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Andy note: "Blast from the past - Best of Eddie" - This one is originally from April 2010 . If there's an old post from Eddie you'd like to see up again shoot me a message.

I've often wondered why there's no unrestricted free agency for taxpayers. You know, like an athlete fulfills his contract and then becomes an unrestricted free agent and is free to sign with the highest bidder, or the team he feels will be the best fit. Why can't a tax payer, after paying into the system a certain number of years or reaching a certain threshold of taxes paid, sign with a lower-tax jurisdiction or the country he thinks will be a better fit?

Think about it. The only people the notion would appeal to are the top earners, so there would be competition on the part of other countries to attract that kind of "talent" with the promise of lower taxes, better climate, etc... American corporations (since they've all but abandoned manufacturing) enjoy this freedom. Steve Ballmer of Microsoft even went so far as to say that if the IRS messed around with corporate taxation (specifically, an American corporation's ability to book profits in low-tax international jurisdictions but write off losses against highly-taxed American earnings) that the company could close down and re-open the next week in another country.

Doesn't it seem fair that individual tax payers should be afforded the same opportunity? I'm making this point because some truly frightening things have come out on the taxation front this week.

Depending upon whom you believe, the new health care reform bill calls for the addition of somewhere in the neighborhood of 16,000 new IRS agents. These guys will be there primarily to enforce fines and penalties. Whether you are for or against the bill (and I'd rather this not devolve into a healthcare debate), I'm sure we can all agree that more IRS agents - FOR ANY REASON - is a bad thing.

Next, I present you with this chilling video and the accompanying article (it's short; read it):

...continue to use new and enhanced techniques to bring people into the tax system...

If that doesn't make you shiver, I don't know what will. The last time someone in government was extolling the virtues of "new and enhanced techniques", it was that dickbag Cheney telling the world that we were suddenly okay with torture.

The bottom line is, these guys really believe that it's their money, even though you earned it. They're just letting you hold it for a while. But if you try to hide their money, well, they're gonna come down on you like a ton of bricks.

Finally, I wanted to point out something Paul Volcker said the other day. Don't shoot the messenger. Volcker is pretty much a straight shooter and is only saying what everyone knows in the back of their mind already. Taxes are going to be raised. And not just that, we should get ready for a European-style VAT here in the States. Not instead of our current system of taxation, but in addition to our current system of taxation.

The years of deficit spending, dipshit wars, bank bailouts and other corporate welfare, and a bevy of government giveaways have finally caught up with us, and it's time to pay the piper. And for individual tax payers, there will be no escape. The days of true wage slavery are fast approaching.

Somebody get my agent on the phone...

Comments (49)

  • ideating's picture

    - There is "free agency"; give up your American citizenship and you can move where ever you want and pay whatever taxes you want. It's probably a little painful and time-consuming but it's definitely an option.

    - There are situations where more IRS agents are a good thing - when there aren't enough for whatever reason. Do I know that we need more/less? No idea. But to say out of hand that it's always a bad thing to have more IRS agents is just stupid.

    - Taxes are still ridiculously low here, both historically for the US and compared to other developed countries. This is coming from a unmarried, no kids guy living in NYC, paying the highest tax rate. Believe me, every pay check is painful but that's reality.

    - Loving the completely unwarranted comparison between new tax collection techniques and government-sanctioned torture. Completely warranted and not exaggerated at all.

  • tandaradei's picture

    I actually agree with Edmundo, but the idea of 'free agency' for taxpayers is so idyllic it makes me laugh. That is not how democracy works, Im afraid.

  • Edmundo Braverman's picture

    ideating,

    I always enjoy our exchanges. Renouncing citizenship has never been a simple matter, but now it is next to impossible. In years gone by, when a U.S. citizen renounced his citizenship, the government reserved the right to determine whether he was doing it strictly for tax purposes, and if so, could tax him a certain percentage for a number of years post-renunciation.

