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The Millionaire Man Exodus
Zero Hedge ^ | 11-29-12 | "Tyler Durden"

Posted on 11/29/2012 5:14:39 PM PST by RKBA Democrat

(Full title: The Millionaire Man Exodus: What Obama Can Learn From The UK's "Tax The Rich" Plan)

Regardless if the Fiscal Cliff is resolved tomorrow (impossible), on December 31 (unlikely), or in tandem with the debt ceiling hike some time in March 2013, after all the government fund buffers have been soaked dry as they were back in August 2011 (most likely), one thing is certain: America's wealthiest (billionaires and millionaires) are about to see their taxes soar - that's more or less a given.

The question is what happens then. Will, the wealthiest - those who have access to and can buy banking, incorporation, citizenship and legal services in any global jurisdiction in a world that has never been this decentralized and this , take it all quietly up until that point on the Laffer curve says they will commit mass suicide, or maybe, just maybe, because they don't feel like being force to pay uncle Sam even more than they currently do with the proceeds not used for something constructive like paying down debt, but instead to fund government corruption and inefficiency, they will pick up and leave without saying goodbye or even looking back, and in the process crush future US government tax revenues even more and send the deficit soaring more. After all it is the "1%" who pay 30% of all income tax. This means roughly about $600 billion in tax revenues annually.

"No risk in that", many will say - after all where can they go? Well, apparently many places. Because if the UK, where as the Telegraph reports a stunning two-thirds of domestic millionaires opted to leave the country than pay a "punitive" 50% tax, is any indication it is possible that the imminent tax hike on America's wealthiest is going to be one of the most destructive things that can happen to America's already unsustainable budget deficit.

From Telegraph:

In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.

This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election.

The figures have been seized upon by the Conservatives to claim that increasing the highest rate of tax actually led to a loss in revenues for the Government.

It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes. ...

Last night, Harriet Baldwin, the Conservative MP who uncovered the latest figures, said: “Labour’s ideological tax hike led to a tax cull of millionaires.

Far from raising funds, it actually cost the UK £7 billion in lost tax revenue.

“Labour now needs to admit that their policies resulted in millionaires paying less tax and come clean about whether they would reintroduce this failed policy if they were in power.”

Mr Osborne argued earlier this year that the 50p rate was deterring entrepreneurs from coming to Britain.

It appears that at least the UK has learned its lesson:

George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.

Sadly, even with this largely cosmetic move, the UK too is grappling with a far bigger issue: it has never been about revenue. It is all about spending. And both in the UK and the US government spending is simply too big. How big? So big that all tax revenues couldn't fund just the mandatory payments (which exclude military spending), let alone discretionary.

But both the UK and US know that revealing this little factoid would lead to the beginning of the end, as the realization that the welfare state myth, which has perpetuated a tenuous peace in the "developed world" ever since the advent of Otto von Bismark, has been one big lie. And anyway, with some additional money still entering the ponzi system, one does not need to pull the plug on it just yet: it will likely last at least one or two more years before it all comes crashing down.

Yet while the UK learned the hard way that in today's world jumping on one's G-6 timeshare private jet and becoming a citizen of XYZ takes a few hours top of preparation and execution, the US is only now going to learn this very hard lesson.


TOPICS: Business/Economy; Editorial; Government
KEYWORDS:

1 posted on 11/29/2012 5:14:42 PM PST by RKBA Democrat
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To: RKBA Democrat
They might not have this terrain in the UK, but the outcome will be the same when magical thinking meets harsh reality.


2 posted on 11/29/2012 5:17:37 PM PST by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: RKBA Democrat
What Obama Can Learn

Stopped reading right there.
3 posted on 11/29/2012 5:18:14 PM PST by steel_resolve (Ships With Holes Will Sink And I Will Swim)
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To: RKBA Democrat
One of the ways in which the US differs from most countries, including the UK, is that it has worldwide taxation. If you are a US citizen living abroad, you get a living exemption of (last time I looked) 80K, but owe US taxes on any excess. There are tax treaties with many countries, but you will pay the US extra when its rates are higher than those of the country you are residing in.

The only way out of this is forfeiting your US citizenship, which is a mighty big step to take. Not counting cultural and patriotic issues, but only talking finance, an exit also requires that you pay up on any unrealized capital gains as you exit.

It pains me to say this, but the country I grew up in, the land of the free, now has one of the most greedy and grasping tax systems of the civilized world. I've heard that overseas bankers in many countries don't even want your account if you are a US citizen.

