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To be or not to be a U.S. Citizen
Eduardo Saverin one of the founders of Facebook will not be an American citizen any longer. The Brazilian born Saverin who moved to America in 1992 and became a citizen in 1998 originally owned a 3rd of Facebook’s shares, but was squeezed out of the company. His obvious betrayal by Mark Zuckerberg was dramatized in the flick “The Social Network¨. Still, Saverin failed to do badly. He ended up owning around 10% of the company, a piece of which he sold off to help finance a range of startups in The USA and an extravagant lifestyle in Singapore, where he moved in 2009. Now he stands to make $2-$4 Billion, dependent on how many shares he owns.
He also was among the 1780 Americans who renounced their US Citizenship last year. That compares to just 235 in 2008. It used to be that people from all over the world wanted to be US citizens. Now we are seeing just the opposite. The explanation for his renunciation likely is taxes. Currently the U. S. is the sole country which taxes worldwide compensation, France is thinking about implementing the same strategy. Most nations limit their taxes to those citizens living and working within their borders.
America’s corporate taxation level is also the planets highest. Taxation rates on earnings, dividends, and capital gains will rise next year if the Bush era reductions aren’t extended. Uncle Sam’s most recent attempt is the Foreign Account Tax Compliance Act, which became effective on January 2012. FATCA imposes reporting on monetary assets overseas when handling US citizens. This turns foreign firms into agents of the IRS, many banks and institutions are opting to not work with Americans. Here in Panama we are finding the same issues. As a US passport holder I can´t open a bank account at a majority of the banks. The banks would love to have the business, but would prefer to not have to deal with the FATCA regulations. I should add that in Panama we have a new bank that opened called UNIBANK that offers services to Americans.
When did being an American become a bad thing? When I served in the US Navy during the 90´s I enjoyed respect the world over. I consider it my duty to pay the least amount of taxes possible within the law. I believe 100% in reporting, a minority of tax dodgers have brought the hammer down on everyone. More and more Americans are expatriating, we will need a legal way to take care of our finances abroad.
As far as renouncing ones citizenship, that is a very personal decision. My Great Grandparents left Chiavari, Italy and Poland for a better life in America. Both of my Grandfathers served in the military. Alfred Hilarski served during WWII in the US Army with, ¨Patton´s Big Red One¨, and Merle Milliman served here in Panama for four years with the USMC protecting the canal. I would love to sit down today with a member of that generation and ask them what they think of the state of affairs in the USA. Choosing to leave the country I was born in was difficult, but deep down inside I know that it is the right decision. I have a feeling that if my ancestors were my age and saw the opportunities abroad, that they to would leave.
In the case of Mr. Saverin it may be about taxes, but who are we to judge? He is doing everything within the guidelines of the current IRS laws. More and more people are looking to leave the USA. Will we see draconian laws limiting travel? Will we see laws limiting the amount of hard assets we can take out of the country? We recently saw another law on the books that allows the IRS to inform the Department of State to restrict travel of citizens who owe more than $50,000 in back taxes to the IRS. The expats I talk to are getting nervous. The speed of regulations in the USA seem to be accelerating, will you leave before the opportunity to leave is gone?