While Filipinos have been dreaming of emigrating to the US and acquiring US citizenship, the number of wealthy overseas Americans giving up their citizenship have been ballooning, due to increasingly repressive tax laws.
From Bloomberg,
Rich Americans renouncing U.S. citizenship rose sevenfold since UBS AG (UBSN) whistle-blower Bradley Birkenfeld triggered a crackdown on tax evasion four years ago.
About 1,780 expatriates gave up their nationality at U.S. embassies last year, up from 235 in 2008, according to Andy Sundberg, secretary of Geneva’s Overseas American Academy, citing figures from the government’s Federal Register. The embassy in Bern, the Swiss capital, redeployed staff to clear a backlog as Americans queued to relinquish their passports.
The U.S., the only nation in the Organization for Economic Cooperation and Development that taxes citizens wherever they reside, is searching for tax cheats in offshore centers, including Switzerland, as the government tries to curb the budget deficit. Shunned by Swiss and German banks and facing tougher asset-disclosure rules under the Foreign Account Tax Compliance Act, more of the estimated 6 million Americans living overseas are weighing the cost of holding a U.S. passport.
“It started with the fallout from UBS and non-U.S. banks feeling it’s too risky to deal with Americans abroad,” said Matthew Ledvina, a U.S. tax lawyer at Anaford AG in Zurich. “It will increase because Fatca will require banks to track down people, some of whom will make voluntary disclosures before renouncing their citizenship.”
Renunciations are higher in Switzerland because American expatriates expect extra scrutiny of their affairs after the UBS case and as the U.S. probes 11 other Swiss financial firms for aiding offshore tax evasion, said Martin Naville, head of the Swiss-American Chamber of Commerce in Zurich.
This is another example of the law of unintended consequences at work. Worst, these could be symptoms to the road to serfdom.
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