Choices Mean That Soak the Rich Won’t Work Any More

Obama and the Democrats want us to believe that because the top taxpayers just accepted punitive taxes in the 50’s, when the top marginal personal income tax rates were 90% or higher, that today’s most prolific taxpayers will also accept such punitive taxes again. But as the saying goes, “That was then. This is now.”

In the 1950’s, if you were in business and wanted access to the biggest market, then you had no choice. You had to be in the USA. Europe, Russia and Japan were rebuilding from World War II and China was in the throes of adapting to a Communist takeover. South and Central America were still banana republics.

But in 2010, things are much different. Although much of Europe seems to be trying to follow Greece into Socialist collapse, that isn’t true for all of Europe. several countries in Europe are actively seeking our top income earners. Singapore and Malaysia are also attracting big business and big investors. But most amazing is South and Central America. Those former banana republics are now emerging markets, with stable governments and low taxes, to attract investment.

In the 1950’s, the government could get away with soaking the rich, because the USA was the only game in town. But in 2012, if the government continues to impose increasingly punitive taxes on those who already pay the lion’s share of the personal income tax load, then those people will take one of the many other choices available to them. They will take their investment and tax dollars, and the jobs those dollars create, to some country where they will be appreciated for the jobs they create and the abundance of taxes that they pay.

Both Ireland and Panama enacted laws within the last year, specifically aimed at attracting wealthy US investors and skilled US professionals. For some time, Panama has had what is considered one of the best retirement programs in the world. Chile can no longer be considered a third world country. They are in fact, on the verge of being a top-tier country.

Nations that, in the not too distant past were considered unsafe for travel, have become quite stable and are today, building high-end residential and condo developments and filling them with wealthy Americans. Nations that had poor or unreliable phone service a decade ago, have high speed internet today. And let us not forget Skype, for free or cheap international calls. Then of course, there is FedEx and DHL, so wealthy US expats don’t have to worry about shopping options. It just takes an extra day to get the product from a US distributor. Nations that used to depend largely on US aid workers for healthcare, today have top quality healthcare. Panama, for example, has a huge Johns Hopkins Hospital. Nations that had poor or no schools now rank above the USA in math and sciences.

Finally, there are Virtual Private Networks (VPNs), so expats can even securely access data that is supposed to be limited to US persons. When I lived in London, I would download episodes of current television shows that were not scheduled to be shown in Europe for another year, by using a VPN. To the download server, it appeared that my computer was in the USA.

For those who are still having trouble getting a handle on this, think of it this way. Why are you willing to pay $5.00 for $0.50 worth of popcorn at the movie theater? Your choices are limited. Either pay the exorbitant prices, don’t have popcorn or leave and miss the movie. It’s about choices.

In the 1950’s there were no other choices. But it’s a different world today, than it was when the nation’s most successful people paid 90% personal income tax rates. In the 1950’s they took it, because they didn’t have any other choice. But today the choices for our top taxpayers are not only myriad, but enticing.

The effect of trying to “soak the rich” can be best seen in the fact that formal expatriations have increased almost 8 times since Obama took office. If we keep trying to “soak the rich” the only result will be that soon, we won’t have any rich to soak. Of course that means that we also won’t have any jobs to pay those taxes ourselves. But count on it. That won’t stop the government from raising the taxes of those who remain, to make up the difference. In the end, “Soak the Rich” only hurts the poor and middle class.

If Obama is re-elected, more of our top taxpayers will leave, while they still can and that additional tax load will fall on us. Obama MUST be defeated, if this nation is to survive.

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Who would you rather see packing their bags on November 7, 2012? Obama or the people who pay the taxes?

Packing Day:  November 7, 2012
Who Will It Be?

On November 7, 2012, someone is going to start packing their bags and the choice is yours. Will it be Barack Hussein Obama, who has never held or created a single real job or the people who pay the lion’s share of the taxes in the USA and who have created and will continue to create jobs wherever they go?

We can’t have it both ways. Successful people know that if re-elected, Obama will re-double his efforts to punish success. So if it is not Obama who is sent packing, it will be successful people who will start packing their bags, in preparation for moving to a jurisdiction that will respect them for the large amount of taxes that they will pay and the many jobs that they will create in their new country.

The top 10% of US personal income taxpayers are responsible for paying more than 70% of all federal personal income tax and lots of other taxes. More than half of that is paid by just the top 1% of US taxpayers.

According to a 2008 press release from Zogby International, more than 3 million Americans “relocate” outside the USA every year. Since it’s not reasonable to believe that someone not making at least six-figures could afford to comfortably move offshore, we have to conclude that most of those who are moving offshore are in at least the top 10% of income earners (those who earn at least $112,00 a year). So if just two-thirds of that 3+ million expats fall into that category, then it means that we are already losing about 14% of the top 10%, every year.

All indicators already suggest that the number of expats has gone up significantly, since Obama became President. You see, most expats never formally renounce their US citizenship. They just establish citizenship in some other country that appreciates them and the boost they bring to the economy and they stop paying US taxes. So short of another Zogby study, determining the actual numbers today is rather difficult.

But we have a very good indicator of which way expatriations are moving. Since 1996, the IRS has been required to publish the names of every US citizen who formally renounces his citizenship. In 2008, before Obama took office and the year of the Zogby report, there were only 231 formal expatriations and there had never been more than 762 in one year. Last year, there were a whopping 1782 expatriations and there were 1534, the year before. So Obama is already driving away our most prolific taxpayers and job-creators at an alarming rate.

But if he were to win re-election, expect those numbers to look small, by comparison, next year. The successful know that Obama has painted a target on their backs. They know that if he were to somehow be re-elected, he would double down on his “Soak the Rich” agenda and they don’t want to be here, if that happens.

So, if it isn’t Obama who is packing his bags on November 7, 2012, then count on it. Huge numbers of those who pay the lion’s share of US taxes and create all of the jobs will be packing theirs.

Why is this important?

It’s those of us who remain, who will have to make up the difference in taxes. But we can’t make up the jobs. After all, when did you ever see someone earning less than $100,000 hire anyone? Think about it…

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