It’s Official! Trump has dramatically slowed wealth flight for two straight years!
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Trump reduces Obama wealth flight by 21% - #FakeNews SilentPresident Trump has significantly reduced the wealth flight, caused by Obama, but the #FakeNews media is ignoring it.
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President Trump has significantly the reduced wealth flight, caused by Obama, but the #FakeNews media is ignoring it.

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For eight years, Obama’s “Soak the Rich” policies drove record numbers of our most prolific taxpayers to renounce their U.S. citizenships, leading to a substantial loss of tax revenue. But the latest official numbers show that Trump has reduced that “taxpatriation” by more than 20% in just two years.

The final official data on expatriations of the wealthy, for 2018, was just published in the Federal Register (over a month late, probably due to the shutdown). It reveals that for the second consecutive year, President Trump has significantly reduced the number of wealthy taxpayers who are renouncing U.S. citizenship and moving themselves, their disproportionately high tax base, and the many jobs they create, to another country.

It’s interesting to note that many of the tax and spend crowd in Congress like to paint these exiting former taxpayers as “evil” and “traitorous”, simply because these wealthy expats legally escaped the onerous taxes on wealth that those same members of Congress imposed. But that scorn from the lawmakers who created the problem, doesn’t seem to bother them. In fact, many of these escapees refer to themselves as “taxpatriots”, for exemplifying the spirit of our Founding Fathers, who escaped the punitive taxes of England, to found a new nation called the United States of America.

But to get back to our point, in 2018, the number of wealthy taxpayers who renounced their U.S. citizenship was down to just 3,974. That’s down from the high of 5,409, just two years ago. To put it another way, it’s 1,159 fewer wealthy taxpayers, who renounced in 2018, than in Obama’s last year in office. That represents a 21.43% drop in only two years!

But the news gets better. Not only are the numbers seriously heading in the right direction under Trump’s economic policies, but the trend indicates that the downward shift in the numbers is accelerating. The final 2018 totals were actually much lower than predicted. Even so, as the above chart shows, there’s still a lot of work to be done.

Understanding the Problem

Every time a wealthy citizen renounces his citizenship, it has a disproportionate effect on our tax base. Think of taxes from a return on investment point of view. It actually costs the government far less to provide services to the rich, than to the poor or middle class. For example, the wealthy don’t live in Section 8 housing or avail themselves of low interest housing assistance from HUD. The wealthy don’t receive free healthcare through the Health Resources and Services Administration (HRSA), nor do they receive energy bill assistance through the Low Income Home Energy Assistance Program (LIHEAP). Even wealthy seniors often have private health insurance that leaves Medicare and Medicaid in the dust, which means they are less likely to avail themselves of their Medicare benefits.

It’s clear that for every dollar the federal government spends on the wealthy, they spend thousands or even millions on the poor and middle class. However, for the sake of argument, let’s just ignore this fact and assume that it costs the government the same amount to provide services to either a rich person or a poor person. In other words, for our example, we’re creating a “best case” scenario.

Next, consider the fact that the rich pay far more of the tax load, even based on income, than do the poor. According to the IRS, in 2016 (the last tax year for which this data is available), the top 1% of income earners earned 19.72% of all personal income, but paid a whopping 37.32% of all personal income tax actually collected. That’s almost double their share, based on income. By contrast, the bottom half of income earners paid just barely over a quarter of their share, based on income. The effect is that taxes paid by each rich taxpayer pays for government services that are provided to many poor and some middle class taxpayers.

So when a poor or middle class person renounces his U.S. citizenship, there is no real adverse effect on those who remain. But when a rich person renounces, it means that the taxes that the rich person paid and that supported many less affluent taxpayers, are lost. It means that those of us who remain, must make up the difference, in additional taxes.

