Ten Benefits of Expatriation

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Everybody has their own personal reasons for expatriating, but here are some of the benefits:

1) Freedom from the global US tax net. Taxing you no matter where you breathe on this earth is wanton American exceptionalism. What other nations don’t dare do to their citizens, the US government doesn’t think twice about. Once you renounce, it’s your choice either to live the rest of your life free of any tax net, or to pick a place you want to be year-round and opt into the tax system (assuming it’s not a tax- free jurisdiction). If you do, you’ll at least know you have the freedom to walk away from it by simply moving elsewhere.

Taxes in the US are already high, and rates are set to increase across the board. To gain some perspective, it’s clarifying to calculate the number of months per year you work for the government. How many months did it take to pay all the federal, state, and local income taxes, capital gains taxes, FICA taxes, property taxes, and AMT – plus the raft of permitting, licensing and accounting costs you incur over the course of a year? Add corporate taxes if you’re a business owner. And don’t forget the new 3.8% health care surcharge tax on all investment income, including dividends. Be honest and add it all up. You’ll then have a decent idea of how much it costs you in time and money to be a US citizen every year. That cost will rise dramatically going forward.

Here’s the take-away: The biggest guaranteed return on your capital that you’ll ever have is investing your money free of taxes. Do some long-run compounding calculations with and without taxes to see what I mean. I’ll wager John Templeton did.

2) Freedom from the death tax. Its political label is the “estate tax,” but the fact is the tax is based solely on your demise. I used to think the death tax only applied to gains on assets that had not been taxed already. How naïve I was! It grabs half of all your assets, regardless of the fact that you’ve paid taxes on them.

If you have over a few million dollars net worth, your heirs will be writing a heart-stopping check to the IRS. They also may be forced to liquidate your assets to raise cash. This has happened to countless small businesses and family farms. And if you’re a young, talented entrepreneur who goes on to earn substantial wealth over the course of your life, the death tax has you in its crosshairs too.

The death tax is 45% now and is scheduled to jump to 55% in 2011. Either way, the amount is staggering. Expatriation lifts the death tax burden from your children and other heirs.

3) Freedom from the US government’s War on Solvency. Washington’s crazed debt addiction is uncontrollable and endemic. US politicians have strapped an inconceivably large debt burden on the backs of their subjects. It pays to spend some time on www.usdebtclock.org. The multi- trillion dollar debt avalanche roars on, headed straight towards economic hell. After “Debt Per Taxpayer” and “Liability Per Citizen,” check out “US Unfunded Liabilities” to see a number that’s suited to astronomical calculations – not economics.

Don’t be tricked into thinking this is a partisan issue. It’s sobering to review the debt records of both Democratic and Republican administrations…to behold what politicians do when given trillions of dollars of other people’s money. They spend it all – and then borrow trillions more! Of course, the burden of servicing that debt is on you, not them. Their six-figure salaries are guaranteed, along with their uber-perks and fully funded pension plans.

While often described as “the richest nation in the world,” the reality is that the US is the most indebted nation, by a country mile. No other government comes close to matching the debt burden that has been dumped onto every taxpayer. The US government is rampantly incurring debt in your name, and you have no way to stop it or slow it down. Standing in free speech zones with protest signs didn’t work when it came to war and crony bailouts, and it won’t work for the debt burden either.

The one truly meaningful act you can take as an individual is to opt out. Unload the government’s debt burden off your back. Don’t let yourself or your family be a casualty of the government’s War on Solvency.

4) Freedom from being treated like a “toxic citizen.” When traveling abroad, being a US passport holder used to be a positive thing. Now it’s an albatross. The New York Times article I cited earlier explains it plainly: Americans abroad are being treated like “toxic citizens.” They’re cut off from banking and other business and investing opportunities solely because of their US citizenship.

Typical currency controls don’t permit you to take money out of a country. The US doesn’t have that (yet). Instead, and this is quite clever, the government enacts laws and regulations that function as indirect currency controls. There are so many Patriot Act and other costly impositions forced on foreign banks that handle US customers that they’re simply refusing to put up with the harassment. Here’s the upshot: Your money isn’t fenced in; it’s fenced out.

If you seek firsthand evidence, visit a major banking center outside the US and try to open a bank account. Odds are you’ll be turned away when the bank finds out you’re a US citizen. Reports abound of US citizens’ long-held accounts at foreign banks being summarily terminated. The US government has made its subjects, along with their money, persona non grata.

I’ve read that some foreign banks are now setting up, in essence, holding pens designed to handle US citizens who want to bank offshore. But, really, what’s the point? You’re burdened with having to file extra IRS paperwork, along with FBAR forms to the Treasury Department. And even if you don’t file all the extra papers (not a smart move), new laws force foreign banks who accept US customers to report on you anyway. They are pressured to sign “information reporting agreements” to have US citizens as customers. Google “FATCA” and “qualified intermediary agreements” if you want details.

Now for the most extreme instance of liability. Being a US passport holder can mean life or death in the context of a terrorist attack. The US government’s never-ending War on Terror makes the world more dangerous for Americans. After so many years of bombing and military occupation in the Middle East, how can the hundreds of thousands of civilians who’ve been maimed and killed by the US government NOT be the source of enduring resentment and blowback? Needless to say, the US passport is on the short list of ones you least want to have if somebody sticks a gun in your face and says, “Passport.” Unfortunately, this has happened on more than one occasion, and it would be unreasonable to assume it won’t happen in the future.

