THE AMERICAN DREAM?
The U.S. passport and U.S. citizenship are the dreams of many which they would even be prepared to risk their wealth or freedom for. However, it seems that an increasing number of people also see the negative side of citizenship, and would rather give up this privilege.
The number of Americans living and working abroad who have renounced their U.S. citizenship increased six fold in the second quarter of 2013 compared to the same period of 2012, and doubled in comparison with the previous quarter. This wave of renouncing has become stronger ever since the Internal Revenue Service (I.R.S.) began to collect information about the undeclared offshore assets, investments, and offshore bank accounts of American taxpayers abroad.
The United States is one of the few countries in which tax obligations are based primarily on citizenship and not on permanent or habitual place of residence. Therefore, U.S. citizens living abroad are just as subject to return and reporting obligations as if they were living in the United States. Accordingly, it is irrelevant that they have been living abroad even for decades should they maintain their U.S. citizenship, as it makes them liable in the United States for any asset, business, or income obtained abroad which are thus undeclared and considered to be offshore in the U.S.
The United States is not the only country in which citizens are “voting with their feet” against the perceived or genuine unfairnesses of the tax system. Recently, a number of rich French people revealed that they would be prepared to give up their tax residency in France in order to avoid having to pay three-quarters of their income into the state budget.
Fortunately, many countries with favourable tax laws welcome those who have the ability and willingness to generate income, but wish to finance countries that are spending less of their income.
The number of Americans living and working abroad who have renounced their U.S. citizenship increased six fold in the second quarter of 2013 compared to the same period of 2012, and doubled in comparison with the previous quarter. This wave of renouncing has become stronger ever since the Internal Revenue Service (I.R.S.) began to collect information about the undeclared offshore assets, investments, and offshore bank accounts of American taxpayers abroad.
The United States is one of the few countries in which tax obligations are based primarily on citizenship and not on permanent or habitual place of residence. Therefore, U.S. citizens living abroad are just as subject to return and reporting obligations as if they were living in the United States. Accordingly, it is irrelevant that they have been living abroad even for decades should they maintain their U.S. citizenship, as it makes them liable in the United States for any asset, business, or income obtained abroad which are thus undeclared and considered to be offshore in the U.S.
The United States is not the only country in which citizens are “voting with their feet” against the perceived or genuine unfairnesses of the tax system. Recently, a number of rich French people revealed that they would be prepared to give up their tax residency in France in order to avoid having to pay three-quarters of their income into the state budget.
Fortunately, many countries with favourable tax laws welcome those who have the ability and willingness to generate income, but wish to finance countries that are spending less of their income.
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