Posted on 05/11/2004 7:09:17 AM PDT by Action-America
No, but he seems to be saying so - since him assumption is that if they leave, no one else can become 'rich' to fill their missing place in the economy.
No, he simply assumes, correctly, that their leaving makes it no easier or more likely for anyone who stays to become rich. (If anything, it makes it less likely, since one way to get rich is to work with those who know how to become rich.)
Simply renounce US citizenship and become the citizen of another nation.
I know of at least one guy who did this by going to Switzerland. Was worth a little north of a billion, left because of taxes and became a Swiss national. I am not that adept with Swiss taxation laws, but something must have caused him to literally uproot himself and move there, and i doubt it was the chocolate and the Alps alone.
The US is the only country that taxes an American citizens global income regardless of residency. I had to file a 1040 every year.
That is a very good point, which brings up the point that the above article mentioned. Only a handful, of the millions of US expats that the US government knows of, around the world, are filing that 1040 form every year. The only reason why so many would violate US tax law, by not filing, is that they have no intention of ever returning. As their US passports expire, they are not renewed, since most have some sort of dual citizenship and just fall back on that.
You point out how expensive it is to live in Europe and I must agree. But, if your income is international, then while it remains more expensive to live in Europe, it is less expensive to have your citizenship in Europe (at least until the EU decided to tax worldwide income, as well).
The other thing about that worldwide income thing that is really bad, is that as a US citizen, the US government can force US citizens to repatriate assets that they want to confiscate, regardless of where in the world the asset was acquired or is being held. Such is not the case for citizens of Bermuda, Caymans, Belize, Panama, etc. Only US citizens risk losing everything that they have, anywhere in the world, to government confiscation.
There is one other point that should be raised. Several of the largest traveler organizations rate the US passport as the second worst passport in the world, to carry. Sound surprising? I thought so, at first, too. But, as a US citizen, you are a target for every wacko in the world, who hates rich Americans, even if you are not rich. It's perception. The worst passport is the Israeli passport and it too, is rated poorly, for safety reasons. Also, in some parts of the world, your level of service goes down appreciably if you show a US passport. For example, try to get one of the best rooms at some of the nicer hotels in Paris, showing your US passport. That room might be available for you, if you show a Grenada or Belize passport, but likely not, with your US passport. And, Paris is not even the worst at doing that.
But a correct one nonetheless.
there is a definite implication that they create a gap (see his little pie chart) that must be filled,
You bet it does---unless Uncle Sam decides to get his hands out of the taxpayers' pockets.
and further that it must be filled by those locked into some lower level of income (hence the enormous increases in required tax rates).
They're "locked" by the demands of the marketplace. The only alternative theory is that it was only those existing rich people that were keeping them "locked in"---and we're right back to the strange idea that there can only be a certain number of rich people.
In the end, I'll use as an example three of those in the top 1% that I do know personally and well enough to characterize their businesses. They each run what would be considered a small business - one has a printing business, one a furniture store, and one a oil products supply business. If they left, you can be sure that someone else would fill those needs
But on the average not as well (or they'd have already had those jobs), nor would the people who filled the new owners' old jobs do them as well, so income over the whole business would decline as the old owners took with them their valuable talents.
I'm sure he's also proud to receive his monthly retirement check from the "country that treated me like the enemy".
I really don't know if he even gets that check. You see, he left in 1997, he had millions, at the time and managed to get out with all of his earned wealth intact. That essentially put him in violation of the patriot penalty law. That's the one where they tax wealthy ex-citizens for ten years after they leave. They may have cut him off. I don't know. But, there is one thing that I can tell you. Whatever the value of that check might be, whether he receives it or not, the amount is immaterial to him. He lives on an entirely different scale.
Where would one go?
See my post number 56 to xrp. It's very general, but it gives you an idea. It also links to a few of the largest expat sites. BTW, expat services, that used to be a niche market, only a dozen years ago, have now become big business, as more and more wealthy people are looking for information on moving offshore.
I doubt that Willie Horton had much to say about banks...
No doubt a slip on your point since Willie Horton was a "political football" (and criminal) while Willie SUTTON? was a notorious bank robber (and criminal)!
That's brilliant! A few good people figure out what's happening to them and leave and you want to punish them.
Don't foreigners have to pay taxes on US investments? If not, why not?