5) Freedom from the paperwork prison. Millions of Americans are plagued every year by days, sometimes weeks, of preparing tax documents and paying thousands of dollars to accountants to decipher the IRS tax code. There are, literally, hundreds of different IRS forms. The tornado of rules and regulations in the tax code fills roughly 70,000 pages. And then you have to save boxes and boxes of papers for years in fear of someday being audited and not being able to produce the demanded documents. If you’re unfamiliar with audits, here’s how they work: You’re guilty of whatever the IRS claims, unless you prove yourself innocent. If that sounds preposterous, I encourage you to ask a tax lawyer. “Innocent until proven guilty” does not apply. Freedom from spending days of tedium on mind-numbing paperwork and thousands on accounting fees has been an absolute joy.

Highly recommended.

The Casey Research Team
for The Daily Reckoning Australia

Doug Casey
Doug Casey of Casey Research, author of the best sellers Strategic Investing, Crisis Investing and Crisis Investing for the Rest of the 90’s, has lived in seven countries and visited over 100 more. He has appeared on scores of major radio and TV shows and remains an active speculator in the stock, bond, commodity, and real estate markets around the world. In his spare time, Doug engages in competitive shooting and plays polo.
Doug Casey

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13 Comments on "Ten Benefits of Expatriation"

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Chris in IT
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What happened to 6-10?

Biker Pete
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US site has…

…to be continued…

brc
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There is no way in Gods’ green earth I would become a US Citizen. An Australian friend of mine recently accepted dual citizenship with the USA. I asked him if he was freaking mad, but I guess he can always opt out. Good luck getting rid of the IRS though.

All they need to complete the horror is to re-instate the draft.

Ned S
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I’m too old for the draft and HAVE genuinely let the thought of moving to the US bounce around in my mind given that the AUD has been OK and I could probably buy 8 pretty respectable properties in Dallas (for instance) as opposed to owning maybe 5 more basic ones in Brissy. Problem is that I’d guzzle a pint or two of Good Ole Boy’s Bourbon and tell them why I really DON’T think they collectively are such good ole boys! :) But, the good news is that I still do suspect there are some more mellow countries where… Read more »
Biker
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If _forced_ at gunpoint to live in the US, there are a half-dozen cities I could tolerate… SF included. One of our sons lived there for some time (rent $5K+/month) and enjoyed the markets and the Pier 39 area. Sausalito appeals, as does Carmel. Don’t think all that much of Laguna Beach, or any of the Californian beaches… but I’m spoiled by our _unspoiled_ paradise here. Two Canuck mates have bought in Arizona: Phoenix and Tucson. Just holiday homes, but they enjoy them. Must get to Arizona. The lifestyle is claimed to be pretty good… . I also like Seattle…… Read more »
Ned S
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“If _forced_ at gunpoint to live in the US” – Yeh, that kind of sums it up for any Aussie who doesn’t reckon their chances of making it big in Hollywood are exceptional I guess? (Thank you Biker – I enjoyed the laugh … Whilst also (just!!!) managing to avoid spitting my mouthful of port into my lappy keyboard! :) )

Joe B
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Doesn’t Australia tax worldwide income as well?

US tax is actually lower than Aussie tax, but “tax residency” is determined by whichever country you permanently reside in, per the tax treaty. As a US citizen living in OZ, I have to pay the higher Aussie rates.

But at least we have “free” health care here! I’d pay any price for that.

Ned S
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My American contacts come from mostly up Minnesota/Wisconsin way – Hunting, fishing, gardening and BBQs at home in summer; Hunker down in winter with the occassional intrepid visit to a heated ribs and beer joint – Plus go fishing from a hut through a hole in the lake ice if one really feels inclined to venture out? Shute – By and large the Russkies aren’t even that silly? They just stay home and drink vodka, chat on the phone to their friends and eat their last summer’s pickled baby cucumbers and such like when it gets to 30 below! :)… Read more »
Ned S
Guest

I keep coming back to it and suffering a gut bust laugh Biker – There is absolutely NO way that I could EVER (for now??? :) ) reconcile myself to living amongst Americans. And having said same, there is absolutely NO other nationality on earth I feel that way about?

No question, Yanks are definitely a one off oddity! IMO :)

Biker
Guest
“Yanks are definitely a one off oddity! IMO :) ” Who knows, Ned? Any nation which has enjoyed global financial and military supremacy for so long may evolve the same characteristics. Perhaps the early Brits made the same kind of comments about ‘Rome’: “Nice place to visit, but I wouldn’t want to live there.” I feel some real sorrow for Americans. In New York we were stuck in a kilometres-long line-up to board a ferry to see the Statue of Liberty. An airline-security level search followed, many hours later. Most in the line were Americans… and they tolerated the loss… Read more »
Bertie
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I fail to see how this is relevant to the Aussie housing bubble.
Gold gold gold for Australia!

Biker
Guest

I guess you should ask DR, Bertie. It’s _their_ current theme! :)

Ned S
Guest
Given that American finances seem to have a reasonable amount of effect on just about everything (including the price of Oz housing potentially), having some sort appreciation of what thoughts might rattle around in American’s heads seems of relvance to me. The one that I really struggle with, that they just seem to take as a given(?), and look at a bloke like he must be from another planet if he questions it, or outright accuse him of being anti-American and suggest he may been been well suited to a position as senior instructor in the Hilter Youth League and… Read more »
wpDiscuz
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