Americans Give up Citizenship as Government Stamps out Tax Evasion
Suddenly, there is a rush for turning in American passports and it might have been caused by Americans hoping to avoid the new requirements for disclosure. Others who are living abroad are also giving up their passports because they are reportedly tired of keeping pace with extremely complex tax filing procedures, claim tax attorneys.
Unlike most nations across the globe, America still chooses to tax its citizens on all forms of income irrespective of where it has been earned from or where the citizen resides. And, this means, treading through mountains of tax filing paperwork for expats since they are forced to deal with tax formalities prevalent in two countries.
Where is Steve Forbes when you need him?
In the words of Schneider who is now living in UK on a Swedish passport, “Every year, I was spending about $600 to $700 having somebody do the tax paperwork.” Schneider was one of those who are lived in America for about 13 years. He is one of the group of 1,800 people who chose to renounce his American citizenship by giving up his green cars in early 2013. The second quarter of the year witnessed 1,130 renunciations as per data provided by government sources. There were 932 renunciations through 2012 as well.
The trend of renunciations has picked up since America has started preparing for implementation of the Foreign Account Tax Compliant Act which is a new law that will now require all foreign institutions to report 100% assets owned by an American citizen. This is the result of a measure that was approved by the Congress way back in 2010 and was aimed at recouping hundreds of billions of dollars that the government lost every year on account of unpaid taxes.
The government would not have to do this, says financial and tax experts, if they just made America more comfortable to live. If America stopped harassing its citizens these same citizens would bring billions of dollars back to America in creating jobs and expanding businesses. But the current American leadership does not see it this way.
Run & Hide
Tax lawyers have observed that surrendering citizenship is not an easy route for those who have unpaid tax dues. The government could still penalize former citizens if there are evidences supporting tax evasion.