    Now when an American citizen renounces, the government demands 35% of that citizen's worldwide assets in cash, immediately. Free country, my ass.

    I don't know how "historical" you want to get, but the fact is our country made it 136 years without an IRS, and without personal income taxation. In that time, we became the glowing beacon on the hill, an industrial powerhouse, and a symbol of hope to the world. Now, not so much.

  • jtbbdxbnycmad's picture

    Edmundo,

    The lunacy goes further.

    The US is the only developed country IN THE WORLD to impose tax on FOREIGN-EARNED income.

    The American passport becomes a complete liability when it comes to working abroad.

    It's absolutely incoherent: people (abroad and locally) deride the dearth of cosmopolitan knowledge and experience amongst Americans, but don't stop to think that Americans have NO incentive to go ply their trade abroad and learn foreign arts: look at that pathetic income tax!

    Sadly, between the Republican disdain for the un-American and the Democratic love of taxes, this isn't likely to get any better.

  • In reply to Edmundo Braverman
    ideating's picture

    Don't know enough about renunciation tax policy to comment unfortunately.

    Re: historical tax rates - yes, the IRS didn't exist until 136 years ago but the US government was also puny by modern standards. You can disagree with the government's current spending plans/policies but at the end of the day, we have a huge and mounting deficit that needs to be addressed. A comparable time period for today would be the 50s, with the ridiculous amount of WW2 debt still piled on. The top income tax rate was >90% for the decade before dipping into the 70s for most of the 60s and 70s. A top marginal tax rate of 35% currently is not THAT bad by comparison.

    You can also disagree with the politics of an increasingly socialized medical system but the fact is that we are moving to a certain level of government services and we need to pay for it. I would argue that this is a natural evolution in a country's lifecycle, much like moving from an agricultural to an industrial to a service-based economy. You can argue whether it is good or bad, but that is an argument on values that you can't really win - it's the reality no matter what individually we may want or believe.

    The days of libertarian politics driven by the fronter mentality and a small government supported solely on tariffs on coffee and sugar are over.

    Edmundo Braverman:
    ideating,

    I always enjoy our exchanges. Renouncing citizenship has never been a simple matter, but now it is next to impossible. In years gone by, when a U.S. citizen renounced his citizenship, the government reserved the right to determine whether he was doing it strictly for tax purposes, and if so, could tax him a certain percentage for a number of years post-renunciation.

    Now when an American citizen renounces, the government demands 35% of that citizen's worldwide assets in cash, immediately. Free country, my ass.

    I don't know how "historical" you want to get, but the fact is our country made it 136 years without an IRS, and without personal income taxation. In that time, we became the glowing beacon on the hill, an industrial powerhouse, and a symbol of hope to the world. Now, not so much.

  • In reply to Edmundo Braverman
    fhurricane's picture

    Edmundo Braverman:
    ideating,

    I always enjoy our exchanges. Renouncing citizenship has never been a simple matter, but now it is next to impossible. In years gone by, when a U.S. citizen renounced his citizenship, the government reserved the right to determine whether he was doing it strictly for tax purposes, and if so, could tax him a certain percentage for a number of years post-renunciation.

    Now when an American citizen renounces, the government demands 35% of that citizen's worldwide assets in cash, immediately. Free country, my ass.

    I don't know how "historical" you want to get, but the fact is our country made it 136 years without an IRS, and without personal income taxation. In that time, we became the glowing beacon on the hill, an industrial powerhouse, and a symbol of hope to the world. Now, not so much.


    just saying theoretically,what if you moved all your assets to bermuda,moved there, showed up at the us consulate and said "peace bitches"? How could the us govt assert their claim?

  • In reply to fhurricane
    Edmundo Braverman's picture

    fhurricane:
    just saying theoretically,what if you moved all your assets to bermuda,moved there, showed up at the us consulate and said "peace bitches"? How could the us govt assert their claim?

    LOL.

    I'll refer you to UBS customer service for the answer to that one...

