High taxes force more Americans to renounce their citizenship

[Sugarcane]

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.

And for wealthy expatriates, the financial consequences of remaining a US citizen are most severe. Individuals earning more than $400,000 a year and married couples earning more than $450,000 a year will be paying an income tax rate of 39.6 percent – which is up from last year’s rate of 35 percent.

Those who earn more than $1 million annually will pay Uncle Sam about $170,341 more this fiscal year, according to the Tax Policy Center. Those who fear losing their savings frequently move to countries that do not tax their incomes.

One third of all billionaires that moved from the US to another country chose to go to ‘tax havens’ such as Switzerland, Bahamas, and Singapore, according to a 2012 study by the Research Institute of Industrial Economics.

While those who forego their citizenship will lose protection from the US government and could face difficulty in visiting the US, expatriates increasingly consider it worth it – including high-profile celebrities like 73-year-old American-born singerTina Turnerand Facebook co-founder Eduardo Saverin.

Turner, who is worth an estimated $200 million, in January became a Swiss citizen and ditched her US citizenship. Saverin, whose net worth is an estimated $2.2 billion, holds Brazilian citizenship and lives in Singapore. Bloomberg estimates that the Facebook co-founder saved at least $67 million in federal income taxes by cutting his ties to the US.

But while the rich and famous make headlines for escaping the IRS’ grip on their finances,allAmerican expatriates are subject to US taxes and are required by law to file estimated taxes and income, estate and gift tax returns. Some lawmakers are even trying to subject Americans to taxes even after giving up their citizenship. Sens. Charles Schumer and Bob Casey last yearsuggestedthat Congress vote for a law that would force former US citizens to pay taxes for years after renouncing their citizenship – as well as ban them from ever returning to the US.

But in the short-term, ditching the US comes with its own financial penalties: Americans renouncing citizenship are required to pay an often-hefty exit fee. Those whose net worth is more than $2 million or whose annual income tax average is more than $145,000 are required to pay a 15 percent tax on capital gains above $641,000 and taxes on other assets including retirement accounts at the income rate of 39.6 percent.

As the only country to tax its citizens abroad, the US is pushing thousands of its citizens away.

“If you don’t mind where you live and the tax becomes excessive, then leaving might be a good choice,” Nigel Green, CEO of deVere Group, told Yahoo! Finance. “Countries have less of a hold on people. Governments have to raise more taxes, but they can’t go too far.”

High taxes force more Americans to renounce their citizenship — RT

 

[FaujHistorian]

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..]

And they are all moving to Pakistan.

Where NO BODY pays any taxes.


(just kidding).

Yes. out of the population of 300+ millions some rich americans do feel bad about paying taxes so they move off shore.

Remember this. Overall income taxes over there are a lot less than EU.

So Americans have few options left as far as moving to a safe and prospereous country where they work and still pay less taxes.


So All you Americans.


Come over here. in Pakistan.


We will make sure you pay no taxes no more.


peace

p.s. LoveIcon, the source of this news is "Russian TV" that is known for creating ultra left wing and anti-American news. Just saying this FYI.

 

[Al Bhatti]

April 27, 2014

More renounce US citizenship but deny stereotype

Experts say government’s pursuit of tax evaders is driving the jump in abandoned citizenship

Inside the long-awaited package, six pages of government paperwork drily affirmed Carol Tapanila’s anxious request. But when Tapanila slipped the contents from the brown envelope, she saw there was something more.

“We the people ...” declared the script inside her US passport — now with four holes punched through it from cover to cover. Her departure from life as an American was stamped final on the same page: “Bearer Expatriated Self.”

With the envelope’s arrival, Tapanila, a native of upstate New York who has lived in Canada since 1969, joined a largely overlooked surge of Americans rejecting what is, to millions, a highly sought prize: US citizenship.

Last year, the US government reported a record 2,999 people renounced citizenship or terminated permanent residency” most are widely assumed to be driven by a desire to avoid paying taxes on hidden wealth.

The reality, though, is more complicated. The government’s pursuit of tax evaders among Americans living abroad is indeed driving the jump in abandoned citizenship, experts say. But renouncers — whose ranks have swelled more than fivefold from a decade ago — often contradict the stereotype of the financial scoundrel. Many are from very ordinary economic circumstances.

Some call themselves “accidental Americans,” who recall little of life in the US, but long ago happened to be born in it. Others say they renounced because of politics, family or personal identity. Some say signing away citizenship was a huge relief. Others recall being sickened by the decision.

