I heard the rumor the other week. A number of wealthy Americans are leaving, or making plans to leave, the country. The player-haters can’t wait (of course). Consider the following comment that appeared on DemocraticUnderground.com:
LEAVE. Take your money and go. America will survive without you…
So rather than ruin our country for the other 90% whom you despise. Go away. Take all of your precious money and go elsewhere. Even if it means depression we will be better off in the long run without your manipulation of our government just for the sake of having your cake and eating it too.
And it appears some politicians can’t wait for the rich to leave either. On June 11, CNN Money senior writer Jeanne Sahadi talked about the 2008 U.S. presidential candidates’ proposed tax policies. She wrote:
But voters really want to know one thing: How would the presidential candidates’ views trickle down to their tax bills? A report released Wednesday by a nonpartisan policy group in Washington, D.C., takes a big first step toward answering that question.
According to the Tax Policy Center’s findings, Sahadi wrote that under presumptive Democratic nominee for president Barack Obama:
High-income taxpayers would pay more in taxes, while everyone else’s tax bill would be reduced…
Obama’s plan would keep the 2001 and 2003 tax cuts in place for everyone except those making more than roughly $250,000, and he would increase the capital gains tax.
…the highest-income households – those with at least $603,000 in income - would see a dramatic decline in their after-tax income - a drop of 8.7%, or $116,000.
The CNN Money senior writer noted:
Jason Furman, a newly appointed senior economic adviser to Obama, said his preliminary response is that the report’s findings bear out what Obama’s campaign has been saying: that he’s for the middle class.
At the expense of the rich, apparently. Just this afternoon, the Associated Press reported:
Democratic Sen. Barack Obama on Friday called for higher payroll taxes on wage-earners making more than $250,000 annually, a step that would affect the wealthiest 3 percent of Americans.
The presidential candidate told senior citizens in Ohio that it is unfair for middle-class earners to pay the Social Security tax “on every dime they make,” while millionaires and billionaires pay it on only “a very small percentage of their income.”
The 6.2 percent payroll tax is now applied to all wages up to $102,000 a year, which covers the entire amount for most Americans. Under Obama’s plan, the tax would not apply to wages between that amount and $250,000. But all annual salaries above the quarter-million-dollar amount would be taxed under his plan, Obama said.
I know what you may be thinking. It’s about time the rich starting paying their fair share of taxes. However, last fall, the Washington, D.C.-based tax research organization The Tax Foundation looked at the latest release of Internal Revenue Service data on individual income taxes. In 2005:
The top-earning 25 percent of taxpayers (AGI over $62,068) earned 67.5 percent of the nation’s income, but they paid more than four out of every five dollars collected by the federal income tax (86 percent). The top 1 percent of taxpayers (AGI over $364,657) earned approximately 21.2 percent of the nation’s income (as defined by AGI), yet paid 39.4 percent of all federal income taxes. That means the top 1 percent of tax returns paid about the same amount of federal individual income taxes as the bottom 95 percent of tax returns.
Stephen Moore, a senior economics writer for the Wall Street Journal editorial board and a contributor to CNBC, wrote in the November/December 2007 issue of The American magazine:
Yes, income in America is skewed toward the rich. But taxes are skewed far, far more. The top 5 percent pay well over half the income taxes.
Maybe the rich ain’t so bad after all. Get rid of them, and who will pay for all those precious government programs?
But the question still remains. Are rich Americans leaving, or planning to leave, the country? Consider a poll conducted by Zogby International which asked adult Americans if they had ever considered moving outside the United States. The survey, which had more than 115,000 respondents, excluded anyone relocating offshore for less than two years and anyone who relocated because of government requirements, the military or their jobs. Bob Bauman of offshore experts The Sovereign Society wrote on October 16:
The Zogby results are shocking – especially compared to the entire U.S. population (now about 303,116,000). The numbers below are for households, not individuals.
• 1.6 million U.S. households already decided to move offshore and are headed in that direction.
• Another 1.8 million households are seriously considering moving and are likely to do it. Many have taken preliminary steps.
• 7.7 million households are “somewhat seriously” considering moving and “may” do it.
• Nearly 3 million households are seriously considering buying a vacation home or other property outside the United States. Another 10 million are “somewhat” seriously considering it.
This means that almost 10% of U.S. households are considering leaving the country. Another 10% are considering living outside the country part-time. Most analysts are ignoring this silent massive emigration.
These would-be emigrant households plan to spend an average of US$260,000 on buying or building a house. They’re also planning to spend at least US$36,000 annually on living expenses outside the United States.
In total, they represent hundreds of billions of dollars leaving the U.S. economy each year.
Bauman quoted John Gaver of ActionAmerica.org, who said:
The problem is that increasingly, the wealthy perceive that they are under attack by their own government and they are taking the only rational option left open to them. They’re taking their wealth and leaving.
And regarding the number of wealthy Americans who have already left the country, Bauman wrote:
Every year, about 250,000 U.S. citizens and resident aliens leave America to make a new home in some other nation.
In 2005, the U.S. Bureau of the Census upped this estimate. They guessed that over 350,000 U.S. citizens and resident aliens would leave the United States permanently.
On February 15, John Gaver wrote in a piece on ActionAmerica.org:
Wealthy US citizens continue to leave the US at an alarming rate…
Tax haven countries are recording significantly larger numbers of US applicants for permanent residence or second citizenship every year. Keep in mind that most of those expats are wealthy, since poor people can’t afford to leave. In fact, millions of poor people risk their lives in the back of trailers or crossing Arizona desert every year, to take advantage of our increasing welfare state. It is the wealthy, who are leaving and they represent lost US investment dollars and subsequently, LOST US JOBS…
When big money is forced out of the US, it is the average citizen who has to make up the difference in higher taxes. The Income Tax and US government attacks on wealth is costing you money in more ways than you know.
Sources:
“What they’ll do to your tax bill”
Jeanne Sahadi
CNN Money, June 11, 2008
“Obama wants payroll tax on incomes above $250,000”
Charles Babington
Associated Press, June 13, 2008
“Summary of Latest Federal Individual Income Tax Data”
Gerald Prante
The Tax Foundation, October 5, 2007
“Guess Who Really Pays The Taxes”
Stephen Moore
The American, November/December 2007
“Why the Well-to-Do Are Escaping America”
Bob Bauman
The Sovereign Society, October 16, 2007
“US Taxpatriates Compiled by the Internal Revenue Service”
John Gaver
ActionAmerica.org, February 15, 2008
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