Tax hostages?

The Washington Times ^ | 6-12-08 | Richard W. Rahn

[JZelle]

Do you believe the tax system should be used to punish people with unpopular views? One of old Soviet Union's actions that was most heavily and correctly criticized by human-rights activists both left and right was its confiscation of the wealth of those who chose to leave the U.S.S.R. The right to emigrate is considered by civilized people to be a basic human right.

Regretfully and embarrassingly, the U.S. Congress has just passed a law that places a higher tax burden (and in some cases wealth confiscation) on those who choose to permanently leave the United States, and may make some "tax hostages."

You may be thinking, so what, "it doesn't affect me and I don't care about those who leave my country." The reason you should care about how the government deals with such people is that wrong policies, if implemented, will undermine both investment and the rule of law in the United States, thus reducing employment and economic growth.

Some of the small number of Americans who renounce their citizenship and move elsewhere do so because they disagree with U.S. policies, and some do it to avoid what they consider unreasonable and excessive taxation. Others do it for very benign reasons, such as having married a foreign national and choosing to live in their spouse's country, not wanting to be double-taxed by the United States. And some, who had immigrated to the United States wish to retire to their original home country and again avoid double taxation by the U.S. government. (This occurs in jurisdictions where there is no tax treaty.)

[griswold3]

You’re kidding, right?

[stockpirate]

There is no such thing as a fair tax, we are all slaves to our Socialist masters.

[MEGoody]

If a person renounces their citizenship but still expects to make income in the U.S., I really don’t have a problem with taxing them at a higher rate. If they hate the U.S. so much, let them make their money in their new home country.

[Hostage]

Too bad you missed the point of the article. But then the article was very accurate in pointing out the attitudes of people like you.

[MEGoody]

Too bad you missed the point of the article.

So you think that people who renounce their citizenship should pay lower taxes on U.S. income?

[Hostage]

What you missed is they are now required to pay capital gains taxes on unrealized gains.

For example, if they own a home and cannot sell it or choose not to sell it, they must pay taxes on its value minus cost basis, before they can leave or before they can take citizenship in another country and give up US citizenship.

If they don’t have the money, tough luck. They are guilty of tax evasion if they leave and take citizenship in another country without paying tax on an unrealized gain.

This is why the article was entitled ‘Tax Hostages’.

[Kellis91789]

This is petty and mean-spirited. All men should have the right to shop around for the best government to live under, otherwise there is nothing to prevent any government from treating its citizens badly.

The old phrase, “Well if you don’t like it here, then leave !” is a bit unfair if you are going to be stripped of your assets on the way out the door.