About 15 years ago, I knew a couple from Latvia who had moved here and gone through the long process to become U.S. citizens. It was a big deal to them and it represented the culmination of years of hopes — dreaming of getting away from what had been a repressive government and becoming a part of the American experience.
For many of us, it’s always been a point of pride that so many people in other places wanted to become Americans. Some are like the 6-year-old from China, above, who are adopted here and don’t have much say in the matter. But most of the naturalized citizens are people who have struggled to get here and then struggled to make something of themselves in their new homeland. They’ve been grateful to have opportunities they couldn’t have dreamed of in the countries of their birth, in many cases. But I wonder whether that’s slowly changing.
The United States is still the “land of opportunity” compared to many places, but there are an increasing number of people who find the tax burden isn’t worth putting up for in exchange for U.S. citizenship. The latest example is Eduardo Saverin, a Brazilian-born c0-founder of Facebook. Saverin has decided to renounce his U.S. citizenship. It’s going to save him a lot of money as he becomes a very wealthy man by Facebook going public.
Those who renounce U.S. citizenship are typically very wealthy people who don’t want to keep paying U.S. taxes. The U.S. government is almost the only one in the world which claims the right to tax money made by Americans even in other countries. If a British or French or Italian citizen lives in this country and pays tax here, the governments back home don’t demand money from him. For an American living in another country, he has to pay taxes in the host country and then the IRS wants to tax his income, too. It’s insane.
As the pressures increase on governments such as the United States (and other western welfare states, to one extent or another) to come up with more and more revenue, the people they’re going to be looking for are the most productive people. The ones who are most successful are going to be the ones paying the highest penalty. The per capita debt in this country is already more than $44,000 and it’s going to get far worse. Do you want to be among those the feds are expecting to pay that money back?
I can see how someone without much current income or wealth would still be attracted to come here, but why would someone successful choose to stay?
If you punish success, you’re going to lose successful people. The only thing that’s still missing is a good place to park that money and protect income while living a good lifestyle. The first country to understand that and cater to those people — to treat them as potential customers — will gain a tremendous asset.
Note: If you’re interested in what it takes to renounce U.S. citizenship, here’s a guide to the process. It’s not as easy as you might imagine.