It’s (faux) tax panic time again – the U.S./Swiss edition

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Brynner

Yul Brynner in 1985

Bloomberg is carrying one of those tiresome stories entitled Brynner’s Tax Spat Augurs Rush to Give Up U.S. Passports. Tax people too much, it goes, and there’ll be a deluge of people rushing for the exit! The story begins:

“Almost 50 years after Oscar-winning actor Yul Brynner gave up his passport at the U.S. embassy in the Swiss capital, the number of Americans relinquishing their citizenship jumped 47 percent in the first quarter.”

Panic time!

And hey – we can match that. How about this headline of ours from not so long ago: Number Renouncing US Citizenship rose 221% in 2013, in tax panic. That 221 percent is a real shocker, no?

Well, possibly. But the thing that the breathless Bloomberg story misses is a little detail, called “context”. Let’s provide some, courtesy of our previous 221% article.

“Here’s another way to spin the same story.

0.0009 percent of Americans renounced US citizenship in 2013.

Nearly three thousand Americans renounced their citizenship in 2013 – nearly a quarter as many as the number of people from the Dominican Republic who gained U.S. citizenship through naturalisation. In all, the number of foreigners who became U.S. citizens through naturalisation was 757,434 – more than 250 times as many as renounced citizenship.”

On the latest data, Bloomberg finds 1,000 Americans giving up citizens – out of six million expatriates. So one in six thousand U.S. expatriates renounced their citizenship. That’s a deluge! And we earlier added an important cultural and human point.

“As we have pointed out before: when tax rates (or enforcement or whatever) change, only a small handful of tax extremists rip their kids out of school and leave all their friends and family behind to start brave new lives in bizarre, soulless places like Monaco or the Cayman Islands.”

The Bloomberg story focuses on U.S. data, but from a ‘colour’ perspective it focuses heavily on Switzerland. Let’s face it, though: Switzerland is already full of anti-tax extremists like Tina Turner who have made these life decisions. It’s hardly surprising that they are going to get up in arms about U.S. efforts to defend its taxpayers against attack from jurisdictions like Switzerland.

And let’s not forget: when we say ‘attack’ and ‘defend’, we must be clear of the battleground. This is not – repeat not – a geographically-based battle between the United States and Switzerland. This is a battle between ordinary taxpayers everywhere and a globe-trotting, rather nomadic élite who want to take the benefits of societies and get poorer people to pay for those benefits.

As we said: it would be nice if this story had added just a little sprinkle of that small detail called ‘context.’

Further reading: Financial Times finds evidence of huge flight of rich after French tax hikes.


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