  • econ's picture

    Edmundo Braverman:
    Finally, I wanted to point out something Paul Volcker said the other day. Don't shoot the messenger. Volcker is pretty much a straight shooter and is only saying what everyone knows in the back of their mind already. Taxes are going to be raised. And not just that, we should get ready for a European-style VAT here in the States. Not instead of our current system of taxation, but in addition to our current system of taxation.

    The years of deficit spending, dipshit wars, bank bailouts and other corporate welfare, and a bevy of government giveaways have finally caught up with us, and it's time to pay the piper. And for individual tax payers, there will be no escape. The days of true wage slavery are fast approaching.

    Do you think they'll be a significant number of people who will move to other countries? I was born and raised in the US (and only speak English), but if taxes got high enough here in the states, I'd definitely be willing to work/live in plenty of other countries. The truth is, I'd be willing to do this now, but it seems like there's not tons of good opportunities (feel free to correct me if I'm wrong). As we keep approaching a Nanny State, I wonder if more individuals and businesses will setup shot elsewhere, leading to more opportunities for people like myself?

  • Edmundo Braverman's picture

    ideating,

    I actually agree with you on every point. (except you misunderstood the inception date of the IRS, which was 1912 - 136 years into our country's history and only 98 years ago). Libertarianism is a lost cause in the U.S. and the vast majority of the population is in favor of the expanded government services that we have today. I also agree that the deficit is a monster, and taxes have to be raised to tame/slay it.

    What I can't understand is why we can't let free men and women opt out without extorting 35% of their worldwide assets. If it's such a great country, why do you have to pay to leave??? The government knows the best and brightest would hit the doors the minute they weren't barred by mafia-level extortion.

    Renunciations were up 9,000% in the decade leading up to the 35% rule (1998-2008), so plenty of people clearly want to GTFO.

    Believe me, dude, these things are hard to come to terms with. My dad and I both fought for the U.S. in the military. I accept that the country has gone in a different direction, and that the things we believed in no longer really matter, but it really chaps my ass that I can't even raise my family somewhere else without paying what amounts to "tribute".

  • In reply to econ
    chifin's picture

    econ:
    Edmundo Braverman:
    Finally, I wanted to point out something Paul Volcker said the other day. Don't shoot the messenger. Volcker is pretty much a straight shooter and is only saying what everyone knows in the back of their mind already. Taxes are going to be raised. And not just that, we should get ready for a European-style VAT here in the States. Not instead of our current system of taxation, but in addition to our current system of taxation.

    The years of deficit spending, dipshit wars, bank bailouts and other corporate welfare, and a bevy of government giveaways have finally caught up with us, and it's time to pay the piper. And for individual tax payers, there will be no escape. The days of true wage slavery are fast approaching.

    Do you think they'll be a significant number of people who will move to other countries? I was born and raised in the US (and only speak English), but if taxes got high enough here in the states, I'd definitely be willing to work/live in plenty of other countries. The truth is, I'd be willing to do this now, but it seems like there's not tons of good opportunities (feel free to correct me if I'm wrong). As we keep approaching a Nanny State, I wonder if more individuals and businesses will setup shot elsewhere, leading to more opportunities for people like myself?

    Can anyone suggest the best/most attractive country (financially/lifestyle) to relocate at this point in time?

  • moneyneversleeps2's picture

    I can't speak for everyone but the day Uncle Sam let's me become a "free agent", I'm not sending him one red cent.

    You are damned if you do and damned if you don't. Pay low american taxes and fork over money for tuition, medical bills, car maintenance bc of potholes, empty out your savings when you loose your job or pay higher taxes, and don't pay for any of that crap.

  • PA's picture

    ^^ what is the best country then?

  • Jimbo's picture

    "Now when an American citizen renounces, the government demands 35% of that citizen's worldwide assets in cash, immediately. Free country, my ass."

    I'm not sure this is exactly true. You are immediately marked to market on all your assets, but that might be at the capital gains rate. Given what the market's done, now might not be a bad time.