To understand where this is going, we need to know more about the lists from which the above chart was taken,

Under IRC section 6039G of the Health Insurance Portability and Accountability Act (HIPAA) of 1996, the IRS is required to publish quarterly, in the Federal Register, a list of the names of all wealthy taxpayers (and wealthy long term permanent residents) who renounced their U.S. citizenship (or permanent residency) in the prior quarter. This report is officially known as “Quarterly Publication of Individuals, Who Have Chosen To Expatriate”. To those in Congress, who voted to create those lists, they were “Name and Shame Lists”. But as it turned out, many of the expats whose names appear on those lists wear that placement as a badge of honor, signifying that they were smart enough to get out before things got really bad. Today, many wealthy expats just call them the “Taxpatriot Lists”.

But what, exactly, does it take to be a “covered expatriate”?

The original legislation specified that the Lists include only the names of “covered expatriates”. The exact definition of a “covered expatriate” has changed slightly, over the years, but it has always been tied to wealth. Since 2008, the net worth specification has remained at two million dollars and the income specification has been tied to the cost of living. Each year, you can find the current definition on the IRS website page titled, “Expatriation Tax“. Here is what that page says, today. (Note: The numbers in orange come from different sources, explained below.)

If you expatriated on or after June 17, 2008, the new IRC 877A expatriation rules apply to you if any of the following statements apply.

  • Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than a specified amount that is adjusted for inflation ($151,000 for 2012, $155,000 for 2013, $157,000 for 2014, and $160,000 for 2015) ($161,000 for 2016 and $162,000 for 2017).
  • Your net worth is $2 million or more on the date of your expatriation or termination of residency.
  • You fail to certify on Form 8854 that you have complied with all U.S. federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency.

If any of these rules apply, you are a “covered expatriate.”

Explanation for the orange text, above:
The specific tax liability requirement of $161,000 for 2016, can be found in paragraph 3.30 (page 19) of the IRS publication “Rev. Proc. 2015-53”, concerning Inflation Adjusted Items for 2016. Beginning in the first quarter of 2017, the tax liability requirement for a covered expatriate will be $162,000 and it can be found in paragraph 3.32 (page 21) of the IRS publication “Rev. Proc. 2016-55” concerning Inflation Adjusted Items for 2017.

There are some who may incorrectly think that there could be a large number of poor or middle class expats, who might qualify as a “covered expatriate”, simple because those individuals failed to file Form 8854. But that’s extremely unlikely to happen. That’s because, besides having your name included on the Taxpatriot Lists, a “covered expatriate” also incurs an additional punitive exit tax that must be paid, before renunciation will be granted. It would be foolish for anyone who did not have enough income or net worth to have to pay that additional tax, to fail to file that form. After all, the purpose of that form is to tell the U.S. government that you don’t qualify as a “covered expatriate”, under either of the first two qualifiers.

Putting the pieces together

It should now be clear that those, whose names appear on the Taxpatriot Lists are extremely wealthy. But you may still be thinking that, even as high as the taxpatriation numbers are, they are not high enough to present a serious problem. So let’s work the numbers.

(As an aside, before I started these calculations, I expected them to expose a fairly significant problem. Those of you who have read my book, “The Rich Don’t Pay Tax! …Or Do They?”, know that I’ve been following this issue for years. But even I was surprised by the results of the calculations you are about to see. In fact, before writing about the results in this article, I double and triple checked the calculations. This really is a serious issue!)

If we look at what it takes to be a “covered expatriate”, we find that it’s almost a certainty that to be a “covered expatriate”, one must be in the top 1% of income earners. If there are any “covered expatriates”, who are not yet in the top 1%, it’s only by a marginal difference. Most, if not all “covered expatriates” are probably well into that category. In fact, we know that many of the people named on those lists have incomes that run well into the millions per year. Actually, several well known billionaires have had their names appear on those lists, over the years.

Although the average is probably much higher, for the sake of argument, let’s just assume the “best case” scenario and say that all of the “covered expatriates” are just barely at the base income of what it takes to be in the top 1% of income earners

Then let’s go back to the above mentioned IRS Collections Data for 2016. In that spreadsheet, we find two pieces of important information.

  • In order to be in the top 1% of income earners, in 2016, you had to earn at least $480,804.
  • The average income tax rate for the top 1% of income earners, in 2016, was 26.87%. Note that this is based on actual taxes collected from that group.

