Published June 25, 2012
NEW YORK -- – America's rich are renouncing their citizenship at record levels -- just to get richer.
Startling new data from Uncle Sam show that defections by Americans are expected to double this year, largely to avoid any stiff tax bills resulting from the proposed 55 percent hike on the rich, as well as the likely Dec. 31 expiration of the Bush-era tax cuts.
As many as 8,000 US citizens are projected by immigration officials to renounce in 2012, or about 154 a week, versus 3,805 in 2011, or about 73 per week.
"High-net-worth individuals are making decisions that having a US passport just isn't worth the cost anymore," according to Jim Duggan, a lawyer at Duggan Bertsch, which specializes in protecting assets of the wealthy. "They're able to do what they do from any place in the world, and they're choosing to do it from places with much lower tax rates."
Duggan added, "Some are philosophically disgusted at the course our country is taking, in all kinds of ways. They're making a strong protest of 'enough is enough.' But largely, it's an economic decision."
There is a catch to reaching tax nirvana. To renounce citizenship, and thus escape any future US taxes forever, a citizen must buy that freedom with a one-time exit tax of 15 percent on the fair-market value of all assets -- including real estate, securities, businesses and personal belongings -- less their basis price.
Duggan said that dozens of tax-haven nations and island regimes around the world eagerly welcome disenchanted rich Americans with quick citizenship, business deals and protections from the US Justice Department and the IRS. Among the popular spots: Australia, Norway, Singapore, Cayman Islands, Costa Rica, Guernsey and Antigua.
And there is one way to have your cake and eat it, too, he added.
The US possessions in the Caribbean -- St. Thomas, St. John and St. Croix -- give a 90 percent tax credit to US citizens living there at least 183 days a year, resulting in an effective tax rate of just 3.5 percent, he said.