Preventing Taxpaying Milk Cows from Seeking Greener Pastures
By Nick Giambruno, Senior Editor, International Man
As the world rapidly evolves, many Americans find themselves considering the feasibility of new horizons. This article delves into the unique challenges posed by the U.S. taxation system that have resulted in a growing number of citizens exploring their options for departure.
The burden of American citizenship comes with a distinct disadvantage: U.S. citizens are the only individuals worldwide subjected to a comprehensive system of taxation based on citizenship rather than residency. Consequently, if an American and an Italian move to Singapore (or any foreign nation) and earn income there, the American is still obligated to file and pay U.S. taxes, while the Italian faces no tax liability to Italy. This disparity highlights a significant taxation anomaly that affects Americans alone.
Each year, Americans must navigate a labyrinth of complex tax forms often requiring the guidance of costly tax preparers. Even minor errors can trigger severe penalties, amounting to what many perceive as a cruel form of punishment.
This predicament extends to U.S. corporations as well, which contend with the highest effective corporate tax rates among developed countries. Compliance with burdensome regulations, such as the Foreign Account Tax Compliance Act (FATCA), imposes substantial costs on foreign companies wishing to engage with American clients. The hefty compliance expenses, along with the potential for significant penalties, have driven many foreign firms to sever ties with their American customers altogether.
Moreover, extensive SEC regulations have restricted access to various global investment prospects, further trapping Americans in a convoluted system. The additional burdens imposed by the Dodd-Frank Act only exacerbate this situation. Collectively, these ever-expanding regulations serve to drive a noticeable increase in U.S. citizens renouncing their citizenship—something that should come as no surprise.
Blocking the Exits
In a surprising move in 2010, the U.S. government instituted a $450 fee for those who wished to renounce their citizenship—a first in U.S. history. This fee was drastically raised to $2,350 in late 2014—a more than fivefold increase—marking a cost that is over twenty times higher than the average in other developed nations.
This increase signals yet another strategy aimed at curtailing options as the opportunity window narrows. The State Department justified this hike by citing a surge in renunciations, consuming an increasing amount of consular resources. Sadly, the latest 422 percent fee increase likely heralds even steeper charges in the future.
The political climate in the U.S. virtually guarantees heightened government spending fueled by welfare and warfare, which further burdens an already financially strained system. As demands for renunciations grow, the consequent increase in fees appears inevitable. Thus, potential renunciants might find the current fee to be the lowest it will ever be.
Considering the hefty price tag, one could view this fee as the cost of obtaining freedom from the intricate U.S. Tax Code and an unwieldy government—much like how individuals in earlier eras purchased their freedom from servitude.
Peter Schiff Was Right
Peter Schiff, who correctly anticipated the fee hike, articulated this sentiment clearly. During an interview in early 2013—well before the increase—Schiff remarked: “You have to fill out a form to renounce your citizenship, and those forms used to be free. Now they have a cost. If they can impose a price on that form, it could escalate beyond reason, effectively making it impossible to leave. The government is striving to penalize Americans wanting to renounce their citizenship, indicative of a nation in decline. Fifty years ago, American citizenship was cherished; now, many are willing to pay substantial sums to rid themselves of it.”
Fortunately, there exists a solution that allows individuals to enjoy the tax benefits associated with renunciation without relinquishing citizenship or leaving the U.S.—termed “America’s Tax-Free Zone.” Although it may sound too good to be true, it is entirely legitimate.
Peter Schiff has moved a business to this Tax-Free Zone, and an increasing number of everyday Americans—business owners, investors, and entrepreneurs—are successfully minimizing their federal and state tax burdens here. The movement is steadily gaining traction.
Sincerely,
Nick Giambruno
for Economic Prism
[Editor’s Note: This remarkable opportunity explains why we have partnered with Peter to create a complimentary video. To understand more about how you can reclaim your freedom, be sure to click here. The original article appears at internationalman.com.
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