    But the govt catches you in its tax net for the next several years (10?) even after you've given it up.

    And I don't really think the US's taxes are that low.

  • Edmundo Braverman's picture

    Jimbo,

    You're actually referring to the old way they did things. If you renounced prior to the 35% rule, they could examine your income for the next 10 years and asses taxes against you if they determined that you renounced in order to avoid taxation.

    As of two years ago, they no longer want to be bothered keeping track of someone for 10 years in the off chance they might get some tax money out of them. So now they just demand 35% of global assets regardless of the reason for renunciation. Obviously this change has been kept quiet, but the expat community is intimately aware of it.

  • moneyneversleeps2's picture

    @PA. Most *important* European countries are like that. Germany, France, Austria, etc. Switzerland is even better, they only pay about 10% more taxes than we do and have the same free top notch schools, health care, as the greedier countries.

  • In reply to chifin
    breakinginnew's picture

    from what i have heard Switzerland will basically negotiate your tax rate with you (like edmundo suggests)

    also life there is pretty amazing

    note that both of those are mostly only true if you are really really really wealthy

  • jhoratio's picture

    As U.S. citizens, we all enjoy, among many other things, the protection of the most advanced and powerful military in the world. Here's a newsflash for all the anti-tax fucksticks out there: that shit ain't free. Uncle Sam isn't "taking your money." You are paying for what we have collectively decided to buy. I'd like to see you refuse to pay your condo association fees. I wonder how that story would end.

  • ke18sb's picture

    Whining about taxes, in the manner above, makes you sound like a bunch of entitled spoiled little brats. Aside from the fact that the vast majority of your point are incorrect, if you were to leave america what would your options even be? Where are you gonna move and obtain a similar job? How are you going to get a work visa in said country? Will you even be able to have the same earning potential? I'm pretty positive you would all be worse off. Think before you write sophomoric rants.

  • ke18sb's picture

    I'd also like to add that I'm glad the IRS is cracking down on the tax laws. What is the point of have a legal system where by the wealthy break all the rules.

  • In reply to ke18sb
    jhoratio's picture

    ke18sb:
    I'd also like to add that I'm glad the IRS is cracking down on the tax laws. What is the point of have a legal system where by the wealthy break all the rules.

    Agreed. Having more IRS agents going after the significant fraud that's out there is a pretty easy way to increase overall tax receipts without actually raising taxes.

  • ke18sb's picture

    All self entitled WASPS need to realize they were born on third and didn't hit a triple, and for the record I am a rich white kid, I'm just grounded enough to realize I've been very lucky in life.

  • econ's picture

    Why are people getting so upset that some of us object to the level of taxation that takes place? I don't think any of us are denying the fact that we receive benefits from the government, and it's a strawman to suggest otherwise. The point is about the level of taxation that takes place, and government spending in the US is already somewhere between 35%-50% of GDP. I understand that some of you are all for higher taxes, more government programs, and what not. And that's totally fine, I'm not trying to knock your political opinions. I just wish you'd extend me the same courtesy.

  • Beef's picture

    All Liberals should read Atlas Shrugged before they go to the poles.

    And everyone should read the dictionary before they spell "poll" wrong.

    Ok, so let's say I am a double-citizen of two countries, Country X and the U.S. What stops me from renouncing my U.S. citizenship, moving to Country X without paying any fees, and never reporting a dime of income to the U.S.?

    Wall Street leaders now understand that they made a mistake, one born of their innocent and trusting nature. They trusted ordinary Americans to behave more responsibly than they themselves ever would, and these ordinary Americans betrayed their trust.

  • ke18sb's picture

    I'm pretty sure your employer submits info on their employees. Hence the IRS would know.

  • Beef's picture

    Why would your employer (a company in Country X) submit info to the IRS? The IRS has no jurisdiction outside of the U.S.... if I'm a French company in France, I'm not gonna submit W-2 forms to every country's tax authority. All I'll worry about is France (or maybe the E.U., not sure how that works). Right?

