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Are Wealthy Americans Leaving the Country?

I thought I would share my process for gathering viewpoint and facts.  Perhaps others would offer to put articles together in the future, but if nothing else, a look into how I brainstorm a publication:

The high-middle and high-earners in America  pay for the majority of social programs implemented by Congress.

With states facing nearly $100 billion in combined budget deficits this year, we’re seeing more governors than ever proposing the Barack Obama solution to balancing the budget: Soak the rich.

American Senators and Representatives should be thrilled, but instead disparage them for making the money that those Congressmen desperately need to tax.  What happens if they leave?

Perusing democraticUnderground.com, one would find the following comment:

“LEAVE. Take your money and go. America will survive without you… So rather than ruin our country for the other 90% whom you despise. Go away. Take all of your precious money and go elsewhere. Even if it means depression we will be better off in the long run without your manipulation..”

Liberals would love to see anyone with capitalist or free-market ideals leave, but seriously, would they really?  Sure, the populist view is to hate the wealthy – go Robin Hood and such.

Last September, Bob Bauman reported that, “Indeed, the growing trend of Americans voluntarily ending their status as U.S. citizens — the only legal way by which they can escape U.S. taxes and government controls — has reached a new peak and shows no signs of abating.”  Heck, even the radical left site, DailyKOS.com reported that the Bush family bought thousands of acres in Paraguay.  Although Obama doesn’t see what he’s causing, apparently his predecessor and his family did.

How serious are these ex-patriots:

Interestingly, although such a move offshore means departing Americans may have to pay an exit tax that the Democrat Congress and George Bush imposed in 2008, lawyers say this is a price people have become more willing to pay this year, now that recession and decreased asset values has reduced the size of this onerous and unfair tax.

So why do the non-wealthy care?  The top 1% of all earners pay 40 percent of all taxes. Examine the recent health care bill that relies heavily on the wealthy to fund the measure.  If there are not enough wealthy people, the rest of will be left to foot the bill.  A cost the rest cannot afford.

Continuing to hate top-earners for working hard and taking risks is counter-productive.  At some point, the government has to realize that not everyone can work for unions for middle-class wages unless the government is willing to tax middle-class wages at much higher rates.  It is well-known that our legislative branch would never admit such a truth.   Why should they, it would cost them their precious seats.

Wealth Bulletin quotes Jay Krause, a partner at private-client specialist law firm Withers who says he’s seen a rise in those interested in expatriation lately

We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts. -wsj.com

Those who disapprove of tax competition complain that lower state taxes only create a zero-sum competition where states “race to the bottom” and cut services to the poor as taxes fall to zero. They say that tax cutting inevitably means lower quality schools and police protection as lower tax rates mean starvation of public services.

The Live Free or Die State has no income or sales tax, yet it has high-quality schools and excellent public services. Students in New Hampshire public schools achieve the fourth-highest test scores in the nation — even though the state spends about $1,000 a year less per resident on state and local government than the average state and, incredibly, $5,000 less per person than New York. And on the other side of the ledger, California in 2007 had the highest-paid classroom teachers in the nation, and yet the Golden State had the second-lowest test scores.

Christian Kälin, a partner at residence and citizenship planning consultancy Henley Partners, said his firm has had a big rise in such inquiries.
He said: “Tax reasons might be the biggest reason why US citizens will want to drop their passports..” – clubconspiracy.com

Jay Krause, a partner at private-client specialist law firm Withers, said: “The number of inquiries from US citizens wanting to expatriate from their citizenship has increased rapidly in the last year.” – wealth-bulletin.com

To become a resident of Costa Rico for instance only requires proving an income of $50,000 USD per year.  Put $1,000,0000 in the bank and cut a crappy 5% annual and you’re in.   That is nothing serious for a middle-upper earner in their mid-50′s.

*notes:

  1. what would keep the wealthy here
  2. what is the worth of upper-middle income ($200,000) to the American economy
  3. Is the ObamEconomy more about bringing everyone to the same lower-middle class status?
  4. How does Obamacare and the financial reform bill increase Americans worth/income?
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Comments (24)

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  1. The notion that the wealthy only pay 13%, or some other low tax rate, is not accurate. Anyone, not just the wealthy, can generate income at reduced rates. For example, qualified Dividends generate reduced tax income.

    Taking Qualified Dividends as an example, the wealthy pay 15% while middle and lower income citizens pay 0% (nothing) on that income.

