Excerpt taken from the article.
If you tax them, they will leave. That's the message initial Facebook investor, billionaire Eduardo Saverin, inadvertently sent when he handed in his U.S. passport and jumped through the required tax hoops to renounce his U.S. citizenship.
After Treasury's publication of the quarterly list of expatriates on April 30 prompted a media frenzy, Saverin's spokesman explained that Saverin was not motivated by tax considerations, but rather that he finds rules that make it more difficult for Americans to live and invest overseas oppressive. By which he means tax rules like the Foreign Account Compliance Act.
Saverin's decision was not unprecented. The numbers of U.S. citizens who renounce their citizenship and long-term residents who terminate their residency here have been trending upward over the past four year, but they remain small relative to the total U.S. population. The S.S. Census Bureau estimated that the U.S. population in 2011 was 311,591,917; Treasury reported that 1,781 people expatriated that year. Dianne C. Mehany
of Caplin & Drysdale said her firm as seen a "significant uptick" in the number of clients looking to expatriate. She said the increased interest in expatriation likely results from both the IRS's international enforcement efforts, such as the offshore voluntary disclosure initiatives and the reporting regime enacted under FATCA. By requiring foreign financial institutions to report on their U.S. customers, FATCA imposes costs on those institutions that have made some of them decide it is no longer worthwhile to have American business.
Saverin is a fairly typical expatriate. He wasn't born in the United States and wasn't living here when he gave up his citizenship. Saverin, who was born in Brazil, lived in Miami and attended Harvard, where he roomed with Zuckerberg before decamping for Singapore in 2009.
Most Americans who decide to relinquish their U.S. citizenship are foreign residents, said Mehany. She estimated that about 70 percent of clients who consider expatriating live abroad, or are "accidental U.S. citizens" because they were born in the United States or to American parents but had few, if any, U.S. ties. Many of the people in those groups learned that citizens must file U.S. tax returns regardless of where they live after the UBS prosecution and offshore voluntary disclosure programs.
The eventual tax savings that Saverin may reap by becoming Singaporean puts him in another category of expats: those who have or are about to acquire wealth and who elect to move rather than may U.S. tax. Mehany said there is a younger generation of expatriates who decide that they don't have to live in the United States because citizenship in other places can afford them a similar lifestyle and yield significant tax savings in the long run. "The tax issue is forefront in their minds," she said.To read the complete article, click here