4 posted on 11/29/2012 5:24:51 PM PST by Pearls Before Swine
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To: RKBA Democrat

“It should be known that at the beginning of a dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments.”
‘Abd-ar-Rah.mân Abû Zayd ibn Khaldûn (1332-1406)

Way before the Laffer curve, we had historical evidence of the consequences of societial decay.


5 posted on 11/29/2012 5:30:19 PM PST by griswold3 (Big Government does not tolerate rivals.)
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To: steel_resolve

Beat me to it.

I never bother reading articles that begin with the presumption that Obama doesn’t want to destroy the U.S.


6 posted on 11/29/2012 5:33:53 PM PST by Arthur McGowan (If you're FOR sticking scissors in a baby girl's neck and sucking out her brains, you are PRO-WOMAN!)
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To: Pearls Before Swine

I think Eritrea is the only other third-world, socialist sh!t-hole that taxes citizens on their worldwide income.


7 posted on 11/29/2012 6:04:10 PM PST by Vide
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To: Pearls Before Swine
Not counting cultural and patriotic issues, but only talking finance, an exit also requires that you pay up on any unrealized capital gains as you exit.

Not if you get your assets out of the country *before* renouncing your citizenship.Of course such a plan might mean that you'd risk arrest if you ever tried to enter the country again.

8 posted on 11/29/2012 6:22:41 PM PST by Gay State Conservative (Benghazi: What Did Baraq Know And When Did He Know It?)
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To: Pearls Before Swine

They aren’t going to leave, as the British millionaires probably mostly didn’t leave either. All they have to do is fix it so they don’t recognize personal income. Many business owners have the option of declaring dividends or setting the salary they pay themselves out of the business, etc. They will just not declare dividends, pay themselves less, and so forth. There are many other ways.

The higher marginal tax rates go, the more attractive tax shelters are.


9 posted on 11/29/2012 6:30:02 PM PST by buwaya
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To: griswold3
“It should be known that at the beginning of a dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments.”

Abd-ar-Rah.mân Abû Zayd ibn Khaldûn (1332-1406)

---------------------------------------

Great quote! Do you have any info about the original work that came from? I did a couple web searches, and see the quote verbatim, but not the source.

10 posted on 11/29/2012 6:35:45 PM PST by stillonaroll
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11 posted on 11/29/2012 6:40:09 PM PST by musicman (Until I see the REAL Long Form Vault BC, he's just "PRES__ENT" Obama = Without "ID")
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To: griswold3

Looks like the quote is from this:

http://en.wikipedia.org/wiki/Muqaddimah#Laffer_Curve


12 posted on 11/29/2012 6:43:44 PM PST by stillonaroll
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To: RKBA Democrat

In 1990, when Congress imposed a luxury tax on yachts, private airplanes and expensive automobiles, Sen. Ted Kennedy and then-Senate Majority Leader George Mitchell crowed publicly about how the rich would finally be paying their fair share of taxes. But yacht retailers reported a 77 percent drop in sales, and boat builders laid off an estimated 25,000 workers.

What happened? Kennedy and Mitchell simply assumed that the rich would behave the same way after the imposition of the luxury tax as they did before and the only difference would be more money in the government’s coffers. They had a zero-elasticity vision of the world, namely that people do not respond to price changes. People always respond, and the only debatable issue is how much and over what period.

Walter Williams


13 posted on 11/29/2012 6:52:20 PM PST by listenhillary (Courts, law enforcement, roads and national defense should be the extent of government)
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To: RKBA Democrat

Nothing new. In the 1970s Bjorn Borg, young Swedish tennis phenom moved his taxable residence from high tax Sweden to low tax Monaco.

They are called “tax exiles.”

Article showing Europe has learned.

http://www.cato-at-liberty.org/sweden-repeals-wealth-tax/


14 posted on 11/29/2012 6:55:50 PM PST by truth_seeker
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To: Travis McGee
Instead of raising taxes, we should be rewriting the rules re what is deductible for a charitable foundation. There is real abuse in 501c3 expenses and most of those foundations are funding leftists. IOW, those are the real rich (the 0.1%) and not the 1% upper middle class small business person that the Democrats are trying to screw.

Why it is Republicans aren't using that as a couter-position is beyond me.

15 posted on 11/29/2012 7:12:24 PM PST by Carry_Okie (The Slave Party: advancing indenture since 1787.)
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To: Carry_Okie
Why it is Republicans aren't using that as a couter-position is beyond me.

There are charities...and there are causes. From a tax standpoint, they should not be treated the same.

