2015 Renunciations of Rich U.S. citizens exceeded all 8 years under Bush

Formal Renunciations of the Wealthy in 2015 far exceed total for all 8 Bush years!Formal Renunciations of Rich in 2015 exceeds all 8 Bush years!
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Formal Renunciations of the Wealthy in 2015 far exceed total for all 8 Bush years!

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It finally happened. The number of formal citizenship renunciations of wealthy U.S. citizens, in just one year, has exceeded the total number of renunciations over all eight years of the George W. Bush Administration!

According to official government data, published in the Federal Register, 1,058 wealthy U.S. citizens formally renounced their U.S. citizenship in the last quarter of 2015, bringing the total for the year to 4,279 formal expatriations of wealthy Americans. That’s an 1,852% increase in the number of formal renunciations, over the last year of the Bush Administration (231) and it exceeds the combined total of all eight years that Bush was in office (3,939)! See the chart at the top of this page.

The list from which this information is drawn is the most recent publication in the Federal Register, of what is termed the “Quarterly Publication of Individuals, Who Have Chosen To Expatriate, as required by Section 6039G”. Links to each of those lists can be found on our Taxpat Lists Page.

The reason this is important is because these people who are leaving pay a disproportionally large part of the total tax load, paid in the USA. To be included on one of these lists in 2015, the individual had to fit one of the following criteria.

  1. Have a net worth of $2 million on the day of expatriation
  2. Have had a tax liability (not income) of $160,000 in each of the last five tax years
  3. Have failed to file Form 8854, declaring that he/she did not fit one of the first two criteria

Let’s take a closer look at those criteria. The $2 million threshold is pretty clear. But consider that if we take the average tax rate paid by the top 1% of taxpayers and work backwards, we’ll find that a person who owed $160,000 in federal income tax for each of the last five tax years would almost certainly have had an income well in excess of $700,000 for each of those five tax years. Just look at that second criteria. These are people who pay more in federal income taxes than most Americans earn in two or three years.

The last criteria may allow a few other-than-wealthy people to get onto the lists. But those numbers should be extremely low. That’s because of the Bush Exit Tax, which we’ll get to in a few moments. You see, anyone who does not fit one of the first two criteria, but who also fails to file Form 8854, suddenly becomes liable for the Bush Exit Tax, from which they would otherwise be exempt, were they to file that form. Due to the Form 8854 requirement and the possibility of a government worker making a mistake, there is the possibility that there could be the occasional other-than-wealthy individual named on the list. But due to the tax liability issue, any such numbers will certainly be extremely low.

What this all comes down to is that to be on one of these lists, a person with that kind of net worth or annual income is almost certain to be in the top one-half percent of taxpayers. These are the people whose hefty tax bills make life easier for the rest of us and yet, Obama is driving these essential people out of the USA in record numbers.

It’s important to note that these numbers aren’t estimates. The Taxpat Lists, as they have come to be called by many expats, were mandated under the Health Insurance Portability and Accountability Act of 1996 (HIPAA – H.R.3103) and they name each wealthy expat. So from these lists, we now know, not just how many wealthy Americans renounced their citizenship each quarter, but we actually know the names of those people. This means that every number on the above chart represents exactly that many wealthy U.S. citizens, who walked into a U.S. embassy or consulate, somewhere in the world, turned in their passports, paid the Bush Exit Tax (part of the Heroes Earnings Assistance and Relief Tax Act of 2008 (H.E.A.R.T.)), and in doing so, ceased owing any further U.S. income tax liability on non-U.S. sourced income. Moreover, after renunciation, almost all of these people end up deriving all or most of their income from offshore sources. Therefore, this means that they pay little or no U.S. income tax, after renunciation.

For the record, according to the latest IRS Collections Data (tax year 2013), the top 1% of taxpayers (those who earned more than $428,713) paid 37.8% of all federal personal income tax collected that year. But remember that to be on the Taxpat Lists, one most likely has to have an income in excess of $700,000. So we’re not just talking about some “rather” rich people leaving. We’re talking about some “seriously” rich people leaving – generally those in the top half percent of taxpayers or better.

The question that we need to be asking is, “Who is going to pick up the tax load of those mega-taxpayers, when the mega-taxpayers no longer owe U.S. taxes?”

