Plan B Forum

http://iwf.org/blog/2788289/

American Tax Refugees Saying “Enough is Enough.”
Vicki E. Alger
Forget moving out of high-tax states like California or New York. The New York Post reports:



Startling new data from Uncle Sam show that defections by Americans are expected to double this year, largely to avoid any stiff tax bills resulting from the proposed 55 percent hike on the rich — as well as the likely expiration on Dec. 31 of the Bush era tax cuts.

As many as 8,000 US citizens are projected by immigration officials to renounce in 2012, or about 154 a week, versus 3,805 in 2011, or about 73 per week.

“High-net-worth individuals are making decisions that having a U.S. passport just isn’t worth the cost anymore,” said Jim Duggan, a lawyer at Duggan Bertsch, which specializes in protecting assets of the wealthy. … “Some are philosophically disgusted at the course our country is taking in all kinds of ways. They’re making a strong protest of, ‘Enough is enough,’ ” said Duggan. “But largely it’s an economic decision.”

There’s a catch to reaching tax nirvana. To renounce citizenship — and thus escape any future US taxes forever — a citizen must buy that unique freedom with a a one-time exit tax of 15 percent on the fair-market value of all assets — including real estate, securities, businesses and personal belongings — less their basis price.

“Many see it as a cheaper way to get out from under any tax liabilities on future wealth, while their assets have lower values during the weak economy,” he said. … Among the popular spots: Australia, Norway, Singapore, Cayman Islands, Costa Rica, Guernsey and Antigua.

There is one way to have your cake and eat it, too, Duggan said. The US possessions in the Caribbean — St. Thomas, St. John and St. Croix — give a 90 percent tax credit to US citizens living there at least 183 days a year, resulting in an effective tax rate of just 3.5 percent, he said.

How long will the American private sector continue “doing fine,” as President Obama said recently, when people who work, create jobs, and pay taxes jump ship?

So they are leaving the United States to escape high taxes, and choose to move to Norway, which has even higher taxes?

They obviously aren't that smart, so it won't be any great loss.

The people who would benefit the most by that action, Warren Buffett and Bill Gates, choose not to.

The numbers of people, and the wealth they represent, who defect are meaningless. Most of them are shit anyway.

yrs,
rubato

Scooter wrote:So they are leaving the United States to escape high taxes, and choose to move to Norway, which has even higher taxes?

They obviously aren't that smart, so it won't be any great loss.

You didn't actually read the post or the link, did you. (That isn't a question.)

“Many see it as a cheaper way to get out from under any tax liabilities on future wealth, while their assets have lower values during the weak economy,” he said. … Among the popular spots: Australia, Norway, Singapore, Cayman Islands, Costa Rica, Guernsey and Antigua.

Going from a lower tax jurisdiction (the U.S.) to a higher tax jurisdiction (Norway) in order to reduce one's tax liability makes one an idiot.

My point stands.

Thank you for confirming that you did, indeed, not read the link.

Note: the US (and ONLY the US) taxes its citizens on ALL income, regardless of country of origin.

The only difference is that the U.S. uses citizenship, whereas other countries use residence, but in both cases taxes are levied on worldwide income. So if a U.S. citizen were to renounce his/her citizenship and move to Norway, regardless of whether he/she became a citizen of Norway, he/she would pay Norwegian taxes on his/her worldwide income. And since Norwegian taxes are higher, he/she would be paying more than if he/she had remained in the U.S.

It's not exactly rocket science.

Money from rent on our house in the UK is taxed in Aus as income, money spent on maintenance etc is rebated as expenditure against tax.

We call that a tax deduction.

Gob wrote:Money from rent on our house in the UK is taxed in Aus as income, money spent on maintenance etc is rebated as expenditure against tax.

A net loss then?

The actual number of people involved is miniscule, and will not amount to a wart on the ass of the American federal deficit.

The point of the folly and unfairness of "highly progressive" taxation remains valid.

No system which collects unlimited taxes (without a ceiling amount) can be said to be fair. No system which allows the total of all taxes paid to governments at all level to exceed half of one's income could possibly be "fair."

Anyone who doesn't minimize his taxes (legally) is a fool. If you have the resources to move elsewhere and have no personal ties to keep you in the U.S., you would be a fool to remain; there are a lot of great places to live outside the U.S.

dgs49 wrote: there are a lot of great places to live outside the U.S.

I never thought I'd see an American admit that!

dgs49 wrote:The point of the folly and unfairness of "highly progressive" taxation remains valid.

