"I had paid over $1 million in U.S. taxes but didn't receive any benefits, nor did my wife and kids. (She maintains her U.S. citizenship.) As I saw the massive U.S. deficit continue to climb, it became clear that the government would likely raise taxes further. I finally decided to expatriate. ... A dozen of my friends who have lived over 10 years in Asia have done the same. We can no longer afford to be American citizens."
Eugene Chow, an attorney who specializes in helping Americans give up their U.S. citizenship, told The Wall Street Journal's "Asia Today" program that while such actions continue to be rare, they are increasing. He says people pay a high price for giving up their citizenship. Not only is there an "exit tax," but all appreciated assets, including a home, are assessed a 15 percent capital gains tax, even if they haven't been sold.
Chow says, "The IRS is essentially outsourcing its compliance rules to non-American-related companies and they are saying to Americans, 'We don't want your business.' So that's more of a practical reason for why some people choose to give up their passports -- to make it a less complicated life living overseas."
While the media love to focus on billionaires, says Chow, most who renounce U.S. citizenship are "people who have changed circumstances; people ... who have lived and worked (overseas) for the last 10-15 years, who might have married a foreign spouse and who believe their future is overseas, rather than back in the U.S."
With so many foreigners wanting to become U.S. citizens, it's still a shock to know someone who has relinquished his citizenship. It is another reason for simplifying the U.S. tax code. America should want to retain people with the skills and experience of people like Sam, who have contributed more than tax money to their (now former) country.