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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
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
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
Eugene Chow, an attorney who specializes in helping Americans give up their U.S. citizenship, told
Chow says, "The
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.
World - What Price U.S. Citizenship? | News of the World