For those seeking adventure and a refreshed outlook, America has always been a good place to leave and return to. Our writers have sung the praises of Europe, often to the detriment of their home country. Henry James, Mark Twain, James Baldwin, Ernest Hemingway, Scott Fitzgerald have all lauded experiences that weren’t to be found in America. To hell with the good old-fashioned buck! They would always have Paris — or Italy, or Spain, or England.
Veterans of World Wars I and II have also experienced revelations about a world away from America, as have Hollywood stars and exchange students. With the advent of cheap air fare (until expensive fuel costs kicked in), we’ve been afflicted with travel fever.
Even in a terrorist-ridden world, the bloom is still not off the rose for itinerant Americans. What’s changed is the trip home — increasing numbers of citizens are choosing not to make it. They’re opting instead to give up their citizenship. Their decision has nothing to do with the quest for a more refined sensibility (Henry James), the thirst for adventure (Ernest Hemingway), or rage against racial discrimination (James Baldwin). It all comes down to one word: taxes.
Feeling victimized by an IRS campaign to track undeclared accounts opened by Americans abroad, the account-holders are now giving up their citizenship.
In yesterday’s Wall Street Journal, writers Liam Pleven and Laura Sanders report that so far this year 1,001 citizens and green-card holders have chosen to renounce allegiance to the United States. Andrew Mitchel, a lawyer in Centerbrook, Connecticut, who analyzes Treasury Department data, claims “that figure puts 2014 on track to top last year’s total of 2,999 renunciations… which was the most since the government began disclosing the data.”
Since a guilty plea by Credit Suisse to the tune of 2.6 billion in fines, European banks are washing their hands when it comes to bank accounts for American citizens. They don’t want the hassle, the paperwork or the scrutiny. Left with virtually no alternatives, and feeling victimized by a five-year-old US campaign to track undeclared accounts opened by Americans abroad, the account-holders are now giving up their citizenship.
The United States will tax its citizens no matter where they live and no matter what other taxes they pay; and they’ve become mean and unforgiving about it. “If I can compare it to romance, I say the US is like Fatal Attraction,” says Suzanne Reisman, a lawyer in London who advises Americans abroad. “Once they’ve got you, they never let you go. You have to renounce your citizenship, or you have to die.”
The days of relocating abroad permanently for tax reasons are not exactly new. Denise Rich, ex-wife of billionaire Marc Rich who received a pardon from the Clinton administration for tax evasion, gave up her US citizenship to become a citizen of Austria, where her father was a wealthy shoe manufacturer. Eduardo Saverin, co-founder of Facebook, and actor Yul Brynner chose to relinquish American citizenship rather than pony up huge tax bills.
But the heavy-weight championship for tax dodging (is it even fair in this instance to use that phrase?) has to be held by mutual fund kingpin John Templeton, who sidestepped over $100 million in US estate taxes by exchanging his US citizenship for Bahamian citizenship in 1964, so that he could donate over $1 billion to charitable causes.
Even loyalty to the United States of America comes at a price.