It's about time there was a "cease fire" in the war on people's money.
"Exit Tax" Apparently Dead - at Least for Now
Several weeks ago, I described a proposal in the "Small Business and Work Opportunity Act" to impose an exit tax on U.S. persons who give up U.S. citizenship or long-term residence if they have unrealized capital gains that exceed US$600,000. Click here to see the full story . On April 20, House and Senate committees reached an agreement on the bill. They stripped the exit tax from the bill. The revised package is part of the Iraq supplemental spending bill that is now before President Bush.
While Bush is almost certain to veto this bill, due to the timetable it includes for withdrawal of U.S. combat forces from Iraq, he has indicated his willingness to sign the tax legislation. It's my guess that when he does so, the tax legislation will be submitted separately, again without the exit tax.
I'll keep you posted as to the ultimate fate of this ill-conceived legislation. It's not realistic to expect that the exit tax is dead, because it's been introduced in some form in nearly every congressional session since 1995. But the chances look very good that it's dead for at least another year.
Why might a U.S. citizen want to give up their nationality? Primarily because the United States, alone among major countries, imposes income, capital gains, gift and estate taxes based on citizenship, rather than residence. Giving up U.S. citizenship is the only way to eliminate this onerous tax liability.