US Expatriation Picks Up
A good friend recently pointed us to an interesting statistic published at the Tax Prof blog. More and more Americans are renouncing their citizenship these days. This is quite a reversal from how things used to be.
US expatriation, quarterly average since 2004 – the official statistic. We have heard (but can not confirm) that due to delays in confirmations of expatriations from embassies, this may actually understate the true state of affairs somewhat.
The same data in actual quarterly numbers. As can be seen, US expatriation is on quite an upswing – albeit from a very low base. In terms of the total US population these numbers are very small, but one must suspect that the expatriates are heavy hitters in terms of brains and financial standing.
As the WSJ reported on this recent trend:
“These are small numbers of course. With 300 million Americans, 499 expatriates is hardly a drop in the ocean. Yet the trend is almost a straight line up.
Why is this happening?
The IRS doesn’t tell us why people expatriate, or who they are or where they go. Lawyers say most are wealthy Americans who have expatriated to all manner of countries. One argument is that they are leaving because of President Obama and the nation’s leaders.
“There is growing concern, particularly among the wealthy, about the future financial direction of the country,” said Paul L. Caron, Charles Hartsock Professor of Law at the University of Cincinnati College of Law. “This President constantly demonizes the wealthy, who undoubtedly are concerned about the tax policy that would emerge in 2012 if a re-elected Barack Obama, unconstrained by re-election concerns, finally confronts the budgetary train wreck that he has done so much to exacerbate.”
Other attorneys who specialize in helping the Americans expatriate say the reason is that the IRS is cracking down on overseas bank accounts and offshore income. There is a population of U.S. citizens who live overseas and may never have paid U.S. taxes on their non-U.S. earnings and non-U.S. accounts. Now that the IRS is enforcing the rules, with criminal penalties for scofflaws, the overseas residents would prefer to expatriate rather than pay.
“I think this is coming to the forefront because of offshore reporting and banker reporting issues,” said Peter Connors, a tax attorney in New York. “there is a price to being a citizen of the U.S. and at a certain point the price may not be worth it.”
Whatever the case, the numbers are clearly headed in the wrong direction.”
If a government enacts policies that threaten wealth, it can easily end up shooting itself in the foot (or in the face, as Chris Weber has more colorfully put it – more from him below). What if the trickle becomes a flood? Getting more milk from the cow can hardly be accomplished by chasing away the cow.
A cartoon from the time the bailouts were in full swing. Here the abstract 'US treasury' entity is the haggard cow, but it really is a stand-in for the tax payers of course.
The crackdown that is supposedly designed to catch only 'scofflaws' has in the meantime had a myriad of consequences – possibly unintended, but how can one be sure? The minds of collectivists are not wired the same way as those of producers of wealth after all.
As Chris Weber, the investment editor of the noted in a recent missive:
“Everywhere I go in the financial world in Europe," writes Investment Editor Chris Weber, "I hear the same thing: The U.S. is shooting itself in the face.
"The problem is the regulations the U.S. now insists every nation impose on U.S. companies or people seeking to do business or lower their taxes.
"For instance, there are two Swiss cantons that are using low corporate taxes to lure companies to place their headquarters there. The more famous one is Zug, but the up-and-coming one is Obwalden (which just passed a flat tax rate of 6% of a company's profits).
"Companies from all over the world are using this to lower their taxes. But when even the bluest-chip U.S. company, publicly traded on the NYSE, sought to do so recently, it was turned away. Almost no one wants to deal with U.S. companies or people anymore. They've decided it is more problem than it is worth, due to the intense regulatory atmosphere from the United States.
"It used to be that anyone, from whatever nation, could come to the Obwaldner Kantonalbank (OKB) and open an account, even if they had just US$100. (Those who know the gold and silver ETFs offered by the Zuricher Kantonalbank (ZKB) know these banks are backed by the cantonal governments and are thus very safe. These are the banks that are regarded as public utilities.)
"But starting around four years ago, with the UBS debacle and the U.S. financial crisis, this all changed. The long arm of the U.S. government and the numerous new regulations have made OKB decide it will not take on American clients.
"And please don't think I'm talking about tax-evaders here. Americans who used to be able to open accounts with tiny amounts of money at a safe bank like this and treat it just as they would their local banks, fully declaring all their money…these people are no longer welcome. It was with sadness that they told me this. But it is just too much trouble dealing with all the American red tape. The effect of this is to deny small U.S. investors a way to protect themselves from unsafe banks and devalued U.S. currency. Now, pretty much anyone except Americans can do this.”