So let’s do a little math with this info. Remember that we are assuming that all of the “covered expatriates” are at the bottom of the top 1% of income earners, which is being extremely conservative.

Using the above data, we can calculate what would be the average tax paid by a person who earns just exactly what it takes to qualify as a top 1% income earner.

$480,804 * 26.87% = $129,192.03

Let’s round that down to $129,000 in income tax.

Next, let’s total up the number of taxpatriots, who renounced their citizenship during the Obama years. You can see those numbers in the above chart. That total is 21,163.

But many of those taxpats were married and a large portion of those married people were probably filing jointly. In other words, they accounted for only a single tax return. Certainly, that number wasn’t half. In fact, there are many singles on the Lists. But since we don’t know the breakdown, let’s once again go for the best “best case” scenario and say that every name on the list was only half of a married couple, who filed jointly. In that case, we should cut that number of taxpats in half.

So under Obama, the total of family taxpatriations was 10,582.

Finally, we need to calculate the amount of lost taxes, from those 10,582 wealthy families that renounced. To do that, we multiply the number of taxpatriots by the tax payment of one taxpayer at the low end of the scale.

10,582 * $129,192 = $1.37 BILLION!

You read that right!

This is the number that had me surprised. I expected bad. But $1.37 Billion in lost tax revenue was quite a bit more than even I expected.

Worse yet, that’s not just a one-time loss.

That’s how much the USA will lose in taxes each and every year going forward, due to the massive taxpatriation that was caused by Obama’s disastrous “Soak the Rich” policies.

Now, consider that in each and every case, we chose to use the “best case” scenario. We assumed that all expats were at the low end of what it takes to be a “covered expatriate” and we assumed that each and every “covered expatriate” was only half of a married couple filing jointly. What if we had used more reasonable assumptions? That number would be much higher. So make your own assumptions on those scenarios and re-calculate.

Whatever you come up with, just remember that it’s only for a limited number of taxpats (21,163) and that it represents an annual loss in U.S. taxes, every year, going forward. Then consider that this only represents “personal” income tax. Many of those taxpats took businesses and jobs abroad, when they left. That’s more lost tax revenue!

But up to now, we’ve only been talking about 21,163 taxpats. So the next question becomes,

What happens if all of the top 1% leave?

You pay the difference.

After all, you can’t expect the government to cut services by more than a third, to the 99% of us who are still here, just because a relative handful of very wealthy taxpayers chose to move to a more wealth-friendly jurisdiction. In fact, this is one of the primary reasons why our debt is so high. Obama raised our taxes and increased the debt, at least partially, to make up for losing all those wealthy taxpayers.

Of course, not all of the top 1% will leave… at least not right away. So once again, let’s be very conservative and ask, what if only 10% of those top-earning taxpayers were to leave. The top 1% amounts to a little over 1.4 million taxpayers. So 10% of them would be roughly 140,000 filers. In our above calculation, we were looking at just 10,582 filers. Ten percent of the top 1% would be more than 13 times worse. So even using our “best case” scenario assumption that all of those taxpats earned barely enough to qualify as a “covered expatriate”, that would be more than $18 BILLION in lost tax revenue!

It’s getting better, thanks to President Trump.

Actually, to be technically accurate, it’s getting worse slower.

Certainly, the economy is improving dramatically, under President Trump and that improvement is reflected in the significant drop in formal renunciations of the wealthy, as shown in the above chart that tracks the Taxpatriot Lists. But we still have a long way to go. The number of wealthy expatriates is certain to keep dropping, while Trump is in office.

But much of the damage that Obama’s “Soak the Rich” policies caused will not be easily reversed. Much damage has been done that cannot be undone simply by slowing the flow of wealthy taxpayers to other tax jurisdictions.

We need to replace that lost tax base.

While the Trump tax cuts have worked wonders in slowing taxpatriation and creating jobs, there is nothing in that legislation to encourage more wealth to move here from other countries. It may sound enticing, but only till you consider that when Trump’s eight years are up, the next tax and spend politician to win the White House can easily reverse all that Trump has done.

