Best of the Week
Most Popular
1.London House Prices Bubble, Debt Slavery, Crimea 2.0 - Russia Ukraine Annexation - Nadeem_Walayat
2. Gold And Silver – 2014 Coud Be A Yawner; Be Prepared For A Surprise - Michael_Noonan
3.Sheffield, Rotherham Roma Benefits Plague, Ch5 Documentary Gypsies on Benefits & Proud - Nadeem_Walayat
4.Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - Jim_Willie_CB
5.Don't Miss the Boat on Big Biotech Catalysts: Keith Markey - Keith Markey
6.Gold Prices 2014: Do What Goldman Does, Not What It Says - David Zeiler
7.Bitcoin Price Strong Appreciation to Be Followed by Declines? - Mike_McAra
8.Gold Preparing to Launch as U.S. Dollar Drops to Key Support - Jason_Hamlin
9.Doctor Doom on the Fiat Money Empire Coming Financial Crisis - Andrew_McKillop
10.The Real Purpose Of QE - It’s Not Employment - Darryl_R_Schoon
Last 72 Hrs
America has Become a Police State - 19th Apr 14
Elite Herd Psychology And War By Default - 19th Apr 14
E.U. Officially Adopts the Bank Depositors Bail-In - 19th Apr 14
Goldman Sachs Is Highly Motivated To Low-Ball Gold Price - 19th Apr 14
Save MtGox - Bitcoin Important Implications of Going Down - 19th Apr 14
Stock Market SPX Topping Valuations - 19th Apr 14
Tesco Profits Panic! Back to Back £5 Off £40 Shop Voucher Promotions - 18th Apr 14
The Obama Game - Is Putin Being Lured Into a Trap? - 18th Apr 14
The Growing Threat to Capitalism - 18th Apr 14
Build Biotech Wealth on Solid Platforms - 18th Apr 14
Has Solar Power Finally Arrived? - 18th Apr 14
Bank Depositor Bail-Ins and Real Assets vs Liability-Based Assets - 18th Apr 14
10 Ways to Screw up Your Retirement - 17th Apr 14
One of Harry Dent’s Three Keys to Market Prediction is Cycles - 17th Apr 14
Obamacare Proof Stocks - 17th Apr 14
Gold, Silver And The Mining Sector: Prepare For A Severe Fall - 17th Apr 14
Hidden Australian Life Sciences Bio-tech Growth Stocks - 17th Apr 14
Disrupting Big Data Status Quo - 17th Apr 14
What the Stock Market Bears Have Been Waiting for... - 17th Apr 14
Copper Is Pathological and Suffers from SAD, but It Has Value - 17th Apr 14
Old World Order New World Order, Chaos And Change - 17th Apr 14
Even The US Government Will Abandon the U.S. Dollar - 17th Apr 14
Gold - Coming Super Bubble - 17th Apr 14
Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - 16th Apr 14
High-Frequency Insider Trading - 16th Apr 14
Gold Prices 2014: Do What Goldman Does, Not What It Says - 16th Apr 14
These CEOs Will Make Investors Rich - 16th Apr 14
Climate Change, Central Banking And The Faustian Bargain - 16th Apr 14
Every Central Bank for Itself - 16th Apr 14
Social Security, U.S. Treasury Stealing Every Last Penny From Americans - 16th Apr 14
Ukraine Falling to Economic Warfare and Its Own Missteps - 16th Apr 14
Silver and Gold Miners Still Disappoint - 16th Apr 14
Silver, Gold, and What Could Go Wrong - 15th Apr 14
How I Intend to Survive the Meltdown of America - 15th Apr 14
France Wakes Up To The Multicultural Multi-Threat - 15th Apr 14
The Real Purpose Of QE - It’s Not Employment - 15th Apr 14
Peak Coal - 15th Apr 14
Flash Crash, Rigged Markets - What’s the Frequency Zenith? - 15th Apr 14
Forecasting U.S. GDP Growth: A Look at WSJ Economists’ Collective Crystal Ball - 15th Apr 14
Stock Market - Is Something Nasty About to Happen? - 15th Apr 14
How to Trade Your Way To Freedom - 15th Apr 14
Understanding (and Ignoring) the Media Bandwagon Against Gold - 15th Apr 14
When Stock Market Bubble Crashes, Take Refuge in Gold Stocks - 15th Apr 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Too Late to Leave the U.S.?

Politics / US Politics Feb 01, 2013 - 12:44 PM GMT

By: Jeff_Berwick

Politics

Wendy McElroy writes: The Ex-PATRIOT Act lies like a coiled snake on a table in the U.S. Senate. The longer title of this unenacted bill from 2012 is the Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy Act. Its self-description is, "A bill to amend the Internal Revenue Code of 1986 to provide that persons renouncing citizenship for a substantial tax avoidance purpose shall be subject to tax and withholding on capital gains, to provide that such persons shall not be admissible to the United States, and for other purposes."


The Ex-PATRIOT Act seeks to impose a perpetual exit tax and a re-entry ban on “specified expatriates.” A specified expat is anyone with a net worth of at least $2 million or a tax liability averaging at least $148,000 over the last 5 years. A renunciation of citizenship would be automatically viewed as a tax dodge. The person would need to prove his innocence to the IRS to become exempt from a permanent and annual 30% tax on all earnings from U.S. investments. The net worth level at which the tax triggered would undoubtedly sink over time and, perhaps, quickly so.

(Even the Nazis were not so extreme. Until 1941, the third Reich used the Reichsfluchtsteuer (Reich Flight Tax) to charge emigrating Jews a one-time 25 percent exit tax. Schumer wants 30% in perpetuity.)

