Much ink has been spilled on the trend of wealthier Americans fleeing fiscally dissolute, high-tax states like California and Illinois, and heading for comparative tax havens such as Texas and Florida. The golfer Phil Mickelson made headlines recently when he wondered aloud about leaving his native California over its newly enacted steeper tax rates on the rich.
And when France sought to introduce a new wealth tax, its wealthiest businessman, Bernard Arnault, sought Belgian citizenship while one of its most famous actors, Gerard Depardieu, found a financial haven in Russia.
While in the American popular imagination, tax flight is something that prompts overtaxed Europeans to come to America (think John Lennon), Facebook billionaire Eduardo Saverin’s renouncing of his U.S. citizenship and move to Singapore in 2011 to avoid a $67 million tax bill may mark the point when America came of age as a higher-tax developed nation.
That is because anecdotal evidence, as well as the increasing rate of Americans renouncing their citizenship since the IRS started tracking the phenomenon in 2008, suggests that the wealthiest Americans may no longer be content to move merely to Miami Beach or North Dallas, but are looking to overseas destinations with less onerous tax requirements.
This heightened interest in tax flight is a trend spotted by Nigel Green, CEO of the deVere Group, a global financial advisory firm catering to British expats and wealthy Americans in foreign countries, among others.
The firm, which according to its website has $90 billion in assets under management and 70,000 clients in more than 100 countries, is now making a push into the U.S., with offices in New York and Miami. AdvisorOne asked Green about the conversations occurring between his deVere’s advisors and their wealthy U.S. clients.
What destinations are U.S. tax refugees looking at and why (aside from, or in addition to, tax advantages)?
In our experience, the Cayman Islands, Hong Kong, Thailand, Malaysia and the Philippines are proving to be popular destinations for America’s high-net-worth individuals who are considering moving themselves and their assets out of the U.S. to safeguard their funds. Having said that, anywhere they’ll be taxed less than 30% might seem appealing.
Besides the tax advantages, these individuals might be drawn to a destination because it offers a more attractive quality of life, a greater potential for job promotion, lower crime rates and a safer atmosphere, a lower risk of natural hazards, and better education and health care systems, amongst other factors.
Texas Gov. Perry is flamboyantly holding open the welcome mat to California businesses. Are any international leaders involved in recruiting wealthy Americans?
To my knowledge, international leaders have not been directly involved in recruiting wealthy Americans as Gov. Perry of Texas has been doing—although perhaps they should be and will in the near future—as it might be perceived that this could potentially damage relations with Washington.