In fact, as long as we maintain an income tax of any kind or level, we can expect to see Congress and the White House using the tax code as a ping-pong ball, to favor each party’s big donors. That’s because an income tax not only makes such tampering possible, but it encourages it.

There is, however, a solution, in the form of a bill that is currently being held up in the Ways and Means Committee of the U.S. House of Representatives. It’s also a bill that Vice President Mike Pence co-sponsored when was in Congress.

H.R.25 – The FairTax Act of 2019, would replace the entire income tax code with a simple and effortless progressive sales tax that removes the ability of Congress to tamper with the tax code, to create favorable treatment for big donors. If income is not taxed, there is no way to give particular businesses an income tax break.

But the best thing about the FairTax would be that it would create a serious enticement for foreign businesses and wealthy foreigners to invest in the USA. Consider this: Under the FairTax, U.S.-manufactured products would have no built-in income tax component in the price. That would make U.S.-manufactured goods more competitive, worldwide. Why would a major manufacturer want to build his product in Mexico, Europe, or China, where the cost of his product would be driven up by that country’s corporate income tax, when he could build in the USA, for less cost. He could sell his U.S.-manufactured product at a lower price and make a bigger profit, than manufacturing in most other countries.

However, it’s the side effects that are what’s really great. When those foreign manufacturers start building plants in the USA, it will create a massive number of new jobs. With more people being employed, there will be a broader tax base. This will mean that more people will be paying less tax, to generate record tax revenue.

But it gets even better.

Remember that, as long as the USA taxes income, any changes imposed today, can be easily undone or even reversed, tomorrow. But with a retail sales tax, there is no way to play favorites. Taxes are collected at the point of retail sale. There would be no IRS looking into your financial affairs. All of your private financial data that is currently held by the IRS would be destroyed. The infrastructure to play favorites would be gone. Any future attempt to implement an income tax would have to start over from scratch and once the income tax is gone, any attempt by politicians to re-introduce it would be political suicide. So wealthy foreigners and foreign corporations, who are considering investing in the USA, would be able to feel confident that the next administration or Congress won’t suddenly turn their move to the USA into a costly error, by weaponizing the IRS against them. That’s because there would be no IRS to weaponize.

Reducing taxpatriation is fine. But think about it. Wouldn’t it be better to not just reduce it, but reverse it?

President Trump has us going in the right direction, in reducing taxpatriation. But even his best efforts are limited, as long as his efforts are tied to an income tax. The FairTax is the lever that Trump needs, to actually turn the tide and reverse taxpatriation.

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By reversing Obama’s “Soak the Rich” policies, Trump is slowing wealth flight
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Slowing wealth flight in his first two years is another big Trump win the #FakeNews isn't reporting.Slowing wealth flight in his first two years is another big Trump win the #FakeNews isn’t reporting.
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Slowing wealth flight in his first two years is another big Trump win the #FakeNews isn’t reporting.

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After eight years of watching our wealthiest taxpayers flee the USA in record numbers, due to Obama’s “Soak the Rich” agenda, wealth flight is definitely turning around, under President Trump.

We have delayed reporting on this turn-around in wealth flight, in order to make certain that it wasn’t just a blip in the statistics. But Trump is now entering his third year as President. That means that we have one full year of data, as well as data from the first three quarters of 2018. There can now be no doubt. President Trump has significantly slowed the flight of our wealthiest taxpayers from IRS jurisdiction.

Under Obama’s “Soak the Rich” policies, formal renunciation of citizenship by our most prolific taxpayers increased on a geometric scale. Obama inherited the lowest number of renunciations by the wealthy (231 in 2008), since that statistic has been tracked. But by the time he left office, “taxpatriation”, as it is called by many who are leaving, was headed for a projected 7,000 to 8,000, in 2017. There is no doubt that, if Hillary had been elected, she would have continued those “Soak the Rich” policies and that 7,000 to 8,000 taxpatriations in 2017 would have become reality and 2018 totals would have topped out well over 10,000. But by repealing many of Obama’s “Soak the Rich” policies, President Trump has significantly slowed formal renunciations of the wealthy.