    Wall Street leaders now understand that they made a mistake, one born of their innocent and trusting nature. They trusted ordinary Americans to behave more responsibly than they themselves ever would, and these ordinary Americans betrayed their trust.

  • Edmundo Braverman's picture

    In order to renounce, you have to first secure citizenship in another country (as in your example), and then you must go to an American embassy in a foreign country (perhaps your country of dual citizenship, but it doesn't have to be) and formally renounce. Once you do that, there is a shit ton of paperwork and the bulk of it is related to taxation and wealth disclosure.

    I think what you're talking about Beef is not renouncing, just not reporting your foreign income. You are correct that your foreign employer doesn't give a frog's fat ass about the IRS, but you'll be violating American tax law if you fail to report the income. And trust me (I live in France), the IRS has become really zealous lately about income and asset reporting. They even want every foreign bank account (interest bearing or not) reported.

  • jtbbdxbnycmad's picture

    What struck me about the video was the zeal with which this staffer felt that by persecuting income-earning Americans, he was actually doing some sort of good.

    And Beef, you beat me to it: it's pretty ridiculous for someone to advocate reading an opprobriously tedious book as common knowledge, and spell out "poles". It's either a typo, or a fundamental misunderstanding of what the hell a poll is.

    This really does prove to be a dilemma for people with dual citizenship. Up until recently, the incentives to be American were huge: this was truly a country where people earned first, borrowed second, and people believed in success. America's doors were open and so was its economy. Now you have IRS staffers like the drone in the video, acting like a leech on the people, and a general jingoistic moan from the incompetent: "what, you don't want to be American? F*ck you! Go somewhere else!".

    They don't seem to realize that I already did that. I'd love to come back to the US if it tries to return to the country it used to be, but the people have spoken, and it looks like they don't want to be that country anymore.

  • Beef's picture

    This is a complete tangent to what we're talking about, but it seems to me like our government is completely broken. I almost feel like we should whip out the constitution, send 99% of today's politicians to an island somewhere, and start from scratch with a system that is not bipartisan and idiotic.

    Wall Street leaders now understand that they made a mistake, one born of their innocent and trusting nature. They trusted ordinary Americans to behave more responsibly than they themselves ever would, and these ordinary Americans betrayed their trust.

  • 2007Grad's picture

    http://www.newyorker.com/online/blogs/johncassidy/...

    50% of the people in this country pay nothing in taxes or even end up receiving money from the government, so why do they receive benefits ? Why should these people even be allowed to vote ?

    I don't care what the rates were in the 70's and what Europe is like. There are too many freeloaders in this country already, and all they're going to do from this point onward is vote for higher taxes on the rich and more benefits for themselves.

    This country has become fuckin' pathetic.

  • econ's picture

    So, let me make sure I get this straight. If you decide to "bounce" on the US, they get 35% of your worldwide assets? I guess that means you're best off making this move fairly early in your career, when you have little to no assets.

    By the way, what does it mean to renounce your US citizenship? How easy is it to become a US citizen again?

  • Edmundo Braverman's picture

    Once you renounce, I doubt they'd ever grant you citizenship again. And they will probably do what they can to fuck up your life going forward. There have been instances in the past where they've forbidden renounced citizens re-entry (even on vacation, etc...) to the U.S. Nowadays, they'd probably just put you on some dipshit "No Fly" list and fuck up your travel worldwide.

    Guys, I never meant to make this a discussion about renunciation or whether the U.S. was a worthwhile country to be a citizen of, etc... It was merely a post on the inevitability of the coming tax increases and a commentary on how a little equality with the rights of a corporation could benefit some tax payers.

  • In reply to jtbbdxbnycmad
    fhurricane's picture

    jtbbdxbnycmad:
    What struck me about the video was the zeal with which this staffer felt that by persecuting income-earning Americans, he was actually doing some sort of good.


