The ongoing mystery of the missing American expatriate numbers

New Zealand has an estimated 27.6 million sheep, or around 6 sheep per head of the country’s human population, according to StatsNZ, the New Zealand government’s statistical arm.

This is down from 1982, when New Zealand’s sheep population peaked at 70.3 million, equal to approximately 22 of the animals per human being in the country, StatsNZ points out. (An article reporting the news of the latest sheep headcount, in The New Zealand Herald, referred to the “sheep-to-people ratio” as “New Zealand’s most-often-quoted statistic.”)

A specialist website for the cattle industry, meanwhile, offers a detailed breakdown of the world’s cattle population, which globally stands at around 998.3 million animals, with Uruguay having the most cattle per capita, followed by New Zealand and Argentina.

There’s even data to be had about the numbers of vegetarians globally (said to be around 1.5 billion, although a report published a few years ago noted that “only 75 million [of these] are vegetarians of choice”).

When it comes to knowing how many Americans are currently living outside of the U.S., and where exactly they reside, though, it seems no one has much of a clue, exactly. There are some estimates, but they vary widely, and some of the data that is available is conflictory, and/or not very recent. 

Not even the American government, it would appear, knows for sure, although the U.S. State Department publishes on its website a page of “Consular Affairs by the Numbers” which includes a sentence stating that “an estimated 9 million U.S. citizens live overseas.” (Four years ago a similar State Department document put the figure at 8.7 million.)

It is this “9 million expats” number that one hears over and over when references are made to the number of Americans living outside of America’s borders. Hardly any other numbers aside from this one, though, are typically offered up.

As if the lack of data weren’t enough, there are also differing definitions of what constitutes an American resident overseas, as some who may be included in some surveys may be students, abroad for a year or even less; U.S. military personnel; individuals who went abroad for work and ended up staying on; and even “accidental Americans,” whose citizenship came to them because their non-American parents happened to be in the U.S. when they were born, for example, or they were born abroad to Americans.

Spokesmen for the accidental Americans say they are unlikely to show up in any census counting American expats, with the result that the best measure of their numbers is turning out to be held by the world's banks, which are obliged to report to U.S. officials on the accounts of any American "citizens" they have, a sub-group of whom don't have Social Security numbers, and are therefore thought to be "accidentals". 

Because of such questions, many financial services experts in the American expat space are privately skeptical of the 9 million figure, as they are of quite a few of some of the other numbers, such as there are any, that exist anywhere about the so-called American diaspora.

One of these other numbers one sometimes hears, for example, although its origins are less clear (and perhaps for this reason it isn’t referred to as often), is that an estimated 6.5 million of those 9 million expat Americans are actually over the age of 18, and thus obliged to file a U.S. tax return and potentially pay tax on their income if it’s above US$9,350.

(This is, of course, required of Americans and even Green Card holders who live outside of the U.S., unlike non-resident citizens of most other countries, because of the States’ citizenship-based tax regime.)

The lack of data on Americans living outside of the U.S. would not have mattered in the past, when there was less interest in enforcing America's unique "citizenship-based" tax regime. After the Foreign Account Tax Compliance Act (FATCA) was signed into law in 2010, however, and came into force in 2014, the lack of reliable numbers and other information about America's overseas citizens is becoming an increasingly-asked question, both in Washington and around the world.  

Tax return, FBAR discrepancies

Among the reasons some are sceptical of the State Department's 9 million figure, for example, is because only around 619,000 tax returns were received from such non-U.S. resident taxpayers in 2015, according to IRS data;  a recent Government Accountability Office report  noted that only around 950,000 Foreign Bank Account Reports (FBARs) were filed in 2016. 

If there is an explanation for this discrepancy, it has not been widely shared, as no one we spoke to for this piece was able to explain it. 

(FBARs need to be filed by Americans for any year during which they have “a financial interest in, or signature authority over” one or more “foreign” financial accounts that in total exceeded US$10,000 at any point, even if just for a day.)

One of the seemingly best informal sources of data on the number of Americans living overseas is the “American diaspora” page of Wikipedia, which is comprehensive and, to its credit, provides a listing of the 40 countries with the most Americans, in declining order of American expat population size.

The 40-country listing is based on data the Wikipedia contributors apparently managed to obtain from numerous sources, though, some of which are now apparently more than nine years old.

And even here, the first sentence of the Wikipedia entry notes that “there are no exact figures on how many Americans live abroad,” and it goes on to note that the lack of such data “makes the U.S. the only developed country that does not even attempt a formal enumeration of [its] expatriate citizens.”

According to this Wikipedia list, Mexico is home to the largest number of American expatriates – a fact which few would dispute – with between 738,000 and 1 million Americans, followed in declining order of American citizens in residence by Canada, with some 316,350 to 1 million; Germany, 324,000; the Philippines, with 220,000 to 600,000; Israel, with 200,000; and the United Kingdom, with 139,000 to 197,143.

