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Editorial See other Editorial Articles Title: American Expatriation In 2011, more than 1,800 Americans renounced their citizenships. This figure exceeded the numbers from 2007, 2008, and 2009 combined. The US government is notorious for under-publishing the full list of Americans renouncing though, so 1,800 is likely on the low end. What is known for certain is that the numbers of Americans renouncing their citizenships have become so great in some jurisdictions that the State Department has actually scheduled mass renunciations for rooms full of people. Over the last decade, the number of Americans choosing to renounce has exponentially increased almost every year. The vast majority of these people are extremely wealthy, highly-educated Americans who are cashing in their US assets and taking their resources to more hospitable locations. At a time when the top 1% of American earners pay about 37% of all the federal taxes, the US can ill-afford to lose even a few super-wealthy taxpayers. Unfortunately, this trend will surely continue and have a significant impact on the American economy in the near future. There are several reasons why the wealthiest, most-educated Americans are leaving in record numbers. The ship is sinking, and just as in the movie the Titanic, the wealthy are boarding the lifeboats while the plebeians are locked in the lower decks to drown. Let me explain the analogy. Wealthy Americans understand that the US government will never be able to pay off its $16 trillion national debt, let alone its entitlements which total another $100 trillion. These people, many of whom are financiers, know that it is only a matter of time before the nation hyper-inflates its currency (ship starts to sink), which will lead to economic disaster. The recent anti-rich rhetoric coupled with pledges by the newly re-elected President Obama to tax the wealthy in greater proportion has led to a mass panic among the 1% of wealthiest Americans to find safe havens for their families, and probably more importantly to many of them, for their money. While the rich are boarding what few life boats are left available, average Americans are finding it quite difficult to find a decent piece of driftwood to latch on to. Even the least desirable countries around the world demand that new immigrants invest significant sums of money into their nations or possess skills that the country is in need of. Let’s examine the process for an American choosing to leave and reside elsewhere. First, the person must meet the destination country’s strict requirements to apply for a work permit or permanent residency. The application process can be quite onerous, if not impossible, for middle class Americans. Unless the work permit is translated into more permanent status it is of little value because it only allows a person to reside for a set number of years. The work permit is easier to acquire than permanent residency, but both can be painstaking processes that cost thousands of dollars and take years to be approved. Even if the average worker does happen to have a valuable skill, most can neither afford the time to apply, nor the expense. In order for Americans to benefit from leaving the states, they must renounce their US citizenships because America, "The Land of the Free" is one of only a handful of countries on the planet that has worldwide taxation. This means that no matter where Americans choose to reside, they are still liable for US taxes. Obviously an inequitable situation for expats who are using no American services whatsoever, but still paying millions of dollars to fund programs they will never see the benefit from. America will not allow citizens to renounce their citizenships unless they have citizenships of another nation first. Essentially, if Americans want to be free from their government, they have to first seek residency elsewhere, which can take years, and then reside in the country for several more years to fulfill its requirements to gain citizenship. Only after all of this time has transpired can Americans renounce their citizenships and be free from tyranny. But then Americans actually have to file IRS forms and agree to military service for another 10 to 15 years before the government will acknowledge their renunciation. The IRS requires this final disclosure because high net worth Americans must now pay a 30% exit tax just for the privilege of renouncing. Taxation is not simply a monetary issue, as many think, but rather a control issue. Taxation means the government can forcefully look into one’s personal affairs. Over the last few decades, the Internal Revenue Service has flexed its muscle all over the world in its attempt to catch American tax cheats. Because most banks use intermediaries in the US, the federal government has a great deal of power over their assets. Unfortunately, the IRS and other federal government agencies have abused this power and put some banks and businesses in the uncomfortable position of having a choice between violating their home nation’s privacy laws, or being charged by American authorities and losing their US assets. As a result, most large banks around the world have begun to turn away US customers. And many other financial service providers have begun to follow suit. To make matters worse, the US has enacted absurd foreign corruption laws, which prevents American citizens from bribing foreign officials. While this seems noble, the reality is that many countries around the world operate on bribery and corruption and those who refuse to participate simply can’t conduct business in those nations. These are significant disadvantages for Americans overseas. There are now so many foreign corruption, environmental, and tax laws that not only are banks turning away American clients, but some business people now prefer to do business with non-Americans so they can avoid the hassle altogether. Regardless of the negative consequences associated with being an American citizen abroad, some patriotic Americans still want to keep their citizenships. Unfortunately, the US government is actually forcing their hand to renounce. The tax code is so complex, convoluted, and long that many tax attorneys and accountants can’t even understand the law for expatriates living abroad. Current legislation forces Americans to declare all foreign bank accounts and holdings or face up to a $100,000 fine or 50% of the account value, whichever is larger. Americans can also be held responsible by the IRS for honest mistakes. This does not necessarily mean that they will always be thrown in prison, but their lives can still be financially ruined. Think about it, a multi-millionaire claims a deduction he shouldn’t have by mistake and the IRS catches it three years later. By that time, the interest and penalties have surpassed the original amount owed and the honest business man can no longer afford to pay. Americans who married foreign bread-winners can also be put in impossible positions by the IRS. The American spouse must file tax returns, which gives the US government unadulterated access into their husband or wive’s personal finances. While this may not seem like a big deal to most Americans, who, despite all evidence to the contrary still illogically trust their government, this can be a scary proposition for foreign nationals who do not get propagandized by the American mainstream media. If the foreign national spouse refuses to give his American husband or wife his/her financial data, the American spouse can be held financially and even criminally liable by the IRS. For American expats living in low-tax, low-regulatory districts, the choice between facing the possibility of ruin or being free from reporting requirements altogether is not a tough one. Considering that an estimated 6.3 million American citizens are living abroad at this very moment, the numbers of renunciations will most likely increase markedly in the future. Populist politicians like to refer to Americans who renounce their citizenships as "traitors." But of course that title could probably be more aptly applied to those who have so violated their oaths to uphold the Constitution as to enact legislation that has driven these people to make this difficult choice in the first place, rather than being applied to freedom-seeking Americans who choose to leave the country. When America was truly the "Land of the Free," people immigrated in massive quantities. Now, the US must erect barriers to keep its citizens prisoner; a very telling sign of the times. Part two in the series: American Expatriation Options will outline a plan for those Americans wishing to leave the states and renounce their citizenships. Publication on November 15th, 2012. Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest Begin Trace Mode for Comment # 1.
#1. To: F.A. Hayek Fan (#0)
When America was truly the "Land of the Free," people immigrated in massive quantities. Now, the US must erect barriers to keep its citizens prisoner; a very telling sign of the times. When America was truly the "Land of the Free," people immigrated in massive quantities. Now, the US must erect barriers to keep its citizens prisoner; a very telling sign of the times. When America was truly the "Land of the Free," people immigrated in massive quantities. Now, the US must erect barriers to keep its citizens prisoner; a very telling sign of the times. When America was truly the "Land of the Free," people immigrated in massive quantities. Now, the US must erect barriers to keep its citizens prisoner; a very telling sign of the times.
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