    I once met an irs agent. He said that there many "mini madoffs" out there from the "hot dog stand owner, to the dry cleaner, etc." He was beiing serious, not making a joke.

    I still think that's funy, but also a little scary how hardcore the dude was. Seriously,he talked about "cheaters" like the worst people in the world.

  • In reply to jtbbdxbnycmad
    fhurricane's picture

    jtbbdxbnycmad:
    What struck me about the video was the zeal with which this staffer felt that by persecuting income-earning Americans, he was actually doing some sort of good.


    I once met an irs agent. He said that there many "mini madoffs" out there from the "hot dog stand owner, to the dry cleaner, etc." He was beiing serious, not making a joke.

    I still think that's funy, but also a little scary how hardcore the dude was. Seriously,he talked about "cheaters" like the worst people in the world.

  • In reply to fhurricane
    jtbbdxbnycmad's picture

    fhurricane:
    jtbbdxbnycmad:
    What struck me about the video was the zeal with which this staffer felt that by persecuting income-earning Americans, he was actually doing some sort of good.


    I once met an irs agent. He said that there many "mini madoffs" out there from the "hot dog stand owner, to the dry cleaner, etc." He was beiing serious, not making a joke.

    I still think that's funy, but also a little scary how hardcore the dude was. Seriously,he talked about "cheaters" like the worst people in the world.

    Fhurricane, you're right, it's funny and scary at the same time.

    Fortunately, not everyone in the government is like this. Whilst the CIA in Bolivia is not reassuring (find the video of how they were unable to figure out on time that a plane carrying US missionaries was NOT full of drug smugglers - and by too late, I mean that the Bolivian air force shot it down and killed a newborn), some of the decision makers at the international level DO have their stuff together (basically, through my work encounters).

    Now, your usual staffer that you find in the US... that's probably another story (as you've described).

  • nrc_chicago's picture

    Edmundo,

    You're missing a key point in your argument. You are operating under the assumption that you - alone - are responsible for your success and your high salary. That through hard work alone you've climbed to the top and deserve to keep all your earnings. This is a seriously flawed assumption.

    I have no doubt that you and most self-made wealthy people work very hard (I'm in top bracket myself coming from a middle class background), but to imply that you owe nothing to the society in which you made your wealth is hypocritical. The reason that i-banking/trading/PE jobs exist or that an entrepreneur with a great idea can make a fortune is due to our highly developed and complicated economy. An economy that is the result of generations of investment in infrastructure, education, and most importantly, a social compact among citizens that provides for a relatively stable environment in which investment and growth can take place. Without a stable social situation and an educated workforce, there is no ability to develop top-level jobs. Look at Africa or the Middle East - these are countries where most of those at the top gained wealth and power through corruption or force. Very few "self-made" people exist in those nations, unless self made is rising through the military and looting by force.

    We have a social compact in the U.S. and most developed nations (where would you propose moving to by the way??) where the rich subsidize the middle and the poor. The rich pay to educate the children of the poor so that those children can provide intellectual capital and skilled labor to the businesses of the rich (or future rich). The rich pay for roads everyone can use so the poor can commute to work and the rich can leverage that labor to gain further wealth. The rich pay for national defense and police because they have the most to lose. The rich make sure people are fed, housed and given basic medical care so that they don't feel hopeless - hopeless people turn into martyrs and suicide bombers.

    Could Bill Gates have started a software empire in Zimbabwe, Warren Buffet made a fortune investing in Sudanese markets? Likely, they wouldn't have even gotten the chance to try. You pay taxes to the US because you have benefited from living here. You grew-up able to go to school instead of searching for food and water because our society makes such things possible. You make money in a market that is protected by a legal system and social compact that allows predictability. There is a cost to this. If you want to live in a country where the rich can pay nothing, look to Africa. You may keep more of your income, but watch out for the revolutions, coups, arbitrary confiscation of your hard-earned property, collapse of your markets due to failure to invest in infrastructure or defense, difficulty finding educated workers to grow your business, the list goes on and on.

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