Renouncing Citizenship Over Taxation

[nathanm]

Looks like if I lose my job I can get some earned income tax credit.   Thanks.

Nope. There's a reason it's called the Earned Income Tax Credit.

[guido911]

Here's another high profile tax avoider:

Rich, 68, a Grammy-nominated songwriter and glossy figure in Democratic and European royalty circles, renounced her American passport in November, according to her lawyer.

Her maiden name, Denise Eisenberg, appeared in the Federal Register on April 30 in a quarterly list of Americans who renounced their U.S. citizenship and permanent residents who handed in their green cards. (link.reuters.com/naq28s)

By dumping her U.S. passport, Rich likely will save tens of millions of dollars or more in U.S. taxes over the long haul, tax lawyers say.

http://www.reuters.com/article/2012/07/09/entertainment-us-usa-immigration-deniser-idUSBRE8680MN20120709

[nathanm]

If she lives/works outside the US. If not, her (legal) tax situation doesn't change. Not that that usually stops people. Tax enforcement is worse than speed enforcement in this country.

I have a sneaking suspicion that someone is hard selling a tax "avoidance" scam at the moment that involves the renouncement. That seems to be how these schemes get suddenly fashionable. I'm also surprised that so many folks are doing it, given that you have to prepay a decade of tax ahead of time if the renouncement is for tax purposes. That makes me think that the enforcement of that provision is also lax at the moment...

[Gaspar]

A handful of wealthy expats does not an exodus make.  However it is good to understand the motivation.

Some governments put up physical walls to keep their people in captivity.  Other governments use more subtile methods of force to enslave their residents.  Either way, for a government, it's not about money, it's about power.  Nothing is as damaging to a power structure government as the exodus of its citizens.  It indicates injustice and advertises that to the world.  It gives foreign societies a powerful marketing and diplomacy tool.  In essence, it's a gut blow to the government.

We've learned this lesson before. First the best and brightest, the innovators, the inventors, engineers, scientists, and otherwise successful make their escape.  When that starts to happen other countries move into action by doing whatever is necessary to attract these valuable individuals (we used to be the masters of this).  What they are fleeing may be as simple as property rights, taxes, or even a lack of social freedoms, it matters not, ultimately they are leaving to seek liberty from something.  As they leave they form a vacuum, and where they go, they build prosperity.  In their new country, they act as ambassadors and spokespeople for whatever liberty they receive.  At this point the government has some choices, either build a wall, extort or threaten expats, imprison them, or eliminate whatever injustice exists.  History teaches us that the latter is typically not the choice made.  It seems we are growing our policies of extortion through financial penalty.

As free societies slouch towards socialism (the natural cycle) they become more reliant on a shrinking population of innovators, and at the same time they must serve a growing population of entitlement minded or otherwise dependent.  If they don't stop the bleeding, one way or another, they will soon run out of the elements that make societies grow and prosper.  Either enslave, or liberate.

[cannon_fodder]

On average 1500 people renounce their US citizenship each year.  Most to secure residence elsewhere.  Some for tax planning.  Some in protest.  To replace them 1000000 immigrants come to study, work and live.  The amount living is miniscule.

To make sure the rich stay what should we do?  After a certain level of wealth your tax rate already goes down.  You can legally dump all the money you want at any cause or politician.  There are very few ciuntries with any sort of a standard of living that would tax them less to which they could move.  The FB guy has lessfreedom and more taxes in singapore.  Other than just saying no taxes for the super rich... what is the proposal?

Or is the exodus of.0.000001% per year a crisis?

[DolfanBob]

If you were to renounce your citizenship from our good ol U.S.of.A.
What would you miss the most?

[Conan71]

If you were to renounce your citizenship from our good ol U.S.of.A.
What would you miss the most?

I'll tell you what I'd miss the least: our useless two party political system and broken bureaucracies.

[Townsend]

I'll tell you what I'd miss the least: our useless two party political system and broken bureaucracies.

Probably find those in most places

[heironymouspasparagus]

We've learned this lesson before. First the best and brightest, the innovators, the inventors, engineers, scientists, and otherwise successful make their escape.  When that starts to happen other countries move into action by doing whatever is necessary to attract these valuable individuals (we used to be the masters of this).  

