Senators Propose to Block the Exits
It’s bad enough that the politicians can’t stop bleating about “taxing the rich” as a suggested means of greasing the economy in this country. And now the latest suggestion is that the government economically imprison its very own citizens.
According to at least a couple of Democrat senators that is: Shumer (NY) and Casey (PA). These geniuses have come up with some proposed legislation – uncleverly dubbed the “Ex-Patriot Act,” short for “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy.”
Seems they retroactively don’t cotton to the notion that Facebook co-founder, Eduardo Saverin took it upon himself to move to Singapore, a while back, and recently announced that he is surrendering his U.S. citizenship. And possibly the fact that Saverin reportedly owns an estimated 4 percent of the company, netting him a few billion in the recent IPO, and would save himself a whole bunch of U.S. taxes by so doing has something to do with the good Senators’ attitude.
The Tax Foundation summarizes the key elements of the suggested legislation:
- Anyone who renounces U.S. citizenship and has a net worth of at least $2 million or an average income tax liability of at least $148,000 over the previous five years would be presumed by IRS to have done so to avoid paying taxes.
- Folks who could not prove another reason for renouncing citizenship would face a 30% tax on future capital gains arising from U.S. investments – double the current 15% rate – and be barred from future returns to the good old U.S. of A.
“Eduardo recently found it more practical to become a resident of Singapore since
he plans to live there for an indefinite period of time,” quoth Tom Goodman, Saverin’s spokesman, in dialogue with Bloomberg News.
We guess such a freedom just isn’t enough to satisfy Shumer and Casey.
And speaking of contrarians, we hear that new research by Peter Diamond, the 2010 winner of the Nobel Prize, and Emmanuel Saez, a John Bates Clark medalist for the best economist under 40 stands to disprove the work of the noted Arthur Laffer, whose famous “curve” stands for the proposition that the raising of tax rates on high income folks actually produces less revenue for the fisc in the long run.
These two blokes conclude that the optimum federal tax rate is somewhere in the 50 to 70 percent range, and cite the fact that per capita growth in the U.S. was slower between 1980 and 2010 when top marginal rates were low, than between 1950 and 1980 when they were much higher.
We guess they will be elated, come next January 1…..
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be reached at 831-7288, welcomes comments at firstname.lastname@example.org, and invites readers to consider his other commentary at http://blog.nolo.com/taxes.