At the US consulate in Geneva, “I talked to a man who explained to me that I could never, ever get my nationality back,” says Donna-Lane Nelson, whose Boston accent lingers though she’s lived in Switzerland 24 years. “It felt like a divorce. It felt like a death. I took the second oath and I left the consulate and I threw up.”

When Americans do hear about compatriots rejecting citizenship, it’s more often people keeping their US citizenship and dropping that of another country.

Last year, Texas Senator Ted Cruz acknowledged the Canadian citizenship he was born to, but said he would renounce it. In 2012, Representative Michele Bachmann, Republican-Minnesota, saying she was “100 per cent committed to our United States Constitution,” announced she was giving up Swiss citizenship gained through marriage.

One of the few times rejected US citizenship has gotten significant ink was Facebook co-founder Eduardo Saverin’s 2011 decision to turn in his American passport after moving to Singapore. Savarin likely avoided millions of dollars in taxes by doing so shortly before Facebook’s initial stock offering.

Other wealthy Americans also have relinquished US citizenship. Denise Rich, the ex-wife of pardoned trader Marc Rich, expatriated in 2012 and lives in London. Last fall, singer Tina Turner, a resident of Switzerland since 1995, relinquished her US passport.

But Saverin’s decision, in particular, hit a political nerve, along with scandals surrounding UBS and Credit Suisse, which were caught matching wealthy Americans with offshore accounts.

In recent years, federal officials have stepped up pursuit of potential tax evaders, using the Foreign Account Tax Compliance Act which requires that Americans overseas report assets to the IRS or pay stiff penalties. Those trying to comply complain of costly fees for accountants and lawyers, having to report the income of non-American spouses, and decisions by some European banks to close accounts of US citizens or deny them loans.

But some of those surrendering citizenship say their reasons are as much about life as about taxes, particularly since the US government does not tax Americans abroad on their first $96,600 (Dh354,811) in yearly income.

Decisions to renounce “are driven by a whole range of emotional considerations. ... You’ve got anger, you’ve got fear, you’ve got a strong sense of indignation,” said John Richardson, a Toronto lawyer who advises people on expatriation.

“For many of these people, this is not a tax issue at all.”

Even some who acknowledge tax worries say decisions to renounce are far more complicated than a simple desire to avoid paying.

Peter Dunn, born in Chicago and raised in Alaska, moved to Canada to pursue a graduate degree in theology. He met his wife, Catherine, and they made Toronto home when her work as one of the owners of an aviation maintenance firm made her the breadwinner.

Dunn remained an American. But he was alarmed by a change in US law requiring those with more than $2 million in assets to pay an exit tax if they gave up citizenship. He didn’t have $2 million. But his wife was doing well enough that he imagined one day they could get there. The idea of the US government taxing his Canadian wife’s money didn’t seem right.

“When I learnt about that, I decided that to protect my wife, I better expatriate,” he says.

More renounce US citizenship but deny stereotype | GulfNews.com

 

[Al Bhatti]

November 02, 2014

The Tribute in Light is illuminated next to the Statue of Liberty (C) and One World Trade Center (L). The majority (73 per cent) of Americans who live outside the US are tempted to give up their US passports in response to the introduction of Fatca, reveals a new survey by one of the world’s largest independent financial advisory organisations.

Are US expats in UAE thinking of giving up passports?

Poll asked more than 400 American expatriates: 'Would you consider voluntarily relinquishing your US citizenship due to the impact of Fatca?'

Nobody likes taxes and if you are an expat from the US then you probably dislike one in particular, the Foreign Account Tax Compliance Act (Fatca).

The legislation, which, came into full effect on July 1, 2014, has many implications, particularly for US expatriates.

The majority (73 per cent) of Americans who live outside the US are tempted to give up their US passports in response to the introduction of Fatca, reveals a new survey by an independent financial advisory organisation.

The findings come as Federal Register data shows that the number of Americans renouncing US citizenship increased by 39 per cent in the three months to September after the new global tax law came into force.

In a global poll, deVere Group recently asked more than 400 of its American expatriate clients: ‘Would you consider voluntarily relinquishing your US citizenship due to the impact of Fatca?’ and cumulatively, 73 per cent of respondents answered that they had ‘actively considered it’, ‘are thinking about it', or ‘have explored the options of it’.

On the other hand, 16 per cent of the respondents said they would not consider relinquishing their US citizenship and 11 per cent did not know.

“It is alarming that nearly three quarters of Americans abroad said that they are going to or have thought about giving up their US citizenship,” said Nigel Green, founder and chief executive of deVere Group.

