Chuck Schumer proposed the ex-Patriot Act, cosponsored by a bunch of
Senate Democrats and receiving positive praise, though not yet voting
support, from Senate Republicans. It states that the State Department
is allowed to determine that if somebody renounces their American
citizenship for tax reasons, they can be forced to pay a 30% capital
gains tax instantly and will be banned from ever entering America
again. This would be an escalation of a current law that states that
anybody wealthy who leaves the country needs to pay 15% of the value
of their property.
Details here:
http://en.wikipedia.org/wiki/Ex-Patriot_Act
I'd like to state from the outset that I don't think it's a
particularly good life choice to leave a country just to avoid
taxation on a major taxable event. On a Facebook-level sum of money,
the taxes aren't going to prevent you from doing anything because
you'll have enough money, and on a smaller sum of money that isn't
quite so life-changing, I'm not sure why anybody would think it's
worth it to leave a country just for that smaller amount of cash.
Maybe I overvalue the connection I have to my job, friends and
coworkers, but personally, I would only renounce US citizenship if I
were in a place in my life where there were a happiness-related reason
for me to go elsewhere and become a member of that society - either a
career that I want to build elsewhere as a member of that society, or
the desire to live in a culture that I've never had long term exposure
to (or that I have and like enough to want to be in - as many Jews do
with Israel, because being surrounded by other Jews and being a
citizen of that society gives you a sense of community that
individually-focused America doesn't have, for many people at least),
etc.
That said, on a fundamentally moral level, as well as a governance
one, it's hard to overstate how scary this is. Firstly, the moral
presumption behind the act is that America fundamentally "owns" a
portion of all of its citizens' assets and having them leave means the
US is entitled to its "cut". The justification is very close to the
justification of asset expropriation by Latin American countries - and
there's not a very good reason why a proportion less than 100% is
somehow morally different than a proportion of 100%, they're both
unacceptable. In addition to being a gross violation of property
rights, it furthers a regulatory climate that discourages risk taking
and entrepreneurship that benefit the country. It's also highly
inconsistent with a society that likes to label itself "free" - you
can't be free if you're not also free to leave without suffering a
lifetime ban from returning.
If you want to keep your capital, create a tax environment that
encourages people to stay, rather than using force.
I'm coming around to a more fundamental view against taxation. More
fundamentally, taxation should be considered a necessary evil, with
emphasis on both words. It's evil, because it is the result of a
collective violation of property rights. It is undeniably, on some
level, theft. However, from a zero tax base, it's almost undeniable
that most people would prefer to have a positive tax rate than a zero
rate on people in their income class (setting aside the desire to
exclude themselves), because government does provide a number of
services that they cannot purchase themselves and are necessary for a
stable society. As a result, in the face of property rights, taxation,
as forcible theft, is justifiable up to the point (and only up to the
point) where the taxed class is probabilistically better off for that
tax money having been taken from them. Taking taxes from expatriates
clearly does not pass this test; expats can in no way be made better
off by having that tax money taken from them and thus are not really
an appropriate target for tax targeting. Doing so is outright theft.
This implies that you pay for the continued benefit of being a US
citizen, not the past benefits you have accrued (the taxes you paid at
the time were what you paid for being a US citizen at that point), but
that's fundamentally a provision of the way we tax for income - we
don't select your marginal tax rate based on aggregate lifetime income
to that point, we tax based on how much you earned in that period.
Which makes perfect sense, but you need to be morally consistent when
you're dealing with something as fraught as taxation.
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