It turns out, the U.S. government doesn’t like it if you renounce your citizenship to avoid paying taxes — even more than people don’t like paying taxes. At least, that’s what Facebook co-founder Eduardo Saverin discovered after he announced that he was giving up his U.S. passport, just days before he was set to make millions from today’s Facebook IPO. Saverin, though, is not alone. Ever since the U.S. government began to crack down on tax evasion four years ago, nearly 2,000 wealthy Americans living overseas have decided to give up their citizenship to avoid paying taxes.
The U.S. is the only nation in the Organization for Economic Cooperation and Development that taxes citizens wherever they live, which means that rich Americans can’t avoid paying taxes by moving to, say, Switzerland. Now, with concerns about the budget deficit clogging up Congress, the government is going after tax cheats with a vengeance. This means that many wealthy expatriates, especially those who live in Switzerland, started facing pressure from banks abroad, who didn’t want to risk being charged with aiding tax evasion. Instead of coughing up the tax money they owed, many rich expats decided that holding a U.S. passport was more trouble than it was worth.
Some say that the government assumes that any American living abroad are there for “nefarious” reasons, but in reality many are there for business or leisure. However, the fact remains that many Americans do live abroad in order to evade U.S. taxes, because they apparently agree with Mitt Romney’s friend and former Bain colleague, Edward Conard, who believes that dramatic income inequality is in everyone’s best interest — so government policy should cater to those of extraordinary wealth.
Photo Credit: sandstein
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