Would you renounce your U.S. citizenship if it
meant you’d be sending less of your hard-earned
dollars to Uncle Sam?
Angry about the latest tax hikes? Each year,
thousands of Americans pack their suitcases, rip up
their US passports and move permanently overseas
to prevent Uncle Sam from taking their money. In the first three quarters of 2012, more than 1,100
Americans renounced their citizenship and made
their homes elsewhere, according to the Federal
Register. Available data does not yet include those
who left in the fourth quarter, but it is on track to
surpass the 1,781 Americans who relinquished their passports in 2011. And the number of
Americans who ditched the US in 2011 was seven
times higher than those who left in 2008. With 6 million US citizens living abroad and
continuing to pay US taxes, expatriates increasingly
abandon their citizenship for the sake of saving
cash. The US is the only industrialized country that
requires its overseas citizens to pay income taxes –
even if their income is generated abroad.
As Americans face higher taxes and stricter
enforcement, a growing number of them are,
indeed, deciding to turn in their US passports. As of
2013, 77% of Americans will pay higher federal
tax rates because the cuts in Social Security payroll
taxes expired when Congress passed its tax package on New Year’s Day. But the wealthiest households face the highest tax
increases. From 2009 to 2011, the number of
expatriates, or those who renounced their U.S.
citizenship, doubled to 1,781. Nigel Green, CEO of
deVere Group, which provides financial services for
expatriates, said that since the start of this year, 48% more of his clients in January than in a typical
month inquired about moving funds abroad and
the possible tax implications of changing
citizenship. The income tax rate rose this year to 39.6% from 35% for individuals earning more than $400,000 a
year and married couples earning more than
$450,000. The Tax Policy Center estimated that those who
earn more than $1 million would pay an average of $170,341 more in taxes . Green said there’s a tipping point for most people
with regard to tax issues affecting their choice of
location and citizenship. “If there’s only 10% tax
[on income], no one would be leaving. But if there’s
90%, then most people would leave,” he said. Federal taxes aren’t the only issue, though.
Increases in state income tax rates factor into these
decisions as well. Recently, California enacted
Proposition 30, which raised state income tax rates
to 10.3% from 9.3% for individuals making at least
$250,000 and 13.3% from 10.3% for those earning at least $1 million. Golfer Phil Mickelson publicly voiced his concern over the tax increases and threatened to leave California because of the
higher rates. Famous Faces In the first three quarters of 2012, more than 1,100 people left the United States,
according to the Federal Register, which tracks
Americans who renounce their citizenship. (The
Federal Register doesn’t make note of why these
people give up their citizenships; we can only
guess there are financial considerations in many situations.) Among them, one of the most high-
profile examples was Facebook co-founder
Eduardo Saverin, who filed to relinquish his U.S.
citizenship in September 2011; Facebook had its
initial public offering in May 2012. Saverin, a Brazil
native, had already been living in Singapore for three years after emigrating to the U.S. in 1998. He
could reportedly save as much as $100 million in
taxes because Singapore does not tax capital
gains. Saverin isn’t the only famous renunciation. Singer
and socialite Denise Rich also gave up her
citizenship last year under her maiden name,
Denise Eisenberg. She is well-known as the ex-wife
of former international fugitive Marc Rich, a
commodities trader who was indicted on 50 counts of wire fraud, tax evasion, racketeering and other
charges. But on his last day in office in 2001,
former president Bill Clinton pardoned Rich.
Reports claimed that Eisenberg gave up her
citizenship to be closer to her long-time partner, an
Austrian citizen. Austria also has tax benefits for nationals who live abroad for more than half the
year. Chinese kung fu star and actor Jet Li held American and Chinese citizenships , but dropped both in 2009 in order to be a citizen in Singapore.
(Singapore prohibits dual citizenship.) In interviews Li indicated that he chose Singapore because it was free from paparazzi and provided
language opportunities for his children. Most recently, actor Gerard Depardieu made headlines for renouncing his French citizenship to become a Russian citizen in order to avoid France’s
proposed 75% tax on earned income above $1.4
million. Russia has a flat 13% tax rate. Ready to Tear Up Your Passport? According to a 2012 study published by the Research Institute of
Industrial Economics that examined the mobility of
billionaires over the past two decades, “70% [of
those billionaires] have migrated from higher to
