That being said, all this “what sort of red-blooded American renounces her citizenship over tax?” stuff is a wee bit much. It is the Government of the United States, uniquely in the civilized world, that binds citizenship to tax. An American who falls in love with an Uzbek or takes a job helping starving Third World children in Southern Sudan remains liable for U.S. taxation and has to file U.S. paperwork that is, in fact, more onerous than that required of U.S. residents, and is about to get more so.
Is she really lowering her tax burden by moving to Austria and/or London?
That’s the wrong question. As Jonah deduces, neither Austria nor the United Kingdom are famous tax havens. But it’s not the “burden” — the tax rate — but a more basic premise. Elsewhere in the world, there are two generally accepted bases for taxation: residency and source of income. Most countries tax you if you live within their borders, some tax you if you live elsewhere but earn money within their jurisdiction, but only America claims the right to tax you simply for being American — even if you, say, live in Belgium but drive over the border to work in Luxembourg every day. This is unique to the United States: Spain taxes you if you’re a resident of Spain; Slovenia taxes you if you’re a resident of Slovenia; but America taxes you if you’re an American who’s working as a teacher in Gabon. You’re at permanent risk of double taxation, and the fines for minor and accidental infraction are arbitrary and confiscatory.
As I say, no other developed country does this — although Eritrea does.
On January 1st 2013, all this gets worse. The FATCAT act (technically, it’s FATCA, but we all get the acronymic message) makes it not worth a foreign bank’s while to do business with Americans. I don’t just mean Mitt Romney’s chums in the Cayman Islands, but an American of modest means on a two-year secondment to Hong Kong requiring a small checking account with which to pay local utility bills — or a small businessman attempting to expand his distribution in Canada.
Maybe you don’t care about these people: Why can’t the business guy expand his business in Michigan or Idaho like true-blue Americans would do, etc? But at a time when America is ever more mortgaged to foreigners, making it more difficult for Americans to go out and earn money from the rest of the planet doesn’t seem a smart move. Unless you’re planning on making U.S. citizenship a combination food-stamp card. American exceptionalism and American isolationism are not the same thing.
More to the point, the 2008 “exit tax”, the existing foreign bank-account disclosure paperwork, the new FATCAT act, and even the recent habit of publishing the names of those who renounce citizenship are simply inappropriate in a free society. Or to go back to Mark Krikorian’s original post:
In a nation like ours, where membership is based on adoption of a combination of ideology and culture, one who renounces that membership has completely severed himself from us and can no longer claim any connection.
Fair enough. But if, as Mark says, American nationality is based on “ideology” rather than blood, then pray tell in what sense is this ever more onerous global tax regime compatible with American ideology? Does American ideology decree that Frenchmen and Swedes and Canadians should enjoy more freedom in these matters than Americans? Yes, yes, Denise Rich is ghastly, and the Facebook guy no doubt, but we’re conservatives around here, aren’t we? A bit of first-principles analysis wouldn’t go amiss.
Oh, and a P.S. on that “completely severed” and “no longer claim any connection” stuff: Under current U.S. law, Austrian citizen Denise Rich can invest in a U.S. business — like, say, buying a conservative magazine — and pay tax on her U.S. profits at a lower rate than U.S. citizens do, a distinction designed to encourage “foreign investment.” Less taxation with no representation! U.S. tax law makes U.S. citizens second-class citizens in their own country. What bit of “American ideology” does that come under?