Should You Renounce Your US Citizenship?

For many people, US citizenship is a great privilege and one that they value for their entire lives. After all, US citizenship allows a person to travel with a US passport, live and work in the US, vote in US elections, and run for office in the US. However, a small number of people give up or renounce their US citizenship each year. Most recently, Eduardo Saverin, one of the founders of Facebook, decided to renounce his US citizenship and his decision sparked quite a lot of debate and discussion about the issue.

According to statistics, 1800 Americans renounced their citizenship in 2011, up sixfold from just 2008. One of the reasons people renounce their citizenship is because they stop agreeing with the policies and values of the US. For example, a person may decide that the current system or the current way of doing things in the US is no longer acceptable and they no longer wish to be associated with the country. Another reason for renouncing citizenship is because a person wishes to become a citizen of another country, usually a country which does not permit dual citizenship.

One of the most common reasons why people renounce their American citizenship is due to tax reasons. It has been reported that Saverin revoked his citizenship to become a Singapore resident in part because the billionaire wanted to take advantage of the tax reasons for doing so. Saverin has denied moving for tax purposes, and says that he has made up his base in Singapore for purely practical reasons.

Singapore has a maximum income tax of 20% and has no capitals gains taxes, while the US has a 15% capital gains tax and a maximum 35% income tax rate. In addition, US tax laws require citizens to pay taxes, even if they live outside of the US. This means that people cannot avoid these taxes simply by living outside of the US.

While renouncing US citizenship may have some long-term tax advantages, there are also several disadvantages to the move as well. For example, many people who decide to renounce US citizenship and leave often end up having to pay a considerable “exit tax.” In addition, traveling back and forth between the US after renouncing US citizenship is more difficult. In fact, some legislators are looking to make it even more difficult in the future by attempting to pass a law which would make it impossible for former US citizens from entering the US once they renounce citizenship.