It
is hard enough having a worthless liberal college degree with no chance of
employment. It is much harder to understand how an engineer cannot find a job
in this “growing and rosy” economy.
The
Bureau of Economic Analysis (BEA) released the data showing that the third
quarter GDP rose to 3.1 percent. That is fantastic news say the MSM pundits. We
are rolling in recovery. Never mind that much of the increase came from
government spending for national defense, restocking of business inventories,
consumer spending in the form of durable goods such as cars and car parts, and
the higher costs of health care and of mundane commodities such as food and
gasoline. For proper disclosure, I must say that food and gasoline are no
longer counted in the Consumer Price Index, a.k.a. inflation. We would not want
these commodities that hardly anybody consumes to mess up the rosy economic
talking points.
Aside
from the fact that it is President Bush’s fault, what is a college graduate to
do who cannot find a job or an unemployed engineer? Should they move back in
with mom and dad, should they go on welfare, or should they live from savings
or a trust fund? Living from special savings, a trust fund, selling stock, a
house, a car, a motorcycle, or cashing out mutual funds sounds more
independent, however, there are capital gains taxes that must be paid and these
are going to go up significantly after January 1, 2013.
Many
companies are paying next year’s dividends to their shareholders now in order
to avoid a huge tax bill increase. Costco is paying out a special dividend of
$7 per share to stockholders, for a total of $3 billion. “To pay for the
dividend, Costco is going to sell $3.5 billion in debt and it will buy back
some shares as well.” Taxes on corporate dividends are expected to go up from
the current 15 percent to as much as 39.6 percent. Costco (warehouse store),
Carnival (cruise ships), Brown-Forman (liquor) are borrowing money to pay these
dividends called dividend recaps. (http://finance.fortune.cnn.com/2012/12/03/costco-fiscal-cliff-dividend/)
Americans
could migrate to other states without state tax or to other countries without confiscatory
federal taxes. Gérard Depardieu did just that –
he gave up his French passport and moved to Belgium. It was not that Gérard Depardieu, a beloved
French actor who delighted people around the world with his fabulous acting and
directing, is not patriotic; au contraire mon frere, he said, he had paid 85
percent of his income in taxes last year. He was just tired of being ripped off
by France’s greedy socialist government who wanted to confiscate even more.
After all, what is “fairer” or more “socially just” (to quote progressives) than
to take from the “undeserving rich” who worked hard to create their wealth and
income, and to give to the poor who are entitled to everything free for life,
no effort necessary?
Americans
could migrate and give up their citizenship or green card held for at least 8
years or more, but then, they have to pay the piper - exit taxes.
The Heroes Earnings Assistance and Relief Tax Act of 2008 (The HEART Act) applies
to U.S. citizens who expatriate and long-term U.S. permanent residents who give
up their green cards. The exit tax is levied on “unrealized gains on all assets
in the U.S. and worldwide, including grantor trusts, as well as any future
gifts or bequests to U.S. citizens and residents.” (http://www.isla-offshore.com/second-passport/usa-expats-exit-tax/)
Eduardo
Saverin of Facebook had already paid capital gains taxes before he decided to
move his fortune out of the United States. The co-founder of Facebook is said
to have saved $67 million in taxes by moving out. Unhappy with the outcome,
Senator Charles Schumer (D-NY) proposed a bill to tax expatriates 30 percent
unless they show that renouncing U.S. citizenship was not based on tax
avoidance. The proposed bill, the “Expatriation Prevention by Abolishing
Tax-Related Incentives for Offshore Tenancy (Ex-Patriot) would bar re-entry into
the U.S. (http://www.forbes.com/sites/robertwood/2012/05/18/expats-face-steep-exit-tax-courtesy-of-facebook/)
The
expatriation tax appeared first in U.S. tax law as the Foreign Investors Tax
Act of 1966 (FITA). “FITA introduced Sections 877, 2107, and 2501 to the
Internal Revenue Code.” According to Stephen M. Moskowitz, Esq. and Anthony V.
Diosdi, Esq., the computation is quite complex and includes income such as
gains from the sale or exchange of stock and property, or debt obligations
issued by a U.S. person or company. (http://www.jdsupra.com/legalnews/just-how-is-the-expatriation-tax-calcula-40024/)
I
came across a form of exit tax when I left my country. In order to receive a
visa for permanent non-citizen residence in the U.S., I had to pay a tax for
all the government benefits I had received in my first twenty years of life,
schooling, medical care, subsidized concrete block housing, pot-holed road use,
constant police surveillance, and other “services” I was not even aware existed
or received. I was worried since I had no penny to my name and I knew I would
not be able to leave without paying. The final figure was provided to me after
months of deliberation and computation by the communist party apparatchiks – my
freedom was worth exactly $160 U.S. dollars. I owned a Japanese boom box, it
was the rage back then, which I sold quickly for $160, and paid my “exit tax.”
This cleared my name - I did not owe anything to the government of Romania, for
the communist care and education I had received. I was finally free.
The
far reaching arm of the IRS may not be so cheap if American citizens run afoul
of the proposed 30 percent exit tax. No matter how you exit the U.S., dead or
alive, you are going to be taxed to the max. So, it is true, the only
certainties in life are death and taxes.
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