The Wall Street Journal has picked up on a story about taxpatriatism that I first wrote about . Excerpts:
More Americans Sever U.S. Ties as IRS Gets Tougher
The number of American citizens and green-card holders severing their ties with the U.S. soared in the latter part of , amid looming U.S. tax increases and a more aggressive posture by the Internal Revenue Service toward Americans living overseas.
An Ohio-born entrepreneur, now based in Switzerland, told Dow Jones he is considering turning in his U.S. passport. Mounting U.S. tax and reporting requirements are making potential business partners hesitate to do business with him, he said.
“I still do dearly love the U.S., and renouncing my citizenship is not something I take lightly. But more and more it is seeming like being part of a dysfunctional family,” said the businessman, who asked that his name not be used for fear of retribution.
“The tax itself is only a small part of the issue,” the Swiss-based entrepreneur said. “It’s the overall regulatory environment.”
A minority of the recent expatriates are U.S. natives who have started a new life overseas. Most are people with family ties outside the U.S.: foreign professionals who acquired a green card while working in the U.S., or people who have received higher education in the U.S.
“Fifteen or 20 years ago there was a big rush to make sure your kids became U.S. citizens, for access to U.S. schools for example,” said Timothy Burns, a tax lawyer at Withers law firm in Hong Kong. “Now we’re seeing just the opposite.”
While the Journal suggests that it is a tighter regulatory environment and the prospect of higher taxes that is causing the bump in taxpatriatism, International Tax Blog made what seemed to me to be a stronger case for the idea that a recent relaxing of regulations and less-onerous tax penalties for moderately wealthy taxpatriates was the real driving factor. I suspect the Journal article’s spin made it more palatable to the anti-regulatory and anti-tax editors who can now use it as a talking point on the editorial page.