    There are investments that requite large amounts to participate. But lowr income citizens enjoy greater tax relief than others, even when making the same income streams.

    The fact is, most people are not willing to take the risk. The tax relief is an incentive to invest moeny with American Companies. These types of investments should not be viewed as something for wealthy alone.

    I do not consider anyone a throwaway. A life is a life. Howver, I do not want to carry others for bad choices in life, just because they exist. I am very charitable, with the miney I want to give towards charity. In addition, I help a lot of people. I’ve provided housing for people in hard times… Clothes and food too. It should be my choice to donate to people as I see fit.

  2. Mark Smith says:

    Taxes are too high – our household is an example. My wife and I both made about 90k mostly because we are trained professionals. My wife is a nurse. We were paying a crazy amount in taxes and we lost out on lots of other things as well because of our income bracket – it is crazy. Most people think the high-middle class just pay a higher tax rate but its actually much higher than that because we lose out on LOTS of other things that just keep adding up. It’s pointless for us to open up a education account for our children. We do not qualify for many kinds of retirement accounts. When we bought our house and we did not get our large goverment rebate. When the government gave tax money back a number of years ago – we got less. The list goes on and on. And all of this actually has a multiplication effect on the tax bracket.

    My wife then left her job for a year and then all of the sudden we qualified for more programs, more discounts and had less tax penalties. It is almost pointless for her to go to work so she has been home ever since. This is nice for us because she can take care our child as well as more things at home. But, society just lost a very useful working trained professional – a nurse – because of basically taxes. She could go to work but it would put our “total tax bracket” higher that its hardly worth it.

    On another topic, I know people in our extended family that can live off of “government programs” and they basically can survive without working. They are from outside the country and have been here 5-10 years and have never paid a single cent in income tax. They get food stamps, subsidized housing, and better medical care then I do. They don’t live wonderfully but they do not have to work. This drives me nuts actually.

    • M says:

      You sound like you live in New Jersey.

    • pam mine says:

      I think that is wonderful! that is how it’s supposed to work. The man makes enough for the mom to stay home and care for the kids.
      That is how everyone lived up until the mid 60′s.
      I’m sorry you feel burdened, but I would rejoice that your wife can stay home with the kids.

      • pam miner says:

        sorry, my name, the r got left off somehow. MineR.

      • Mark Smith says:

        You are right – it really is for the best – especially the kids! It just really got to us for a year or two. While the world did lose a nurse, for now at least anyway, our two children gained a mom.

  3. Hedgehogrebellion says:

    You are saying it is counter-productive to hate the rich bcuz they work hard and take risks…just like Bernie Maddoff, right?

    • mikemed says:

      Is Bernie still rich?

      I don’t think he’s talking about scammers. He’s talking about people that have good ideas, implement and expand on those ideas and consequently become wealthy.

      Many people are wanting to raise the Robin Hood Index. One of the key notes Obama got elected on, “I’m going to redistribute the wealth,” is another way of stating I’m going to increase the Robin Hood Index.

      • pam mine says:

        The question of who is rich was defined once by John McCain. he said the dividing point to be $5 million. I don’t know really.
        I had never heard the term Robin Hood tax, but the concept is clear.
        I am 66 and one of the many who live below poverty line. To me a luxury would be having a TV larger than 19″. Or eating out once a month. Going to see a fist run Movie. Buying clothes that nobody has worn before me.
        What I need is to be able to pay off my car repair debt. Buy new tires. A back operation. enough money to keep my car mobile.
        It would be cheaper and better for the pollution to take mass transit, but when you are older and have to walk several blocks to get to a bus stop, it’s also harder.
        I don’t begrudge the rich, Through hard work or luck of birth, either one.
        I don’t pay income taxes, I pay sales taxes, so do all the poor and all the workers. I know the rich pay 40% Of the income tax, but at a lower % rate.
        When you only get $8,500. a year, there really isn’t that much to tax.
        The thing I do resent is that my kids, and most people I know pay about 45% in income taxes. But The very wealthy only pay 13% or there about. Is that fair?
        I know that big corporations often pay no taxes but have subsidies and such.
        I worry about the large number of children, through no fault of their own live in poverty.
        I know there are cheaters out there, but they are darn few, compared to the many who need to buy their kids food and new shoes.

        Well, I don’t want to rant about the wealthy, have fun, but please, don’t think of me and others like me as Throwaways.