Monday, August 12, 2013

Exodus of Wealthy as U.S. Tax Protesters Relocate Abroad

Given the recent IRS scandals that have been prevailing, the world’s largest collection agency went from being loathed in the eyes of Americans to being detested. So much so, in fact, that an unprecedented exodus of the nation’s wealthiest citizens has fomented as a result, seeing tax protesters unhappy with the currently overly complex tax code instead relocating to countries that have more lucrative income tax options, or in some cases, none at all.

Such a decision is not one that should be taken lightly. After renouncing your citizenship, provided that you find a country of refuge that will grant you permanent citizenship, you must also turn over your passport. Forever after, you will be required to be approved for a visa when visiting the U.S. and you will no longer enjoy the freedoms or protection of this great nation. Yet for some that’s worth it when it equates to reducing their annual tax liability.

The most recent of the wealthiest to depart our nation is Facebook cofounder Eduardo Saverin, who did so much to the dissent of fellow Americans. Some other well known persons have recently followed suit, including celebrity Tina Turner. The primary reasons are a lower tax rate and a less complex system. For example, Russian actor Gérard Depardieu will likely remain in his home country because he only pays a 13% effective income tax rate; he’d pay 75% in France; 55% in the UK; and 45% in the U.S.

There is tax costs associated with leaving the U.S. for such reasons. Firstly, citizens must demonstrate that they have been compliant in their taxes for at least five years. Furthermore, and most importantly, if you earned more than $155,000 per year over the past five years, and or, have a net worth greater than $2,000,000, you will pay an Exit Tax.

Texas Lawyer Joe Garza (B) is a prominent and respected attorney that provides asset protection, estate planning and complex business tax litigation services nationally. He enjoys writing about recent events that relate to taxes as well as providing a variety of essays on topics relative to all issues of taxation.

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