The United States now has officially joined the ranks of Nazi Germany and Stalinist Russia by enacting its first-ever "exit tax." President George W. Bush signed the legislation–passed unanimously last month by both the House and Senate–into law yesterday, June 17.
You must pay the exit tax within after "expatriation"–giving up your U.S. citizenship or (in some cases) long-term residence in the United States. Only a few hundred people do this each year, but Congress didn't like the fact that severing all ties to the United States allows wealthy people to legally avoid all U.S. tax. For my take on the exit tax, click here.
The news isn't 100% bad, though, particularly if you're not wealthy enough to trigger the tax. In that case, you can bypass some of the complexities and hassles of the law the exit tax replaced. If you have a net worth that exceeds $2 million, though, or otherwise qualify as a "covered expatriate," the new law could make your expatriation a more "taxing" experience.
Is expatriation for you? It's not a step for the faint of heart, but if you're seriously interested in this option, we can help.
Copyright (c) 2008 by Mark Nestmann
Update: My Billionaire's Loophole report contains a detailed analysis of the exit tax law and numerous suggestions for legally avoiding it.
(An earlier version of this post was published by The Sovereign Society.)
