That brings the total number
to 2,999 for all of 2013. The previous record high for a year was 1,781
set in 2011. It’s a 221% increase over the 932 who left in 2012. You can call
it a shaming or a public record, but the Treasury Department is required to
publish a quarterly list of Americans who renounced their U.S.
Citizenship or terminated their long-term U.S. residency. The public outing
puts Americans on notice who relinquished their rights.
Those seem like tiny numbers, yet
the total thus far for 2013 is 2,369. See Number of Taxpayers Who
Renounced U.S. Citizenship Skyrockets to All-Time Record High, quoting Andrew
Mitchel. Under U.S. tax law, it is not relevant why someone expatriates. Whether the expatriation was
motivated by tax avoidance or something else used to
matter, but the law was changed in 2004.
Since then, the tax and other
consequences do not depend on why one leaves. Yet
after Facebook co-founder Eduardo Saverin departed
permanently for Singapore with his Facebook IPO riches, there was an angry
backlash. Mr. Saverin’s post-Facebook fly-away prompted such outrage that
Senators Chuck Schumer and Bob Casey introduced a bill to double the
exit tax to 30% for anyone leaving the U.S. for tax reasons.
So far, that bill remains unpassed.
Meantime, are people following Tina Turner’s lead? No, and not Eduardo
Saverin’s either. Most expatriations are probably motivated primarily by
factors such as family and convenience. Many people like Ms. Turner have built
a life somewhere else and may not plan to need a U.S. passport.
Complex or costly taxes can help
sway a decision but are often only one factor. Although statistics are not
available for why people say a final good-bye, many now find America’s global
income tax compliance and disclosure laws inconvenient and nettlesome. Some go
so far as to say that the U.S. tax and disclosure laws are downright
oppressive.
No group is more severely impacted
than U.S. persons living abroad. For those living and working in foreign
countries, it is almost a given that they must report and pay tax where they live.
But they must also continue to file taxes in the U.S. What’s more, U.S.
reporting is based on their worldwide income, even though they are paying taxes
in the country where they live.
Many can claim a foreign tax credit
on their U.S. returns, but it generally does not eliminate all double taxes.
These rules have long been in effect, but enforcement was historically less of
a concern with expats. Today, enforcement fears are palpable.
Moreover, the annual foreign bank
account reports known as FBAR forms carry civil and criminal
penalties all out of proportion to tax violations. The penalties for failure to
file these forms, civil and criminal, are severe. Even civil penalties can
quickly consume the balance of an account.
The coup de grace is FATCA, which
is ramping up now worldwide. It requires an annual Form
8938 to be filed with income tax returns for foreign assets meeting a
threshold. And foreign banks are sufficiently worried about keeping the IRS
happy that many simply do not
want American account holders. Americans abroad can be pariahs
shunned by banks for daily banking activities.
Even Canada has now agreed to turn
over data to the U.S., though many in Canada are hopping mad about it.
See Canada Signs U.S. FATCA Deal, IRS To Get Data. Still, leaving America
can have a special tax cost. To exit, you generally must prove 5 years of tax
compliance in the U.S. Plus, if you have a net worth greater than $2 million or
have average annual net income tax for the 5 previous years of $155,000 or more
(that’s tax, not income), you pay an exit tax.
The theory of the exit tax is that
is the last chance the U.S. has of taxing you. It is a capital gain tax as if
you sold your property when you left. At least there’s an exemption of
$668,000.
Citizens aren’t the only ones to
suffer. Long-term residents giving up a Green Card can be required to
pay the tax too. See High Cost To Go Green: Giving Up A Green Card. A
decision to expatriate should never be taken lightly. Taxes or no, it can be a
big step. And around the world, more people are talking about taking this giant
leap.
Source:http://www.forbes.com/sites/robertwood/2014/02/06/americans-renouncing-citizenship-up-221-all-aboard-the-fatca-express/ Published by:
http://www.teaparty.org/americans-renouncing-citizenship-221-34395/#sthash.0Nnz1Rxv.dpuf
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