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Monday, June 4, 2012

Citizenship Renunciations: A Closer Look at the Numbers

Some days I just like to kick back and watch finer minds than mine tackle sticky questions.  Posts about the number of renunciations of American citizenship appeared recently in two blogs that I follow regularly, the Isaac Brock Society (I'm also a contributor) and Overseas Exile.   In their analyses is an important lesson about raw numbers and why it's important to dig deeper in order to understand what's really happening.  Context and a little critical thinking, mes amis, is everything.

Let's start with Overseas Exile.  Blogger Curtis Poe has been running a series about the data and politics concerning renunciations of U.S. citizenship.   Following Eduardo Saverin's  highly publicized departure, this number, 1,780 renunciations of U.S. citizenship in 2011, has been thrown out by the media and has been analyzed as high or low depending on your perspective.  Poe digs into that number and those of previous years to ask if these numbers are correct and has the U.S. done a proper job of compiling them for the official list?  The short answer is "no."  As Poe points out in this post :
Names are duplicated, some names are apparently missing, as we see updates posted later, and there's no way to cross-reference these names to anything reliable because there's just not enough information. Further, while my many years of work with raw data tells me that when data is bad it's usually consistently bad, that's for computer-managed data. But for this data, as far as I can tell, it's largely a manual process of handing this data from the various consulates, over to some central office of the State Department and then over to the IRS. It's also entirely possible that there have been political decisions involved in how this data is moved around and presented.
His suspicions are confirmed by accounts at Isaac Brock and elsewhere of Americans who did renounce and, to their surprise, never saw their names appear on the list.  Poe also took information about U.S. citizens naturalizing (taking on a new citizenship) in countries that do not allow dual citizenship - people who, in theory, would be required to renounce their American citizenship per their new countries citizenship requirements.  This is what he found:  "As you can see, aside from 2010, every year shows that more Americans obtained citizenship in countries which do not allow dual citizenship than Americans having reported as renounced. Heck, just for 2008 we have Germany reporting twice as many Americans acquiring German citizenship as there are reported renunciations."

And finally in this post, Poe looked at the only other year to date besides 2011 when renunciations of American citizenship were soaring:  1,812 in 1997.  Following a tip from Tim at Isaac Brock he found the answer in a U.S. government report:  1997 is high because the U.S. IRS combined the data from 1995-1997 into one year.  You read that correctly - the 1,812 renunciations of American citizenship on the IRS list for 1997 is really three years dumped into one.   Which means that "2011 does have the highest recorded number of renunciations in US history."

Conclusions?  The data on renunciations of American citizenship as reported by the American government is not to be trusted.  The numbers are higher, maybe much higher.  What I find interesting is that the media in the U.S. do not seem to be questioning them.  Where is the serious investigative reporting that U.S. journalists have been rightfully known for in the past?

Moving to the Isaac Brock Society, Eric took on an interesting task in this post, Comparing Renunciation Rates Around the World.  The U.S. numbers are one thing and taken in isolation you can argue that they are high or they are low or perhaps even that they are "just right" given the size of the U.S. homeland population. So Eric decided to see how the U.S. stacked up compared to other countries and their renunciation rates.  And instead of looking at the numbers of renunciations relative to the population, he   looked at the size of each countries' diaspora (those living abroad who are probably most likely to renounce) and calculated the number of renunciations per 100,000 people.  Just using some basic data on a few developed countries like Japan, Singapore and New Zealand and making some "back-of-the-envelope” calculations, he finds that the U.S. has a surprisingly high rate of renunciations.  Lower than countries like  Japan, Singapore, Taiwan and South Korea but higher than countries like New Zealand or Hong Kong.

Eric is very careful to say that his data was not necessarily reliable, especially for the U.S. which does not track its own diaspora (numbers range from 2 to 7 million) but his preliminary results were interesting enough that he continued his analysis here using renunciation data from Europe.  His conclusion? "Contrary to what the U.S. media would like us to think, 1,780 renunciants is a surprisingly large number for a first-world country, even one the size of the United States."  I invite you to have a look at his posts to date, the data and his analysis and decide for yourself.  But clearly he's onto something worth pursuing further.  It is simply not enough to assert that 1,781 U.S. citizenship renunciations in 2011 is "nothing and means nothing."  Rubbish.  Not only is this an emotional response devoid of any empirical evidence to back it up, but people's perceptions (especially those of politicians shaping policy) are influenced by these numbers when they are thrown out by the mainstream media without any context, questions or analysis.

Sometimes I look at my own country and the swill that passes for serious journalism there these days and I ask myself, "What are they thinking?"  Not critically, that's for sure.  What happened?  Perhaps one answer can be found in the growing numbers of American citizens living abroad.  What if the real damage is caused, not by people taking their money out the U.S., but by folks taking their brains elsewhere.  Curtis and Eric are two salutatory examples of people (from abroad, mind you) who are asking hard questions and actively looking for answers.  

Good work, guys.


Just Me said...

Good work indeed! Thanks for highlighting here, again! As you know, our journalist are more Press Release scribes these days, as that is what you mostly see. Sad but true. There are good sites like Global Post, ProPublica, Planet Money doing real investigative journalism, but they have yet to discover or report on the Citizenship taxation issues, FATCA, FBAR or OVDI IRS practices. I keep trying, by tweeting and emailing them links like to your good blog! Someday they may turn their attention our way.

Victoria FERAUGE said...

And thank you, Marvin, for your great work. I see you everywhere and it really inspires me. Perhaps if we keep plugging away at it long enough we might get a debate going. All the best to you, Victoria