"It goes the other way, too. Non-U.S. companies used to dream of listing themselves on the NYSE. That was the 'big-time.' But it is no accident that the overall number of listings on the Big Board reached its peak in 1997 and has been falling ever since.
"Again, the problem is excessive regulation. The companies can list themselves on Hong Kong, Singapore, or London exchanges with much less cost and headache. The list of companies who have turned down a chance to list themselves on U.S. exchanges is long.
"It goes further than this. There are many nations on earth that have no inheritance taxes, or maybe just small ones. But if a non-U.S. person buys stocks in the United States (in excess of about US$60,000), their estate has to pay U.S. estate taxes if they die. No wonder people are not excited to buy U.S. stocks.
"If the object of the government is to encourage investment and entrepreneurship and to create jobs, this is exactly the wrong way to go about it.
"And I'm not blaming any one political party. Things are the same now as under the last American president. It's as if the nation has decided it no longer wants to encourage its companies or foreigners to invest in the U.S. Most likely, they don't think of it in those terms; they likely still think that, because the United States is such a great country, then of course anyone would want to invest there.
"But the truth is that by doing these things, non-U.S. people are less likely to invest. Thus the United States is seen to be simply hurting itself.
"More than just hurting itself, it is building up ill will all around the world. It is getting so that people will be avoiding the U.S. entirely, going around it to invest and even to trade. I know this sounds like an extreme reaction. But if things continue the way they've been going for the last four or five years, this will be the result.
"The American government can put on all these restrictions and keep out foreign investors and companies who want to list on the NYSE. It can deny the right of even the smallest investor to diversify into another banking system with a stronger currency.
"But will this make for a stronger United States? Are we entering a new world where everyone prospers except for Americans? If so, it is particularly sad, because America will be turning its back on the very ideas that made it so great.
"You see, 100 years ago, there was outright famine in Obwalden. With so many farmers, who often had 10 children, the available farmland was just not enough for the people. Starvation got so bad that the Swiss government offered anyone free passage to America if they would promise never to come back. Many of these emigrants settled in the Imperial Valley of California, about as far from the Alps and green meadows as you can get.
"The U.S. was haven for the poor people of Obwalden, who were starving and saved by moving to America. These people are very appreciative of what America offered to their great-great-grandparents. America literally saved their lives.
"And that is why they don't understand why America is now 'destroying itself,' as one of them told me. They are very, very sad to see it happen. In fact, they seem much sadder and more concerned about what has happened to the United States than most Americans do."
However, it is not only in the realm of taxation and financial matters that the US is 'shooting itself into the face' by means of over-regulation and merciless enforcement.
Scenes from Atlas Shrugged and Killing New York
The recent reform of the US health care system has borne some remarkably strange fruit. It turns out that there are exemptions from the more oppressive aspects of the law – the granting of which which is of course a preserve of politicians and bureaucrats. As the 'International Liberty' blog notes, this is akin to a scene from Ayn Rand's novel 'Atlas Shrugged'. Writes author Dan Mitchell:
“In a column about the revolving door between big government and the lobbying world, here’s what the irreplaceable for folks trying to escape the burden of government-run healthcare.
Congress imposes mandates on other entities, but gives bureaucrats the power to waive those mandates. To get such a waiver, you hire the people who used to administer or who helped craft the policies. So who’s the net winner? The politicians and bureaucrats who craft policies and wield power, because this combination of massive government power and wide bureaucratic discretion creates huge demand for revolving-door lobbyists. It’s another reason Obama’s legislative agenda, including bailouts, stimulus, ObamaCare, Dodd-Frank, tobacco regulation, and more, necessarily fosters more corruption and cronyism.
This seemed so familiar that I wondered whether Tim was guilty of plagiarism. But he’s one of the best journalists in DC, so I knew that couldn’t be the case.
Then I realized that there was plagiarism, but the politicians in Washington were the guilty parties. As can be seen in this passage from Atlas Shrugged, the Obama Administration is copying from what Ayn Rand wrote – as dystopian parody – in the 1950s.”
The International Liberty blog already noted on a previous occasion that the Obama administration seemed to encourage people to 'go Galt' – a phrase that describes a peaceful but effective way of hitting back at the collectivists. Productive, wealth generating people simply withdraw their talents from the economy and thereby no longer produce anything the statists can loot. The administration's point man for recommending this course of action to Americans who don't like 'Obamacare' was the president's solicitor general, Neal Kumar Katyal.
