New Tax Law Chases Americans Away
By Jeff D. Opdyke, Editor of Profit Seeker
Dear Sovereign Investor,
How do you divorce your country?
I don’t mean the physical process of renouncing your citizenship to live the life of an expatriate. That’s simple enough; just a bunch of bureaucratic paperwork. No, I mean the emotional process of severing ties with the nation that bore you, that raised you up, that provided you the opportunity to succeed.
Expatriation happens all the time, all over the world, every day. And I understand the universal rationale — people following their dreams of a better life somewhere other than the country stamped on their passport. Most commonly, that’s people from foreign lands, roughly 1.1 million a year, flocking to America. Because as I’m routinely told on my trips abroad, America still maintains its image — however anachronistic — as the shining beacon on the hill, where the greatest symbol of freedom beseeches the world: “Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore. Send these, the homeless, tempest-tossed to me; I lift my lamp beside the golden door.”
But when the flow reverses noticeably, when Americans feeling tempest-tossed themselves are heading out through the “in” door, you’re left with my initial question: How do you divorce your country?
Between January and March of this year, a record 1,001 Americans terminated their relationship with America. They divorced their country.
Their reasons are varied. Some married a foreign national and decided to make a new life in the spouse’s homeland. Some are — or, were — hyphenated-Americans going home again for family or, given the booming economies in emerging nations, to pursue greater opportunities in faster-growing markets.
But many quit America because they feel America has quit them.
And I have to imagine they made their choice with the same sense of ambivalence I feel toward expatriation: Love of country, but hatred of how politicians, lobbyists and the legal system are warping or simply eradicating the ideals that made her so great.
People I know — people I’ve talked to many times — will say the solution is to vote those politicians out. That’s naïve. You can dress a donkey to look like a show pony, but it’s still an ass underneath — by which I mean that the American political culture is now so corrupted by money and influence that changing political flavors does nothing to alter the underlying reality of America’s political decay. It’s that decay that’s leading increasing numbers of Americans to abandon America.
We’re now at a run-rate that will see more than 4,000 Americans relinquish their U.S. citizenship — and that dramatically undercounts the real number. Certain types of expatriations, ones in which the expat is not required to file exit-tax forms, aren’t reported. Given that the exit tax kicks in when net worth tops $2 million, or average annual income exceeds $155,000 for five years running, it’s easy to see how the real number of expats is higher than the official numbers indicate.
Rise of the American Expatriate
Those escaping America for political reasons are a unique version of refugee — the American refugee. They’re fleeing because of financial persecution — or, at least, fears of its impending emergence. There’s no developed country in the world quite as desperate financially as our own. By now, we all know about the $17 trillion in debt, and the $125 trillion in on- and off-balance-sheet obligations that are of such enormity that the International Monetary Fund sees no way for that debt to go away through normal measures of economic growth or taxation. It — along with a growing chorus of other voices — sees some form of wealth confiscation as the only viable option.
Expats are seeking divorce because they sense this option is all that America really has left. When it will be executed, no one knows. But the expats are the visionaries. They see a dismal future for their wealth — potentially even society — here at home. They see government moves such as America’s taxation on global wealth or the Foreign Account Tax Compliance Act (FATCA) as desperate moves by a desperate government groping for any cash to keep the beast fed until the beast’s own gluttony brings about a violent death.
So, how do you divorce your country?
Reluctantly? With heavy heart? With a melancholy sense of fait accompli, begrudgingly accepting that our future has already been cast and that, while this situation will change in the future — possibly though a violent separation of the union — we are powerless in the near term to change anything of importance?
The 1,001 new expats are sending us a message: As frustrated, angry, sad Americans, we have just two honest choices: Stay and try to arrange our lives as best we can to protect our family and our wealth from the ravages so clearly on the horizon … or pack up our memories, divorce our country and pump a little Green Day into your earbuds as we jet off to a new homeland … I hope you had the time of your life.
Until next time, stay Sovereign …
Jeff D. Opdyke
Editor, Profit Seeker
The Sovereign Investor Daily
55 NE 5th Avenue, Suite 200
Delray Beach, FL 33483