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U.S. citizens ditch passports in record numbers

Americans are ditching their U.S. passports in record numbers, a sign of growing frustration with a system that taxes U.S. citizens on their global wealth whether they live in Montana or Mongolia.

The latest bold-faced names to relinquish their U.S. citizenship include Mahmood Karzai, a brother of Hamid Karzai, the president of Afghanistan, according to federal data released Wednesday.

In total, more than 670 U.S. passport holders gave up their citizenship — and with it, their U.S. tax bills — in the first three months of this year. That is the most in any quarter since the I.R.S. began publishing figures in 1998.

If the recent quarter’s pace continues, 2013 will become a landmark year for saying goodbye to America, tax-wise.

International tax lawyer Phil Hodgen said growing numbers of Middle Eastern investors were ordering their dual-citizen children to dump their U.S. passports if they wanted to inherit family-owned companies without onerous U.S. estate taxes.

While dumping citizenship may seem unpatriotic or smack of tax avoidance to some critics, tax lawyers blame the byzantine complexity of American tax regulations.

 

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