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Tuesday, November 11, 2008 Leaving the Country? Pay the Price! By Paul Hsieh @ 12:06 AM In the wake of Barack Obama's election as 44th President of the United States, some people have talked about leaving the country. However, an Instapundit reader noted that the US government may impose a stiff exit tax for the more productive people seeking to leave: ..."Going John Galt" is not that easy -- Congress quietly passed an "exit tax" earlier this year to penalize any (somewhat) high net worth US resident that decides to vote with their feet. As quoted in the links below, the U.S. government, through the Heroes Earnings Assistance and Relief Act of 2008 (the HEART bill, for short, and I am not making this up), effective June 17, 2008, imposes an "exit tax" on certain citizens and long-term residents who expatriate or terminate their long-term residency. Such individuals, called covered expatriates, will be deemed to have sold all of their worldwide property for its fair market value on the day before expatriating or terminating U.S. residency, and will be liable for U.S. tax on the amount deemed realized in excess of $600,000 (subject to cost of living adjustments). Covered expatriates are: citizens and long-term residents who (a) have an average annual U.S. tax liability for the previous five years of $139,000 (adjusted for inflation), (b) have a net worth of at least $2,000,000 on the expatriation date, or (c) fail to certify compliance with all U.S. federal tax obligations for the previous five years. Link 1 Link 2 And regular NoodleFood commenter Jim May gets a mention from Instapundit with this quote: ...I left Canada for the greater opportunity and freedom in America. I never expected Canada to follow me here. I still agree with Dr. Leonard Peikoff's assessment in his November 3, 2008 podcast -- I'd still rather stay in the US and fight for good ideas than leave, at least at this point in time Labels: Politics Share |    E-mail Paul Hsieh     PermaLink ()    Comments (New Page)   Subscribe to NoodleFood Blog Posts via Feed Reader   via E-mail Subscribe to NoodleCast Podcasts M4A via iTunes (MP3)   via Feed Reader   via E-mail

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	Tuesday, November 11, 2008 at 1:59:40 mst Comment ID: #1 Name: Adam Reed E-mail: adamreedatalumdotmitdotedu URL: http://www.calstatela.edu/faculty/areed2 Yes. Signed into law by President George W. Bush. Is anyone here, besides me, old enough to remember back when the old Soviet Union was pressured by the West to permit emigration - then imposed exactly this kind of exit tax? The main difference was that old Soviets included the value of the emigrant's education in the emigrant's "deemed wealth." At that time, the United States led the campaign against the Soviet "emigration tax" as a violation of human rights. The US dollar is losing approximately half its real value per decade. Even if you are nowhere close now, you might give serious thought to emigrating BEFORE the dollar falls so low, that your annual tax liability or total net worth reaches the specified exit tax threshold in constantly falling nominal dollars. Delay too long, and it may become too late.
	Tuesday, November 11, 2008 at 5:45:19 mst Comment ID: #2 Name: Ted Coxhead E-mail: tedcoxhead(at)yahoo.co.uk I have a relative who has already been caught by this exit scam - under GWB not Obama. I do not know the exact details but broadly his position is this: he lives and works in a non EU European country. He is married with children there. In order to avoid continuing to pay US taxes (as well as those in his adopted country - no US dual taxation agreements), he renounced his US citizenship. This was a subject of much heart-ache for him, a Republican voter, and ex military). He was charged the "exit" fee as a "one-off" lump sum based on tax he would have paid on his world wide possessions. Like so many other bad US laws and regulations, this one also seems to have been spawned by the Republican Party.
	Tuesday, November 11, 2008 at 6:10:44 mst Comment ID: #3 Name: Paul Lin E-mail: paul.lin(at)hushmail.com I know someone who renounced his US citizenship because of tax burden long before any of this and whatever is going to come. After this wave of bailouts, I think the US government will face two choices: 1.Downsize the government by laying off unproductive workers. (at least 50% of total workforce) 2.Increase taxes. If #1 is chosen, we are going to have another boom, like the one in the 90's. If #2 is chosen, Atlas will shrug.
