America’s leaders have forgotten one of the most significant lessons of history.
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It was a quiet time. Things could not have been better. Some people were still asleep. After all, it was only 7:55 AM. Other people were having breakfast, while still others were getting ready for church on a tranquil Sunday morning, in this tropical paradise. Everyone had been told, by those who should know, that there was no reason for concern.

Life was good.

The date was December 7, 1941.

Then the first bomb dropped on the Naval Air Station at Pearl Harbor. A mere 110 minutes later, 2,335 U.S. servicemen had been killed, with another 1,143 servicemen wounded. Sixty-eight civilians had also been killed and another 35 wounded. The USA had just become the latest victim of a sneak attack by a nation that had never, in its long history, preceded an act of war with a declaration of war or any other type of warning. The Japanese had played upon the naivety of a U.S. president, who had ignored the lessons of history.

arizona-13President Roosevelt called it “a day that will live in infamy.”

But he was talking out of both sides of his mouth. That’s because the infamy wasn’t all the fault of Japan. Don’t get me wrong. Japan was primarily at fault. But our own government was partially responsible for the high body count at Pearl Harbor, due to their complete incompetence.

The administration had refused to believe that we had enemies who might attack us without warning. Instead, they played politics with with the lives of our soldiers and sailors, and the people of Honolulu, knowing full well of Japan’s history of not preceding hostilities with any kind or warning or ultimatum. The Roosevelt Administration intentionally kept our theater commanders in the dark, denying them access to the Operation Magic intercepts that contained critical information. Instead of keeping theater commanders informed, they were sent a series of cryptic messages from Washington and as a result, our military forces were caught entirely off guard and unprepared.

In fact, had it not been for the boldness of Admiral Kimmel, in sending his carriers out on patrol, without escort, the U.S. might well have lost the war, since all of our carriers would have been sunk at their moorings, along side the battleships and other ships that were sunk in the attack on Pearl Harbor. We would have been totally defenseless in the Pacific. Instead, only six months after the Pearl Harbor attack, three of those carriers turned the tide of the war in the Pacific, at Midway Island, sinking four of Japan’s largest carriers – a defeat from which Japan would never recover and which put Japan on the defensive for the rest of the war.

But the fact that those U.S. carriers were not in port at the time of the attack, was due to the decision of an admiral in Hawaii, not a decision made in Washington, DC. While there are many who believe that Roosevelt wanted the fleet to be attacked, to give him justification for entering the war, I just can’t bring myself to believe that any president (before Obama, anyway) could on his worst day, be so cold and heartless. However, the best case scenario is that Roosevelt and his administration were entirely incompetent, in that they refused to believe that our enemies were so cowardly that they would attack without warning.

So fast-forward to modern times. Every year on December 7, our leaders pretend to honor those who died as a result of those past failures. They make grandiose speeches, promising to not let the lesson of the sacrifice of those servicemen be lost. They go on to make empty promises that they will make sure that their administration will be prepared to defend our nation from any and all enemies.

Then came September 11, 2001 and once again, this nation learned the same painful, but entirely unnecessary lesson that we learned in 1941. Clinton had been suckered in to the same complacency that plagued Roosevelt, in that he allowed our military and intelligence readiness to decline, believing that he could bargain with those who have been taught from birth, to hate all who do not accept Islam.

400 years before Christ walked this planet, Plato observed, “Only the dead have seen the end of war.”

It is a truism that the most powerful and successful will always have enemies among those who have less power. This isn’t to say that all who have less power will consider the most powerful to be their enemy. But there will always be some among that second tier, who will be willing to do anything to be on top. This is a fact that time will never change. Therefore, you would expect that any competent leader would keep that truism at the forefront of his mind.

But today, we see Obama attempting an “outreach” to the Muslim world, while simultaneously doing everything he can to weaken our military readiness. But to make matters worse, even when we have relief troops in place, as we did during the attack on the consulate in Benghazi, Obama orders the relief troops to stand down. The result was the needless slaughter of four Americans – U.S. Ambassador J. Christopher Stevens; information management officer Sean Smith; and two security officers who were former Navy SEALs, Tyrone Woods and Glen Doherty.

