I’ve written many times about how investors, entrepreneurs, small business owners and other successful people migrate from high-tax states to low-tax states.
Well, the same thing happens internationally, as France’s greedy politicians are now learning.
It’s a lot harder for Americans to escape our tax system, though, in part because of reprehensible exit taxes that are disturbingly reminiscent of some of the awful policies of past totalitarian regimes.
But it still happens, and that’s a very damning indictment of Obamanomics and a worrying referendum on the future of the United States. Here are some blurbs from a recent Fortune article.
Americans are ditching their U.S. passports in record numbers, a sign of growing frustration with a system that taxes U.S. citizens on their global wealth whether they live in Montana or Mongolia. …on the list, published quarterly by the Internal Revenue Service, is Isabel Getty, the daughter of jet-setting socialite Pia Getty and Getty oil heir Christopher Getty. In total, more than 670 U.S. passport holders gave up their citizenship — and with it, their U.S. tax bills — in the first three months of this year. That is the most in any quarter since the I.R.S. began publishing figures in 1998. And it is nearly three-quarters of the total number for all of 2012, a year in which the wealthy songwriter-socialite Denise Rich (christened “Lady Gatsby” by Yachting magazine) and Facebook co-founder Eduardo Saverin joined more than 932 other Americans in tossing their passports. …Expatriations first picked up pace in 2010, when more than 1,530 Americans dumped their passports.
The problem is particularly serious for Americans who live and work overseas. The United States is one of the few nations (and the only developed nation) to have “worldwide” taxation, which means overseas Americans have to pay tax to the IRS as well as to the nation where they live.
And thanks to laws such as “FATCA,” that burden just became far more onerous.
While dumping citizenship may seem unpatriotic or smack of tax avoidance to some critics, tax lawyers blame the byzantine complexity of American tax regulations. The rules “are confusing, complex, and so complicated that even Americans with good intentions can easily find themselves running afoul of the law,” said Jeffrey Neiman, a former federal prosecutor who was involved in the government’s offshore banking probe and is now in private practice in Fort Lauderdale, Fla. “This very well may explain why we are seeing a record number of Americans renouncing their United States citizenship.”
No wonder more and more people are escaping Obamanomics.
The good news, by the way, is that Senator Rand Paul has introduced legislation to repeal the worst parts of FATCA.
But that’s not going to happen while Obama’s still in the White House, so let’s focus on the Americans who are “going Galt.”
I have mixed feelings about these rich people. Many of them did nothing to help the fight for liberty while they were U.S. citizens.
And notwithstanding my post about where I would go if America suffers a Greek-style fiscal collapse, I suspect I’ll stay in the United States and fight until my last breath. So I get a little bit irked that they escape and leave the rest of us to deal with the mess created by our political elite.
Nonetheless, I strongly believe that all individuals have the right to protect themselves from predatory government.
And when you add up the various forms of double taxation in the internal revenue code (particularly the death tax), it makes little sense for families with high net worth to stay in the United States when there are many jurisdictions around the world that will welcome them with open arms.
In other words, let’s not blame the victims and castigate Americans who redomicile in jurisdictions with better tax policy. Let’s fix the awful internal revenue code with a flat tax.
P.S. I’m ashamed to admit that France has a more pro-liberty policy on tax migration than the United States.
P.P.S. But that may not last too long. Other nations are looking to copy America’s disgraceful worldwide tax approach.