A record number of U.S. citizens or long-term residents are renouncing U.S. citizenship, including some high-profile names like Tina Turner. Commentator Robert Wood discussed relinquishing and renouncing citizenship because of tax concerns. He notes that there is not a mass exodus and that the number of people trying to get in very much exceeds the number of people who are leaving.
Says Wood: “America’s global income tax compliance and disclosure laws can be inconvenient, expensive, and some say downright oppressive.” Some Americans with high incomes want to move to friendlier tax climes. Even if you are a U.S. citizen living somewhere else and paying taxes there, you have to report the income here.
Many of the expatriates may think that renunciation or relinquishment is a solution to their problems. Not necessarily, Wood explains, unless underlying problems are addressed. And there is an exit tax, so an individual with perhaps $2 million or more “could have to pay for the privilege of leaving.” In fact, after the co-founder of Facebook left for Singapore to avoid paying higher U.S. taxes, there was a bill in Congress to increase the exit tax.
Wood discusses the subject at greater length in his Forbes article, “Record Numbers Renounce U.S. Citizenship---And Many Aren't Counted.”
For more information on the subject, please refer to Mr. Wood’s article in Forbes. Robert Wood is a tax attorney with Wood, LLP in San Francisco, California and spoke with The Tax Law Channel, an affiliate of The Legal Broadcast Network. The Legal Broadcast Network is a featured network of the Sequence Media Group.