Granted, the numbers are still alarmingly high. But that’s due in large part to Democrats and RINOs in Congress, fighting President Trump at every step. But like everything else that Trump has done, you can count on two things. First, he’s getting marvelous results. Second, the Fake News media is eerily quiet about that success.

The point is that taxpatriation numbers that were previously skyrocketing, are definitely on the way down.

The above chart is a visual representation of the official IRS numbers of wealthy taxpayers who have formally renounced their U.S. citizenship, from 1998 through 2017 and it shows not only the devastating effect that Obama’s “Soak the Rich” agenda had on wealth expatriation, but the remarkable turn-around that occurred in just the first year President Trump was in office. The turn-around is remarkable, not because it is slightly lower than the 5,409 taxpats, who left in 2016, but because it it dramatically lower than the 7,000 or more, where it was headed. In other words, he had to first, stop the ascent, which was headed for more than 7,000, before the numbers could start coming down.

But it gets even better. Although the fourth quarter numbers for 2018 have not yet been reported by the IRS, projections indicate that if the expatriation rate we saw in the first three quarters of 2018 continued during the fourth quarter, the soon-to-be-released totals will show a significant drop in “taxpatriation”, in 2018.

Those final numbers from the IRS are due in early February and we will publish those numbers as soon as they become available. But at this moment, a simple straight line projection shows that the 2018 taxpatriation total will be in the vicinity of 4,385. In the first three quarters of 2018, a total of 3,289 taxpatriots formally renounced their U.S. citizenship. Take that number and divide by three (for the three reported quarters) and then multiply the result by four (to project that average our to four quarters). You get 4,385. That’s how many taxpats there would be in 2018, if the fourth quarter numbers show that taxpatriation has averaged the same as the first three quarters.

But taxpatriation is not remaining flat. It’s dropping. However, we cannot yet use any trending models, other than a straight line projection, since the Obama trend has ended and the Trump trend does not yet have enough date to declare it fully established. So lacking any solid analysis, we cautiously expect to see even fewer wealthy taxpayers taking their wealth and tax liability to another country, in the fourth quarter report.

So why should we care?

Why should anyone care if a bunch of greedy rich families leave? After all, if you believe the Fake News media, liberals, and a handful of tax and spend RINOs (most of whom lost to Trump in the 2016 primaries), it’s the rich who are the problem. But that’s just not the case.

You see, in the last full IRS reporting year (2016), the IRS reported (link downloads IRS spreadsheet) that the top 1% of income-earners paid 37.32% of all personal income tax actually collected that year. Notice that the word “collected” is highlighted. That’s because this data is not just some bunch of numbers that have been estimated, adjusted, factored, distributed, combined, normalized, run through a random number generator, and otherwise massaged, all so they would fit the talking points of the Fake News media and tax and spend members of Congress. That 37% of taxes represents money that was actually deposited into the U.S. Treasury and that is identified as having come from the personal income tax payments of the top 1% of taxpayers.

It’s money in the bank.

Moreover, it’s money that you and I don’t have to pay in taxes, to help keep this country running, because a tiny handful of, supposedly greedy, rich people (1%) already paid more than a third of all U.S. income taxes for us.

It’s precisely because those in the top 1% pay a share of the income tax load that approaches double (1.8 times) their share of the income earned, that you and I don’t have to pay nearly as much to keep this nation running. For the record, the top earning 0.1% (those earning over $2,124,117 a year) pay 1.9 times their share of the tax load, based on their share of income earned.

What this means is that for every one of these wealthy taxpayers who formally renounces his U.S. citizenship, those of us further down the income scale have to disproportionately make up that difference. So unless you like the idea of having to pay a lot more in taxes, to make up the difference for that lost tax base, it’s critically important that those wealthy taxpayers be enticed to remain here in the USA, where their taxes benefit you and me, instead of supporting some other country.

But are there enough taxpats leaving to be significant?

The answer to that question is an unqualified “Yes!”

