In 1996, under President Clinton, Congress passed “The Health Insurance Portability & Accountability Act and the Immigration and Nationality Act. Provisions of this legislation include allowing Uncle Sam to tax ex-citizens for up to 10 years, and prohibiting ex citizens from ever visiting the States again. All Uncle Sam has to do, in either case, is deem that you left for tax related reasons. A “virtual Berlin Wall”, this has been called.
Interesting, and pretty obvious what the objective is here. But did it work? Apparently not well enough. In 2001, under President Bush, The Patriot Act was passed. One of its provisions says the government can seize your assets (and you have no right to appeal) simply by deeming your business a “terrorist organization”. Who would of thought that a bunch of cave-squatting “evil-doers” could have had such a profound impact on the most powerful nation in the world? Couldn’t there be a more plausible explanation? Yes, there could. The answer can be found, strangely enough, by following the money.
The more plausible explanation is capital flight. The USA has one of the highest corporate income tax rates in the world. In addition, the USA is one of the few countries that taxes the income of its citizens regardless of where in the world that income is earned. And taxes aren’t the only thing driving the wealthy, their investment capital, their talent, and the jobs they create offshore. Many Americans today are finding that both offshore investment and living offer benefits that are no longer available in the United States.
“According to the US Census Bureau, as reported in the “2000 Statistical Yearbook of the Immigration and Naturalization Service”, the wealthy are leaving the United States in record numbers. According to that report, in 2002, roughly 363,000 US citizens and permanent residents quietly left the United States permanently. Now granted, not all of those 363,000 expatriates were rich. But, think about it. How many do you think were poor?… How many do you think were even middle class?” … “Furthermore, that INS report indicates that this is the highest expatriation rate ever. Other data, such as records of citizenship and permanent residency applications at key foreign consulates, support these facts and some even indicate that the problem is much worse than suggested by the US Census Bureau. But what’s worse, is that this exodus appears to have increased significantly since that report; most notably, since the enactment of the USA Patriot Act.” (additional info)
It would be nice if the Patriot Act was what it purports to be, just a measure to help fight terrorism. But for anyone even vaguely familiar with history it raises a red flag when the government asserts that everyone must be spied on and that asset forfeiture laws must be enacted in order to fight “evil-doers”, especially when our government has so often been found aiding and abetting them in the past. Upon following the money, we discover that there is indeed a motive behind the aforementioned legislation. It’s just not the ostensible one. It’s more a matter of attempting to control a world that is on the brink of some massive power shifts in favor of countries like the BRICs. The United States has the most to lose here. And to add insult to injury, the US also has the baby boomer demographic, which is not only part of the reason the US has lost its status as a leader in production, but also part of the reason countries like the BRICs will eventually eclipse it going forward. And many of these retired boomers, along with many innovative entrepreneurs who have not yet retired, would love to take their fortunes overseas where they can stretch them alot further. This creates problems for the US, the dollar, and hence the entire global economy, since the dollar is the world reserve currency. Hence the legislative efforts in the US to curb the exodus.
But are the legislative efforts in the US really ameliorating the problem? Or will such draconian measures just expedite the outflux of wealthy innovators and capital? It will be interesting to see how this plays out. It doesn’t seem like the floods of unskilled illegals coming in across our southern borders represent much of a trade for what is being lost.