Ten years ago, it was unheard of for immigrants to ditch their highly-coveted US passports. But now, as the US enforces tax collection overseas, many wealthy Chinese immigrants are following the footsteps of Eduardo Saverin, the Brazil-born Facebook investor, who renounced his US citizenship earlier this year. Last year, 1,780 Americans renounced citizenship. In 2006, the number was a mere 280.
US law requires citizens and permanent residents to pay taxes on income, even if you don’t live in the US. For rich mainland Chinese who immigrated to the US but have since returned to their homeland, the weighty tax bill often causes sticker shock.
“I regret it to death, all of my friends regret it to death,” said Wu, a 31-year-old housewife, about choosing to get US citizenship. “I’m never going back.”
Wu, who is only willing to disclose her last name, was unaware of tax implications when she got her US citizenship after graduating from college in the US. She now lives in China and hasn’t been back to the US in 10 years.
It’s interesting to consider what’s causing this trend of repatriation for US immigrants. I think part of the story is that some wealthy immigrants were admittedly overly casual about taking out US citizenship, which was, as the South China Morning Post put it, “the ultimate status symbol in China.” On the other hand, the trend also reflects the growing economic power of China, a powerful incentive for Chinese immigrants to return home.