Posted on 06/29/2008 4:41:06 PM PDT by Coffee200am
A lot of people probably can't understand why someone would voluntarily give up American citizenship -- but if someone wanted to do that, they'd now incur financial penalties for it.
Congress just passed a new law that will stop your capital -- or at least a good portion of it -- at the border, should you decide not to be a U.S. citizen anymore. Is it, perhaps, in preparation for the possibility that Americans might rebel at the debt and taxes incurred by their government by leaving for lower-tax locales?
You probably didn't notice this little provision inserted into the Heroes Act of 2008, passed by Congress on June 17. The headlines in the press release about the law were about the increased benefits for veterans and families of deceased military.
But Richard Kohan of Price WaterhouseCoopers drew my attention to one section of the act, which states that anyone voluntarily giving up his or her citizenship will be taxed on all of his assets as if he or she had sold them -- paying capital gains on assets that have increased in value, even though they have not been sold.
That's right. While everyone in the media is focused on keeping aliens out of America, Congress has voted to lock its citizens - or at least a good portion of their assets -- into America! Maybe they're thinking that patriotism won't be enough to keep the smart money from recognizing the coming increases in the tax burden.
Patriotism and Debt
We expect our elected leaders to be patriotic, to wear flap pins on their lapels? But how patriotic is it for our elected officials of both parties to drag our country into debt?
This year the Federal budget deficit will be a record $400 billion. That astonishing number will be added to our existing $9 trillion national debt. It's money that our government spends in excess of what it collects in taxes.
Government officials say they're shocked at the record number of American consumers who are filing for bankruptcy. Yet those same politicians are spending America into an effective bankruptcy -- building a burden of current debt and promises of future debt that can never be repaid. Now, how patriotic is that?
Patriotism and Taxes
Do you consider it your patriotic duty to pay your taxes? Do you feel unpatriotic because you spend some time trying to figure out how to reduce your tax burden, by maximizing deductions whenever possible?
If that's not unpatriotic for you, is it unpatriotic for wealthy people, or corporations, to try to reduce their tax burden? Where do you draw the line? Perhaps it's most unpatriotic for our elected officials to construct a tax system that doles out benefits to special interest groups, pitting one group of Americans against another.
What's really unpatriotic, in my opinion, is trying to divide Americans through the politics of envy. Our country has moved forward because of our optimism and our belief that any American can build a better financial future. It has been our nature to honor those who have been successful, and seek to emulate them, not to destroy them because they have more assets or income.
Of course, that presupposes that the successful people accept their patriotic responsibility to give back to the society that made their success possible. And the facts show that Americans are the most charitable and generous people on the planet.
Think of Warren Buffett and Bill Gates, literally giving away their fortunes to help humanity. Or think of the people who filled sandbags along the Mississippi this month to save the homes of strangers.
When a government encourages the best in its citizens, by its policies and its example, patriotic citizens rise to the occasion. And when a government burdens its citizens, it inspires dissent and departures.
The Beatles famously left Britain, and Bjorn Borg left Sweden, when their governments raised taxes to such high levels that even these national icons departed. Are American lawmakers preparing for that kind of scenario with this new law?
Now in America, you can love it, or leave it -- but you can't take it all with you. And that's the Savage Truth!
Nothing there to catch.
/johnny
I guess that’s own own Iron curtain then.
This doesn’t conflict with the U.S. Constitution at all does it.
Who grants power in this nation? The people or the government...
How can I become judgment proof?
For years, acknowledged expatriots have faced a levy of several years' income tax based on prior years' earnings.
Let your assets precede you, grasshopper.
I'm considering it.
The USA is 'way down the freedom index scale and sinking further every day.
The walls and fences around East Europe were all to keep people in.
It gets scary when government begins putting up obstacles to supposedly free people leaving.
I'm not a lawyer.
/johnny
Be poor.
Later
Tough to do that when poor.
Broke is one thing, poor is another.
/johnny
“The USA is ‘way down the freedom index scale and sinking further every day.”
If Obama gets his way with his proposed tax increases, our upper income bracket will be the 6th most taxed in the world.
I suspect there will be plenty jumping ship should that happen.
This country was founded by tax protesters and evaders!
I’ve been seriously considering giving it all up and moving to Ireland. Guess I’d better send all my money and goodies there way beforehand....lol.
Or the other option is dispersing your money in $12,000 allottments to every person you could ever trust, tax free. Then collecting it the next year. Well, assuming you move to a country that will allow you to receive monetary gifts tax free.
You have not seen anything yet. The rats will be desperate for tax revenues when the humongous tax increase does not generate the anticipated revenue. The rats will unleash the IRS with vicious intent. Capital will flee to countries with economic freedom.
For the super rich, movement of assets and relocation is not difficult. For the reasonably wealthy, it seems that relocation and movement of assets is not easy. If the situation here gets bad enough, I may consider relocation for retirement. I really like this country and lifestyle so it would be very difficult for me to leave.
Not that it would amount to a hill of beans, but it would just be nice to know who these first class A*holes are.
“Congress just passed a new law that will stop your capital — or at least a good portion of it — at the border, should you decide not to be a U.S. citizen anymore.”
Ping
Set up a company in Hong Kong - tax free if your income is NOT made in HK. Then move to the Philippines. Great place to live, low cost, and your income can be tax free.
Setting up an HK company - with an HK bank account and nominee shareholder and director - is around $1500, and $500 each year thereafter. Use a nice, international bank like HSBC and you can access your funds anywhere in the world. And because you used nominee shareholders and directors, your name doesn’t show up on any government-filed paperwork.
Move money and income to the HK company - you’re now a consultant for them, and have management fees to pay your HK company. Sure, you earn $6,000 per month, but your HK firm you work for charges you $5500 in management fees. So you can send $5500 overseas as a professional fee, meaning you can do it with pre-tax dollars. This gets your money overseas.
Then sell your house and car to your company, getting the cash and depositing it into your HSBC account, tax free. Foreign ownership of your own property. It’s not yours, it’s a company in HK who owns it, and you lease it from them for the ongoing money you send to them.
The cost and difficulty to move your assets overseas is very low today, and anyone with any significant net worth (like a house) should consider it. The tax man really has limited bite if you have no assets to levy or lien against.
And your taxes are greatly simplified to start with - a sole proprietor filing a 1040 EZ. Allowable deductions such as professional fees mean you get to deduct most of your income since you pay it overseas.
bttt
I want to keep a large part of what I earn and I want to be able to eat, drink and smoke in the same building without being arrested by the calorie, smoking or neo-prohibitionist police.
That leaves me with Estonia (for the time being).
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