lower capital gains tax country … One-third of the
billionaires that moved went to small countries defined as ‘tax havens,’” including Switzerland,
Bahamas and Singapore. If you want to join the pack, the process to
renounce your citizenship isn’t very difficult. The U.S. Department of State says that in order to do so, one must “appear in person before a U.S.
consular or diplomatic officer, in a foreign country
(typically at a U.S. Embassy or Consulate); and sign
an oath of renunciation.” But before you take the plunge, be aware that if
you forego your U.S. citizenship, there’s no turning
back. The U.S. government won’t reinstate it if you
change your mind later — so think it over carefully. In 1965, movie star Elizabeth Taylor attempted to
expatriate to keep her European income from
being subject to American tax law. But she did not get approval from the State Department because she refused to disavow “all allegiance to the United
States of America.” And you might be saving money in the long run,
but you still have to pay an “exit” tax, according to
the Heroes Earnings Assistance and Relief Tax Act
passed in 2008. This applies to those whose net
worth is $2 million or more, or whose annual
income tax average for the past five years is $145,000 or more (as of 2008 and adjusted
annually for inflation each year). One exception
applies to people who were born with dual
citizenships. For the exit tax, a 15% tax applies to
capital gains above $651,000, and tax on other
assets like a retirement account, would be at the normal income rate up to 39.6%. These assets are
taxed as if the individual were selling or
withdrawing their monetary funds from the
accounts on the last day of their American
citizenship. Already Living Abroad? So is giving up your rights and privileges as a U.S. citizen worth
it? If you live and conduct business mostly in the
U.S., it may not be the best decision. Renouncing
your citizenship isn’t just about taxes— it also
means no more protection from the U.S.
government; possible issues with travel visas, including traveling and staying in the U.S. for long
periods of time. But it may be worth it if you already live in a foreign
country. The U.S. is one of the few nations that
taxes its citizens regardless of where you live in the
world. As long as you remain a U.S. citizen, you will
be taxed on your income even if you’re living
abroad. But if you aren’t a citizen and live in a foreign country, you don’t need to pay any income
tax. “[Renunciation] seems to be more pronounced
with Americans, and that’s more with Americans
currently living abroad,” Green said. “It’s easier if
you’ve already left the country. There are less
factors involved [in changing citizenships].” In the case of Saverin, he was already living in
Singapore and did not have deep ties to the U.S.
because he hadn’t been here very long. In his case,
the financial benefits were clear: he would’ve paid
a 35% federal tax rate in the U.S. in addition to 15%
on capital gains, while in Singapore his tax rate would be 20% at most and no capital gains tax. So how would your tax burden stack up? If you
earn $1 million a year, that’s almost $396,000
you’re keeping in your pocket (based on the top
39.6% income tax rate) if you said goodbye to the
U.S. and took up residency in a place like Monaco,
which doesn’t tax income at all. If you were to earn the median household income of $50,054,
according to the Census Bureau, then you’d be
saving $12,500 (based on a 25% federal tax
bracket). The Federal Register first
started recording the number in 1997. (The high
number of expatriations that year is thought to be
a result of Hong Kong reverting back to Chinese
sovereignty, according to tax attorney Andrew Mitchel . Chinese citizens are not allowed to have dual citizenship, so many Hong Kong residents
renounced their U.S. citizenship prior to Hong Kong
joining China in 1997, so they would become fully
Chinese citizens.)When it comes to changing
nationalities though, Asia seems to be the popular
country of choice, Green said. He sees many clients leaving the U.S., the U.K. and other European nations and moving to Asia. “In Hong Kong a person can be paying as little as 15% for income tax, and in New York it can be 40%,” he said. Many Middle Eastern countries don’t tax income at all. “If you don’t mind where you live and the tax becomes excessive, then leaving might be a good choice,” Green said. “Countries have less of a hold on people. Governments have to raise more taxes, but they can’t go too far.''

www.rt.com/usa/news/us-tax-income-pay-244/

whos going to read this

achina boy: whos going to read this

You read it, didnt you..?

Just a little tip for those brothers who think the US is a land where everything is free and rosy....

And u expect me to go tru dis ur epistle....nah nah...

It is quite a long read, but it is an interesting article and informative. Lazy people are put off on reading anything long.