“President Obama’s solicitor general, defending the national health care law on Wednesday, told a federal appeals court that Americans who didn’t like the individual mandate could always avoid it by choosing to earn less money. Neal Kumar Katyal, the acting solicitor general, made the argument under questioning before the U.S. Court of Appeals for the Sixth Circuit in Cincinnati, which was considering an appeal by the Thomas More Law Center.
As Margaret Thatcher once famously said: "The problem with socialism is that eventually, you run out of other people's money”.
Especially, one should perhaps remind Mr. Katyal, if those 'other people' actually decide to earn less. Or, as the case may be, decide to simply expatriate.
What we are asking ourselves is this: in what way do these ideas and rules conform to American ideals? It appears to us that America is indeed busy shedding everything that once made the nation great. Mind, it is not really our intention to solely pick on the Obama administration. What is at stake is freedom as such, whether it is threatened by the welfare statism of the socialist party or the the warfare statism favored by the conservative party. In our opinion, the shredding of the bill of rights under Obama's predecessor G.W. Bush is equally if not even more deplorable. What all these activities have in common is this: they amount to an exchange in which (perceived) 'safety' is achieved by surrendering something that seems to us far more precious, namely liberty. Liberty is of course what the US once stood for, as a shining light for others to emulate.
Another example of how the nanny-state has begun to infest American life was recently discussed in the 'Spectator'. The article, which we strongly recommend reading in its entirety, is entitled ''. As we mentioned to friends who pointed this article out to us, 'a place where they no longer allow you to smoke should be considered highly suspect by everyone, whether one is or isn't a smoker'. As the article notes, a closer examination of the various 'pro-health' regulations that are now covering New York like a deadening blanket apparently designed to take all the joy out of living, reveals that the intentions of their authors are less than pure.
“New York is currently governed by a gaggle of health-obsessed bigwigs who believe they have a duty to grab New Yorkers by the scruffs of their outsized necks and drag them towards lives of bicycle-riding, non-smoking, booze-avoiding, fruit-snacking conformity. City Hall, under Mayor Michael Bloomberg, is awash with that new breed of psycho-politician known as the ‘nudger’, who believes that he has the right to use psychological techniques and brute censorship to manipulate and ‘improve’ human behaviour. he Bloombergers have become world-beaters in the banning of public smoking and the demonisation of junk food. It is testament to their successful colonisation of these islands that the banning of smoking in all public parks, pedestrian plazas and beaches passed without incident, and even without much angry commentary, on 24 May. Under the Smoke Free Air Act (it is clever, in an Orwellian kind of way, to use the word ‘free’ in an act of law that diminishes freedom), New Yorkers can no longer light up in Central Park, Prospect Park, the Brooklyn Promenade, the Coney Island concrete walk or even Times Square, that flashing, noisy advertisers’ paradise where you can still watch naked cowboys play guitar and buy Sarah Palin condoms from streetsellers — so long as you don’t puff on a ciggie at the same time. ‘Where can I smoke now?’ one New Yorker said to a newspaper. ‘In an underground fortress of shame?’
In 2003, NYC became one of the first cities in the western world to outlaw the evil weed in bars, restaurants, workplaces and theatres. But the outdoor smoking ban is of a different, more jaw-dropping order. It gives the lie to the idea that bans on public smoking are driven by a good-hearted instinct to protect non-smokers from second-hand smoke. (How could that possibly be a problem in a space as vast and airy as Central Park?) Rather it exposes the Bloombergers’ desire to monitor more closely what people ingest, not only at work or on the bus, but now in Central Park too, a place that was originally designed, in the words of David M. Scobey’s book Empire City, to ‘enhance the experience of freedom’ and allow New Yorkers to ‘lose themselves’. The outdoor smoking ban has stubbed out something of the spirit of New York. As one smoker who was reprimanded by the NYPD for daring to light up in Union Square on the day ‘Smoke Freedom’ was enforced, put it, ‘New York is kind of lame now.’
The article also highlights the almost comical regulatory 'fight against fatty and sugary foods' which forces street vendors and restaurants to prominently display the calories of the items they sell. As it says in the title of this blog post, the people inventing all these regulations are regular killjoys. They don't even make a secret out of the fact that they not only want to impose a 'healthy', but also a decidedly joyless life on their fellow citizens.