“Nationality, especially for an expatriate, is an incredibly important part of one’s identity and typically it’s a very emotional issue, too. It is our experience that most Americans are extremely saddened at the prospect of giving up their US citizenship to avoid the harsh implications of a new and utterly flawed tax law.

“However, it should come as little surprise that such a high number are prepared to do so because Fatca’s reporting requirements are excessively onerous, burdensome and expensive.

"Also many non-US banks and other financial institutions will no longer work with Americans which can make living outside the US achingly complicated,” he added.

The survey highlights that Fatca has been designed as a tool to counteract tax evasion and has resulted in additional reporting requirements for all US citizens overseas.

Fatca opponents argue that it will do little, if anything, to tackle the important international matter of tax evasion.

According to Jessica Cook, a private client advisor with AES International, Global Wealth Management, many Americans residing overseas are reporting banking lock-out as some foreign financial institutions have simply chosen to eliminate their US client basis in order to minimise their exposure to Fatca reporting requirements, withholding fees and potential penalties.

“Some experts even believe that there are risks that this law will make it less desirable for foreigners to do business with Americans.


“There may even be a reduced desire to hold dollar-based assets. The possibility that the new law will make it more difficult to open foreign accounts of any type could impact some nearly 7 million Americans who live and work abroad,” she explained.

Are US expats in UAE thinking of giving up passports? - Emirates 24/7

 

[Al Bhatti]

November 3, 2014

28 Kuwaitis renounce US citizenship
Move attributed to obligation to pay taxes to the US

Banking sources in Kuwait said that 28 Kuwaitis with dual nationalities have informed the competent authorities they wanted to renounce their US citizenship.

The move was attributed to their wish to avoid paying taxes as required by the Foreign Account Tax Compliance Act (FATCA) that targets tax non-compliance by US citizens with foreign accounts.

The act that was passed as law in March 2010 and came into effect in July this year forces the world’s banks to report information to the US Internal Revenue Service (IRS) about their customers who hold US citizenship or a green card in order to ensure they file tax returns.

The law, initially intended to track and catch money launderers, is now affecting all US citizens and green card holders, including Kuwaitis who have the US citizenship even though they do not have any business in the US or do not earn money from a US company.

While Kuwait and the other five member countries of the Gulf Cooperation Council (GCC) — Bahrain, Oman, Qatar, Saudi Arabia and the United Arab Emirates — are tax free and citizens do not pay any taxes, US citizens are required to file tax returns annually.

The sources cited by local daily Al Shahed on Monday said that the Kuwaitis who wanted to renounce their US citizenship were concerned about the taxes they would have to pay to the US Treasury even though they worked on Kuwaiti government projects in Kuwait.

According to the sources, banks in Kuwait have started to refuse requests by Kuwaitis who also hold the US citizenship to open accounts amid concerns they would wade into serious financial problems with the US as their non-compliance with FATCA would incur a 30 per cent withholding penalty on their US investments.

According to Dr John P Hayes who teaches marketing at Gulf University for Science and Technology (GUST), at least one bank in Kuwait with major ties to the US has reportedly hired 600 people to comply with FATCA at a cost in the range of $100 million (Dh367 million).

“When it comes to collecting his money, Uncle Sam is ferocious. If you have not filed your US income tax returns, you may want to comply starting with the coming tax season. Do not think your bank is going to protect you because the penalties are too severe for the banks to risk the loss,” he advised in a column published by Kuwait Times in December.

28 Kuwaitis renounce US citizenship | GulfNews.com

 

[libertad]

The tax regime is out of control and with laws like FATCA its only going to get worse. My strongest advice to any amerikan is to get a second passport. Even if you don't want to renounce your citizenship, your second passport will be very useful.

 

[Al Bhatti]

So when they want money even if you don't hold US passport you are still an American Citizen and when they do not want you they will reject your application or delay it even if you fulfill all the requirements.

@Mosamania did you have a child born in US or will you do so ?

----------------------------------------


February 1, 2015

Italian-Swiss lawyer Giovanni Rossi

GCC nationals may face surprise US tax
GCC nationals with dual citizenship face IRS efforts to collect income tax from non-residents

Thousands of Gulf States nationals could be US tax evaders and not even know it.

According to Italian-Swiss lawyer Giovanni Rossi who works for a law firm handling many of similar cases, the number could reach a few hundreds of thousands.

