Posted on 01/01/2013 7:02:39 AM PST by Kaslin
HONG KONG -- We read about famous people like French film star Gerard Depardieu, who moved to Belgium to avoid a 75 percent income tax on millionaires proposed by France's Socialist government (a measure rejected last week by a French council, though French leadership has vowed to resubmit a similar proposal). Then there is Eduardo Saverin, who took the extreme step of giving up his U.S. citizenship and could see a savings of $39 million on his Facebook investment, according to the research firm Wealth-X. He says business reasons, rather than high taxes, were his primary motivation.
I had read about financially motivated expatriates but never knew one who had taken the ultimate step until I visited with my longtime friend "Sam" (I'm withholding his real name to protect his current employment). Sam works for a large investment firm. He has lived here for the last 25 years.
He says that five years ago, he began thinking he could no longer "afford to be an American." Contributing to his decision was the cost of sending his five children to college. Even though he and his wife pay taxes on a home in California, the state has denied them in-state college tuition, meaning it could cost them $50,000 per child. While there is a $95,100 earned U.S. income tax exclusion, Sam says it isn't enough to substantially reduce his U.S. taxes and still cover his costs.
Here is how burdensome U.S. tax laws have become: Seven years ago, Sam left a major investment banking firm based in the U.S. to join another international bank. The law required that his 14 years of pension savings become current income and taxed it at a rate of 35 percent. He says he could not roll over the account due to a "quirk" in the law. Hong Kong citizens are taxed at a rate of only 15 percent.
Another consideration, he says, was the refusal by Hong Kong banks to allow him to open a securities account. The reason? "None wanted to deal with onerous U.S. reporting requirements. My own bank could not even open an account for me to invest in local securities."
Sam says his decision was "emotionally difficult. My parents worried I would not be able to return to see them in the U.S. (He managed to get a 10-year tourist visa.) I would have to give up the right to vote or run for political office. I was concerned that others would call me a traitor or deserter."
"I had paid over $1 million in U.S. taxes but didn't receive any benefits, nor did my wife and kids. (She maintains her U.S. citizenship.) As I saw the massive U.S. deficit continue to climb, it became clear that the government would likely raise taxes further. I finally decided to expatriate. ... A dozen of my friends who have lived over 10 years in Asia have done the same. We can no longer afford to be American citizens."
Eugene Chow, an attorney who specializes in helping Americans give up their U.S. citizenship, told The Wall Street Journal's "Asia Today" program that while such actions continue to be rare, they are increasing. He says people pay a high price for giving up their citizenship. Not only is there an "exit tax," but all appreciated assets, including a home, are assessed a 15 percent capital gains tax, even if they haven't been sold.
Chow says, "The IRS is essentially outsourcing its compliance rules to non-American-related companies and they are saying to Americans, 'We don't want your business.' So that's more of a practical reason for why some people choose to give up their passports -- to make it a less complicated life living overseas."
While the media love to focus on billionaires, says Chow, most who renounce U.S. citizenship are "people who have changed circumstances; people ... who have lived and worked (overseas) for the last 10-15 years, who might have married a foreign spouse and who believe their future is overseas, rather than back in the U.S."
With so many foreigners wanting to become U.S. citizens, it's still a shock to know someone who has relinquished his citizenship. It is another reason for simplifying the U.S. tax code. America should want to retain people with the skills and experience of people like Sam, who have contributed more than tax money to their (now former) country.
Our leaders in Washington know what's happening in your city as quickly as you do.
n00b,
Some kids cry at Disneyland. Others believe they are at Disneyland, when in fact, they are in Cleveland.
Both are wrong. You can’t fix miserable or unobservant.
And, if I have to choose between being unobservant and being miserable, I don't want to trade places with you - I'll happily stick with unobservant, thank you.
Unobservant is fixable.
Due to your short tenure on Free Republic, your posting privileges are governed by Rule 122: "All n00b posters are limited to 2 responses per thread, per poster, during the first 12 months of tenure at Free Republic."
There are two ways to overcome this limitation:
1. Increase length of membership on Free RepublicSystem generated message. Reply here
2. Increase in the level of usage of facts, logic and clarity.
Except for all the old people, we've got a great country here. We just need to elect better leaders!
Agree with you 100%.
Many overlook the fact that some may well leave America because they are more American than America herself, at least the current one.
Indeed America was borne out of a rejection of the things this weird new country is now fast becoming —these enlightened people a type of new Mayflower Diaspora.
TOUGH LOVE —A HARBINGER OF THINGS TO COME.
Our leaders in DC could not even protect a US Ambassador who warned them that an attack was imminent. All they could do was watch it live. You need to ask yourself, why ? They will not protect any of their troops. Nor will they care what happens to them. They are corrupt with no morals. Anyone fighting for them, knows that now.
Our leaders have no such excuses. They are failing because they are crappy leaders. However, we are responsible for the folks we send back there.
I think that there are just too many Americans who like government goodies and who also like to avoid paying for them. Thus, high spending, low taxes, huge deficit/debt. Each day brings us more and more old people who want more and more goodies. And, they don't want to pay for the goodies. And, they always show up to vote.
Once this huge cohort of old folks dies off, we will have another crack at small government. That will be a wonderful time.
Are you drunk? Since your spelling and sentence structure are looking fairly intact, I conclude you’re just a liberal idiot who is too slow too realize who you are.
Tell that to the Australians. They would have all been British/Americans if it was not for our revolution.
At any rate, if you have not yet figured out that the current US government also has a fatal disease, then you really are not paying attention.
No, sir, I am not drunk. I won’t be renouncing my American citizenship and I’m betting you haven’t, either.
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