Defending the American Dream

Defending the American Dream
How the Wealthy Defend Against
Taxes, Tort and Terrorism

As our elected representatives argue among themselves about how best to exert even more legislative control over citizens and corporations, in the name of "fighting terrorism", they fail to realize that just that sort of draconian legislation is actually brewing a virtually unseen crisis of terrifying proportions. Combine that with the effects of the terrorist attacks of September 11, 2001 and more data that we have uncovered and what you have is a recipe for disaster.

The wealthiest people in the United States - those who have achieved the American Dream - those who pay almost all of the taxes - those who are responsible for the vast majority of US investment capital - are leaving the United States large and growing numbers. This isn't news. We have known about the growing expatriation rate for some time and common sense tells us that it isn't the poor who are leaving. But, new data that we have uncovered confirms that it is indeed, the wealthiest Americans, who are being forced to leave. Furthermore, we can now expect to see this government induced capital flight increase dramatically in the near future, as a result of the growing media attention to this issue and the effect of the terrorist attacks.

This is a very serious problem, because as we have shown in previous articles, if only the top earning 1% of taxpayers leave (just over a million taxpayers), it will mean a loss of over one-third of income tax revenue, requiring a 50% tax increase for those who remain.

It would be a serious mistake to call those who are leaving, unpatriotic. After all, what could be more patriotic than defending the American Dream. In fact, all that they are doing is responding to a recent spate of oppressive laws, designed to punish the wealthy for having achieved the American Dream. If anyone in this equation is unpatriotic, it is our elected lawmakers, who are attacking the American Dream and forcing these patriotic Americans to defend what they have achieved, by taking it elsewhere.

Those who have followed our articles on Action America (http://www.ActionAmerica.org) in recent years are already aware of this disconcerting trend of government induced capital flight that has been growing like a cancer, just under the surface. But, rather than report on an issue and then just set back on our laurels, we're constantly looking for new sources of information that might indicate that things are either better or worse than first reported. The reason for this article is that we have, indeed, uncovered new information.

I'm sorry to have to say this, but it looks like the flight of wealth from our shores is much worse than originally reported; worse even than reported in our annually updated article on this subject, "Tick-Tick-Tick - The Economy Bomb" which you can find at (http://www.ActionAmerica.org/taxecon/ticktick.html). There are three new facts that point to this ominous conclusion. Actually, it is two new facts and one that has been around for a while, but it took some work to uncover it.

In recent weeks, I have read numerous news articles about how Congress is considering several different pieces of legislation aimed at preventing major corporations from reincorporating in offshore jurisdictions, in order to remain competitive with their foreign rivals and punishing those corporations that leave anyway. What those corporations are doing is referred to as corporate expatriation and is not only legal, but in many cases, necessary in order to stay competitive with their foreign rivals. But, it's not corporate expatriation that this article concerns. I only mention it, because it demonstrates that the media is beginning to take notice of capital flight issues.

In previous articles on the subject of capital flight, we have pointed out that even though the number of wealthy individuals choosing to leave the United States, for more wealth friendly climates, is increasing rapidly, the worst flight will not occur until the media takes notice of what is happening and draws attention to the problem.

Granted, the current news is not about the government induced individual expatriations that represent a true threat to our economy, but only about corporations that expatriate and cause no real harm to the economy in the process, since their jobs stay here. But, if the media is now reporting the smoke of government induced corporate expatriations, how long do you think it will be before they find and begin reporting on the fire of government induced individual expatriations?

As the media tries to bleed every ounce of interest out of the story of corporate expatriations, it's almost certain that some industrious journalist, eager to make a name for himself, will soon stumble across the facts surrounding expatriation of wealthy individuals. After all, it's not that hard to run across that info, once you start looking. For example, let's just take two likely search terms that a journalist might use in such research and try them on the Google search engine (http://www.google.com). Since we are talking about "expatriation" and "capital flight", let's use those terms.

Note: To enter a two word phrase into Google, you need to quote the phrase. So, to see how easy it will be for a journalist to stumble across this information, go to Google and enter:

On July 4, 2002, if you entered that search criteria on Google, you would have found that 11 out of the 42 listed links related to the increasing level of expatriation of wealthy individuals. In fact, 5 out of the 10 links on the first results page directly addressed individual capital flight and four of those were Action America articles.

Even dropping the quotes in the search does not significantly change the outcome of the search, other than increasing the number of results. One National Review article that was returned verifies, "As taxes continue to soak up a larger percentage of the GDP, the number of U.S. citizens moving out of the country is increasing". If National Review is reporting on this ominous trend, how long do you think it will be before other major news sources pick up on it?

The major media, in general, has not yet realized how serious this is. But, as you can see, it's only a matter of time. Whether the story is broken in the Wall Street Journal, on Fox News or through any other large news outlet, the other news organizations will jump all over it and the word will spread like wildfire. In fact, as pointed out above, it actually looks like National Review is beginning to take notice.