What they are fleeing may be as simple as property rights, taxes, or even a lack of social freedoms, it matters not, ultimately they are leaving to seek liberty from something.  As they leave they form a vacuum, and where they go, they build prosperity.  In their new country, they act as ambassadors and spokespeople for whatever liberty they receive.  At this point the government has some choices, either build a wall, extort or threaten expats, imprison them, or eliminate whatever injustice exists.  History teaches us that the latter is typically not the choice made.  It seems we are growing our policies of extortion through financial penalty.

As free societies slouch towards socialism (the natural cycle) they become more reliant on a shrinking population of innovators, and at the same time they must serve a growing population of entitlement minded or otherwise dependent.  If they don't stop the bleeding, one way or another, they will soon run out of the elements that make societies grow and prosper.  Either enslave, or liberate.

We just lost 4 of those kind of people (that I know - good friends) - from Tulsa - who are the "best and brightest" technical types you are talking about.  Because of the lack of social freedoms you mention.  They are now in Canada, making a tremendous technical contribution to our buddies in the north. 


Oh, well, we still got our "Okie" ways her in the USA....that's what's important....

[heironymouspasparagus]

If you were to renounce your citizenship from our good ol U.S.of.A.
What would you miss the most?

The right...no, the obligation! to bitc$ like he$$!!!!!

[AquaMan]

History doesn't exactly match Gaspar's post. There was a tremendous lack of social freedoms prior to and during WWII in the Axis countries. Germany was decades ahead of us in science/technology and Japan was much more efficient in many areas. And, we profited little from the exodus of their best and brightest at that time. It wasn't till after the war that we liberated those Nazi and Japanese intellects into this country to help us catch up.

Interestingly, just prior to the depression, during the roaring twenties we lost lots of talent and brainpower because of perceived lack of freedoms here in America (prohibition, racism, religion and politics). Financially we were experiencing our first income tax and curbs on corporate excess. Socialism was growing in Europe. Our economy was roaring and the brainpower was exiting.

Then during the most conservative post war period the political repression peaked and we lost again. The Russians launched Sputnik years ahead of us. Major entertainers, writers, intellectuals all felt the pangs of the loss of social freedoms. And the economy was booming.

It sounds like a defensible, plausable construct that he offers, it just isn't in line with historical events.

[guido911]

If you were to renounce your citizenship from our good ol U.S.of.A.
What would you miss the most?

That's a good question. Other than easy access to extended family, most places I'd want to go can replace a typical U.S. day-to-day life for me and my family--except I get to keep my money.

[heironymouspasparagus]

Leaving for social issues (real or perceived) is one thing.  Or family, health, etc,.

An extremely rich person leaving due to some contrived issue involving taxes and the feeling they are being 'put upon' for having to pay those taxes is the symptom of a truly disgusting, despicable person.  Having been here and enjoyed the freedoms, the opportunity, and the assistance of everyone involved in getting them rich, from availability of everything from infrastructure to personnel,....then to decide to leave because they must participate?  Even with the lowest taxes available in the industrial world?  Well, there should  be - and there is - a leaving tax.  For these circumstances, it should be a fixed rate of say, about 75%....

Worst sort of low life.

[guido911]

Leaving for social issues (real or perceived) is one thing.  Or family, health, etc,.

An extremely rich person leaving due to some contrived issue involving taxes and the feeling they are being 'put upon' for having to pay those taxes is the symptom of a truly disgusting, despicable person.  Having been here and enjoyed the freedoms, the opportunity, and the assistance of everyone involved in getting them rich, from availability of everything from infrastructure to personnel,....then to decide to leave because they must participate?  Even with the lowest taxes available in the industrial world?  Well, there should  be - and there is - a leaving tax.  For these circumstances, it should be a fixed rate of say, about 75%....

Worst sort of low life.

If people want to leave and take THEIR money and THEIR jobs overseas, that should only be THEIR business. A person is free to leave if they are zillionaires or poor, and in this free country it shouldn't be punished.

I just do not get this "the rich got rich because of everyone" meme currently sung by Oklahoma's Elizabeth "Your Wampum My Wampum" Warren (borrowed).

[nathanm]

I would better understand your rage if the rich in this country weren't the most prolific tax evaders. You're outraged about stuff that doesn't actually exist. That seems to be all the rage these days, though. Luckily, being a free country, nobody is going to stop you.