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2 years ago

Renouncing US Citizenship

2 years ago
You are a wealthy heir to a fortune living on Park Avenue in New York. You pay large taxes on your current income. You are about to pay a huge estate tax when your parents die and leave you the business. (We're talking a large multinational, but privately held, business whose name you would recognize.)

What to do? Your lawyer says give me a bunch of money. I will take it to a friend in an African country. The President of that country will make you a citizen there and appoint you as that country's US Ambassador. Then you can renounce your US citizenship and escape all that tax. It happens.

Nothing changes for the wealthy heir. He continues to live in the same apartment on Park Avenue, same friends (maybe some new ones), same parties, same private schools for his kids, same beach house in the Hamptons, etc. But now he has no US taxes and enjoys diplomatic immunity.

Congress's answer? After you renounce your citizenship you have to pay US taxes for the following ten years and pay a $2,350 fee to the State Department.

So if you are thinking about becoming a citizen of Mexico and renouncing your US citizenship . . . .

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