets the net worth threshold, there is no further clue as to how
wealthy they are. Their net worth at the time of expatriation could be $2.1 M or $2.1 BILLION.
Secondly, the 2020 Unified Credit for Gift/Estate Tax Purposes is $11.58 M ($23.06M if
combined with a spouse). If expatriation were motivated by an avoidance of the estate tax, then
expatriation would not start to make sense until the individual were well over the UC
threshold(s).

2. Thirdly, it is important to remember that since the introduction of FATCA in 2010 there has also
been a surge of middle class ‘Accidental Americans‘. These individuals are NOT on the List
(unless they are Covered Expatriates) BUT are also renouncing US citizenship.
Finally, the uptick, flattening and subsequent drop-off of the numbers are easily understood
considering the following points:
• Covered Expatriates do not have any priority in booking renunciation appointments. They are
now competing for appointment slots with the substantially larger numbers of Accidental
Americans; and
• There is a finite number of government resources devoted to helping Americans exercise their
right to renounce US citizenship.
The reality of the ‘Expatriate List’
The reality is that an American looking to renounce must first book an appointment in a
processing system that has reached capacity. This is evidenced by the significant backlogs in the
granting of interview slots. In fact, the backlogs have grown so bad (up to and sometimes over a
year), that most US missions no longer publish the appointment date information on-line. Indeed
they haven’t done so since the system appeared to reach capacity a few years ago.
Taken all together, the peak and drop-off mean that Wealthy Americans are still leaving in
record numbers. The fact is that the capacity of the processing system has reached capacity.
Additionally the limited number of renunciation appointments are being predominately booked
by departing Americans who are not wealthy.
If the List represents only the Wealthy, what has been the total number of
Americans renouncing U.S. Citizenship over the last decade?
Damn good question! I submitted a FOIA request for the annual numbers of Certificates of Loss
of Nationality (“CLN”) issued over the prior 10 years on December 5, 2017… two years
ago! After various follow-ups, on October 1 2019 I was finally given an estimated date when I
would receive the information… April 4, 2021.
Strange, given that more recent FOIA applications are consistently generating news coverage.
Either I must be not a very good applicant or this information is being suppressed.
Rather than wait another year, an alternative way to estimate the real number of total number of
annual US expatriates is as follows:
1. Canvas each US mission and ask for the number of renunciation interviews they give per month.
While months will vary with holidays, it probably averages out.
2. If the missions have a backlog of more than a month, it is safe to assume that they are at 100%
capacity. When you multiply the monthly figure by 12, you will get the number of actual
CLNs originating from that mission for a year.

3. 3. If you ask for their backlog, then you can add the monthly average times the backlog months to
the figure arrived at in #2 to get the number that would be processed annually if the system
was properly resourced.
4. Add up all the missions actual and potential figures. You will have a more realistic target for the
total number of CLNs actually issued in a year.
5. Compare the numbers from the past few years of Covered Expatriates. You can then reasonably
estimate the ratio of Covered Expatriates to Non-Covered Expatriates.
If any readers of this blog have the bandwidth to undertake this exercise, I would be more than
happy to guide them.
Are Wealthy Americans adding the option of Expatriation to their financial
planning?
Every day I am fielding questions such as:
“Who will be the Democratic POTUS candidate?”
“Will there be a Democratic ‘Grand Slam’?”
“How likely are the ‘Tax the Rich’ proposals of the Democratic Presidential candidates to
become law?”
“What will be the voter reaction at the polls to the impeachment acquittal and subsequent
behaviour of Donald Trump?”
“What impact would a recession caused by a pandemic or Iranian terror action have on the
election outcome?”
The honest answer is that no one knows. The November election is clearly a ‘jump ball’ not only
for POTUS but also the down-ticket senators, representatives and governors.
But we do know that all of the Democratic candidates have now announced their tax proposals.
Therefore, we know that should the Democrats win the Presidency and both houses, at a
minimum there will be a doubling of capital gains rates (Biden, Buttigeig, Bloomberg). If the
progressive wing wins out, there is also the distinct possibility of a Wealth Tax (Sanders /
Warren). This would mean increased estate taxes, and a major jump in the ordinary income rates.
How should Wealthy Americans react?
When faced with these questions, I ask my clients to consider how they would deal with the
threat of a wildfire. Automatically their response is that they have purchased home insurance and
worked out a fire escape plan. They do not do this because they think there is a more than a high
PROBABILITY that they will have a fire. Rather, they understand that fire is a POSSIBILITY.
If it were to occur when they do not have insurance and an escape plan, the impact would be
devastating. I then tell them to apply this same logic to their family’s wealth. There are the

4. numerous uncertainties arising from the upcoming election. I suggest that they shouldn’t let their
party allegiance, candidate preference or overly optimistic predictions blind them. Logically they
should plan for all possible outcomes.
Practically speaking they should:
• Have their accountant ‘Run the Numbers‘ to determine their personal tax liability in the event
tax proposals become law. This ‘Damage Assessment‘ sets a benchmark for their risk;
• Have their tax and business advisors review all of the various ‘Play the Game Better’ options to
deal with each of these threats; and
• Alongside the Play the Game Better strategies they should develop a Backup Plan. This will
provide them and their family alternative residences (both within and outside the US) and
second citizenships. This gives the family ‘Optionality‘ to deal with any events that might
significantly impact their family wealth. Furthermore, with a well-conceived Backup Plan the
family could relocate temporarily or permanently in times of emergency (e.g. natural disasters
or pandemics) as well as open new doors to opportunity (e.g. attending university or working
abroad).
In the December 2019 New York Times article “When U.S. Citizenship Starts Looking Like a
Bad Deal”, I noted that the number of wealthy American families getting Backup Plans is
substantially increasing. In a subsequent article in Wealth Management entitled “Expatriation: A
Financial Backup Plan”, I provided a more detailed description of the elements to be considered
when developing a Backup Plan.
If record numbers of wealthy Americans are preparing to swell the numbers
of US expatriates, what are the consequences?
Americans are free to elect politicians who propose Tax the Rich policies such as a Wealth Tax
or taxing capital gains at ordinary tax rates. Likewise, wealthy Americans have the freedom to
sever their future tax obligations. The US public, however, should be aware before casting their
next votes of the consequence of departures of wealthy Americans. The reality is that this will
result in the US Treasury will receiving significantly less tax revenue.
If this sounds alarmist, it is not. This is exactly what happened in every country, like France,
which tried to bring in Wealth Taxes or other Tax the Rich policies. Indeed, the US is even more
vulnerable than most of these countries. This is because they had VAT tax revenues to reduce
their over-reliance on personal tax revenues.
Therefore, the US government, politicians and voters should all be very mindful that the most
relevant opinion of what is ’fair‘ is that of the person who will be asked to pay. The Democratic
POTUS candidates have changed their rhetoric. It used to be “Getting money to spend on good
things”, now it is “Taking money from bad people”. In turn, wealthy Americans have recognized
that getting ‘insurance’ and organizing a ‘fire escape protocol’ in the form of a Backup Plan is
just plain prudence.
Hope for the best but plan for the worst is the catchphrase of our uncertain time.