Consider this. To be on one of the quarterly Taxpat Lists, you must be what the IRS calls a “covered expatriate” and the IRS has three very specific criteria that define that term. Those criteria are found in the instructions for Form 8854. In 2018, those criteria were as follows:

  1. Owed/paid an average income tax for each of the last five tax years of more than $165,000
  2. A net worth of more than $2,000,000 on the day of renunciation
  3. Failure to file Form 8854, in which you declare that you have complied with all U.S. federal tax obligations for the 5 years preceding the date of your expatriation and that you don’t fit one of the first two criteria

So let’s address each one of those criteria.

  1. It’s an absolute certainty that anyone who has owed/paid more than $165,000 per year in federal personal income tax, for the last five years, is very wealthy. If we work that number backwards, using the average tax rate for people in the top brackets (26.87%), we will find that a person who has had a tax liability of more than $165,000 per year, for the last five years, has probably earned well in excess of $700,000 per year. Remember that to be in the top 1%, a taxpayer only had to earn $480,804 in 2016. So a $700,000 income would put such people quite safely in the top 1% of taxpayers.
  2. It’s also a pretty safe bet that most people who have a net worth of more than $2,000,000 are in the top 1% of income earners. While it is possible to have a net worth of more than $2,000,000 and not be in the top 1%, it’s very unlikely. If there are any names of people on the “Taxpat Lists”, who are on the lists solely because they fit this criteria, but are not in the top 1% of income earners, they certainly make up an insignificant portion of the lists.
  3. As for failure to file Form 8854, I’ll just ask you a very basic question. “If you were planning to do anything for which you would be punished, if you had more money than you really do have and all you had to do, to keep from being punished, would be to file a form, what are the chances that you wouldn’t file that form?” Think about it… Well that’s the position of those who are not rich enough to fit either of the first two criteria. They have an easy out, to keep from paying the “Bush Exit Tax“. They aren’t going to make themselves responsible for paying a punitive tax that they are not otherwise responsible for paying. Count on it. Expats who aren’t wealthy will file the form.

The point of all this is that for a taxpayer to be on one of the Taxpat Lists, that taxpayer must be rich and will almost certainly be in the top 1% percent of income earners.

Now let’s take it a step further. The latest IRS data reveals that the top 1% of income earners is made up of just 1,408,888 taxpayers. So, by and large, that’s the pool from which the names on the Taxpat Lists are drawn. That same group is also the group that the IRS says paid 37.32% of all personal income tax collected in 2016.

But we’re not through yet. It gets worse.

According to a statement from the Joint Committee on Taxation, “of all tax units (roughly equivalent to households), including filers and non-filers… approximately 49% will have a positive tax liability.” So what this means is that the top 1% of taxpayers amounts to the top one-half percent of the population. So the top one-half percent of the population of the USA, is paying 37.32% of all personal income tax that is actually collected by the IRS.

Are you beginning to see a picture developing here? If you still don’t think it’s important that these top taxpayers are leaving, then just ask yourself this question.

“Who pays all that tax, after the rich leave?”

The answer to that question is simple… We do.

Those of us who remain in the USA have to make up that difference. There is no other option. Government liabilities aren’t going to suddenly be reduced by 37%, just because 1% of taxpayers renounced their citizenship. So since the government can’t afford to lower taxes by 37%, they’ll just raise taxes on those of us who remain, to keep revenue stable.

Since some people may still have trouble getting their head around what this all means for them, I would like to take a moment to visually explain it. As you look at this animated graphic, keep in mind that the top 1% of income earners paid more than 37% of all personal income tax actually collected in 2016. So let’s let this Susan B. Anthony dollar represent all of the federal personal income tax that was collected that year. Then we’ll take away 1% of taxpayers — not just any 1%, but the top earning 1%, who pay 37% of all federal personal income tax (and likely a similar amount of state taxes). Those are the taxpatriots of whom we are concerned.

When the rich leave, you pay the difference in tax.When the wealthy renounce their U.S. citizenship, it means that they no longer pay U.S. income tax on non-U.S.-sourced income and due to our high tax rates, most of those who renounce move all of their investment assets offshore with them, so there is no U.S.-sourced income to be taxed at our high rates. Some even see it as more advantageous to have their investments closer to them. But for whatever reason, the result is that, when the wealthy leave, the vast majority of the taxes that they used to pay, is now paid by those of us who remain.