Since renunciations were on the way down, when Bush left office, it’s obvious that Obama’s “Soak the Rich” policies are responsible for this dramatic rise. Many years ago, lack of foreign business infrastructure forced the Rockefellers, Vanderbilts, and Morgans to stay in the USA and accept 90% income tax rates on the rich, if they wanted to make money. Back then, there was no other country in the world, where rich people could go and be able to make as much money as they were making here. But today, with the Internet, smartphones, and FedEx, the wealthy are no longer anchored to U.S. soil. Of course, congressional Republicans have to take part of the blame, since many of them helped pass the Foreign Account Tax Compliance Act (FATCA), that was a part of the HIRE Act of 2010 (H.R. 2847), which is driving many U.S. citizens who currently live and work abroad, to renounce their U.S. citizenship, just so they can maintain a bank account in the country where they reside and work.

At the heart of the problem is our tax system. Were it not for the taxation of income, Obama would not be able to move forward with his “Soak the Rich” agenda. Actually, the same applies to a Value Added Tax (VAT), like that proposed by Sen. Ted Cruz.

It’s time to end the system that enables such attacks on success. It’s time to abolish the income tax and the IRS. But as long as income is taxed, be it progressive, flat, or through a VAT, the IRS cannot be more than marginally reduced in size. On the other hand, without an income tax, the IRS goes away and it becomes impossible to target a particular income group.

Of the various tax reform plans, both in Congress and on the campaign trail, only the FairTax (H.R.25 / S.155) will or even can abolish the IRS. The FairTax makes the IRS superfluous, by turning over all federal tax collections to the states. The states would audit a portion of about 25 million retail businesses (as they currently do in 45 states) and a small sub-department within the Treasury Department would audit the 50 states. Nobody would audit you (unless you happen to own a retail business and then it would be the same state auditors that currently conduct your state sales tax audits).

NO IRS. No individual audits. No April 15th deadline. No compliance costs. No “Soak the Rich”. The total lack of a personal or corporate income tax would draw wealth and jobs back into the USA in record numbers. With more wealthy citizens spending their money on new retail products and services, and more people working, earning a salary, and spending that money, the tax load would be spread out more, so we could all pay less tax. Everyone wins… well, except the illegal aliens, who would be at a roughly 23% tax disadvantage, compared to entry level working citizens, since illegal aliens would pay the full 23% tax rate, without the benefit of the prebate, which would wipe out most or all of the taxes paid by those poor working citizens. The FairTax would be a WIN-WIN-WIN situation.

For more detailed information on this ominous trend, read, “The Rich Don’t Pay Tax! …Or Do They?”, available in print and popular ebook formats on Amazon, Barnes and Noble and through other booksellers or click one of the links on the left side of this page.

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The REAL issue with Cruz’s Canadian birth

Bias Statement: When writing about candidates, I believe that authors should include a bias statement, indicating the author’s possible bias. So here is mine. As a conservative Texan, I campaigned for and voted for Ted Cruz for the U.S. Senate. Sadly, I now think he has been only a marginally “acceptable” Senator. I believe that Cruz is a natural-born citizen. My choice for President is Mike Huckabee, but if it comes down to it, I will have no problem voting for Trump in November.

Donald Trump recently suggested that Senator Ted Cruz has a problem with his Canadian birth. In response, Cruz responded by saying that the case regarding his birth was “quite straightforward and settled law.” So who is right?

As it turns out, both are right. Trump is right, because Cruz does have a real problem, but it’s not directly with his citizenship. It’s with the litigation liability that his circumstance of birth creates. Cruz is right, because his citizenship is “quite straightforward and settled law.” For the Cruz supporters, I want to make it clear that I am in the camp with the many legal scholars, who believe that, if the Cruz citizenship case were to go before the Supreme Court, they would rule in his favor.

So how can they both be right. It’s simple. Once again, Cruz is doing what he does best – spinning the truth. His statement about the issue being “settled law” is probably true. But as an attorney, he knows that just because something is “settled law,” it does NOT mean that there is no case. But his misleading statement is intended to give GOP voters the false impression that, since it is “settled law,” there is no litigation liability and that is not true.

