Rich Americans Renounce Citizenship to Evade Taxes

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.

Why Rich Americans Want to Leave

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.

The Hyper-Wealthy Shouldn’t Pay Taxes?

Earlier this month, Conard explained to the New York Times’ Adam Davidson that vast sums of money held by a small elite benefits all Americans because these elites use only a small fraction of their wealth to support themselves. The rest, he said, finance investment and innovation that keep the economy running. The idea is that the financiers of Microsoft or Eli Lilly and Company, for example, created for more benefit for the world than if that money had gone to taxes. The wealthy are, therefore, entitled to their money. After all, the rich always know best — even if they have invested in JP Morgan.

Davidson is quick to eviscerate Conard’s argument, explaining, “If a Wall Street trader or a corporate chief executive is filthy rich, Conard says that the merciless process of economic selection has assured that they have somehow benefited society.” This sense of entitlement and superiority — Conard spits that anyone who does not seek fabulous wealth as a financier is an “art-history major” — is what is at the root of the exodus of wealthy (former) tax payers.

If only they could see one step back from the benefits that corporations bring to the world — how corporations got there in the first place. As Senate candidate Elizabeth Warren reminds us, “nobody in this country got rich on his own,” because government intervention, paid for by tax dollars, creates a business- and innovation-friendly environment in the first place.

Related Stories:

Tax Day: Make the 1% and Corporations Pay Their Fair Share

Apple: Mega-Profit, Curiously Low Taxes

Romney Pays a 15 Percent Tax Rate, How About You?

Photo Credit: sandstein

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Huber F.
Huber F.2 years ago

Whats will these guys do to keep their names from defamation? Will they think of charities or educative grants to the needy, or aid agents of promises to the needy?


Stanley Rampersad
stan Balgobin3 years ago

There was a time when it was a source of pride to be an American citizen. Now the USA is hated and despised by a large proportion of the rest of thw world.

Alan Lambert
Alan` Lambert3 years ago

Perhaps we should fine those who renounce American citizenship half of their net worth...

David Fletch
David Fletch3 years ago

Does anyone really think a politician will spend money more efficiently then an individual with his own money? I applaud them for providing a service that people want need and desire. Some, like Chuck Schumer apparently think the border fence should double as an Iron curtain to keep people in. (or else)

Carrie H.
Carrie H.3 years ago

Thye should never be allowd back in the country

Robert H.
Robert Hamm3 years ago

ROTFLMAO> There is WAYYYYYYYY more socialism in the countries they are moving too. They simply have a lower tax base.

WE don't have socialism here, thats downright laughable. Well, we do……but at the top end, the corporations etc. A HUGE segment of society can't find a job………it took me 3 years to find one myself, and at half the pay too. IN fact I likely would not have gotten that job either except my son was dating a woman in this company. Your too qualified,,,,,,,I will call you when a proper opening open. You aren't qualified enough we need someone bilingual, The list of excuses was huge. MANY people went through the same process because companies laid people off at around 50 during that time period. We will eventually recover…….in fact the economy is doing better…..even housing is bouncing back very slowly. But there are few jobs. ALL, those people, just like me, WANT to work. The difference between the right and the left is the right says tuff shit. If you can't find a job then have the courtesy to vanish so we don't have to look at you. When the right and the left can finally start cooperating again…….then we will see jobs.

Jeffrey H.
Jeffrey H.3 years ago

Instead of renouncing their citizenship, why don't filthy rich Amerikans just move to a foreign country that refuses to extradite them for tax evasion?!

june t.
june t.3 years ago

thanks for the post

Eric Lees
Eric Lees3 years ago

Well said Carlos, David, and Todd

For the other 95% of my fellow care members. Are you just having a knee jerk reaction? Stop and think for a minute, you are looking at the problem totally wrong.

Why are you cheering for punishment of success people that no longer feel America is where they can create the most success? Which will create more jobs the US government stealing his money or him investing it in a business here or elsewhere. Is this the America you want to live in?

Instead how about asking why are young entrepreneurs fleeing America and what do we need to change to make them want to stay? America used to be the land of the free where people with grand ideas came to build their dreams. Sadly that is no longer the case.

We are in a global economy and there is no reversing that either we reverse course and once again make America the land of opportunity or we take a back seat while the rest of the world catches up and surpasses us.

Steve R.
Steve R.3 years ago

What do I keep saying - tax the rich and they will take their money and run.

It's ridiculous to try and tax American citizens when they live in a foreign country where they have to pay taxes to the government of that country as well.

It's not only rich people - anyone would renounce his citizenship if he had to pay taxes to two governments!

And guess what - if you renounce your US citizenship and become a citizen of another country - it's not tax evasion. Get real!

Democrats - stop spending money you don't have! That's the answer! The rich are too clever!