The Ex-PATRIOT Act would also ban “former citizens” from U.S. soil unless he received a waiver. The waiver requirements are to be determined at a later date. Current expats have no legal right to return, but they are rarely banned from doing so

The Act was introduced in May 2012 by Senator Charles Schumer (D-NY), read twice, and referred to the Senate Committee on Finance. It is likely to pass in 2013.

THE LIKELIHOOD OF PASSAGE

Reason #1. When the Act emerged from the Democrat-dominated Senate, John Boehner – the Republican leader in the House of Representatives -- was luke-warm. He would back the Act if it was “necessary,” he stated. But he asked, is this really necessary? Since then, the two parties have feuded bitterly over a budget bill, with the Republicans accused of serving millionaires at the expense of America. The mud stuck. Boehner caved; despite a vow to never do so, he allowed taxes on millionaires to rise. 

If he opposes the Ex-PATRIOT Act, Republicans will be excoriated for  pandering to jet-set tax evaders. Democrats will chortle with joy. In fact, they have already played the embarrassment card. A co-sponsor of the Act challenged Boehner through a press conference, “Washington needs to work together in a bipartisan manner. I request that you introduce the Ex-PATRIOT Act in the United States House of Representatives and call for an immediate vote on this important legislation.” The political dynamic favors passage of the Act in both the Senate and the House.

Reason #2. The average trapped American is resentful of expats...and, most especially, rich ones. As long as the rate of expatriation was small, it could be dismissed as an aberration. After all, who would flee from the land of the free? That was something Europeans did. But the annual rate of expatriation has been rising sharply since Obama's first term (2009-2012). In 2008, 231 Americas went through the complex and expensive process of officially leaving. In 2009, 750 left; in 2010, 1534; in 2011, 1782. These are official numbers from the Taxpatriate Lists published by the IRS. 

The real numbers would be much, much higher. Consider a series of Zogby International polls conducted between 2005 to 2007. The polls focused on households, not individuals, and excluded households in which any member went abroad as a part of work for the government or a private company. Zogby found that1.6 million U.S. households had already determined to relocate abroad; an additional 1.8 million households were seriously considering such a move, while 7.7 million more were 'somewhat seriously' contemplating it.” Zogby concluded, “If the data collected in the seven polls...are fairly representative of the current decade, then, by a modest estimate, at least 3 million U.S. citizens a year are venturing abroad."

The polls were pre-Obama. If the post-Obama rate of household relocation tracks the Taxpatriate List rate, then household relocation increased more than eight-fold from 2008 to 2011. No one knows the real numbers but the “expat problem” is now too large to ignore.

[Editor's Note: If you would like to become part of this "problem"...then take this necessary step to free yourself from the increasing burden of belonging to the US...]

Reason #3. Even if the expat numbers remained small, Eduardo Saverin was a game-changer. On May 11, 2012, a Global Post headline announced, “Eduardo Saverin, Facebook co-founder, to renounce his US citizenship ahead of IPO.” Bloomberg estimated that Saverin might well save $67 million in taxes by renouncing prior to Facebook going public. 

One week later, on May 17, Schumer announced the Ex-PATRIOT Act as a direct response to Saverin's “outrage.” Even Boehner was politically compelled to denounce Saverin. Then Denise Rich – a prominent songwriter, socialite and political fundraiser – went expat for tax advantages. And, now, it is rock legend Tina Turner. The United States cannot permit mega-rich and famous people to make expatriation trendy, especially not for tax reasons. 

Reason #4. The Ex-PATRIOT Act is another in what seems to be an irresistible juggernaut of repression against expatriates and Americans abroad. 

Some of the totalitarian measures are well known, such as the Foreign Account Tax Compliance Act. Others fly under the radar. For example, a provision was buried in an unrelated and 1676-paged Transportation Bill entitled “Moving Ahead for Progress in the 21st Century Act” (MAP21). Section 40304 allows the IRS to unilaterally revoke the American passport of anyone it believes "owes" $50,000 or more in taxes. There is no hearing or due process. The IRS can now prevent Americans from fleeing abroad by slamming shut the exit door. And that's that.

Reason #5. Expats and unobtrusive Americans abroad have no hand. Politicians do not care about exiles who do not vote or about people who expose “America, the beautiful” as a lie. Politicians need to demonize them as being greedy, unpatriotic, and thieving elitists. By accusing expats of their own sins, the politicians create a scapegoat.    

CONCLUSION

As it is currently written, the Ex-PATRIOT Act would not be retroactive in its tax provisions. But 2013 may be the last year to use the old tax code. If you are thinking about leaving the U.S., then do it NOW! The legislative pipeline in Congress has been clogged during much of 2012. Do not wait until measures like the Ex-PATRIOT Act or another Section 40304 pass the blockade and land directly into your life. 2014 may be too late. 

Wendy McElroy is a renowned individualist anarchist and individualist feminist. She was a co-founder along with Carl Watner and George H. Smith of The Voluntaryist in 1982, and is the author/editor of twelve books, the latest of which is "The Art of Being Free". Follow her work at http://www.wendymcelroy.com.

Anarcho-Capitalist.  Libertarian.  Freedom fighter against mankind’s two biggest enemies, the State and the Central Banks.  Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast.  Jeff is a prominent speaker at many of the world’s freedom, investment and gold conferences as well as regularly in the media.

© 2013 Copyright Jeff Berwick - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Jeff Berwick Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014