U.S. Citizenship Given Up by Weathly Americans
In a very unpatriotic trend, more and more Americans are giving up their citizenship in an effort to avoid paying taxes.
About 1,780 Americans gave up their citizenship's at U.S. embassies last year, which is a dramatic increase from 235 in 2008, according to Andy Sundberg, secretary of Geneva's Overseas American Academy, highlighting numbers from the government's Federal Register.
The increase can be attributed in part to whistleblower Bradley Birkenfeld after he left UBS, Switzerland largest bank. Birkenfeld exposed the tax evasion practices of UBS, which then led to a governmental crackdown on tax evasion.
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"It started with the fallout from UBS and non-U.S. banks feeling it's too risky to deal with Americans abroad," said Matthew Ledvina, an American tax lawyer at Anaford in Zurich.
"It will increase because Fatca will require banks to track down people, some of whom will make voluntary disclosures before renouncing their citizenship," he said.
The 2010 Fatca law states that banks must hold 30 percent from "certain U.S.-connected payments" to some accounts of American clients who don't disclose enough information to the IRS.
The high number of relinquishments in Switzerland can be linked to Americans who live there. They are worried about the added scrutiny of the holdings in the wake of the UBS scandal and other Swiss banks which have been the subject of inquiry, according to Martin Naville, head of the Swiss-American Chamber of Commerce in Zurich.
"Most of the real cross-border tax troubles have been around Switzerland," Naville said. "We've got absurd tax laws coming into force because of the activities of certain people who tried to hide money."
The U.S. embassy in Bern did not disclose the exact number of people giving up their citizenships. The U.S. State Department does not release annual figures. State Department spokeswoman Elizabeth Finan explained that "on average" around 1,000 people give up their citizenship each year.
