June 25 2012
American Tax Refugees Saying “Enough is Enough.”
Vicki E. Alger
Forget moving out of high-tax states like California or New York. The New York Post reports:
Startling new data from Uncle Sam show that defections by Americans are expected to double this year, largely to avoid any stiff tax bills resulting from the proposed 55 percent hike on the rich — as well as the likely expiration on Dec. 31 of the Bush era tax cuts.
As many as 8,000 US citizens are projected by immigration officials to renounce in 2012, or about 154 a week, versus 3,805 in 2011, or about 73 per week.
“High-net-worth individuals are making decisions that having a U.S. passport just isn’t worth the cost anymore,” said Jim Duggan, a lawyer at Duggan Bertsch, which specializes in protecting assets of the wealthy. … “Some are philosophically disgusted at the course our country is taking in all kinds of ways. They’re making a strong protest of, ‘Enough is enough,’ ” said Duggan. “But largely it’s an economic decision.”
There’s a catch to reaching tax nirvana. To renounce citizenship — and thus escape any future US taxes forever — a citizen must buy that unique freedom with a a one-time exit tax of 15 percent on the fair-market value of all assets — including real estate, securities, businesses and personal belongings — less their basis price.
“Many see it as a cheaper way to get out from under any tax liabilities on future wealth, while their assets have lower values during the weak economy,” he said. … Among the popular spots: Australia, Norway, Singapore, Cayman Islands, Costa Rica, Guernsey and Antigua.
There is one way to have your cake and eat it, too, Duggan said. The US possessions in the Caribbean — St. Thomas, St. John and St. Croix — give a 90 percent tax credit to US citizens living there at least 183 days a year, resulting in an effective tax rate of just 3.5 percent, he said.
How long will the American private sector continue “doing fine,” as President Obama said recently, when people who work, create jobs, and pay taxes jump ship?