16 posted on 11/29/2012 7:27:57 PM PST by okie01 (THE MAINSTREAM MEDIA; Ignorance on parade.)
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To: stillonaroll

The Muqaddimah, An Introduction to History, Franz Rosenthal translation, abridged and edited by N.J. Dawood, Bollingen Series, Princeton University Press, 1967, p.230, quoted by Ronald Reagan. ....

“The great Arab historian Ibn Khaldûn clearly anticipated the Laffer Curve. While most of his political enemies regarded Ronald Reagan as an ignorant fool, Reagan actually majored in economics in college and long remembered Ibn Khaldûn’s wisdom. Supply Side economics was nothing new to him.”


17 posted on 11/29/2012 7:40:11 PM PST by griswold3 (Big Government does not tolerate rivals.)
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To: okie01
There are charities...and there are causes. From a tax standpoint, they should not be treated the same.

I'm talking Rockefeller, Per, Jones, Packard, Hewlett, MacArthur... These leftist foundations are not charities; they GIVE to "charities", usually with an indirect for-profit motive for the stocks they hold. Sometimes they launder the money first, through an intermediary like Tides Foundation. In any event, there are expense rules these people abuse in which they hide much of their day-to-day expenses, from food to travel. A whole bunch of these people belong in jail. It has to stop.

18 posted on 11/29/2012 7:45:29 PM PST by Carry_Okie (The Slave Party: advancing indenture since 1787.)
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To: listenhillary

Amen! Idiot politicians and liberals just assume that taxation doesn’t change behavior, which is absurd. If you tax something, there will be less of it. People don’t stand still to be sheered like sheep. I know of several people who are planning to retire if taxes go higher. Why work to have what you earn taken from you?


19 posted on 11/29/2012 8:23:24 PM PST by Pining_4_TX ( The state is the great fiction by which everybody seeks to live at the expense of everybody else. ~)
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To: griswold3
Reagan actually majored in economics in college

Yes, but it wasn't an Ivy League college, so it doesn't count.

20 posted on 11/29/2012 8:54:46 PM PST by Graybeard58 (What G.O.P.e. candidate is in store for us in 2016?)
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To: RKBA Democrat

The dirty little secret is American millionaires have been exiting the country during Obozo’s reign AND they are renouncing U.S. citizenship. I think it was 1,200 last year and 2012 is ahead of 2011. Tax the rich, Barry. Watch the stampede accelerate.


21 posted on 11/29/2012 10:02:10 PM PST by MasterGunner01
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To: Gay State Conservative

This reminds me of one of a true story from my business days. A European senior finance executive of a mid size privately held multinational company was sent to the US headquarters for an assignment. He was one of the executives with a significant ownership stake. Near the end of his US assignment the company was purchased by a publicly held US corporation. The executive received shares of common stock in the US company for his shares of his old company. The transaction was not considered taxable until he sold shares of the publicly traded company. He asked for and obtained the shares in certificate form, not electronic.

When he was reassigned to Europe he flew to an offshore country for a vacation before flying home, carrying his paper stock certificates with him. While there he sold the stock and deposited the proceeds. The transaction was not taxable in the US as he was not a US citizen and was no longer working in the US. The transaction was not taxable in his native country because he received the shares while in the US and he was not yet physically back working in his native land. The sale transaction had to occur in his native country, while he was technically a resident, to be taxable. As he had not yet arrived home from his foreign assignment he was not technically a resident for tax purposes. The offshore island nation did not tax the transaction because it was happy to have foreign money flowing through its banks.

A unique situation in which timing was perfect to avoid millions in taxes without breaking the law.


22 posted on 11/30/2012 2:21:41 AM PST by Soul of the South
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To: Carry_Okie

“Why it is Republicans aren’t using that as a couter-position is beyond me. “

You still believe the GOP is on our side?


23 posted on 11/30/2012 4:43:44 AM PST by Jim Noble (Diseases desperate grown are by desperate appliance relieved or not at all.)
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To: MasterGunner01; RKBA Democrat
The dirty little secret is American millionaires have been exiting the country during Obozo’s reign AND they are renouncing U.S. citizenship.

Barry's Regime has decided to make life rough for banks that accept deposits from U.S. citizens.

I think it was Rush last week who told us that Swiss banks are no longer accepting U.S. deposits less than $30,000,000 because smaller accounts are too much of a hassle.

I don't know how true and how widely true that is. USG may have some sort of hammer to hold over the Swiss arising out of tax-evasion cases a few years ago.

