Friday, May 4, 2012

Leaving America...because of taxes.

The tax policies in the US are starting to scare away the wealthy who are changing their citizenship to avoid our heavy tax burden.

This story points out that the number of Americans jettisoning their US citizenship increased from 235 in 2008 to 1,780 in 2010.Wealthy Americans are choosing to give up their U.S. citizenship rather than pay high taxes when living outside of the country, according to a new Bloomberg report. The number of people giving up their nationality at U.S. embassies has risen over the past few years after facing a crackdown on tax evasion.

Four years ago, whistle-blower Bradley Birkenfeld triggered a crackdown on tax evasion, which was meant to stop wealthy Americans who stored money in offshore accounts to avoid paying high taxes.

Though this was intended to stop Americans living in the country who stored money in other places, it also applies to individuals living outside of the U.S. who store money in the banks of countries they reside.

The U.S. is the only nation in the Organization for Economic
Cooperation and Development that taxes citizens wherever they reside. In facing taxes within foreign countries they live in as well as paying American taxes due to their U.S. citizenship, many wealthy Americans are weighing whether remaining a U.S. citizen is worth it.

Andy Sundberg, secretary of Geneva’s Overseas American Academy, shared that 1,780 expatriates gave up nationality at U.S. embassies last year, which is an increase from 235 in 2008. The number has increased so quickly that the embassy redeployed staff to clear the backlog of Americans queued to relinquish their passports.

Another reason Americans are ready to give up their passports is that many non-U.S. banks feel it’s too risky to deal with Americans abroad after the Birkenfeld and the U.S. probed USB and 11 other Swiss financial firms for aiding offshore tax evasion.

Due to difficulties acquiring accounts in some countries and facing taxes from the United States, Americans are deciding  that giving up their U.S. passports and relinquishing their citizenship is the right choice to make.

I suspect that number will only grow if major tax increases are used to address our enormous federal government deficits and debt problems.

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