“Actually, I do not think that this is “a problem” legally speaking but, in my opinion, this is indeed a phenomenon of certain relevance especially here in the Middle East,” he said. Under US law, tax evasion is a felony that could land a person in jail.

Those who were born on American soil and those who were born to an American parent are American nationals even if they don’t have passports, Rossi stressed. According to the US’ Internal Revenue Service (IRS), American citizens or resident aliens of the US who are living abroad must pay tax on any income over $99,200 (Dh364,064) per year.

“Although I am not aware of official statistics or official numbers, it is reasonable to assume that this phenomenon is quite widespread in the Middle East as, for example, there are more than 200,000 Saudis who have the potential to have US citizenship,” Rossi told Gulf News in an interview in his office in Dubai.

His firm has dealt, so far, with mainly Saudi and Kuwaiti clients.

While no estimates are available for dual UAE and US citizens, Rossi said “informally, I am aware of the significance of this phenomenon here too.”

“Many people think that if they have a US passport they automatically have the US nationality but actually the two things are not related … let us not forget that a passport is purely a travel document which does not prove that you are a national of a certain country.”

“You could still be an American national even without having an American passport, because you maybe never asked for it, because you didn’t need it, because you were using your other country’s passport.”

The issue of dual nationality of many Gulf nationals has surfaced recently with the introduction of the US law, namely FATCA (Foreign Account Tax Compliance Act). The law was passed in 2010 but it is still being implemented around the world. It basically obliges any bank worldwide, including banks in Europe and the Gulf region, “when opening an account dealing with US dollars for any individual or company to provide information to the American authorities to ensure that if there are American interests involved with such bank account they should be taxed,” Rossi said.

Complying with US tax laws simply means submitting necessary papers and paying the necessary taxes; however, given the relatively high exemption level ($99,200 in this tax year) many citizens simply need to show that their income is below the exception cap.

Avoidance

Last November, Kuwaiti Arabic-language newspaper Al Shahed reported that 28 Kuwaitis with dual nationalities have informed the competent authorities they wanted to renounce their US citizenship — a move that was linked with their wish to avoid paying taxes according to FATCA.

However, lawyer Rossi explained that people who wish to renounce their US citizenship need to settle outstanding taxes for a certain number of previous years first.

“Most likely, many Middle Eastern people know that they are Americans, but in good faith they are not aware of the fact that they have to pay taxes in the USA given that most of their assets are in the UAE [or] Saudi [or] Kuwait … etc and because they are working here and their families are here, they don’t see why they should pay taxes in the USA,” Rossi explained.

The IRS, which is the tax authority in the US, “when giving penalties does take into consideration if you have acted in good or in bad faith in case you have not made the necessary declaration for over 6 years, etc. But you have to prove your good faith,” he added.

Rules of taxes on income and property are generally the same whether US citizens are inside the US or outside it, Rossi explained.


However, if people pay their due taxes, and later decide to relinquish their American nationality; this doesn’t solve their problem for ever. Anyone who renounces their American nationality will not be allowed to enter their former homeland, as was the case with entrepreneur Roger Ver, who was denied several non-immigrant visas to the US after he renounced his American citizenship last year because he didn’t want to pay taxes.


Press reports quoted a letter by the American embassy in Barbados, as saying Ver was rejected because: “one of the most common elements within the various non-immigrant visa requirements is for the applicant to demonstrate that they have a residence in a foreign country which they have no intention of abandoning ... You [Ver] have not demonstrated that you have the ties that will compel you to return to your home country after your travel to the United States.

However, under American immigration law, article 8 U.S.C. 1182, any alien who is a former citizen of the United States who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States is inadmissible”.

Cases

So far, Rossi’s law firm in both Switzerland and Dubai has managed to settle some 40 cases over the past 6 years for Gulf-US dual nationals.


There are some 60 cases in process.


Among the 100 cases, there are five of dual Emirati-US nationals.


Apart from paying taxes, many countries including the US and Gulf States don’t allow double nationality, and in such a case it is “easier” to renounce the American rather the gulf nationality, Rossi added.


“They should start worrying,” said a Gulf woman of her two children with American nationality after she gave them birth while studying in the US. “It is their problem,” added the woman, who asked not to be named because it is not allowed to have dual nationality,


The Gulf woman explained that her children need to read the American regulations carefully and check their income. However, she doubted that her children, who are working in their Gulf country, are making the maximum for exclusions.

GCC nationals may face surprise US tax | GulfNews.com

 

[faisal6309]

High taxes for what? More wars? I've heard that Alaska is far better than other parts of US in this case.