Although the number of taxpats is currently decreasing, it should be noted that nothing is static in government. For example, if the Democrats regain control and implement their “Soak the Rich” agenda, formal renunciations would skyrocket to record levels. So consider this. If all of the top 1% were to leave, it would mean a 60% tax increase for everyone who remains. Do the math.

    100% – 37.32% = 62.68% in Remaining Tax.
    37.32% / 62.68% = 59.5% Additional Tax

Sure, not all of the top 1% would leave. Some can’t afford to leave, due to the particular business they are in. But consider this. While the top 1% are leaving, do you think the top 5% are just sitting on their hands, waiting to be the next target of the tax and spend liberals? Not likely. They’re leaving too. But there is no data to track those who aren’t in the top 1%. The point is that whatever the number turns out to be, if the tax and spend crowd gets back into power, they’ll re-implement Obama’s “Soak the Rich” policies and you and I will ultimately face huge tax increases, to make up for that relative handful of wealthy people leaving.

As the chart at the top of this article shows, President Trump is reversing this disastrous trend. But it’s obvious that the wealthy, who are watching this play out, are being very cautious. While Trump is systematically dismantling Obama’s “Soak the Rich” policies, the Democrat leadership is out there pushing for higher taxes on the wealthy.

The Democrats are out there using the #FakeNews media to threaten the rich with more punitive taxes. They’re pushing for “Medicare for all”, which would of course, be paid for by the rich, just as Obamacare included additional taxes on the rich, to fund it. Even though the last few winters have totally shattered the global warming myth, the Democrats are still out there pushing for more environmental laws, to fight their fantasy of human caused global warming, which again, will be paid for by even higher taxes on the rich. There are even some Democrat members of Congress, who are talking about a 90% tax rate. If that were to become law, any wealthy taxpayers who were left would flee the USA “en masse”.

Fortunately, the Democrats don’t have the votes to override a Trump veto on any of their tax and spend agenda. But all the noise they are making is having an effect and preventing the taxpatriation rate from slowing down any faster. So, even though Trump is definitely reversing this flight of our most prolific taxpayers, the rhetoric coming from the Democrats is making it slow going.

Some of those who were considering renunciation before Trump took office have obviously taken a temporary pass on that move, as those decisions are showing up in the reduced taxpatriation rate. But with the “Soak the Rich” rhetoric coming from the Left, it’s probably a safe bet that most of them are keeping that option on the back burner, at least for now, while they wait to see what develops.

But just as obviously, many wealthy taxpayers, who had decided to renounce, before Trump became president, went ahead with those decisions. After all, even for an average person to move to another country takes months of time and planning, even when renunciation isn’t in the picture. I know this for a fact.

We lived in London for a time and I can tell you that it took months and multiple trips back to the USA, before we were fully settled in London. Furthermore, in our case, although London was our primary residence, we maintained a home and cars in the USA for the whole time. So our preparations were much simpler than those of someone who is renouncing and selling everything they have in the USA. Of course, the more wealth you have in the USA, the more planning has to go into moving offshore. People don’t just decide that they are going to renounce one day and get on a plane the next. It’s a long process.

For a wealthy person to move all of his assets offshore and comply with all the legal requirements of renunciation could easily take a year or two. That’s another reason why the numbers are dropping so slowly. Many of those people who already had their renunciation plans in the works, before Trump took office, likely just decided to follow through, rather than spend time reversing everything that they had done up to that point. After all, based upon Democrat “Soak the Rich” rhetoric, if they decided to stay, they might have go through that process all over, should the Democrats regain power.

But as Trump continues to disassemble the Deep State and make the USA a better place to do business, we can certainly expect to see fewer cases of taxpatriation. Although this is a very good thing, just slowing taxpatriation is not enough. There are still thousands of wealthy taxpats, who were chased out of the USA by Obama’s “Soak the Rich” agenda, who never wanted to leave, but are hesitant to return. It is those people, who are Obama’s enduring legacy… at least as long as they remain offshore. The problem is that most of them are naturally going to be very cautious about ever returning.

