Moving On Out

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Joel Bowman, reporting from Taipei, Taiwan…

Against a backdrop of heated immigration disputes along its border
states, America this week learned that a small but growing number of
her citizens are choosing to renounce their citizenship in order to
pursue a freer life abroad. This should come as no surprise, not even
to those who have forgotten why their ancestors set sail for the “Land
of the Free” in the first place.

According to the Federal Register, the government institution charged
with keeping tabs on such activity, 502 expatriates gave up their US
citizenship or permanent residency status in the last quarter of 2009.
That figure, though still relatively small when compared with the 5.2
million Americans estimated to be living abroad, is more than twice the
total for all of 2008. Nevertheless, the increase – from a rate of 235
per year to over 2,000 per year – is enough to raise a nationalistic
eyebrow or two.

For some, the decision of their fellow countrymen and women to
surrender their American passport – and, after an enormous initial
penalty, future tax obligations – is tantamount to desertion…treason,
even. Of course, that all depends on what we assume a freedom-loving
person chooses to swear their allegiance to in the first place: the
concept of freedom itself…or a nation professing to uphold and honor
it.

“Let’s be clear about something,” opined Lew Rockwell, founder of the
Mises Institute and editor of LewRockwell.com, earlier this week, “A
person who decides to give up his US citizenship is not guilty of
disloyalty to America; quite the opposite. He could very well be more
loyal to American principles than the regime is willing to tolerate.”

Indeed. It is helpful here to inquire as to what, precisely, this band
of wayfaring renegades is voting (with their feet) against.

“American expats have long complained that the United States is the
only industrialized country to tax citizens on income earned abroad,”
elaborated an editorial in The Washington Post during the week, “even
when they are taxed in their country of residence, though they are
allowed to exclude their first $91,400 in foreign-earned income.”

In addition to onerous taxes (which some expats have taken to calling
“taxation without representation”), it would be difficult to argue that
the growth of the State – and its myriad associated expenses, debts and
deficits – had nothing to do with this still nascent trend. It is
surely no coincidence that this uptick in “deserters” comes as the Feds
demand and occupy an increasingly larger share of the country’s
economic landscape.

In fact, not since a brief spike circa WWII has government expenditure
gobbled up a larger percentage of the nation’s GDP pie. Where as
government expenses began the 20th century at a relatively modest 7% of
the nation’s entire economic activity, they today account for almost
45% of the whole. Until as recently as 1950, total government expenses
– including pensions, health care, education, national defense, welfare
and all other spending – were still in the vicinity of $70 billion, or
roughly 25% of the nation’s GDP. Just two decades later, that number
had more than tripled (in nominal terms) to $322 billion, or around one
third of the nation’s GDP. We doubt if the number ‘trillion’ had ever
even been uttered in the halls of Congress at that time, but by 1990
the government’s expense figure had reached just over $2 trillion,
edging its way toward 35% of GDP. Today, it weighs in at over $6.5
trillion and is projected to top $8.6 trillion by 2015.

Because politicians don’t typically spend other peoples’ money as
prudently as they might have spent their own, state-funded activity
generally leads to a mountain of waste and, eventually, an even bigger
mountain of debt. According to figures compiled by the Peterson
Foundation, the government’s debt was over $180,000 per person in 2008.
Since then, it has grown at more than $4.2 billion dollars per day.
This includes expenses like servicing the interest payments on the
national debt, maintaining armed forces in hundreds of permanent bases
around the world, funding various and multiplying welfare programs and
paying the swelling public workforce more than the private market would
ever tolerate for the sub-standard services they tend to provide.

Why is this important? Because an increase in the size and cost of
maintaining a welfare state is directly proportional to a decrease in
economic freedoms for those who are forced (through taxation and other
coercive measures) to sponsor it. Ergo, greater state presence in an
economy equals more confiscation of private individuals’ property and,
ultimately, an unsupportable number of people living at the expense of
the dwindling, productive few.

Unsurprisingly, Uncle Sam is cracking down. One only need consider the
ever-tightening noose of capital controls. Our vigilant friends over at
The 5-Minute Forecast noticed recently a “provision slipped
unceremoniously into the Hiring Incentives to Restore Employment Act,
AKA ‘the jobs bill,’ which passed into law on March 18, 2010.

“The provision,” The 5 continued, “outlines new rules on ‘Foreign
Account Tax Compliance.’ The gist is this: Send more than over $50,000
to a foreign bank not on good terms with the US and the IRS will
withhold 30% of it for possible tax claw back – and a boatload of your
private account information.”

What’s more, with trillion dollar annual deficits as far as the eye can
see, there is little chance that the political pressure to “eat the
rich” will ease up anytime soon. Is it any wonder then that a fast-
growing number of people are already trying to get out before the
hammer really slams down? And, more germane to this discussion, are
these people to be considered “unpatriotic” for surrendering a passport
– of any color and origin – in favor of liberty?

Perhaps it is useful here to consider freedom as a concept, not an
institution or a political or geographical location. Certainly one
cannot point to freedom on a map, nor is it defined – regardless of
laws attempting to render it otherwise – by the color of one’s passport
or skin. It resides neither in the wooden speeches of politicians nor
in the empty promises of their sophistry, where it is prone to being
debased, corrupted and molested. Instead, it lives and thrives in the
impenetrable safekeeping of those who seek to achieve it. As such, it
is only natural that the torchbearers of mankind’s greatest attribute
should seek a home in which they can live their lives unencumbered by
the coercion of others.

Joel Bowman
for The Daily Reckoning Australia

Joel Bowman
Joel Bowman is managing editor of The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.
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Comments

  1. It was fortunate that the original freedom seekers happened to lob into a continent full of natural reources that could be explioted with only small regard for the native owners. Their freedom was enhanced by that abundance of wealth. As far as i can tell, there are no more undefended continents to plunder under the banner of manifest destiny. Freedom in the future might be more mundane and hand-to-mouth than it has been for the last couple of hundred years.

    Reply
  2. John’s comment is logical – the fuller the planet, the tighter the restrictions. But it is still not right that a land of such resources should find itself owing trillions. That’s an automatic pressure to enslave the people, and it has barely started. The choice is to face the music, take the cuts and get some freedom back … or … keep consuming those shiny (plastic) beads from Chinese traders.

    p.s. There appears to be some doubts over the Manhattan/bead story, but it makes a terrific little irony here.
    http://www.hartford-hwp.com/archives/41/415.html
    Work brings profit, but mere talk leads to poverty. Prov 24:7

    Reply

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