Rather than pay ridiculous taxes, Americans renouncing citizenship
Dropping citizenship can allow former Americans to save on taxes.
Some Americans are moving overseas to work and renouncing their citizenship as they go. The reason isn't because they hate their country, but they despise its tax code. The byzantine tax code and onerous reporting requirements for citizens living overseas is makes compliance difficult.
For a few Americans, it is easier to renounce their citizenship and escape the burden.
According to records, over 1,000 citizens living overseas renounced their citizenship in the second quarter of 2013. While this is only a fraction of the more than one million Americans living and working abroad, it is the highest number ever reported.
The primary motivation is the Foreign Account Tax Compliance Act, which requires foreign employers to report the overseas assets of American citizens. The goal of the law is to find individuals who may be trying to evade taxes by one means or another. By knowing what they hold overseas, as reported by a third party, the government can keep individual taxpayers honest.
According to the Wall Street Journal, overseas tax evasion costs the government $100 billion a year.
However, Americans living overseas say they are weary of the paperwork and burdensome requirements. Most countries have lower tax rates and caps, which make it more attractive to become citizens elsewhere. Some citizens only retain their American passports for travel purposes, which makes the document very expensive.
If you're only retaining citizenship for ease of travel, there may be other, less expensive options for expatriates.
According to the WSJ, Americans living in Hong Kong and Singapore are renouncing their citizenship to take advantage of the lower taxes assessed in those countries.
As the paper suggested, the American system does little to encourage overseas living and working.
It's acceptable for a nation to pursue taxes which citizens rightfully own and should pay. However, imposing burdens that make them want to give up their citizenship suggests something is fundamentally wrong with the system.
© 2013, Distributed by NEWS CONSORTIUM.
Pope Francis Prayer Intentions for December 2013
General Intention: Victimized Children. That children who are victims of abandonment or violence may find the love and protection they need.
Missionary Intention: Prepare the Savior's Coming. That Christians, enlightened by the Word incarnate, may prepare humanity for the Savior's coming.
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