America’s Berlin Wall
June 20th, 2008Via: Economist:
QUEUES of frustrated foreigners crowd many an American consulate around the world hoping to get into the United States. Less noticed are the heavily taxed American expatriates wanting to get out—by renouncing their citizenship.
In Hong Kong just now, they cannot. “Please note that this office cannot accept renunciation applications at this time,” the consulate’s website states. Apart from sounding like East Germany before the fall of the Berlin Wall, the closure is unfortunately timed. Because of pending legislation on President Bush’s desk that is expected to become law by June 16th, any American who wants to surrender his passport has only a few days to do so before facing an enormous penalty.
That penalty is buried in an innocuous piece of legislation with the veto-proof name, Heroes Earnings Assistance and Relief Tax (HEART) act. The new law means active American soldiers will benefit from tax relief. To pay for that, Congress has turned on expats, especially those who, since new tax laws in 2006, have become increasingly eager to give up their citizenship to escape the taxman.
Under the proposed legislation, expatriates surrendering their citizenship with a net worth of $2m or more, or a high income, will have to act as if they have sold all their worldwide assets at a fair market price. If the unrealised gains on these assets exceed $600,000, capital-gains tax will apply. A study by the Congressional Budget Office guesses that the new law will progressively net the government up to $286m over five years. It is unclear, however, why people would suffer the consequences if they did not expect to save money in the long run by escaping American taxes.
That expats want to leave at all is evidence of America’s odd tax system. Along with citizens of North Korea and a few other countries, Americans are taxed based on their citizenship, rather than where they live. So they usually pay twice—to their host country and the Internal Revenue Service. As this makes citizenship less palatable, Congress has erected large barriers to stop them jumping ship. In 1996 it forced people who renounced citizenship to continue paying income taxes for an extra ten years. Theoretically, the new law allows for a cleaner break.
But even as the law tries to prevent people from renouncing their citizenship, it may have the opposite effect. Under the new structure, it would make financial sense for any young American working overseas with a promising career to renounce his citizenship as early as possible, before his assets accumulate. For everyone else, plunging stock and property prices mean now may be as good a time as any to hand back the passport, says Kurt Rademacher, a partner at Withers, a global tax-planning firm.
In Hong Kong the temptation for Americans to switch citizenship is particularly strong, because of the territory’s low taxes. On the other hand, banks and other firms who want to hire Americans may find it harder to do so, even though greater China is one of the world’s fastest-growing regions. It places Americans in the awkward position of weighing their patriotism against their vocation.
While the Economist is joined to Tavistock at the hip, the subject and their angle is illustrative of what’s really going on behind the Hollywood backlot facade hiding the new USSA. Due to the source, you’ll see no mention of the fact that the IRS is rather famously an illegal imposition on the US populace. So it goes.
Who are we, the thin but growing ranks of cranks and wacky “theorists” everybody still suckling the mainstream teat refers to with a dismissive wave of the hand these days?
A mixed bag, to be sure, from those who are battening down hatches in hopes of riding out the bumpier bits of the decline of American empire to those who could make a go of getting offshore in time. Honestly, I’ve been looking for a “way out” since the post-pubescent transition awakened all the dangerous tendencies that the “civilized” fools who run the game think can be legislated out of the species. Played the game and fed the machine pieces of my soul in exchange for scrip long enough.
What person with even the most rudimentary conscience and awareness of how the world appeared to work didn’t come away from their school-age years with a profound sense of the injustice in the world?
If you also happen to be the questioning sort, and the type who tends to hunt compulsively for answers, you may end up deep into fellows like Eduardo Galleano or Noam Chomsky. It took a few years of circling back to figure out that Mr. Manufacturing Dissent was a lightning rod by design; all analysis and no solutions. Go this way, but go no further. Great Intellectual Guardian of the Leftist Gate.
Such a process requires the kind of cynicism that only comes with experience, after the oh-so-necessary learning experience of plowing through a mountain of bogus ideas disguised as literary shite, pop culture and social commentary — and developing powerful BS filters.
Galleano, on the other hand, reveals glimpses of the open veins of Latin America; bled by the compradors who play the western way. He reveals the true orientation of the game. Above and below, not the bogus left/right metaphor snatched whole out of French legislative history and plastered over the global socio-economic behemoth we’re told is the natural course of progress.
Against the screaming mind-f**k that is mainstream media in all its modern and multifarious forms we have only our wits. The slow ratcheting of restrictions on travel in, out and OVER the country should be cause for alarm. The clearly demonstrated priorities of both flavors of bland corporate leadership are on full display as they shake the public even harder by the ankles and prop up the bankster owners and the technocrats who love them causing the whole mess.
Ultimately, anyone who keeps an eye on the less “accepted” side of historical knowledge has pieced together by now that our world is well into what appears to be a significant “phase change”. Regardless of your preferences as to cause and effect, from economic to catastrophic and man-made to “Act of God”, the next several years promise to test us all in ways that we have not been conditioned to expect by the bread and circuses system we still call civilization.
As the Chinese apparently like to say to their enemies: May you live in interesting times.
In the end, another tired old saw may also turn out be true for expat Americans:
You really CAN’T go home again.