They were some of the most prolific taxpayers in the USA, not to mention that this group tends to encompass the largest donors to charitable causes. But in return, they were punished with even higher taxes and reviled in the #FakeNews media. The thousands of wealthy taxpayers who we lost during the Obama years are those who created hundreds of thousands or even millions of jobs in the USA. But as thanks for creating these jobs and for the hugely disproportionate taxes they paid, they were demonized and targeted by the Obama Administration. Convincing them to return, now that they have settled into their new lives abroad, will be a monumental undertaking.

These are the people we need most.

While it’s a huge win that President Trump has reversed the Obama taxpatriation trend, we still need to find a way to entice the thousands of Obama taxpats to return. We need their jobs. We need their tax revenue. But enticing them to return, after they way they have been treated, is the problem.

However, there is something that Trump can do, to not only dramatically lower the number of taxpats, but to actually get some of those who have already left, to return. That’s a total overhaul of the tax system, that would draw all kinds of wealth back into the USA. That overhaul has a name. It’s called the FairTax and it’s a bill that is currently languishing in the Ways and Means Committee, because those in the Leadership of both parties know that to implement the FairTax would seriously reduce their political power. They know that to end the income tax would mean that 50% of all lobbying activity would go away, as would 50% of PAC monies.

Just the thought of a tax plan that would take away half of their PAC dollars has the Leadership of both parties trembling in fear. They might actually have to start doing the unthinkable… listen to their constituents, instead of lobbyists. The members of the Leadership of both parties are afraid to let the FairTax reach the floor, for a vote. But Trump could use his “bully pulpit” to push the FairTax out onto the floor of the House and then on to the Senate. Even if it didn’t pass on the first vote, it would show taxpayers of both parties, which of their elected servants are really serving them and which are in the pockets of the DC Establishment and that’s what the Leadership of both parties really fear.

The FairTax (H.R.25 – FairTax Act of 2019) would eliminate the income tax, abolish the IRS, and implement a proportional national retail sales tax. There would be no more IRS… for anyone – rich or poor – to fear. There would be no more forms to fill out every year, no audits to fear.

U.S. products would suddenly become way more competitive, both overseas and domestically. Companies would rush to build their products here, where they would have a 23% tax advantage over companies manufacturing similar products in any other country. Businesses would make more profits in the USA, while more jobs, with better pay would be created here. Better yet, when billionaires buy a new yacht or plane, they would be much more likely to buy a U.S.-manufactured product, than to buy a more expensive foreign product. The only people who would pay more tax than they do today, would be illegal aliens, who would be the only group that would pay the full 23% FairTax rate, since that group would not receive the family consumption allowance that un-taxes cost-of-living spending. That means that poor working citizens would have a roughly 23% tax advantage over the illegal aliens, with whom they compete for the same jobs. The FairTax could even cause many illegal aliens to self-deport, because they could no longer afford to live here.

The benefits of the FairTax to all U.S. citizens are numerous. However, since it would represent a serious reduction in PAC money to members of Congress, getting it to a vote is going to require some extra effort.

The Trump reduction in taxpatriation has begun. Now it’s time to contact the White House and your members of Congress, and tell them to bring the FairTax to a floor vote in both houses of Congress. With a combination of President Trump’s leadership and the FairTax replacing the income tax, we could not only reduce taxpatriation, but turn it into tax repatriation. After all, the more wealthy taxpayers we have, the less everyone else has to pay in taxes.

I urge everyone to learn about the FairTax and to then embark on a mission to convince those who represent you in Washington, to pass the FairTax.

Learn more about how the FairTax can help you. Read, “The Rich Don’t Pay Tax! …Or Do They?” Also visit, bigsolution.org and do your research. You’ll soon understand why there is a large and growing FairTax movement across the nation.


There’s just one more thing. Watch for the final 2018 report on taxpatriation to be released here, in the next few days. We’re just waiting on the IRS to release the 2018 Q4 numbers.

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