	Tuesday, November 11, 2008 at 6:16:49 mst Comment ID: #4 Name: Don Kenner E-mail: dbkenner(at)earthlink.net Let us remember that this money grab DID NOT occur under the "evil Muslim communist" Obama. Nor did it happen during the reign of the new Democratic majority congress. This all happened under Bush. And I'd bet a kidney that Senator McLame believes this to be a fine way to stick it to the "fat cats." Good grief.
	Tuesday, November 11, 2008 at 7:54:30 mst Comment ID: #5 Name: Sidney Cammeresi E-mail: sac(at)cheesecake.org Not to defend Bush, but as a point of fact, the US expat tax has existed, albeit in a different form, since 1996, in the Clinton years. The version back then required anyone renouncing US citizenship for tax reasons to continue to file US taxes for 10 years. (One was deemed to be renouncing citizenship for tax reasons if one exceeded the above mentioned limits on total annual tax owed or total assets.) Bush's modification was to require marking to market one's entire life on the way out the door and paying taxes on capital gains immediately. Not enough liquid cash? Just sell some of your assets.... For this and many other reasons (28 others to be exact), it is no longer clear, in my view, that the US is still the best place to live and do business.
	Tuesday, November 11, 2008 at 8:21:01 mst Comment ID: #6 Name: Spoudaios Interesting. Me and my family almost lived in Canada for a while, but left because had we stayed any longer we would have been subject to Canada's exit tax. I wonder how many wealthy individuals and families this new exit tax will keep from coming to the U.S.
	Tuesday, November 11, 2008 at 8:32:17 mst Comment ID: #7 Name: Andrew Baker E-mail: smoke_owner(at)mac.com How do these politicians find so many "creative" ways to plunder people further? Perhaps it shows the poverty of my imagination but I would never think of exit taxes being performed here. My question is: if liberty is diminishing rapidly in the United States to where could we escape? Not a place that just benefits business, but a good friend to freedom.
	Tuesday, November 11, 2008 at 9:03:30 mst Comment ID: #8 Name: Paul Hsieh E-mail: paul(at)geekpress(dot)com URL: http://www.geekpress.com Andrew Baker: I don't know of any obviously more-free country than the US at the moment. (Certain countries might have slightly better laws in one sector, but worse laws in another sector, etc.) Hence, I don't think the solution (at present) is emigration to some other country. Besides, if the US descended into a tyranny, how long would that hypothetical other country remain free? For better or worse, the freedom for the world will be fought in the US, and in the realm of ideas. Fortunately, there are people gearing up for this fight. The question is whether there will be enough people willing to make their voices heard and whether we will have enough time.
	Tuesday, November 11, 2008 at 9:53:05 mst Comment ID: #9 Name: Michael A. Slivka E-mail: michaelslivka(at)earthlink.net URL: http://www.slivkalawcom Buyer's remorse is such a bitch. Liberal websites, such as HuffPost and Alternet, are beginning to realize that their Messiah won't end all wars, or spread socialism fast enough and far enough for them. Objectivists and (gasp!) Libertarians refused to support Republicans because they made abortion rights THE issue, not to mention fear of a few holy rollers. We've all helped Procrustes make our beds, and now we have to lie in them, for better or worse. I plan to continue following the Hugh Akston plan, making as little money as possible for them to plunder, maybe find a small Western Slope town where I ca flip burgers.
	Tuesday, November 11, 2008 at 10:15:35 mst Comment ID: #10 Name: Ted Coxhead E-mail: tedcoxhead(at)yahoo.co.uk Paul says: I don't know of any obviously more-free country than the US at the moment. (Certain countries might have slightly better laws in one sector, but worse laws in another sector, etc.) I think he is right, although there are many British businessmen, some right now languishing in US jails (the Natwest 3 for example), who would disagree. These are businessmen who have been extradited under ANTI-TERROR legislation and there are others facing extradition for offenses in the US which were not even crimes in England at the time! (e.g. the retired Chairman of Morgan Crucible). Since the Natwest 3 were jailed (and bankrupted by having to defend themselves in the US), there have been indications that British businessmen are increasingly reluctant to do business in the States. We have to remember that some of the worst excesses of US anti-business law were committed under Bush. I think that in many respects Thatcher's Britain was probably the easiest and best country in which to do business and maybe also to live. But having said that, if America had open immigration, and other factors in my life were condusive, I would probably emigrate to America. Despite the efforts of US governments from 1890 onwards, I think that the spirit of individualism and "can-do" does still exist. I was struck with how much of that came out in the election debates, where discussion on the issues (and the issues themselves) took place at a far higher level than in UK elections post Thatcher. It's also huge and under populated! And there are more Objectivists there than the entire population of my village! (Although I would probably live in Montana and therefore never meet anyone at all, or California and only meet communists!)
