Posted on May 22, 2012
Is Your Citizenship a Good Business Move?
People flee their countries for safety, opportunity, avoidance of persecution, rape and even genocide. I am fortunate enough that the U. S. of A. is not one of those countries. We have our own problems but not like that. You could have a line from New Mexico to New York of people who would accept instant citizenship if it were an option. But last week an American businessman is renouncing his citizenship…willingly. What was even more surprising was that there are enough people that do this every year that the IRS publishes an annual report to highlight these cases.
Why would yo want to give up your citizenship to the greatest county on Earth? The Land of the Free and Home of the Brave isn’t good enough for you?!
Are you nuts…?
Quite the opposite actually. It doesn’t say much for his patriotism but his American citizenship was not a good financial decision. It simply costs him too much money.
Yep, take a minute to let that soak in.
If you have not heard, I am referring to Eduaro Saverin, co-founder and initial financier of Facebook. While it is costing him a few dollars to do this deal (a cool $220 million “exit tax”) before last Friday’s Facebook IPO, he will save an even cooler $600 million. Why you ask? Because Singapore has zero capital gains tax, compared to our 35% in the States.
So after reading all this, three things come to mind.
First, stay in close contact with your accountant. You don’t have to renounce your citizenship but there are lots of ways to save money on your taxes, especially if you are a business builder. Second, start working towards becoming a business builder. You may not create the next Facebook but there are lots business ideas that you can start at home during your 5-9 that won’t not interfere with your 9-5 (as my friend Bassam Tarazi would say). And finally, maybe our dysfunctional government should consider changing the tax code so that we stop scaring entrepreneurs & business builders to other countries?