“Walking down Fifth Avenue, I saw a huge poster in a Burger King window advertising two burgers for the price of one, alongside an equally huge notice saying: ‘1320 CALORIES.’ Even the temporary stalls that hawk hot dogs and ice-cream in Central Park and elsewhere display calorific facts. That salted pretzel you buy as you stroll back to your hotel (‘500 CALORIES’) now comes with a side order of inner turmoil and gym fantasies. It is hard to convey the impact of this state-enforced calorie-counting. It effortlessly zaps the fun from eating out. It is designed to induce caution, even guilt, in New Yorkers, to make them stop and think before snacking or dining, to make them treat calorific consumption as something akin to snorting cocaine — an act that can have grave consequences.” […]
“The lowest blow in City Hall’s war on wicked food is its recurring efforts to ban the buying of fizzy pop with food stamps. In an initiative that could easily be titled ‘No Coke for poor black folk’, the Bloombergers have sought federal permission to prevent welfare recipients from using government cash to purchase fizzy drinks. The killjoyism of this campaign, the Scrooge-infused miserabilism of it, is astounding. City Hall has launched an advertising campaign demonising sugary drinks as one of the great evils of our time, and its internal email correspondence about the campaign, which was leaked to the New York Times, shines a rather harsh light on the evidence-lite nastiness of the modern-day nudge-and-nanny industry. Scientific advisers emailed Thomas Farley, Bloomberg’s overactive health adviser, to say that the ad’s claim that drinking pop can make you gain 10 or 15 pounds is ‘simplistic’ and ‘exaggerated’. Overriding them, Farley responded: ‘I think what people fear is getting fat, so we need some statement about what is bad about consuming so many calories.’ Who needs evidence when you have fear? The ad shows human fat gurgling from the top of a can of soda. One City Hall employee could barely conceal his excitement: it is ‘deliciously disgusting’, he said in one of the emails that was leaked.
In an effort to counter the efforts of these killjoys a bit we would recommend starting one's day with a shot of Bourbon, as suggested by Jeffrey Tucker. The book 'Bourbon for Breakfast – Living outside the Statist Quo' can be (pdf). A critique of the book written by Michael Lawrence is available here.
In our opinion, people who fearfully impose 'healthy living' on themselves to the extent that they take all the joy out of their lives are at great risk of not only missing a lot of fun, but of dying very early. Those who try to impose it on others are a great deal worse still.
One of the greatest paragons of a healthy lifestyle was Adolf Hitler, who neither drank, smoked nor reportedly ate any meat. His politics not surprisingly mirrored his joyless life perfectly. He imposed double-plus-joylessness on millions of people. Now, we certainly don't want to suggest that New York's administration is as bad as Hitler, we just mention him as an example of a killjoy whose alleged virtues masked a personality that was intent on imposing its own dour outlook on life on everybody else. He was unhappy and he wanted to make damn sure that the rest of the world would end up even more unhappy. Who knows, if he'd had a regular shot of Bourbon for breakfast, he may have decided to never pursue his crazy Nazi shtick.
Charts by: US Treasury Department
Dear Readers! We are happy to report that we have reached our turn-of-the-year funding goal and want to extend a special thank you to all of you who have chipped in. We are very grateful for your support! As a general remark, according to usually well informed circles, exercising the donation button in between funding drives is definitely legal and highly appreciated as well.
Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke
6 Responses to “America’s Killjoys”
Most read in the last 20 days:
- How the Welfare State Dies
Hollande Threatens to Ban Protests Brexit has diverted attention from another little drama playing out in Europe. As of the time of writing, if you Google “Hollande threatens to ban protests” or variations thereof, you will find Russian, South African and even Iranian press reports on the topic. Otherwise, it's basically crickets (sole exception: Politico). Gee, we wonder why? They don't like him anymore: 120.000 protesters recently turned Paris into a war zone. All...
- Toward Freedom: Will The UK Write History?
Mutating Promises We are less than one week away from the EU referendum, the moment when the British people will be called upon to make a historic decision – will they vote to “Brexit” or to “Bremain”? Both camps have been going at each other with fierce campaigns to tilt the vote in their direction, but according to the latest polls, with the “Leave” camp’s latest surge still within the margin of error, the outcome is too close to call. The battle lines are...
