CNN Money writes:
The number of Americans choosing to give up their citizenship has spiked dramatically this year as the government works to implement a new disclosure law aimed at stamping out taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. evasion.
Some of the rush may be caused by Americans hoping to avoid the new disclosure requirements. Others living abroad say they are giving up their U.S. passport because they are tired of dealing with overly complicated tax filings.
While not everyone living abroad has to pay U.S. taxes, they are still required to file U.S. tax forms, which have their own costs.
"Every year, I was spending about $600 to $700 having somebody do the tax paperwork," said Kim-Fredrik Schneider, according to the article.
This year has seen a spike in renunciations of U.S. citizenship with 1,809 people giving up their citizenship or green cards in the first half of 2013. In all of 2012, only 932 renunciations occurred.
Part of what is driving this increase may be the impending Foreign Account Tax Compliance Act, which requires foreign institutions to report financial information of U.S. customers to the United States government for tax collection purposes.
But perhaps of greater importance is the U.S. government’s attitude that it has the right to any money produced by Americans anywhere in the world. This mindset is burdensome for businesses as well as citizens, and violates the benefits principle of taxation.
A better solution would be to allow Americans who live in other countries full-time to only have to comply with the taxes in those countries and give the same treatment to businesses as well.
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