24 posted on 11/30/2012 4:50:46 AM PST by lentulusgracchus (Hanoi toy, McCain's their boy. (Hat tip to FReeper |neverdem|.))
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To: Vide
I think Eritrea is the only other third-world, socialist sh!t-hole that taxes citizens on their worldwide income.

The long arm of the Eritrean IRS is probably less fearsome and efficient than Uncle Sam's. I doubt Eritrea sends demand letters for client lists to banks and threatens their banking privileges. I doubt that Eritrea follows its citizens around, unless political feuds are involved--and then income isn't really the issue.

25 posted on 11/30/2012 4:56:06 AM PST by Pearls Before Swine
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To: lentulusgracchus
There are still ways to shelter money to keep the IRS at bay. You're right about the Swiss; their banks caved-in to the U.S. Feds. However, there are other havens such as the Cayman Islands that have told our Feds to take a hike (they know where the money is and they're not telling).

The other thing is the surrender of U.S. citizenship. When U.S. citizenship is considered a burden of monumental proportions and getting citizenship in another country is preferable, there IS a problem. However, this dual problem of giving up citizenship and sheltering funds in “safe” foreign banks is something the U.S. Treasury wants to hide at all costs lest people start asking: “Why?”

26 posted on 11/30/2012 6:32:57 AM PST by MasterGunner01
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To: Jim Noble
You still believe the GOP is on our side?

I like to think that at least they are on their side.

27 posted on 11/30/2012 7:03:41 AM PST by Carry_Okie (The Slave Party: advancing indenture since 1787.)
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To: RKBA Democrat

Here’s what I would do if I were in this squeeze:

I would pay off all my large debts, to the best of my ability. I would use funds I already had paid taxes on and would pay off my property/house—car—and whatever other debts I had that I could pay off with about 35% of my accumulation of funds. I would take the vast majority of the rest of that 65% and convert it to cash or silver coins and have a safe installed at my home. I would keep as much as possible at my home, hidden.

IF I were running a company, I would then pay myself just enough to pay day-to day and month to month bills. I would drop myself into a tax bracket which would leave me paying nowhere near the taxes I had been paying. Where I might have been paying myself $200,000 a year for my efforts, investment & expertise, I would drop that down to a month-to month minimum. I would probably also increase certain life insurances with the owner of the policy a person who could get the benefits without any taxes.

Mentally, or even on paper, I would record the shortfall I was holding back from paying to myself. When Obama and his plans were proved completely wrong, and I could go back to my usual salary paid to myself, I would add back into that salary the shortfall I underwent in the meantime.

I would also make sure that ANY and ALL employees of my company that voted for Obama or vocally supported him were removed from my employment. If any of them held a really important slot, I figure I can find someone in the ranks of the unemployed who is a true conservative.

IF I have to ratchet down the volume of business I am doing, I will do that also.

I will refuse to continue feeding the pig.


28 posted on 11/30/2012 11:32:06 AM PST by ridesthemiles
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To: RKBA Democrat

Here’s what I would do if I were in this squeeze:

I would pay off all my large debts, to the best of my ability. I would use funds I already had paid taxes on and would pay off my property/house—car—and whatever other debts I had that I could pay off with about 35% of my accumulation of funds. I would take the vast majority of the rest of that 65% and convert it to cash or silver coins and have a safe installed at my home. I would keep as much as possible at my home, hidden.

IF I were running a company, I would then pay myself just enough to pay day-to day and month to month bills. I would drop myself into a tax bracket which would leave me paying nowhere near the taxes I had been paying. Where I might have been paying myself $200,000 a year for my efforts, investment & expertise, I would drop that down to a month-to month minimum. I would probably also increase certain life insurances with the owner of the policy a person who could get the benefits without any taxes.

Mentally, or even on paper, I would record the shortfall I was holding back from paying to myself. When Obama and his plans were proved completely wrong, and I could go back to my usual salary paid to myself, I would add back into that salary the shortfall I underwent in the meantime.

I would also make sure that ANY and ALL employees of my company that voted for Obama or vocally supported him were removed from my employment. If any of them held a really important slot, I figure I can find someone in the ranks of the unemployed who is a true conservative.

IF I have to ratchet down the volume of business I am doing, I will do that also.

I would cherry pick out the very best customers I have accumulated & discard the ones who pay late, want fast service when they have brought me the work late, and in general, refine my customer base. That would reduce my gross, but will also reduce my stress in working with the jerks.

I will refuse to continue feeding the pig.


29 posted on 11/30/2012 11:33:44 AM PST by ridesthemiles
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