00:00/Announcer: While many Americans are struggling to make ends meet, there is a growing trend among some of America’s ultra-wealthy: they are willing to give up their U.S. citizenship, in many cases to save money in taxes.
Clearly if two people renouncing citizenship are ultra-wealthy, then all 1,800 must be!
Cartoon by Randall Munroe/xkcd.org; licensed CC-BY-NC 2.5
Unless of course you could be bothered to look at Wikipedia’s list of famous people who renounced/relinquished — which consists primarily of politicians running for office in foreign countries, activists who object to U.S. policy, and other random emigrants. Not to mention the ordinary people who don’t make it into these lists, like Peter Dunn and Genette Eysselinck who have been interviewed by a real and honest journalist about their choice to give up U.S. citizenship.
00:15/Announcer: Our report tonight, from NBC’s Andrea Mitchell.
(Archive footage of Denise Rich and Bill Clinton)
00:20/Rich (archive): We know this saxophone has your name on it
00:24/Mitchell: A songwriter and philanthropist, Denise Rich even got the president of the United States, the First Lady, and Michael Jackson to headline her fundraisers for cancer, honouring her daughter Gabrielle, who died of leukaemia. She supported the Clinton campaign, and just before leaving office, Bill Clinton faced a storm of criticism for pardoning her husband, fugitive financier Marc Rich, who fled prosecutors for tax fraud in 1983.
To Mitchell’s credit, she at least opens her report with a balanced summary of Rich’s life, including mention of her philanthropy and of human tragedy which afflicts the rich and the poor alike. This offers a sharp contrast to how Lynnley Browning covered the same subject. But Mitchell’s report goes downhill from there.
00:49/Rich (archive): Just to be recognised by your peers is so wonderful.
00:52/Mitchell: From politics to the Grammies, Denise always surrounded herself with superstars and the super rich.
00:59/Rich (archive): It’s just a lot of fun, and everyone has a really good time.
01:01/Mitchell: But now, she’s put the 5th Avenue apartment — twenty rooms with view — on the market for $65 million dollars. She’s one of nearly 1,800 people last year who gave up their U.S. citizenship, compared to only 235 four years ago. It’s not only Denise Rich. Facebook co-founder Eduardo Saverin gave up his citizenship before the Facebook IPO. He moved to Singapore.
As usual, the mainstream media either do not understand — or do not care to make it clear — that people emigrate first and then renounce, and that the process moves at the speed of government and not of news reporting. Saverin moved to Singapore in 2009. And after living there for two years, he gave up U.S. citizenship in favour of retaining his existing Brazilian citizenship. He began the process of renunciation in January 2011. He finished it in September 2011. The government declined to mention it until eight months later. The media love to focus on the tax aspects; they make no mention of the other difficulties Saverin would face by retaining his U.S. citizenship if he wanted to invest in local startups and maintain a local bank account.
Certainly you can describe the above sequence of events as “gave up citizenship before the Facebook IPO, and moved to Singapore”. All three of those statements are factually accurate in isolation. Similarly, if a woman you wanted to libel met a good man, took him to her hometown to meet her relatives, got married, and had a son two years later, you could say, with the same logic, that she “got married before her baby was born, and introduced the father to her parents”. We all know what you’re trying to sneakily imply with your wording and your distorted ordering, but of course your careful wording preserves plausible deniability.
01:28/Mitchell: Why the trend? Tax lawyers say, because of an IRS crackdown, and to avoid estate taxes.
01:30/Hodgen: They don’t pay any estate tax when they die, and this is a big concern to them, particularly for preserving family businesses.
What happened to the rest of that quote? Who’s the “them” that Phil Hodgen is referring to? My guess would be that he’s talking about Persian Gulf oil state families where it’s common for brothers to jointly own businesses, the same as he mentioned in “Why People Expatriate” “[F]or those living in countries with no estate tax, the impact is profound. I have many clients in the Middle East. There it is the norm to have very large family-owned businesses. If two brothers own a business and one is a U.S. citizen, upon the citizen’s death an estate tax will be imposed, essentially causing his share of the business to be sold to the non-citizen’s side of the family. In order to preserve the family business, ownership must be removed from U.S. citizens.”
But thanks to the magic of careful editing, anyone quoted on TV can be made to seem like they’re talking about anything at all. No doubt most viewers will have concluded that Mr. Hodgen’s “them” refers to Saverin and Rich, and the editors will have succeeded at leaving the audience with the impression that the only reason to renounce citizenship is to avoid the estate tax.
01:38/Mitchell: In a statement, Rich says she gave up her citizenship in order to be closer to her long-time life partner as well as her family and loved ones in Europe. New York Senator Chuck Schumer, who’s sponsoring a law to penalise people like Rich, sees a tax dodge:
01:49/Schumer: You certainly don’t need to renounce your citizenship to be closer to your family. We all know the reason she’s doing this, and it’s to avoid paying taxes. I find the people who renounce their American citizenship to be despicable.
Indeed, you certainly don’t need to renounce your citizenship to be closer to your non-US family. You and your non-American spouse can treasure the experience of hundreds of thousands of dollars of FBAR fines together. Shared hardship is great for bringing people closer. And think of the benefits to the U.S. Treasury, which can get its hands on all those assets which were earned by non-Americans elsewhere in the world. It’s Patriotic And It’s Their Fair Share!
02:05/Mitchell: Whatever her reason, Denise Rich, whose father escaped the Holocaust and found refuge in the U.S., has now become a citizen of Austria. Andrea Mitchell, NBC News Washington.
Browning’s story implied that Rich had been an Austrian citizen all along (“Rich, who was born in Worcester, Massachusetts, has Austrian citizenship through her deceased father, said Michael Heidt”); however, this apparently was refuted by a statement by Rich’s spokeswoman Judy Smith reprinted in the WSJ’s Washington Wire blog. Rich might have had dual citizenship at birth, but she might have never claimed it, or at the time she became an adult Austrian law might not have permitted dual citizenship. Current Austrian nationality law permits those who were born dual citizens to retain both citizenships indefinitely, but those who naturalise must give up other citizenships.
So either Mitchell or Browning must be wrong about Rich’s Austrian citizenship. Between that and Browning’s false statement that Saverin became a citizen of Singapore, we can see very clearly how this story is progressing: news organisations are sacrificing any semblance of fact checking, clarity, and accuracy in favour of speed and sensationalism. All they have to do is keep the outrage at an orgiastic peak for another couple of weeks, and then the second quarter name-and-shame list will come out and there will be a new Emmanuel Goldstein for everyone to denounce. Anyone wanna take a bet on how long before Schumer hijacks the Senate floor again to demand immediate passage of his “Emigration Punishment by Abusing Taxpayers Residing In Other Territories” Act?