	Tuesday, November 11, 2008 at 10:50:10 mst Comment ID: #11 Name: Michael Labeit E-mail: logician169(at)yahoo.com URL: http://unit-perspective.blogspot.com It appears from these posts that along with the law of diminishing marginal utility, we also have the law of diminishing liberty. The law of diminishing liberty states that as the willingness to defend liberty from a moral and economic perspective declines, so does liberty itself.
	Tuesday, November 11, 2008 at 10:54:43 mst Comment ID: #12 Name: Michael Labeit E-mail: logician169(at)yahoo.com URL: http://unit-perspective.blogspot.com Regarding the flight of freedom from this country, there are only a few ways to hedge against it. One is to participate in the underground economy. If Obama wants to impose a "stiff exit tax" there may arise a market for emigration that sets its transport prices under the government imposed tax.
	Tuesday, November 11, 2008 at 11:01:15 mst Comment ID: #13 Name: Ryan Isn't this a plank of the Communist Manifesto... Ah, number 4: 4. Confiscation of the property of all emigrants and rebels.
	Tuesday, November 11, 2008 at 11:09:22 mst Comment ID: #14 Name: Michael Labeit E-mail: logician169(at)yahoo.com URL: http://unit-perspective.blogspot.com The Hertiage Foundation note that Ireland, Australia, Singapore, and Hong Kong are all economically freer than America in their 2008 Economic Fredom Index. http://www.heritage.org/research/features/index/ Ireland and Australia just best the U.S while Hong Kong seriously puts us to shame.
	Tuesday, November 11, 2008 at 11:10:04 mst Comment ID: #15 Name: Michael Labeit E-mail: logician169(at)yahoo.com URL: http://unit-perspective.blogspot.com I mean "Heritage"
	Tuesday, November 11, 2008 at 11:13:33 mst Comment ID: #16 Name: Michael Labeit E-mail: logician169(at)yahoo.com URL: http://unit-perspective.blogspot.com In addition to this, according to Heritage, the country of Georgia (yes Georgia) has the freest labour market in the world.
	Tuesday, November 11, 2008 at 11:25:59 mst Comment ID: #17 Name: DavidR E-mail: user(at)server.type http://stuffwhitepeoplelike.com/2008/02/24/75-threatening-to-move-t ...
	Tuesday, November 11, 2008 at 12:37:32 mst Comment ID: #18 Name: KPO'M E-mail: ka84796(at)comcast.net Bush and the GOP Congress didn't enact the "exit tax" but they most certainly did raise taxes on expat citizens living overseas. It used to be that the $80,000 income exclusion was just that, an exclusion. Your first $80,000 of income were completely ignored for tax purposes (meaning your 80,001st dollar was treated as your first). Now, the exclusion works differently. Now, that 80,001st dollar is taxed the same way that it is taxed for a resident, meaning that it is at the higher marginal rate, etc. They also limited the value of the housing deduction for overseas citizens. While this didn't affect expats in high-tax countries in Europe, it had a HUGE impact on people living in Asia or the Middle East where taxes are lower. Note that the US is one of the only countries that taxes non-resident citizens, and one of the only that taxes worldwide income (Russia being another).
	Tuesday, November 11, 2008 at 14:12:13 mst Comment ID: #19 Name: Clint URL: http://dummyfencing.typepad.com I'm curious about this "GOP Congress" that existed in 2007/2008. Seriously? Wasn't there a Democratic majority in those years? I mean, I'm not going to try to defend these actions, but I think keeping a bit of historical accuracy and perspective is quite important. I'd be curious who sponsored the "revenue provisions" portion that enacts the "exit tax", but my search-fu is too weak.
	Tuesday, November 11, 2008 at 14:44:23 mst Comment ID: #20 Name: Steve D'Ippolito Let that instance count as the third time I've seen a post on an Objectivist site wrongly assume (implicitly or otherwise) that Congress was Republican from 2007-2009....