Many wealthy individuals are already aware of this flight, but have no idea how serious it is. Oh, most wealthy Americans know a couple of people who have expatriated, but they think that those expatriations were one-of-a-kind events and that expatriations, in general, are infrequent and of little concern. When stories about expatriations start showing up in the media every day, they will realize just how serious a problem it really is and start planning their own escape. ("Escape," by the way, is the common term used by most US expats to describe expatriation. That in itself, is a sad commentary on where our government has brought us.)

Other Americans, who are already in the process of planning to expatriate, will speed up their departure, knowing that in response to such news, the government will try to slam the door shut on expatriation. This additional boost in expatriations will certainly become part of the news, which will encourage even more expatriations and that cycle will continue until such time as the government really does close the borders. But as history shows, even that won't stop capital flight.

Unfortunately, our lawmakers are so obsessed with their own power and control, that they are unlikely to realize in time, that their attempts at control are only making matters worse.

As we have shown in previous articles, there is ample evidence of the growing number of expatriations. However, the amount of dollars concerned has been, until now, a matter of conjecture and projections. This new evidence actually ties dollars to these expatriates.

For many years now, Forbes Magazine has been publishing annual lists of the 400 Wealthiest Americans and the World's Billionaires. When most people look at those lists, they just look at the names and net worth of the people on the lists. But, we have discovered that those lists tell a much more important story, if you dig deep enough.

Since Forbes has been using the same basic procedures to build those lists for years, I got to wondering if those lists might reflect the same alarming level of capital flight that we, at Action America, have been reporting on. They did.

In fact, the Forbes lists show that since 1999, the number of US billionaires has dropped by over 13%, with a 7% drop in average net worth, while the number of billionaires worldwide has increased by over 80%.

Think about what those numbers say. Either wealth is leaving the United States at an alarming rate and moving offshore or wealthy people in the United States are losing huge amounts of money, while wealthy people in the rest of the world are making tremendously more money. It doesn't matter which explanation you accept, because if you accept the second scenario, how long do you think wealthy Americans will continue to stay in such an inhospitable business environment before adopting the first scenario. What it comes down to is that the land of opportunity no longer offers the greatest opportunity.

You won't find the above information quoted in any major media source. I had to take it upon myself to do the research. For your information, the lists that we used were the Forbes 400 Richest Americans and the Forbes World's Billionaires for 1999, 2000 and 2001. Since the information was not easily downloadable, we had to copy and paste the Forbes data for the last few years, from dozens of web pages, into a single worksheet. We totaled up the number of billionaires in the US and worldwide for each year, along with their combined net worth and used that to calculate an average net worth for each group. If you want to go to that effort (3 to 12 hours, depending on the speed of your Internet connection), you will come up with the same results.

By doing the research yourself, you eliminate a lot of the spin. This is especially true, when you use non-political data, such as the Forbes lists. Perhaps it is for that reason that nobody in the major media ever thought to use the Forbes lists in such a manner. I certainly don't believe that Forbes has been tweaking their lists to make a political statement, just waiting for someone to stumble across that data. In fact, such unbiased information from a non-political source soundly substantiates the information that we have derived from many other sources that might be considered political.

OK, Math 101 for all you capitalists:

One Billion is "one" followed by 9 zeros. (I think in England they have a different name for it. Not sure, though.) Assume that one guy is making that money a year. Now assume that money gets divided in $50,000 increments among workers. How many workers will get a good salary? Would you believe 20,000? Yes, twenty thousand! Those $20,000 will be spending money and paying taxes. With multipliers, I think the GDP goes up .1 for every billionaire that leaves the country. IMHO, they should not let the door hit them in the rump on the way out to Galt's Grinch Gulch, or wherever it is they are headed. I hope they migrate to some country where they still have peasant revolutions. parsy.

With the billionaires gone, the living standard of the rest of the country will go up. Their money will get spent by more people.

Duh!

When the Billionaires leave, they take ALL of their wealth with them, as a direct result of the Health Insurance Portability and Accountability Act of 1996 (26 USC 877(a)(1)), which claims the right of the United States government to tax the income of former US citizens for 10 years after they have renounced their citizenship and become citizens of another country. So, by taking it ALL with them, all the IRS can do is whine about how unfair they are.

What that means is that they will be spending ALL their money in other countries and funding JOBS in other countries, while the middle class here slips into poverty, as their jobs flow offshore and their tax load goes through the roof. However, you are partially right, in that since their money is funding more jobs offshore, their money will indeed be spent by more people. But, those people will be in other countries.

Just ask the folks in South Africa what happened to their economy as those with money fled their country. The more restrictions they put on wealth and capital flight, the more money slipped out.

