Economy & Budget

Americans flee the country to avoid Taxmageddon

The New York Post reported on Monday that “Startling new data from Uncle Sam show that defections by Americans are expected to double this year, largely to avoid any stiff tax bills resulting from the proposed 55 percent hike on the rich — as well as the likely expiration on Dec. 31 of the Bush era tax cuts.”

The number of Americans renouncing their citizenship has more than doubled over the past year, from 3,805 in 2011 to about 8,000 in 2012.  The Post does not introduce any hard data to establish the income level of these expatriates, but quotes a lawyer from a firm that “specializes in protecting assets of the wealthy” who explains that “high-net-worth individuals are making decisions that having a U.S. passport just isn’t worth the cost anymore.”

The cost of escaping American taxation is a 15 percent exit tax on all assets, while preferred tax-haven destinations include Australia, Norway, Singapore (where Facebook billionaire Eduardo Saverin headed) and the U.S. possessions in the Caribbean, where full-time residents pay an effective tax rate of just 3.5 percent.

It’s disturbing for those of us trapped on the Titanic to hear so many lifeboats hitting the water, while Captain Obama keeps the bow pointed firmly at the approaching iceberg of fiscal collapse and bellows for full steam ahead.  Of course, there will be plenty of efforts to demonize these fleeing billionaires, as parasite Democrats like Senator Chuck Schumer screamed their hatred at Eduardo Saverin’s back, and made clumsy legislative attempts to pick his pocket one last time before his assets vanished over the Pacific horizon.  But these people deserve neither public scorn nor official attack, because a crucial component of American government is its need to obtain the consent of the governed.

“Consent” can only be extended voluntarily.  By definition, it cannot be compelled.  No one can be held accountable for granting their “consent” at gunpoint.  Therefore, it must be possible to withdraw consent, particularly since most citizens of any nation are born under the authority of its government.  The right to cast votes is often portrayed as the signal difference between a “subject” and a “citizen,” but the requirement of any government, no matter how it is assembled, to obtain the consent of the governed is just as important.  It’s no coincidence that the Declaration of Independence mentions it early, and with great prominence.

Americans have spent the past century slowly learning that it’s quite possible to become the “subject” of a democratically elected government.  Votes cast once every couple of years, to influence the course of a massive central government with otherwise unlimited power, are insufficient armor for the protection of essential liberties.  The threat of actually dissolving the government has been entirely theoretical, ever since a notoriously unpleasant period in the 19th century when it was seriously attempted.  The one thing that really gets, and retains, the attention of public officials is the possibility that individual citizens might choose to withdraw their consent, by relocating to a different jurisdiction.

That’s one reason the devolution of centralized power to states, counties, and cities produces more efficient and moral government.  It’s easy to withdraw your consent from a city government, by moving to another city, but not many of us can afford to decamp for Singapore when we no longer approve of the federal government.

Likewise, the expansion of the private sector produces an environment in which consent is more highly valued.  Consent is required for every private transaction.  Much of civil law can be viewed as an effort to protect citizens from involuntary agreements, in which their will is subverted by fraud or force.  The whole point of avoiding monopolies is to protect the ability of consumers to choose between competing companies, which means their consent to engage in commerce can be withdrawn from one competitor and granted to another.

Monopolistic government is no better than a business monopoly.  A just and efficient government finds itself engaged in competition to retain its citizens, rather than building prison walls to restrain them.  Of course the wealthy will be the first to abandon a nation that no longer offers them a competitive environment for enterprise and investment; they have the easiest means of doing so.  Their flight is a perilous omen of things to come.  Uncle Sam should be attracting such people, not growling and shaking his fist as they head for greener pastures.

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