. . . they ain’t workin’ here no more.
As reported in the Wall Street Journal, a record number of U.S. resident renounced their citizenships and residencies last year — more than double the number who did so in 2011, the previous record-setting year. At 2,999, it’s still a fairly small number, but it is not insignificant. You can learn a lot about the United States from who wants to come here, but you can also learn something from who wants out.
As dumb as our rules regarding taxes on foreign-earned income are — the United States and North Korea are the only countries that attempt to tax their workers extraterritorial income — the proximate cause of this exodus seems to be FATCA, the Foreign Account Tax Compliance Act, which has made it next to impossible for many Americans to reside abroad for long periods of time. FATCA imposes burdensome reporting requirements on worldwide financial institutions when they do business with U.S. nationals, with the result that many overseas banks now simply refuse to open accounts for Americans. (I touched briefly on the case of new Swiss national Tina Turner in my report from Switzerland.) Nobody wants to be in business with the IRS unless they absolutely have to be, and overseas banks and brokerages do not have to be.
Our tax and banking rules are somewhere between cumbrous and outright oppressive. FATCA, a Baucus-Rangel collaboration, came as part of a particularly knuckleheaded law called the HIRE — that’s Hiring Incentives to Restore Employment — Act. (I would like to have congressional acronym writers horse-whipped.) HIRE offers subsidies to employers (certain politically favored employers) to sign on new hires (certain politically favored new hires) on the one hand, and on the other attempts to pay for this largesse by going after the alleged fat cats with overseas accounts. You’ll notice that in spite of the application of federal managerial expertise, the U.S. job market is not exactly on fire.
Our extraterritorial taxes and our invasive banking rules are violations of civilized norms. Our progressive friends are usually eager to imitate the Europeans, but not in this case: The wrong sort of people might benefit. (It is a measure of progressives’ warped worldview that the overseas institution they universally admire is British health care rather than Swiss tax-and-regulatory practices.) When it comes to immigration, we are importing poverty and, to some extent, exporting prosperity. That this is done in the name of the national interest would be the subject of some mirth if the price of our laughter were lower.