The U.S. cracks down on rich tax evaders

That's probably wise, especially because a tax bill expected to be signed into law this week contains a provision designed to crack down on the roughly 500 rich people who expatriate themselves each year to avoid U.S. income and estate taxes.

Although the number of people who take that path may be small, the government has been enacting increasingly strong measures to stop the practice over the last dozen years.

For that you can thank billionaire and ex-Floridian Kenneth Dart, said Bill Ahern, a spokesman for the Tax Foundation, a nonpartisan research group based in Washington.

Dart is one of the heirs to a multibillion-dollar Styrofoam-cup manufacturing business based in Sarasota, Fla. In 1994, he renounced his citizenship and moved to Belize, a small Central American country known as a tax haven.

Belize promptly sought U.S. permission to open a consulate in Sarasota with Dart as its consul. Foreign diplomats are exempt from U.S. taxes, so the move would have allowed Dart to avoid U.S. taxes while continuing to live here.

The plan earned a "chutzpah" award from the late humorist Art Buchwald, but it was rejected by the State Department, which said Belize already was well represented in Florida with a consulate in Miami.

Former President Clinton, who was in office when Dart renounced his citizenship, was so appalled by Dart's action that 10 years later he refused to go to a political fundraiser because it was being held at the Dart mansion, owned and occupied by Dart's wife.

"I don't know what he is up to now," Clinton wrote on his blog in 2005, "but I don't want to go anywhere near this guy."

Dart's tactic also so incensed members of Congress that they passed a law in 1996 aimed at stopping others from doing the same thing.

Under that law, people who paid more than $124,000 a year in income tax and had more than $622,000 in assets when expatriating themselves were required to pay U.S. taxes on worldwide income for at least five years.

In 2004, that was extended to as long as 10 years.

This year Congress again felt the need to tighten the vise on would-be tax exiles. Late last month, the House and Senate overwhelmingly passed the Heroes Earnings Assistance and Relief Tax Act of 2008, which President Bush has promised to sign this week.