That UK data is, apparently, out of date, as the latest numbers from the UK’s Office for National Statistics (ONS), from the July 2017 – June 2018 period, at 138,000, with a “a confidence interval” of 18,000.

This means that the ONS is “95% confident that the true figure is in the range of 120,000 to 156,000. (See the table at the bottom of this article.)

A separate measure of Americans resident in the UK is contained in the ONS’s census data, which doesn’t enquire about nationality, only where those being counted were born. In 2011, the most recent year for which this information was available, 177,185 U.K. residents filling out census forms gave the U.S. as the place of their birth.

As for the Mexican data, a recent Washington Post report on what it called a “little-noticed surge” of “Americans heading south” to live in Mexico quoted Mexico’s official statistics institute as saying that the U.S.-born population of that country had reached 799,000 – “a roughly four-fold increase since 1990.”

But “that is probably an undercount,” the article adds. “The U.S. Embassy in Mexico City estimates the real number at 1.5 million or more.”

Real number ‘closer to 5.1 million’

The American Citizens Abroad, meanwhile, a lobbying and informational organization for expats which is based outside of Washington, DC, suggests that the real number of Americans living outside of the U.S. is much lower than the 9 million the U.S. State Department is quoting.

The organization's executive director, Marylouise Serrato, told an Internal Revenue Service (IRS) hearing last October that although it is “frequently said that there are around 9 million Americans living abroad, ACA believes this number is closer to 5.1 million, after making a number of adjustments, including one for approximately 1.3 million individuals affiliated with the federal government.”

But even the ACA doesn’t have any further data on American expat numbers to share, a spokesperson told the American Expat Financial News Journal.

Call for more, better data

The good news for American expatriate number-crunchers, meanwhile, is that the lack of data on the numbers of Americans overseas could be about to change.

As reported,  North Carolina Republican Representative George Holding has called on the IRS to find out exactly how many Americans are currently “living outside of the country, as well as how many are not filing or under-filing” their taxes each year.

Holding made his comments while testifying before a Congressional hearing in May, which had been called in an effort to learn more about a so-called “tax gap” of around US$460bn that is said to exist between the taxes American owe each year, and the amount they actually pay.

Holding made the point that the U.S. urgently needs to get a more accurate idea of the number and nature of its expatriate citizenship, in order to be able to accurately estimate how many tax returns – and how much tax revenue – the government should expect to receive from abroad.

Told by the IRS’s chief research and analytics officer, Dr. Benjamin Herndon, in answer to a question during the Ways & Means Committee hearing, that the IRS did “not have data, specifically, on that,” Holding vowed to pursue the matter, because of what he said was its necessity in order to understand better the extent of the issues facing Americans living abroad.

“If we don’t have that data, we [also] don’t have an estimate of the amount of revenue lost due to [these overseas Americans’] non-compliance, because you don’t know that they exist,” Holding said.

Years away

One point many expert observers of the American expatriate scene agree on is that hard numbers of American expats may exist in some pockets – such as the UK – now, but globally, such information is likely to take years, if not a decade or more, to be established.

This is in part because America’s unpopular “citizenship-based” tax regime has reportedly caused many who have lived abroad for most if not all of their lives to “go to ground,” dropping any links to the U.S. they might have, and prepare to live out their lives as citizens of whichever country they currently live in, as they have been doing anyway.

This would include thousands of “accidental Americans,” who, as noted above, are considered to be U.S. citizens due to certain facts of their birth but have spent most if not all their lives outside the States. Prior to the introduction of FATCA and certain other relatively recent laws, such “accidentals” would not have been aware that they were expected to file tax returns and potentially pay U.S. taxes.

Many of these “accidentals” don’t consider themselves to be Americans at all, and don’t even speak English.

At the same time, the numbers of expatriates who are choosing to renounce their citizenships has quietly been soaring since the introduction of FATCA, a fact that is inexorably chipping away at the American expat ranks.

The U.S. Government Accountability Office report mentioned above, for example, called attention to the problems FATCA has created for expats, and pointed out that the legislation is seen as having contributed to a "nearly 178%" increase in the rate of citizenship renunciations between 2011 and 2016.

And while the number of renunciations each year is low relative to the total numbers of Americans living outside the U.S. (thus far the most renunciations in a single year was 5,411, in 2016), reports from those in the business of helping expats to renounce indicate that demand remains high.

Some also question the official data on renunciations, pointing out that although the numbers are high by historical standards, the lists of names – published, by law, every quarter – has at times failed to include the names of people who were known to have renounced during this time. 

Source: UK Office for National Statistics

Notes: CI+/- = “Confidence interval”, a measure of how close the data is thought to be to being 100% accurate.
Nationality here refers to that stated by the respondent during an interview. Country of birth is the country in which they were born. It is possible that an individual’s nationality may change, but the respondent’s country of birth cannot change.