Yes, they do.
But a foreigner, who has investments in 10 countries, including the US, with national tax rates ranging from say 10% to 40%, only has to pay tax on the income from each country, at the tax rate of that country. By contrast, a US citizen, who has the same investments in the same 10 countries must pay tax in each of those countries, at that country's tax rate and then pay the difference between that country's tax rate and his US tax rate, to the IRS.
So, if a US citizen, who lives offshore and uses no US services, is taxed by the IRS at, say 38% and he has investments in a country where the tax rate on his investment is 18%, then after paying that 18% to the country where he made his money, he will have to pay an additional 20% to the IRS, just for the privilege of carrying the second most dangerous passport in the world. On the other hand, a citizen of high taxed France, who is taxed at, say 70% on his France earned income, but has the same foreign investment, only pays that 18% foreign tax on the foreign investment, as long as that foreign earned income is not repatriated. So, if 90% of the Frog's income is offshore, that 70% French territorial income tax only applies to 10% of his income. A 70% tax rate is abominable, but as you can see, it isn't nearly as bad as our own much smaller tax on worldwide income.
I hate rich people who bitch and moan that they have to pay taxes.
Well, I can't speak for all rich people. But, I will tell you what I have observed. I know a lot of rich people and I know a lot of middle class people. But interestingly, I have not heard a single person, who I would call rich, complain about the amount of tax he pays. To them, that's small change. In fact, I can't really say that I know any rich people who complain about anything. That's why they're rich. Instead of complaining, they act and they act decisively. If they complain at all, it will usually only be about the really big things, like the government handicapping them, in their ability to do business or about tort laws that put their entire worldwide estate at risk. On the other hand, just about every middle class person who I know, will complain about taxes at the drop of a hat. I'm sure that there are some really greedy rich people out there, who would even complain about a 5% tax. But, by and large, even though they pay a larger percentage of their income in tax, than the rest of the country, they consider it less of a burden, than do the middle class. But, if regulation cripples their ability to make money, in the first place or threatens their entire fortune, then it's a major problem and that's the condition in the US today. While the middle class are complaining about taxes, the rich are taking action to protect what they already have and to many of them, that means leaving for greener pastures. That's where this whole big government thing falls apart.
Very few people will give up their citizenship.
True. According to the INS report referenced in the above article, it is very difficult to determine how many US citizens leave the US every year, since most are seeking privacy and don't feel obliged to tell the US government where they are going. It was explained to me best by a female expat acquaintance who said, "I look at telling the US government where I am going in much the same way as an abused wife would look at telling her abusive ex-husband where she was going." Put that way, the logic is impeccable.
Even if they do, they continue to pay for 10 years.
I don't know where you got that idea. Even the IRS reports indicate that only a relative handful of the expats that they know about, still fill out 1040 forms and even then, it is almost exclusively those who have not yet renounced. In other words, they are the ones who plan on coming back.
In fact, there is overwhelming evidence from a wide variety of sources, that indicates that the 10-year tax penalty on wealthy expats is largely responsible for the surge in expatriations that occurred in 1997, only months after that law was enacted. Although consulates won't talk about the actual number of applications for citizenship that they approve, the fact that I find interesting is that several did report a significant surge in the number of requests for citizenship and permanent residence forms, very shortly after that law was passed. How many of those forms turned into actual applications that were approved, they won't say. But, other evidence indicates that there were significantly fewer high dollar taxpayers in 1997 than should have been expected, adding further credence to the 1997 surge in expatriations. That and other evidence would certainly lead one to believe that a lot of those requests for citizenship application forms, turned into actual applications that were accepted and that's why so many high dollar taxpayers were missing from the IRS rolls in 1997.
Most expatriates are Business people who work for their companies overseas.
Not even close. If that were true, the IRS would be receiving millions of returns from those people, instead of the relatively meager hundreds of thousands. After all, I think that it's safe to assume that most of those temporary workers would be planning to return to the US some day, so they would still have to comply with US tax law. Remember the Bureau of Consular Affairs report on US Citizens Residing Abroad, that was linked to in the above article? There are, in fact, millions of expats that the bureau knows about. The only reason why millions of US expats do not file annual tax returns, is because they have no intention of ever returning to the US. Americans working for their company overseas, are a very small part of the expat community.
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