Has anyone noteworthy given up their US citizenship to escape taxation?

Question

I've heard it said that a US citizen can escape paying US income taxes by giving up their citizenship and living in a foreign country (presumably, somewhere that has lower taxes or perhaps where a deal has been made).

Is this true? If it is true, one would expect a few rich people would emigrate... then of course there is Atlas Shrugged, which is fiction -- but perpetuates this idea.

Has anyone noteworthy (e.g. a multi-millionaire, or an actor or other celebrity) publicized giving up their US citizenship to escape taxation ?

Answer 1

Many countries have "tax treaties", which generally mean that

1. Expatriates can avoid double taxation
2. Expatriates can't avoid taxation

The IRS site provides a list of tax treaties that the US is a member to.

Note, however, that renouncing citizenship may not actually mean you can avoid taxation if you are deemed to be renouncing your citizenship to avoid taxation. Quoting from an Australian Treasury document [PDF] explaining the Australia-US tax treaty, as an example:

Article 1 of the Protocol modifies paragraph (3) of Article 1 of the Convention which permits the United States to continue to tax as U.S. citizens former citizens whose loss of citizenship had as one of its principal motives the avoidance of tax. To make the Convention consistent with U.S. law, the Protocol extends this treatment to former long term residents whose loss of such status had as one of its principal purposes the avoidance of tax.

So if you're planning on renouncing your citizenship to avoid taxation, it probably isn't a great idea to tell people about it ;)

Answer 2

EDIT: This post turns out to be more about celebrities who renounced their citizenship for reasons other than taxation.

According to N.Y. Times, renouncing U.S. citizenship is becoming more and more common among expatriates. This blog post lists the following four people who renounced their citizenship:

1. Terry Gilliam (questionable, since he lives in UK where taxation is higher)
2. W.E.B. Du Bois (renounced when he couldn't get a passport because of communist connections)
3. Ted Arison
4. Bobby Fischer (renounced when his passport was invalidated because of connections to Yugoslavia)

EDIT: I was assuming that taxation is the most probable reason for giving up citizenship, but the people I list seem to have other reasons (added to the list). Credits to Scott Hamilton.

Also mentioned are

• President John Tyler, who accepted "a post as representative of the Confederacy, basically renounced his U.S. citizenship"
• Elizabeth Taylor, whose renouncement wasn't accepted

Answer 3

Celebrities and billionares:

That is the lesson from the disclosure that Eduardo Saverin, the 30-year-old billionaire who helped found Facebook, has renounced his U.S. citizenship to become a resident of Singapore.

Singapore offers huge tax advantages for people like Mr. Saverin, whose wealth is primarily in the form of capital gains. The Southeast Asian city-state has no capital-gains tax and its top income-tax rate is 20%—compared with rates of 15% and 35%, respectively, in the U.S.

[...]

Jet Li became a citizen of Singapore in 2011, and while the kung fu superstar did not say whether he had renounced either his Chinese or American citizenship, Singapore law forbids dual citizenship.

[...]

The act of expatriating isn't new, whether for tax or other reasons. Global investing titan John Templeton famously gave up his U.S. citizenship in the 1960s to become a citizen of the Bahamas, although his family says it wasn't for tax reasons. Biographers of deceased director John Huston and the late actor Yul Brynner report that each gave up his American citizenship in the 1960s.

source: WSJ

See also long list on Wiki: List of former United States citizens who relinquished their nationality

As for numbers:

Rich Americans renouncing U.S. citizenship rose sevenfold since UBS AG (UBSN) whistle-blower Bradley Birkenfeld triggered a crackdown on tax evasion four years ago.

About 1,780 expatriates gave up their nationality at U.S. embassies last year, up from 235 in 2008, according to Andy Sundberg, secretary of Geneva’s Overseas American Academy, citing figures from the government’s Federal Register. The embassy in Bern, the Swiss capital, redeployed staff to clear a backlog as Americans queued to relinquish their passports.

source: Bloomberg

Answer 4

I wonder why nobody mention Eduardo Saverin

http://www.forbes.com/sites/merrillmatthews/2012/05/23/in-praise-of-eduardo-saverins-tax-avoidance/2/

Yes he said he doesn't do it for tax. Look at other answers why. In short, tax laws are so vague that it judge people based on the "intent" of the person. Hence, openly admitting that he lets go his citizenship to avoid tax is politically costly.

Not only the productive are forced to part with huge money they worked hard for, they have to lie their way just keep what's theirs.

Here is some snippets.

So when Facebook co-founder Eduardo Saverin decided to give up his U.S. citizenship, and by so doing avoided paying millions of dollars in U.S. taxes, New York Senator Chuck Schumer attacked him for “selling out the country. ” I can’t recall Schumer being equally critical, or critical at all for that matter, of his above-mentioned congressional colleagues.

In his own defense, Saverin denies that he left the U.S. to avoid paying taxes and stresses that he paid all applicable taxes at the time, including an “exit tax.” He points out that he moved to low-tax Singapore in 2009 and filed to give up his U.S. citizenship in January of 2011, which became official last September. But even if he didn’t intend to avoid the bigger tax bill that would come after the Facebook IPO, he did, and that’s what has Schumer and Pennsylvania Senator Bob Casey — and maybe even House Speaker John Boehner — so upset. Who’s gonna pay for all those stimulus bills and spending sprees?