Posted on 09/06/2009 3:05:12 AM PDT by Maggie Maggie Maggie
As offshore havens comply with transparency demands, a growing number of ultra-wealthy Americans are handing back their passports
Private client lawyers and relocation specialists are reporting a surge in wealthy Americans living abroad who are prepared to give up their citizenship to avoid the scrutiny of US tax authorities.
Although such a move means they have to pay an exit tax, lawyers say this is a price people have become more willing to pay this year, now the fall in asset values has reduced the size of the imposition.
Jay Krause, a partner at private-client specialist law firm Withers, said: “The number of inquiries from US citizens wanting to expatriate from their citizenship has increased rapidly in the last year.”
The level of interest is set to increase following the tax disclosure deal between the US Government and UBS of Switzerland, involving the names of 5,000 alleged US tax evaders being handed over to the authorities. The UK concluded a tax deal with Liechtenstein last week.
Because of this, many ultra-wealthy individuals who have chosen to become stateless now cruise outside coastal waters in their mega-yachts in the belief that if they stay on the move, tax authorities will not be able to catch up with them. One analyst who did not want to be named, has estimated the number of stateless tax evaders amounted to a few thousand.
This implies the quantity of money outside the grasp of global tax authorities could be trillions of dollars. Under US tax laws, the worldwide income of any US citizen or resident is subject to tax. The US is the only country in the world that requires its citizens to stump up, no matter where they live.
Krause said current economic conditions are making it more conducive for Americans to contemplate paying exit tax demands from the US Internal Revenue Service. “The mark-to-market provision in the Exit Tax from the IRS is a big incentive,” he said.
In the final months of the Bush administration, the US Government introduced a package of tax reforms that included an amendment to the exit tax on US citizens and long-term green card holders who expatriate the US.
The tax allows US citizens and permanent residents wanting to renounce citizenship or permanent residency to pay a one-off income tax on gains over $600,000 (€420,000). All assets beyond this amount are valued at mark-to-market.
The exit tax allows a clean break from the US tax system from the date of expatriation without imposing the previous 10-year period after expatriation where tax rules used to apply – another big incentive, say lawyers. One of the other benefits of the amended exit tax is that a former US citizen who has expatriated will be able to travel to the US without his income becoming taxable. Under the previous exit tax this was not possible.
Krause said many people looking to give up US citizenship are accidental Americans. These are either those born in America when their non-citizen parents might have been living there for a short period, or the offspring of an American parent living abroad. Both categories qualify automatically for US citizenship.They may not take up a US passport, but they will still be subject to US taxes unless they expatriate. “More and more accidental Americans are looking at the fall in asset prices in the last year and taking up the option to expatriate,” said Krause.
Official figures on US expatriate cases reported by the IRS every quarter show about 90 people giving up their citizenship in the first half of 2009.
But one prominent lawyer, who did not want to be named, said: “There has been for some time a view that the IRS has been under-reporting these numbers.”
The IRS denies this. Some argue the figures are more or less meaningless. John Gaver, who edits right-leaning website Action America, said in an article published on the site: “What these lists fail to show is the vast and increasing numbers of wealthy US citizens who are just ‘dropping out’ – taking all of their wealth and leaving the US without renouncing. They just disappear off the US tax rolls and appear on some other country’s tax rolls.”
Anecdotal evidence also suggests there has been a surge of inquires from Americans looking at taking up citizenship of another country.
Christian Kälin, a partner at residence and citizenship planning consultancy Henley Partners, said his firm has had a big rise in such inquiries.
He said: “Tax reasons might be the biggest reason why US citizens will want to drop their passports, but security issues will also influence their decisions.
“For example, we saw a huge surge in inquires from US citizens contemplating acquiring an alternative passport after the Mumbai killings.”
The terrorist attacks in Mumbai last November targeted Americans among other foreigners.
Kälin said citizenships of the Caribbean Islands and western European countries prove to be the most popular for ex-American passport holders.
He said: “St Kitts and Nevis is the favourite alternative citizenship option for US citizens. Many will also be looking at Austrian citizenship, but it costs the most.”
St Kitts and Nevis is favoured for its perceived security, while Austria is one of the few European countries where it is possible to purchase citizenship.
Typically, it will cost $400,000 to secure a St Kitts and Nevis passport, whereas Austrian citizenship might run into several million euros.
http://www.wealth-bulletin.com/rich-life/rich-monitor/content/1054959505/
America left so why shouldn’t they?
ups. this topic reminds me that my US passport expired years ago :-) i have dual citizenship Austria/US but i never used my US passport not even when i visit the US.
