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News Link • TAXES: Federal

More Rich Americans Renounce U.S. Citizenship for Lower Taxes

• Jonathan Berr via
A U.S.-born resident of Ireland recently came into some money after he and his wife sold a farm they inherited from her parents. Instead of enjoying his windfall, the man is furious at the Internal Revenue Service for penalizing him for running afoul of the agency's confusing regulations regarding the reporting of income from foreign bank accounts. He is so mad, according to his attorney, Jane Bruno, that he's considering renouncing his U.S. citizenship.
While such a move is drastic, it's also becoming increasingly common. In fact, so many people are eager to renounce their U.S. citizenship for tax reasons, that in some U.S. embassies there's a waiting list to escape from the clutches of Uncle Sam.

Part of the reason for the rising interest in renunciation is burdensome rules like the one about foreign accounts designed to catch people who use quitting their citizenship as a way to illegally duck their tax obligations, says Bruno, who is based in Palm Beach Gardens, Fla. The Irish resident, whom she declined to name, was slapped with a penalty of several thousand dollars.

"These penalties that they came up with are oversized when compared to the misdeeds that were committed," Bruno says.

Triple the Number in a Year

As many as 743 people with American citizenship or legal resident status renounced their U.S. citizenship in 2009 – three times as many as in 2008 – which resulted in a waiting list for people to say farewell to the red, white and blue at the U.S. Embassy in London, according to the Financial Times. That represents a tiny fraction of the 7 million or so Americans living abroad, but does underscore the growing unease about the Obama administration's taxation policies among the wealthy, according to experts.

2 Comments in Response to

Comment by Ross Wolf
Entered on:

It is clear Obama intends to strip U.S. Citizens of their assets; their children of their inheritance, taxing anything and anybody to pay for his Socialist programs. I have already heard at least a hundred Americans say in the last two months...if only I had enough money to leave the U.S. Obama is doing to America what Hitler did to Germany; scaring off Citizens with money, causing skilled and educated people to leave America for other countries. So many people with money left Germany, before Hitler started arresting millions, Hitler had to close the gate. Could Obama do that? Obama might say you can leave but not with your money.

Comment by Doug Nusbaum
Entered on:

When one consideres that according to the IRS, the top 400 paid only about 15% of their income in taxes, perhaps a more appropriate course of action would be for these very wealthy to hire better accountants and lawyers.  Oh, and that 15% is on taxable income.    So, where exactly are they going?  Tax rates are a lot higher in "socialist"  Europe.  Maybe they can move to some kleptocracy where only the poor pay taxes

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