Expatriates on the Rise

Right From the Start

Billionaire and Republican presidential candidate Donald Trump created a political uproar when he declared that:

“When Mexico sends its people, they’re not sending the best. They’re not sending you, they’re sending people that have lots of problems and they’re bringing those problems. They’re bringing drugs, they’re bringing crime. They’re rapists and some, I assume, are good people, but I speak to border guards and they’re telling us what we’re getting.”

Whether you like Mr. Trump’s comments or not, there is a flip side of the issue that gets scant attention from the media but reflects a trend that is growing ever since the election of President Barack Obama.

In a Forbes article dated February 6, 2014, Robert Wood noted:

“America is a great land and lures immigrants worldwide, yet record numbers of U.S. citizens and permanent residents are giving up their citizenship or residency. For all the immigrant arrivals the trickle the other direction is increasing. The number is still small, with the “published” expatriates for the quarter 630 for the last quarter of 2013.

“That brings the total number to 2,999 for all of 2013. The previous record high for a year was 1,781 set in 2011. It’s a 221% increase over the 932 who left in 2012. You can call it a shaming or a public record, but the Treasury Department is required to publish a quarterly list of Americans who renounced their U.S. Citizenship or terminated their long-term U.S. residency. The public outing puts Americans on notice who relinquished their rights.”

The list was created initially to embarrass those who renounced their citizenship but of late it has become a chronicle of wealth leaving the United States because of high taxes, overly burdensome regulation and, in some cases, suspicion of the current government (i.e. the IRS scandal, NSA spying, and the use of “audits” by multiple governmental agencies to “punish” its foes.)

The trend continued in 2014. An August 14 article by Rich Smith of DailyFinance noted:

 “2013 was a record year for expatriation.

“In 2014, we broke that record.

“According to the U.S. Treasury Department, 2,999 U.S. citizens and long-term residents moved abroad and gave up (or abandoned efforts to obtain) American citizenship in 2013. A year later, Treasury Department statistics showed a 14 percent increase in expatriations, to 3,415.

“And that could be just the beginning.”

Mr. Smith’s article continued:

“According to a new poll conducted by British money transfer firm Transferwise, about 35 percent of the Americans it surveyed would consider leaving the U.S. and moving abroad. Only about half of those surveyed, however, cited a desire for lower taxes as one of their “major” motivations.

“Nearly equally important, it seems, is the view that there are better educational opportunities abroad (48 percent cited that as a major motivation, versus 51 percent citing lower taxes). Even more important was the perception that health care is “more affordable” in countries outside the U.S.”

There are two trends converging that has raised the stakes on expatriation – the growth of government and the growth of international travel.  First, it’s not just that the United States has one of the highest tax rates for businesses and those who have accumulated wealth – although that alone has its acolytes. It is accompanied by governmental dominance in every aspect of one’s life – and is government at all levels that causes the friction. There are land use planning, zoning restrictions, development givebacks, and transportation requirements limiting the use of your land. There are health codes, building codes, and environmental codes that restrict your business. There are labor codes, anti-discrimination codes, preference codes, the Occupational Safety and Health Act (OSHA), the Fair Labor Standards Act (FLSA), the Davis-Bacon Act, the states’ little Davis-Bacon Acts, minimum wages acts, maternity leave, paternity leave, mandatory vacation leave, and on and on that limit the relationship between employers and employees. There are acts that bar schools from giving children aspirin without parental notification but encourage abortions for minor without parental notification and now the same for gender modification. There are banking laws that overwhelm small banks and are skirted with armies of lawyers by the big banks. It’s not that any of these, in their original purpose were illegitimate; rather it is that the bureaucracies created to administer them justify their existence, their growth and their budgetary requirements by adopting more and more regulations. And all of this just scratches the surface.

Then there is the massive amount of data mandated and collected by the government on all levels. There is financial data involving your income, your possessions, and your transactions. There is personal data including employment and health (including diseases and sexual activity). The census data goes far beyond determining the number of people residing in particular areas and often times delves into the minutia of your daily life. With Medicare questionnaires now regularly required of seniors on visits to their physicians, I have taken to writing “None of your effing business.” But worse yet is the cavalier attitude taken by the government to protect this data. The IRS used it for political purposes. The federal personnel system was hacked obtaining information on virtually everyone who has worked for the federal government or even made application to work. There have been breaches at Social Security, Health and Human Services, the Internal Revenue Service and those are just the ones that have been reported. Foreign governments (Russia, China, and Iran) routinely access and steal data on American citizens. So frequent are these agencies hacked, it is no longer necessary for the administration to co-op employees to illegally use data, they can simply hire hackers to obtain it with less risk of discovery or attribution.

And the taxes. There are income taxes, sales taxes, property taxes, business license taxes, excise taxes, estate taxes, inheritance taxes, luxury taxes, gas taxes, transportation taxes, arts taxes, special improvement district taxes and fees now for every governmental service that used to be paid by general taxes without any relief in the amount, frequency or variety of those taxes. And there are seemingly just as many taxing jurisdictions: the federal government, state government, counties, cities, metro overlays, library districts, arts districts, and on and on. There are so many taxes and sources of taxes that the governmental class has begun referring to tax deductions as tax expenditures – as if all that you make or have really belongs to the government and what your are allowed to keep is a payment from the government.

And all of this comes at a time when international travel is becoming more and more frequent. That international travel is taking the “alien effect” out of people’s wariness of the unknown. These travelers are now spending enough time in foreign countries that they now know that the creature comforts they enjoy are available, that the language is not a barrier, and that the cost of their living (not the cost of living in general) is reasonable. Many have purchased second homes – often times discovering that there are enclaves of Americans who share their same interests and views. Still more rent homes or apartments for extended periods acclimating to their environs as if they are “natives.”

The thing that the political class routinely fails to remember is that success and the accumulation of wealth provides those who have achieved it not power, but choice – including the choice of mobility.

Mr. Smith’s article cited recent studies that noted:

“While the dream of leaving the motherland and wandering strange paths abroad may be more of a daydream than a real option for some, many Americans appear to be giving a move some serious thought. If 35 percent of Americans “would consider” moving abroad eventually, perhaps around retirement age, fully 14 percent of us — or 4 in 10 of those who “would consider” leaving the States at all — say they would consider a move “within the next five years.”

“What might push them over the edge, and into action? Not taxes. Rather, Transferwise says the three reasons most often named for considering a move abroad are:

• “a better quality of life” — 36 percent;

• “a lower cost of living” — 33 percent;

• and just plain “to have new experiences” — 31 percent.”

We are not frequent travelers but even in our brief sojourns internationally we have identified two countries in which we could easily continue our retirement. Should a subsequent administration continue the acceleration of government interference and domination in the same fashion as Mr. Obama has, those percentages of people “considering a move within the next five years” will likely increase dramatically.

Whether you agree with Mr. Trump or not, you must concede that the massive incursion of illegal immigrants has not brought us the best and the brightest of other countries, or even the financially able. And conversely, you also must concede the growing number of expatriates are generally taking wealth, skill and success with them to other countries to the detriment of the United States.

You might want to consider telling the political class to wake up.