At Sovereign Man, Simon Black writes about the rising number of Americans who want to renounce citizenship – and the increasing roadblocks they face.
A massive 1,131 individuals renounced their US citizenship last quarter…Compared to the same quarter last year in which 188 people renounced their US citizenship, this year’s number is over SIX TIMES higher. Not to mention, it’s 66.5% higher than last quarter’s 679 renunciations…
While still embryonic, it’s difficult to ignore this trend– more and more people are starting to renounce their US citizenship…
So what’s driving it? Taxes…and the search for liberty…Particularly for people who spend most of their time outside of the United States and are constantly hamstrung by [U.S.] worldwide taxation and information disclosure[ rules], the burden for many of them has just become too much to bear.
The US government figured this out some years ago and began charging an exit tax…This applies to anyone whose average US tax liability over the last five years was about $150,000 (the equivalent of roughly $500,000 in taxable income in 2012 dollars), and/or has a net worth of at least $2 million on the date of expatriation.
More on the exit tax, here. But it’s not just for rich people; the U.S. government also holds back the poor:
Renunciation of U.S. citizenship was free until July 2010, at which time a fee of $450 was established.
Get it? If you marry your foreign boyfriend and move abroad and join with his people, it is going to cost you – even if you are both minimum wage earners. So decrees President Obama.
Past generations viewed renunciation as a human right. From Simon Black again (and quoted also in a U.S. government document, here):
…in the “[Expatriation] Act of July 27, 1868″, the United States Congress declared that “the right of expatriation is a natural and inherent right of all people, indispensable to the enjoyment of the rights of life, liberty, and the pursuit of happiness.”
In other words: Even if renunciation might be a mistake and/or unpatriotic, they thought U.S. citizenship should be your choice. But the current U.S. government does not; in addition to the roadblocks described above, we even get the occasional rumor of people’s applications for renunciation being denied outright.
I remember President Reagan in 1987 saying “Mr. Gorbachev, tear down this wall!” that had been built to keep East German citizens *in* that country. I also remember left-liberals in the 2004 election cycle, promising they’d leave America if Bush won. (Few of them did, or none.) I wonder what they’d say now?
My best friend used to have substantial business investments in Great Britain in addition to his business here in the US. Before the Reagan and Thatcher reforms, his accountants figured that he paid 99% taxes on his PROFITS from his British investments.
– British and local business taxes and income taxes after expenses,
– a 10% exit-tax on the actual cash-transfer repatriating the British net-profits back to the parent corporation here in the US,
– then US Federal, state and local corporate taxes on the resulting US profits,
– finally the US Federal, state and local taxes a third-time as personal income.
For years he only kept the businesses because selling them was pointless since there would be nothing-left after taxes if he sold them. In the late 1980s after the reforms, he was able to sell both his US and British holdings to another British company in a merger for intl. tax purposes for a reasonable return.
Similar tax fandangos today still plague Americans with substantial overseas incomes or investments. The WSJ just yesterday addressed the tax madness (and addl. business burden) facing US expat executives in Hong Kong versus their British or Aussie competitors.
How in the hell did this become law? All 535 members of Congress and our dear great leader should removed from office. They are all big government lovers. What is the name of the famous French actor who told France to go to hell and he was going to live elsewhere?
Back in the seventies, one of the standard leftist talking points against people who wanted to escape the Soviet Union and other communist regimes was that they ought to pay an emigration tax to reimburse the benevolent socialist state for all the money spent feeding, housing, clothing and educating them.
I am looking at Chile.
Years ago I was looking at emigration when all the talk of AIDS-testing and “the camps” was circulating. One problem if you in a regulated profession is that many nations restrict “practice” to the locals. Basically the inverse of H1-b visas, you can emigrate but no-longer practice your profession. As an Registered Architect, I could never again practice if I moved to Australia…the same is true of Canada.
An “exit tax”? At the risk of invoking Godwin’s Law, I’ll point out that the Nazis imposed such a tax on Jews who tried to leave Germany; the Khmer Rouge and Communist Vietnam imposed it on Overseas Chinese who tried to flee their coming genocide in Indochina; etc.
So, it really doesn’t surprise me that Obama would think such a thing is a “good” idea.
If we put aside the economic harm created by putting up these strict barriers and just focus on the short-term political calculus… well, as horrible as it is, it seems to me that proposals by the President and his Democratic allies to create these “soak the rich” exit taxes and other such measures are probably going to be pretty damn popular.
This is part and parcel of a broader social trend where the American people are holding more and more to socialistic, zero-sum views of the upper class in society. So hiking income taxes in general are popular. I’d except this to be the same story.
What we need is more measures like the American Enterprise Institute’s “Values of Capitalism” project to educate people. Required reading for everyone interested in this.
Polls link: http://www.gallup.com/poll/1714/taxes.aspx
Institute link: http://www.valuesandcapitalism.com/
So what happens if you don’t pay the renunciation tax? Do they forcibly repatriate you?
“So what happens if you don’t pay the renunciation tax? Do they forcibly repatriate you?”
I’m sure they have made it clear that there will be grave consequences for any foreign financial institution that does not cooperate with them in collecting the tax.
Unless you pay the tax, you can’t reenter the US for visits…and you’re charged with tax-evasion if you don’t continue to pay your US taxes so some countries might extradite you back for trial. I think they can also “snowden” you; strip you of your passport and restrict your ability to travel internationally.
Question: where exactly are these people going? Has some country become a new haven for people who want low taxes, no 24/7 surveillance, respect for free speech, free press, free religion, and small government? If that is the case, WHAT IS IT CALLED AND WHERE IS IT LOCATED?!
A reason why it is liberals who talk of emigration is because, well, there are plenty of countries in the world whose policies conform better to their ideal. They stay in America because… actually, I have no idea why liberals who vocally hate this country stay here.
For conservatives, there is no country outside of the U.S. that fits their ideals. So they talk about secession. Notice that after Obama was reelected, it was the most conservative states, namely Texas, that had people seriously discuss secession.
Sean, America is not what it once was. For one thing, it is no longer the freest country. I was unable to quickly find a ranking of countries (and I know I’ve seen them) on a composite of political, economic and personal freedoms. But economic freedom alone may be a reasonable gauge, and here is the Heritage Foundation’s ranking of countries on that: http://www.heritage.org/index/ranking
The U.S. is tenth, behind: Hong Kong, Singapore, Australia, New Zealand, Switzerland, Canada, Chile, Mauritius, Denmark.
You’re right that no country is as free as it should be; even the top 9 have some major imperfections.
Hong Kong seems decent, little corruption, strong rule of law, and government is transparent and not out of control. Singapore has good anti-corruption laws, but their public conduct laws are super strict, from what I’ve heard. New Zealand’s culture is grey and claustrophobic, according to people who have been there. How in the world does Canada outrank us, their government has way more influence than ours does!
I would like to see a listing of countries by freedoms (religion, speech, press, arms, etc.), I think that would be much more accurate. The U.S. probably doesn’t top that list either, sadly.
>Question: where exactly are these people going? Has some country become a new haven for people who want low taxes, no 24/7 surveillance, respect for free speech, free press, free religion, and small government?
Well, seriously, why not look at things such as the Heritage Foundation’s freedom rankings of nations?
You have the Isle of Man. You have Switzerland. There are places.