	Tuesday, November 11, 2008 at 16:06:01 mst Comment ID: #21 Name: KPO'M E-mail: ka84796(at)comcast.net The GOP congress from 1995-2007 did nothing to stop the exit tax. If it indeed dates to 1996, they had a hand in drafting it. I recall Claire Wolfe's article on the transgressions of the 104th Congress, and the Exit Tax was one of them. The revenue act that increased taxes on expat citizens also was passed in 2006 IIRC.
	Tuesday, November 11, 2008 at 16:37:13 mst Comment ID: #22 Name: Doug URL: http://ruleofreason.blogspot.com Great, now during the next U.S. Presidential election, the two major parties will debate over how much to lower the threshold for taxing expatriates. At this rate, Congress might start finding ways to prevent the most productive individuals from leaving the country.
	Tuesday, November 11, 2008 at 17:27:30 mst Comment ID: #23 Name: Chris Cathcart E-mail: cathcacr(at)gmail.com URL: http://chriscathcart.blogspot.com Hoo boy, this just raises a whole set of issues that I'll have to start a blog posting of my own on. By this point in time I certainly have "unorthodox" views about the meaning of individualism and freedom so I see this exit tax and it creates a nice kind of check on how far I would be willing to take those views. I don't like Joe Biden speaking about taxes as a "patriotic" thing, patriotism and scoundrels and all. "Unpatriotic" easily turns into a smear. I'm more ready to listen to what Warren Buffett has to say about taxes than what a politician or demagogue may be inclined to say. Warren Buffett has this idea about taxes that centers around some widely-held views about what is *reasonable* to pay in taxes. For example, he considers it reasonable for people like himself to pay more in taxes under certain conditions. Let's turn this discussion around and ask what many would find *unreasonable*. Say that people had to pay 10% of their income in taxes every year to fund whatever 10% is most likely to go to cover; it would probably cover quite a bit more than just the courts and the military. Now, few folks would hardly consider that an unreasonable amount to pay. I just don't share the automatic indignation that a know some have that "they're forcing us at gunpoint" to pay some amount when any amount extracted "by force" is unreasonable, period. I just don't think this way of framing the issue captures the problem. Now, in considering this exit tax, you have to ask what would give rise to such a tax in the first place. Is it because people have some good reason to consider the requirements of a proper civil society in which they live and see their fortunes grow? That would be the rationale for it. But maybe the exit tax is introduced because capital flight is a problem, and why would capital flight be a problem? Perhaps because it the taxation people who remain has reached an *unreasonable* level. Perhaps it is unreasonable to demand, for instance, that a populace continue to fund a war that was started and waged under false pretenses. But that doesn't matter to the Bush/Cheney crew, who are real shit as people and as leaders. The principles they are operating on are decidely *not* reasonable ones that pay due regard to the rights and interests of individuals. And like your typical anti-reality ideologues, they will pursue such unreasonableness into the ground, compounding evil upon evil. Rather than clean up their foreign policy so that they aren't taxing people for an unnecessary war, they tighten the tax screws further and only encourage further flight. The differences here are of kind, not of degree. You can have 10 percent taxation and still have a basically rights-respecting and individualist polity. Or you can have the perversion and the abomination that Bush/Cheney have become, all under the mantras of peace, prosperity, unity, etc.
	Tuesday, November 11, 2008 at 17:28:52 mst Comment ID: #24 Name: Jim May E-mail: seerak(at)gmail.com I didn't know there was any Canadian exit tax... either it didn't apply to me, or didn't exist in 1997. The 80k overseas exemption already got clobbered by the depreciating dollar, that was bad enough. Hitting the 80,001st dollar at the same rate as that of a resident, is really nasty. This is one of the reasons I've been hesitant to apply for citizenship. Canada does not tax its expatriates (and there is a tax treaty in place intended to mitigate double taxation). I wonder if entry/exit taxes might be a way to stifle "voting with one's feet" without appearing to do so. That, combined with some noises I've heard lately about discouraging tax competition, does not bode well for freedom of movement. we may all have little choice but to slug it out where we are.
	Tuesday, November 11, 2008 at 17:47:51 mst Comment ID: #25 Name: Robert Speirs E-mail: robspe43(at)gmail.com Chris Cathcart: What were these "false pretenses" ubder which Bush liberated Iraq from Ba'athism? I say they don't exist and that your assertion that they do is a damnable lie.
