That headline in The Wall Street Journal (17 Aug) over an article by David Bain, may have surprised some, but here at the Sovereign Society we’ve been observing this phenomenon ever since out founding in 1997.
Indeed, the growing trend of Americans voluntarily ending their status as U.S. citizens — the only legal way by which they can escape U.S. taxes and government controls — has reached a new peak and shows no signs of abating.
The Journal reporter saw this trend in part as being due to offshore tax havens having been forced to surrender to tax information transparency demands by the major high tax welfare states.
I think that misses the more fundamental causes as to why many more Americans, both wealthy and middle class, are handing in their U.S. passports and moving abroad. I’ll explain in a moment.
As proof of the increased numbers of American expatriates, private client lawyers and relocation specialists report a surge in wealthy Americans already living abroad who are prepared to give up their citizenship to avoid the scrutiny of U.S. tax authorities.
Interestingly, although such a move offshore means departing Americans may have to pay an exit tax that the Democrat Congress and George Bush imposed in 2008, lawyers say this is a price people have become more willing to pay this year, now that recession and decreased asset values has reduced the size of this onerous and unfair tax.
Needing a colorful angle for his story, the WSJ’s Bain conjured up a fanciful picture: “Many ultra-wealthy individuals who have chosen to become stateless now cruise outside coastal waters in their mega-yachts in the belief that if they stay on the move, tax authorities will not be able to catch up with them.”
Bain continued: “One analyst who did not want to be named, has estimated the number of stateless tax evaders amounted to a few thousand. This implies the quantity of money outside the grasp of global tax authorities could be trillions of dollars.”
Liberty a Major Concern
I advise and have discussed the issues with scores of Americans who are considering acquiring a second passport and citizenship, (an absolute necessity before giving up U.S. citizenship).
I can tell you that while some are motivated by taxes, most are fed up with stultifying controls and interference by government and by what they see as President Obama’s radical socialization of a once great nation many no longer recognize as the country of their youth.
Official figures on Americans who end citizenship are reported by the IRS every quarter. In the first half of 2009 only about 90 people gave up citizenship. But one prominent lawyer, who did not want to be named, said: “There has been for some time a view that the IRS has been under-reporting these numbers.”
My friend, whom I have often quoted, John Gaver, who edits the conservative web site Action America looks at this from a different angle: “What these lists fail to show is the vast and increasing numbers of wealthy U.S. citizens who are just ‘dropping out’ – taking all of their wealth and leaving the U.S. without renouncing. They just disappear off the U.S. tax rolls and appear on some other country’s tax rolls.”
Anecdotal evidence also suggests there has been a surge of inquires from Americans who are considering acquiring citizenship of another country.
Our long time associate, Christian Kälin, managing partner and citizenship planning consultant at Henley & Partners in Zurich, said his firm has had a big rise in such inquiries.
In Chris’ opinion: “Tax reasons might be the biggest reason why U.S. citizens will want to drop their passports, but security issues will also influence their decisions. For example, we saw a huge surge in inquires from U.S. citizens contemplating acquiring an alternative passport after the Mumbai killings.”
In my latest (7th) edition of The Passport Book, you can learn all about how Americans legally can escape U.S. taxes by expatriation, whether the U.S. exit tax applies to you, as well as the specific residence and citizenship requirements of nearly 100 countries worldwide that could be your new home place, whether you are American or any nationality. The book will be “hot off the presses” next week. Click here for more information and advance orders.
The Sovereign Society is the recognized voice in the complex offshore world. Join the Sovereign Society and keep informed.
How Will Obama React?
You are about to see a controversial new video.
It shows details of what will soon become the biggest political scandal of the Obama administration. Once it hits the mainstream media, millions of unprepared Americans will hit rock bottom.
How will Obama react? We’re not sure. Maybe you can tell us what you think once you see it for yourself.