Tax burdens make wealthy Chinese give up their U.S. passports

Tax burdens make wealthy Chinese give up their U.S. passports. To many wealthy mainland Chinese who immigrated to the United States, the U.S. passport is like a monster that cannot be put back in the bottle. They are in Vietnam...

Wu (sound), a 31-year-old housewife, started thinking about this matter about a year ago. "I regret it to death, and all my friends regret it to death." Wu said about her U.S. citizenship, "I will never go back." The reason behind her change of mind was paying taxes. Under U.S. law, citizens and permanent residents (green card holders) are taxed on their worldwide income regardless of where they live.

Paying taxes in the United States is a serious legal issue, but many immigrants fail to realize this when they decide to become U.S. citizens. In March 2010, Washington passed the Foreign Account Compliance and Tax Payment Act, with the purpose of cracking down on tax evaders abroad. Not only is paying taxes a problem, U.S. citizens and green card holders also face cumbersome U.S. tax filing requirements and often encounter trouble when opening bank accounts outside the United States. According to statistics, the number of people renounced their U.S. citizenship rose from 280 in 2006 to 1,780 last year. “The trend of considering renouncing U.S. citizenship due to the tax burden will continue,” said Anthony Tong, a tax services partner at PricewaterhouseCoopers.

Timothy Teng, a Hong Kong lawyer who works on immigration, said that many wealthy (Chinese) people give up midway through the process of applying for U.S. citizenship after learning that U.S. tax agencies will monitor their global income. "It is difficult to find a Chinese entrepreneur with an unblemished tax filing history."

There is also a high price to pay for giving up U.S. citizenship. Deng said it would take a year or two to complete the process and would involve high legal consultation fees. But the number of mainland Chinese immigrating to the United States is still rising. Many are seeking better health care, the environment and asset protection.