The thing that we think of that makes a true American, existed even before Columbus found America.
It has always existed in the minds of productive people, farmers, merchants, craftsman that someday what they make with their sweat and ingenuity would be theirs to keep, and not forced over to a emperor, a king, piles of minions, dukes and royalty and their spawn or government Senators and a welfare state and all its hack employees.
American is a place, it is a state of mind.
The United States Government is not American.
Most of the people alive today, that are American, have never been to America. They are people that want to live free and productive lives. I meet them everywhere in my travels.
The "system" on which millions were earned is no longer in place. We have psuedo-communists running the White House, Senate, and the House of Representatives. Given the opportunity, I'd consider leaving as well.
Charlie's not just in the wire, he's in the White House.
BS, ROFLOL
“accidental Americans.” I hadn’t seen that term before, but it does seem appropriate to a country which ceases to be a nation and becomes just a geographical location.
So we owe nothing to the U.S.? No loyalty, no fealty? Nothing other than offering up our sons and daughters to die on foreign soil?
You've got to know when to hold 'em, and know when to fold 'em.
Who says that they are not fighting the battle after they leave? It's certainly better to preserve ones' wealth than to have it stolen by a communist-leaning government. For at least if they preserve their own wealth, it will not serve to feed the enemies of a free, capitalist society. Certainly, if Obama's thugs tax it away, it will not only be useless to the cause of freedom, but will also serve to arm and feed those that despise freedom.
No, we don’t. Nothing.
We are born free, not servant to anyone, for any reason, and no one is master.
We are the thing. It is just us. Everything else is symbolic representation of us. The symbols are not the reality.
The governments, are just manufactured political tools to be exist only so long as they are useful for our God given rights. Which they are not, and have not for a long time.
The Government of the US, and the various State and local governments are rights destroying, slave and serf manufacturing political engines.
You can take the constitution out of the country. I’d say 99.9% of the political thought came from out side the country. Locke, Montesquieu, Italian city states, the Dutch Republic, Rome and Greece.
Free states come and go, mainly were there are free people.
Thank you. I’m reading the second Fair Tax book right now.
It seems to me that one thing I haven’t seen mentioned about the fair tax is the incentives. We all know incentives get people to do things to their own best advantage. Thus this thread about renouncing US citizenship.
But what about the incentive for the US Government under the Fair tax? When ALL Federal income is derived from a tax on sales, this would certainly give the Feds incentive to increase the take to the Treasury, by making the business environment more conducive to MORE business. We’re talking massive reformation here. More and more obstacles to doing business would be removed to increase the $ to the Treasury.
The US would become THE place to do business. We could actually outgrow Obama’s financial mess.
They did make their millions on the system; it didn't happen overnight....they accumulated the wealth under the CAPITALIST/FREE MARKET SYSTEM.
Perhaps those people don't want their successes to be confiscated by a malevolent socialist government and redistributed to an illegal or the local crack-whore.
Okay, but “You’re Not Really Fighting For Anything” isn’t going to look good on a recruiting poster.
“If you love wealth more than liberty, the tranquility of servitude better than the animating contest of freedom, depart from us in peace. We ask not your counsel nor your arms. Crouch down and lick the hand that feeds you. May your chains rest lightly upon you and may posterity forget that you were our countrymen.”—Samuel Adams
My father fought in World War II against the totalitarian governments of NAZI Germany and Imperialist Japan. I have many friends that fought against the communists in Korea and in Vietnam. I have an uncle, deceased, that fought in all three wars.
Right now, individuals with the very same socialist/communist mindset of those enemies against whom we fought, are in positions of power in our government, and they are doing their very best to expand that power. They are destroying the very freedoms that so many have fought to preserve.
The country's at that turning point. The government is financially and morally broke. They WILL go for individual's assets in order to expand their power and protect their balance sheet for a few more months. I simply cannot fault people that want to protect that which THEY ALONE have earned from the thieves in Washington.
Long ago, I pledged allegiance to the flag of the United States of America, and to the Republic for which it once stood, one nation, under God, indivisible, and with LIBERTY AND JUSTICE FOR ALL. That republic no longer stands, and "liberty and justice for all" are just words to be memorized.
I agree with you Outlaw Woman. This country needs patriots today more than ever in my lifetime. Things get tough and these fools pick up their marbles and leave. Is money the most important thing in your life? If so, leave my homeland to save your precious dollars. A real American fights to change the perceived failings of his government. For all of your wealth, you are pathetic.
Under US tax laws, the worldwide income of any US citizen or resident is subject to tax. The US is the only country in the world that requires its citizens to stump up, no matter where they live.
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