There is, in fact, enough evidentiary support and case law to justify such a suit. By that, I mean that there is sufficient reason for the suit that a fair or liberal judge would not be inclined to throw out the case, as being “frivolous”. The point here is that, if Cruz were to become the GOP nominee, there would be at least one major lawsuit, with big money backing, to challenge Cruz’s claim to be a natural-born citizen. Of course, such a suit would certainly be filed in a jurisdiction friendly to Hillary and the Democrats. Since Hillary claims New York as her home, it might be filed in New York or it might be in Washington, DC. Note that both are very liberal courts, so it would not be thrown out. Appeal of a case of such subject matter would probably be heard by the United States Court of Appeals for the Federal Circuit. But the Democrats would fight to have it heard in one of the more liberal District Courts of Appeals. In a case filed in New York, they would fight to have an appeal heard by the 2nd Circuit and in a case filed in DC, it would be the DC Appeals Court.

All that fighting would take time, which would be during election season. So what all this means is that, although Cruz would ultimately win, such a case would almost certainly not be settled in Cruz’s favor before getting to the Supreme Court. It follows then that such a suit could not be settled before the general election. In fact, it could take more than a year, even if it were to be fast-tracked through the courts. Of course, if there was an attempt to fast-track it, that move would be fought by the Democrats.

The important point here is that a citizenship suit would be a shadow, hanging over Cruz’s entire campaign. Worse, the legacy media would use that suit to attack Cruz, with the same resolve that they showed when protecting Obama from similar accusations. Cruz would talk about issues, but all that would be heard in the media would be talk about the lawsuit. Instead of reporting on how Cruz conclusively exposed one of Hillary’s lies, the news programs would be interviewing liberal legal scholars about whether or not Cruz was qualified to be President. Every time Cruz appeared on a news program, the hosts would make sure that he would spend almost all of his time talking about his citizenship and little to no time would be spent on the real issues. It would be just the opposite of what they did with Obama.

Think about it… Think about the media… Don’t try to fool yourself. You know this is exactly how it would play out.

The swing voters, who are most important in every election, would be maneuvered into worrying more about Cruz’s citizenship, than Hillary’s lies. They would be indoctrinated to believe that, if Cruz were to be elected, he might be ruled ineligible a year or two later and that would create a constitutional crisis, since it would mean that all of the bills, Executive Orders, and Presidential Decision Directives that he signed would become instantly null and void. What if he had signed a treaty? Many swing voters would not want to take that risk, so they would vote for Hillary or vote third party.

Then consider that a head-to-head race between Cruz and Hillary would be tight, to begin with. Only a few points or even fractions of points would separate them. The effects of such a suit, though marginal, would be more than enough to shift the vote by those few points and give the race handily to Hillary.

What bothers me about this scenario is that Cruz surely knows how this will have to play out and yet, he is still running. It’s not like he doesn’t know how the Democrats and the media operate. Instead, it’s as if he is running for President in 2020 and wants to get such a suit filed in this election season. I just find that very difficult to accept. Granted, in the time since I campaigned for Cruz, for the U.S. Senate, I have learned not to believe any of his campaign promises. But even so, I cannot believe that he is so mercenary that he would intentionally sacrifice the presidency to Hillary, just so he can get such a suit filed and out of the way before he runs in 2020. On the other hand, I was wrong about him, when I campaigned for him in 2012. Either way, it certainly doesn’t give me a warm fuzzy feeling about him.

The worst case scenario for the GOP, would be a Cruz nomination, since, as Trump suggests, his citizenship would certainly be challenged in court and in the media. The shadow of such a suit would doom his general election candidacy. Fortunately, Trump is so far ahead that Cruz doesn’t stand a chance of winning the nomination. Unfortunately, this means that Trump will be our next President. But, like most conservatives, I can live with a Trump presidency a lot better than I can live with giving the nomination to a candidate who carries with him so much litigation liability that it would hand the White House to Hillary, on a platter.

What this all boils down to is that, while both Trump and Cruz told the truth, Trump’s truth made a valid point and Cruz’s truth was all spin. Cruz has a serious problem related to the circumstance of his birth and it’s not citizenship. It’s litigation and how the legacy media will certainly use that litigation to ruin his chances against Hillary.

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