How can a tax system be labelled "progressive" when those who earn millions of dollars pay an effective rate less than that paid by those earning $20,000?

Depends on how they earn it. Capital gains tax rate is different from earned income rate. Fair? I don't know.
I do know hte money I invest has already been taxed at the higher rate that earned income is based on. The money make on that invested money is taxed at a lesser rate (depending on teh type of investment). The money I lose, thankfully, is not taxed at all.

The USA tax code is wide and complex. A flat tax may be the way to go, but then much of the middle classes tax deductions come from interest paid on their mortgage. Take that away and the burden only gets worse for the middle class. I don't have an answer as I am not an economist, I am an engineer. I look at what I make (gross) and what I take home (net) and know the gov takes a good chunk out of it. And I am not even mentioning scool taxes on my property tax bill (over $4000/year).

Scooter wrote:

dgs49 wrote:The point of the folly and unfairness of "highly progressive" taxation remains valid.

How can a tax system be labelled "progressive" when those who earn millions of dollars pay an effective rate less than that paid by those earning $20,000?

Or Warren Buffet's secretary is taxed at the same rate he is; as he keeps pointing out.

yrs,
rubato

Or Warren Buffet's secretary is taxed at the same rate he is; as he keeps pointing out.

And we have seen both peoples tax returns? I haven't. And as I said before, his daily earned income will be taxed at one rate (as will hers) and his investment income is taxed at another. Is it fair? I don't know. I know the money I put in my investments is "after tax" dollars (aka NET INCOME) so it has already cleared the tax hurdle. If you want to tax money made on investments, then say that. Don't compare income earned made by working daily with money earned on investments. The gov doesn't. If you want to make no distinction, then do so and spell out how you would do it to make it fair.

rubato
If you make what you say you do, then you pay plenty in salary taxes. Also, if you earn what you say you do then you probably have plenty of money in investments, IRA's, 401K's ect that earn you money also. If you want to tax all the same, then say so. I don't see where Obama nor Romney are declaring that line.

And if you are so inclined to a "fair" tax, than take your investment income that is taxed at a lower rate, and figure out the difference and pay it. Me, I plan on keeping my investment profits.

oldr_n_wsr wrote:Don't compare income earned made by working daily with money earned on investments.

Why not? Is a dollar earned in wages worth more than a dollar earned from investments? Do the signs at McDonald's say that a BigMac costs $3 if paid for by money earned from wages, but $3.50 if paid with money earned from investments? What is the difference between money earned by someone who sits at a desk all day trading his/her own stocks, and money earned in commissions by someone who sits at a desk all day trading stocks for someone else? A dollar is a dollar is a dollar is a dollar. Shouldn't matter how it was earned.

Now, if you want to say that certain types of investment income should receive privileged tax treatment because it fulfills some other societal objectives, like creating jobs, that's something else, and in that case, only a tiny fraction of investment income would qualify for special treatment. People who make their money betting on whether AT&T stock is going to go up or down aren't generating any sort of economic growth by doing so. There are trillions upon trillions of dollars in speculative derivative trades on which people have made fortunes in investment income, and in doing so they contribute nothing more to the economy than someone who plays the ponies. Why should either of them be given favorable tax treatment?

Why not?

Because that is the way the tax table is set up. I am not saying it is right or wrong, just the way it is.

And short term capital gains (from my experience in the past of cashing in stock options) are taxed even higher than both regular capital gains and earned income. That may have changed as it's been 4 years since I had the benefit of cashing in stock options for short term gains.

If I make more (or all) of my income via long term gains/dividends, I am taxed differently from the income I make from working. As is everyone. If it's not fair, then the politicians should fix it and I don't see a republican nor a democrat trying to change that.

I am not argueing thaat a dollar earned from whereever is different from a dollar earned elsewhere, just that the tax code is set up as it is and everyone has to deal with it. There are certain ways around it and I do not condemn anyone for trying their best to keep as much money that they earned, however they earned it (legally). I do, and I bet anyone else posting here who lives in the USA and pays USA taxes does so too.

That's kind of the point, oldr: the tax game is rigged in favor of people who already have enough wealth that they can generate their income through capital gains. Why is their income treated more favorably than those of us who work for a wage or a salary? Why should that be "just the way it is"? As Scooter points out, there may be certain kinds of investments we'd want to offer favorable treatment in order to advance specific policy goals, but giving an across-the-board break to the weathiest "investors" just because they make their money trading stocks and bonds is hardly rational.