The wealthy will always have another option, should their government become too oppressive. They won't suffer, regardless of how oppressive our lawmakers make the laws. It's always those who are left behind who suffer.

"What that means is that they will be spending ALL their money in other countries and funding JOBS in other countries, while the middle class here slips into poverty, as their jobs flow offshore and their tax load goes through the roof. However, you are partially right, in that since their money is funding more jobs offshore, their money will indeed be spent by more people. But, those people will be in other countries."

According to the IRS, half the US population is paying into the lowest tax bracket now. And that means they aren't making a living.

They can't carry out but so much "cash" at one time. The "wealth" is in the form of dollars, so it will be spent here regardless. If they invest it in Zamboniland, for egs., they have to convert it to zamboni oyster shell money. We then get the wealth back from the First Tribal Bank of Zamboni. But instead of one greedy selfish billionaire deciding how to spend, lots of folks will get a piece of it. Plus, when the billionaire leaves, we can steal all the stuff he leaves behind. parsy.

That's right, because the rest of us would have it. As far as I am concerned, billionaires are highly over-rated. They contribute squat to the country. They are like poker players who come to the table with more dough than the other guys and then, in a table stakes-no limit game, walk away with everybody's money. They make the game less fun for the rest of us. parsy.

Fun? The game is fun if truly now how to play it. The majority of billionaires who are around for more than a year or so have truly earned their money. Those who haven't, let the money ruin them. What claim do we have to their money either way?

"Only the man who does not need it, is fit to inherit wealth- the man who would make his own fortune no matter where he started. If an heir is equal to his money, it serves him; if not, it destroys him. But you look on and you cry that money corrupted him. Did it? Or did he corrupt his money? Do not envy a worthless heir; his wealth is not yours and you would have done no better with it. Do not think that it should have been distributed among you; loading the world with fifty parasites instead of one, would not bring back the dead virtue which was the fortune. Money is a living power that dies without its root. Money will not serve that mind that cannot match it." Francisco's
Money Speech, Atlas Shrugged by Ayn Rand

Now assume that money gets divided in $50,000 increments among workers. How many workers will get a good salary?

Nice sounding and totally absurd assumption. If the wealthy leave, where are you going to find the money to split up? If I were a billionaire (I wish) and own several businesses where I pay the salaries of 20,000 people, what do you think will happen to the salaries of those 20,000 people if I move those businesses to another country? It doesn't take a brain surgeon to realize that those salaries will move offshore, as well.

For a little while, you might be able to find some other wealthy person to buy the physical assets and reopen some of the businesses under a new name and hire some of the people back. But, since that person will be faced with higher and higher taxes and a wealth of unemployed workers, the salaries will be lower. And, as more and more wealth leaves, it will be harder and harder to find wealthy people to fund such salvage operations. If it keeps up, all those illegal immigrants from Mexico may go home willingly, in order to make more money. That's admittedly, a bit of a stretch. But, when the big money leaves a country, all that is left behind is poverty.

Of course, since that would leave our lawmakers in the position of the only people in the country with any money and power, they probably don't see that as a negative.

"The majority of billionaires who are around for more than a year or so have truly earned their money."

Perhaps. It is possible. But IMHO, a person who has accumulated a billion bucks has probably screwed people left and right, underpaid others, and gotten a lot of stuff for nothing. If you like Ayn Rand, then you should like Aristotle. Read what Aristotle said about rich folks. parsy.

Then the billionaire will pay the 20,000 Zambonians in US Dollars. The Zambonians will either keep the loot in Zambonia, thus lowering our money supply and increasing the value of the dollars that you and I have, or the Zambonians will send it back to the US where it will still fuel our economy.

Think about it. All the arguments that the lazy-unfaire make in favor of "free trade" still work if the "object" being sent offshore is a billionaire instead of a prodcut or a job. The net gain we experience, is we get rid of a probable billionaire parasite. parsy.

I have kept my promise to you and not said a word about the estate tax! Now as far as billionaires---follow my logic:

A billionaire moves an American factory down to Mexico. America loses jobs. BUT WAIT say the free-traders! All of America propsers because we have can now have cheaper cars. If that line of thought is correct (and personally I have severe doubts), then why should we get freaked out because some billionaire wants to move himself to Mexico, or Zamboniland? Looks to me like we are all better off because we have one less billionaire to support. But at any rate, the free traders can't have it both ways. They can't ask us to go numb when a factory moves, but get all excised when a billionaire moves. parsy the utterly-logical.

parsy, I did explaikn this to you, dear. If you want your children to haved tko pat through their colllective noses, on that lovely , signed set and ALL of your other books, when you kick the bucket, that's YOUR choiced. Just don't, for one minute, think that I ( and others, for that matter )am looking forward to having my kiddo have to shell out for her grandmother's toy, etc. !: - (

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