The Internal Revenue Service (IRS) released its quarterly publication this week that lists Americans who voluntarily abandoned their United States citizenship and gave up their passport. The trend suggests that most of them are doing so because of the tax system.
On Wednesday, the IRS published the list of expatriated Americans in order to comply with the Health Insurance Portability and Accountability Act (HIPPA) of 1996. The list found that 679 citizens renounced their citizenship in the first quarter of the year. This is the most in any quarter since the IRS began to release the federal data in 1998.
According to the list, some of the individuals renouncing their citizenship include two people making headlines: Mahmood Karzai, the brother of Afghanistan President Hamid Karzai, and Isabel Getty, the daughter of oil heir Christopher Getty and socialite Pia Getty.
Karzai, however, renounced his citizenship because he said in an interview with Radio Free Europe/Radio Liberty’s Radio Free Afghanistan that he might become politically active in Afghanistan. He has not spoken about his decision after being contacted by media outlets.
“The reason I gave up my U.S. passport and citizenship is that I have been working in Afghanistan for the past 12 years,” said the Afghan president’s brother. “I might become politically active, therefore I decided to give up my [U.S.] passport.”
Other quarterly lists in the past included Facebook co-founder Eduardo Saverin and socialite and songwriter Denise Rich. Saverin moved to Singapore because there is no capital gains tax, while Rich will save millions in taxes from being the ex-wife of a billionaire.
CNN reported that many Middle Eastern families have been ordering their children with dual-citizenship to give up their U.S. citizenship if they wanted to inherit the families’ companies or wealth.
“It’s the cumulative effect of the IRS ‘jihad’ against foreign bank accounts,” said Phil Hodgen, an international tax lawyer in Pasadena, California, in an interview with the news network.
Although many people oppose these individuals’ actions, tax lawyers say blame the confusing and vast tax system.
The system’s rules “are confusing, complex, and so complicated that even Americans with good intentions can easily find themselves running afoul of the law,” said Jeffrey Neiman, a former federal prosecutor. “This very well may explain why we are seeing a record number of Americans renouncing their United States citizenship.”
The individuals who give up their citizenship are seeking nations with a lower tax rate and an easier tax system. However, according to Forbes, it could be costly for those relinquishing their green card because it costs money. Senators Chuck Schumer and Bob Casey introduced legislation that would double the tax to 30 percent because they were enraged that people were leaving the U.S. because of taxes.
Countries with higher tax rates have experienced the same kind of thing, especially in France, where President Francois Hollande proposed a 75 percent supertax for those earning a minimum of one million euros. This led a number of citizens to seek refuge, including Gerard Depardieu, who has escaped to Russia, and Bernard Arnault, France’s richest man, who has been seeking Belgian citizenship.
The full list of names can be found here.
One more time we hear the same nonsense. The reality is that it’s not about taxes. A person living overseas making $20K per year cannot get a mortgage and in fact may not be able to open a checking account. The slightest error in his reporting (or their reporting) could subject the foreign bank to draconian penalties).
It makes sense for them to refuse to do business with a US citizen. It makes sense for long term overseas residents to relinquish their citizenship.
As usual, for the rich it doesn’t matter, and the little guy who cannot relinquish his citizenship has to try to make it without financial services.