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Record number renounce US to avoid income tax

Would you renounce your U.S. citizenship if it meant you didn’t have to pay an income tax?

More Americans than ever are saying “yes” to that proposition, according to the Internal Revenue Service.

A Reuters article says 1,800 people either renounced their citizenship or relinquished their ‘Green Card’ in 2011, the highest number since the IRS began publishing a list of those who’ve quit Team U.S.A.

The number that walked away in 2011 is eight times larger than those who renounced their citizenship in 2008, Reuters reports, and more than 2007, 2008 and 2009 combined.

Why are people doing it? Probably taxes.

The United States is one of the few countries to tax citizens living abroad. An estimated 6.3 million Americans living overseas have until June to file income taxes, but some apparently find the liability is greater than the benefit.

Longstanding federal law requires U.S. citizens to list offshore bank accounts, but a new law — 2010’s Foreign Account Tax Compliance Act — asks foreign banking institutions to provide the IRS with financial information that some Americans may have “forgotten” to provide. This new law likely explains the 2011 spike.

The IRS publishes the names of those who’ve decided not to pay up, a practice referred to as “name and shame” by lawyers representing the expatriates.

There’s an “exit tax” for the very rich who choose to leave. Reuters says Ted Arison, the late founder of Carnival Cruises, and Michael Dingman, a former Ford Motor Co. director, both paid to no longer be considered American.

* Read the complete Reuters article.

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