Your Government at Work

I believe it was Mark Twain who said “No one is safe when the Congress is in session”. There was a movie in the 1960s called “The President’s Analyst” where a KGB agent tells a CIA agent that your country is getting more like ours all the time. How prophetic.

A lot of people probably can’t understand why someone would voluntarily give up American citizenship—but if someone wanted to do that, they’d now incur financial penalties for it.

Congress just passed a new law that will stop your capital—or at least a good portion of it—at the border, should you decide not to be a U.S. citizen anymore. Is it, perhaps, in preparation for the possibility that Americans might rebel at the debt and taxes incurred by their government by leaving for lower-tax locales?

You probably didn’t notice this little provision inserted into the Heroes Act of 2008, passed by Congress on June 17. The headlines in the press release about the law were about the increased benefits for veterans and families of deceased military.

But Richard Kohan of Price WaterhouseCoopers drew my attention to one section of the act, which states that anyone voluntarily giving up his or her citizenship will be taxed on all of his assets as if he or she had sold them—paying capital gains on assets that have increased in value, even though they have not been sold.

Only the most desperate countries and socialist dictatorships employ laws like this. Of course, there are ways you could get around it. But it would be hard. Converting your stuff into gold and cash and sneaking it out of the country somehow. But this is absurd. It makes you feel like a prisoner. If people decide they want to leave, that shoul be their right. Obviously, some scary stuff is going down if laws like this get passed.

Fortunately, it hasn’t been yet. Let’s hope it doesn’t. 

I am acutely aware of this law, as they’ve been trying to pass it or a variation for a decade.  Obviously, it affects me, since I plan to leave the US permanently in the future, and if you don’t give up your citizenship, the US can and will tax your worldwide earnings for ten years.
My new plan is to transfer all my assets to my non-US citizen wife just before I leave.  So far, that will work.  Hopefully, that loophole will not have been closed before I have time to use it....

Posted by  on  07/01  at  01:06 PM

Any politician who sponsors or votes for this bill should be voted out of office. They are a disgrace.

Posted by  on  07/01  at  02:08 PM
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