Why Denise Rich Gave Up U.S. Citizenship

Laura Saunders
The Wall Street Journal

…Rich is not alone in giving up her U.S. citizenship: In 2011, nearly 1,800 people renounced their U.S. citizenship or residency, a sixfold increase from 2008. In May, a furor erupted after it was revealed that Facebook co-founder Eduardo Saverin had renounced his citizenship ahead of Facebook’s public offering, saving himself millions in taxes.

Experts say the increase in expatriations comes in part because of the Internal Revenue Service’s crackdown on undeclared and untaxed foreign holdings of U.S. taxpayers. Unlike many countries, the U.S. taxes citizens and residents on their worldwide income, but the rules were loosely enforced for many years. That changed after the terrorist attacks on Sept. 11, 2001, and, separately, evidence that giant Swiss bank UBS and other offshore providers were encouraging U.S. taxpayers to hide assets abroad.

Bryan Skarlatos, an attorney at Kostelanetz & Fink in New York, says that if Rich has extensive foreign holdings, “she just may not want to pay U.S. tax on that income.”

A spokesperson refused to comment on Rich’s holdings.

The exodus from the U.S. may also be intensifying because of the prospect of higher tax rates next year. Even if Congress extends current tax rates for a year or two, a new 3.8% tax on investment income for most couples with adjusted gross income above $250,000 ($200,000 for singles) will take effect in order to help pay for the heath-care overhaul…

Read the entire article at The Wall Street Journal.

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