- A Market Ready to Blow and the Flag of the Conquerors
Bold Prediction MICHAELS, Maryland – The flag in front of our hotel flies at half-mast. The little town of St. Michaels is a tourist and conference destination on the Chesapeake Bay. It is far from Orlando, and even farther from Daesh (a.k.a. ISIL) and the Mideast. St. Michaels, Maryland – the town that fooled the British (they say, today). Photo credit: Fletcher6 Out on the river, a sleek sailboat, with lacquered wood trim, glides by, making hardly a...
- Going... Going... Gone! The EU Begins to Splinter
Dark Social Mood Tsunami Washes Ashore Early this morning one might have been forgiven for thinking that Japan had probably just been hit by another tsunami. The Nikkei was down 1,300 points, the yen briefly soared above par. Gold had intermittently gained 100 smackers – if memory serves, the biggest nominal intra-day gain ever recorded (with the possible exception of one or two days in early 1980). Here is a picture of Haruhiko Kuroda in front of his Bloomberg monitor this...
- Rule Britannia
A Glorious Day What a glorious day for Britain and anyone among you who continues to believe in the ideas of liberty, freedom, and sovereign democratic rule. The British people have cast their vote and I have never ever felt so relieved about having been wrong. Against all expectations, the leave camp somehow managed to push the referendum across the center line, with 51.9% of voters counted electing to leave the European Union. Waving good-bye to...
- The Problem with Corporate Debt
Taking Off Like a Rocket There are actually two problems with corporate debt. One is that there is too much of it... the other is that a lot of it appears to be going sour. Harvey had a good time in recent years...well, not so much between mid 2014 and early 2016, but happy days are here again! Cartoon by Frank Modell As a brief report at Marketwatch last week (widely ignored as far as we are aware) informs us: “Businesses racked up debt in the...
- What Could Possibly Go Wrong?
A Convocation Of Gamblers The Wall Street Journal and BloombergView have just run articles on the shadow banking system in China. This has put me in a nostalgic mood. About 35 years ago when I was living in Japan, I made a side trip to Hong Kong. Asia's Sin City, Macau Photo credit: Nattee Chalermtiragool I took the hydrofoil to Macau one afternoon and the same service back early the next morning. On the morning trip, I am sure that I saw many of the...
- A Darwin Award for Capital Allocation
Beyond Human Capacity Distilling down and projecting out the economy’s limitless spectrum of interrelationships is near impossible to do with any regular accuracy. The inputs are too vast. The relationships are too erratic. The economy - complex and ever-changing interrelations. Image credit: Andrea Dionne Quite frankly, keeping tabs on it all is beyond human capacity. This also goes for the federal government. Even with all their data gatherers and...
- The Fed’s Doomsday Device
Bezzle BALTIMORE – Barron’s, in a lather, says the market is facing the “Two Horsemen of the Apocalypse.” Huh? Only two? There were four last time! Supposedly, the so-called Brexit – the vote in Britain this Thursday on whether to leave or remain in the European Union (EU) – and uncertainty over where the Fed will take U.S. interest rates are cutting down stocks faster than a Z-turn mower. But Brexit is a side show. As our contacts in London...
- Janet Yellen’s $200-Trillion Debt Problem
Blame “Brexit” BALTIMORE – The U.S. stock market broke its losing streak on Thursday [and even more so on Monday, ed.]. After five straight losing sessions, the Dow eked out a 92-point gain. The financial media didn’t know what to say about it. So, we ended up with the typical inanities, myths, and claptrap. “Investors” are pushing the DJIA back up again..apparently any excuse will do at the moment. The idea may backfire though, as exactly the same thing happened...
- Gold and Brexit
Going Up for the Wrong Reason Gold is soaring. It should—and a lot—but in my view not for the reason it is. Indeed gold is insurance for uncertain times, a time that Brexit seems to represent. But insurance is an administrative cost — one must minimize its use. August gold contract, daily – gold has been strong of late, but this seems to be driven by “Brexit” fears - click to enlarge. Moreover, insuring against Brexit might ironically be equivalent...
- In Gold We Trust, 2016
The 10th Anniversary Edition of the “In Gold We Trust” Report As every year at the end of June, our good friends Ronald Stoeferle and Mark Valek, the managers of the Incrementum funds, have released the In Gold We Trust report, one of the most comprehensive and most widely read gold reports in the world. The report can be downloaded further below. Gold, daily, over the past year - click to enlarge. The report celebrates its 10th anniversary this year. As...