	Tuesday, November 11, 2008 at 20:06:04 mst Comment ID: #26 Name: New-Be E-mail: SteelJaw22(at)yahoo.com Chris, There is alot which is wrong with your post but I'll just deal with this: The overwhelming majority of today's government spending is social welfare spending. Despite the Iraq war, defense spending is only 4% of GDP which is 1.5 percentage points below the 45 year average. That is not what is hurting us whether you consider Iraq a legitimate war or not. IMO, the Iraq War was wrong not because it was waged under "false pretenses" - the standard Leftist rant - but because it was waged in an altruistic fashion and deliberately ignored the central enemies; ie Iran and Saudi Arabia. There is no moral way the exit tax can be defended, least of all some Bush-Derangement-Syndrome based reason that thinks of it as a legitimate expression of rebellion against unjust war policy. That kind of stuff belongs in Daily Kos.
	Wednesday, November 12, 2008 at 7:57:10 mst Comment ID: #27 Name: SurahAhriman E-mail: SurahAhriman(at)gmail.com New-Be, minor point of contention, I believe that most of the funding for the Iraq war was done in some kind of special legislative bills, and is not factored into the annual defense budget.
	Wednesday, November 12, 2008 at 13:12:41 mst Comment ID: #28 Name: Chris Cathcart E-mail: cathcacr(at)gmail.com URL: http://chriscathcart.blogspot.com (1) Robert Speirs: what conditions must be met in order for something to be a lie and not just a falsehood? You haven't even seen what points I might have presented for my claim about invasion under false pretenses. I'm curious just about your basis for leveling accusation. For my part, I raise the questions that need raising and answering in this entry: http://chriscathcart.blogspot.com/2008/10/conspiracy-theories-on-ir ... I'm sure you'll find all kinds of further evidence of false pretensing by the Bush Adm. presented in columns from Salon.com's Glenn Greenwald. http://www.salon.com/opinion/greenwald/ (2) New-Be, as for the composition of federal spending, I'm pointing out the basis on which the Bush Adm. operates, and it is not concern for the rights of individuals. I think that this mentality is going to pervade whatever they do. And I would not separate the false pretensing for war from the war not being in our best interests. It turns out not to be in our interests because rather than some saber-rattler over there, we now have a situation that's worse for everyone. The "Bush-Derangement-Syndrome" phrase is cute but it's used as a way to make fun of dissent where the dissent is rather quite spot-on: that our current administration is evil and operating in defiance of what American principles are supposed to be. Just because it is a President of the United States doing it, doesn't make it less than evil and anti-America. Some years ago I would have chalked the "hysteria" from the left as Bush Derangement Syndrome as well, but the facts have all to scarily borne the "hysteria" out. Just imagine how much the same people who crafted all kinds of apologetics for Bush would react if a Democrat were doing just the same things (torture, detention, wiretapping, false pretexting for war). Can you just imagine? They'd be falling all over each other calling for impeachment. I take the facts over partisanship, thank you.
	Wednesday, November 12, 2008 at 14:09:42 mst Comment ID: #29 Name: New-Be E-mail: SteelJaw22(at)yahoo.com Chris, we are never going to agree. You have the stench of libertarianism or left-liberalism all over you. But I'll throw this out anyway, of what use is it to fault the Bush administration for fighting an "illegal war" or a war "sold on false pretenses" when their sin is that they have not really waged a real war of self-defense against our Islamic enemies in the first place? Their deepest flaw is altruism generated pacifism not imperialism or warmongering or any of the other leftist trash that you are trotting out. The false alternatives that the Left and Right provide us are Conservative altruistic nation-building wars intended to "win the hearts and minds" and "spread democracy" by transforming hostile peoples into friendly "democratic" nations or total liberal surrender by burying their heads in the sand and pretending that the Islamic menace doesn't exist. You can scream all you want about the evils of the Bush administration but IMO it *is* Bush-Derangement-Syndrome to do that and ignore the even greater threats posed by the Left, let alone argue that a Leftists president will stand for "intellectuality and competence." That kind of nonsense I have absolutely no respect for. Its insulting to my intelligence. I'll give you the last word.
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