But the incompetence began much earlier. Formerly classified cables, now released, show that Ambassador Stevens had warned the State Department repeatedly for months, that the consulate security was lacking and that there had been a rise in Al-Qaeda activity in the area. The last such warning went out only hours before the attack on the consulate.

On this day of remembrance, as we look back at the attack on Pearl Harbor and remember the gallant servicemen whose lives were sacrificed, due to White House incompetence, it is abundantly clear that America’s current leadership has forgotten the lessons of Pearl Harbor.

The heroes of Pearl Harbor deserve more than an obligatory speech from a president who claims to have been born in Hawaii, but who doesn’t even understand the circumstances surrounding the attack on Pearl Harbor.

Although the current administration has forgotten the lessons of Pearl Harbor and how and why those heroes died, we the people will keep their memory alive, that their sacrifice will not have been in vain. Hopefully, the next president we elect will be one who actually learns from history, rather than one like Obama, who considers history to be nothing more than a boring college subject.

But until then, it’s up to us to keep alive the memory of those who died at Pearl Harbor, along with those who survived that terrible attack and the lesson that the USA learned, at the expense of the lives of those brave U.S. servicemen and Hawaiian civilians. We remember their sacrifice and the lesson it delivered, even though the current administration doesn’t.

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Expatriations for first three quarters of 2013 ties five whole years under Bush
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taxpats-2013Q3
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Renunciation History (This frame may be scrolled.)

Formal renunciations of U.S. citizenship during just the first three quarters of 2013 have tied the total number of formal expatriations for all of the last five years that George W. Bush was in office.

Think about what that says. Look at the chart at the top of this article. Hover your cursor over the image to view the full size chart. You’ll see that Obama inherited a record low number of expatriations (231) from Bush. But immediately after taking office, his policies drove expatriation to a near record high (750) in 2009. Every year since then, formal renunciations have not just been higher than any year before Obama took office, they have skyrocketed to alarming levels.

The greatest year-to-year increase, before Obama took office was 131, between 2004 and 2005. But it dropped the next year, for the first time, by 483 and remained low for the rest of the Bush Presidency. Compare that to this year, under an Obama Administration. Formal renunciations of U.S. citizenship have already increased by 1376 and we’re only three quarters into the year. Granted, that’s coming off of Obama’s second lowest year for expatriations. But keep in mind that even that low year saw in excess of 30% more renunciations of citizenship than the highest year under Bush. However, there is a likelihood that a small a portion of the increase in the first quarter of 2013 can probably be attributed to delayed processing of renunciations in the last quarter of 2012, in order to make Obama look a little less incompetent, for the election.

The point to keep in mind is that the overall trend is clearly and dramatically up, since Obama began his “Soak the Rich” campaign.

The latest version of the quarterly government report that has become known as the Taxpatriot Lists was released today and it isn’t pretty. These “lists” are quarterly reports that are published in the Federal Register and list the names of every person who renounced his U.S. citizenship during the previous quarter. The original idea for publishing these names was that it would become a list of shame, with Democrats and government tax lawyers taking to calling it, “name and shame.” But it didn’t work out that way, as more and more expats now look at having their name on that list, rather as a badge of honor, as if to say, “I was smart enough to get out while I still could.”

A count of the names on the Taxpatriot Lists for the first three quarters of this year show that the number of formal renunciations of U.S. citizenship from January through September of this year (2369) is almost identical to the total of all formal renunciations for the entire last five years that George W. Bush was in office (2373). But it doesn’t stop there. Due to the recent government shutdown, the list for the third quarter is likely to be incomplete. The real number may be much higher. But since we don’t know, let’s just stick with just what they’ve published.

Now I know that some people may react to this information without thinking and say something like, “So what? Let’em go! We don’t need’em!” But that would be a big mistake, because we desperately do need them.

You see, what’s most alarming about this trend is that most of those who are renouncing are the people who pay the vast majority of the taxes and who create the lion’s share all of the jobs in the United States.

Think about it. How many poor people do you really think would give up all of the freebies that they get in the United States?… Really.

Poor people don’t renounce U.S. citizenship. They just don’t. They can’t afford it. In fact, just the opposite is happening. Deadbeats come wading out of the Rio Grande River or emerge from tunnels in Arizona, with their hands already open for a hand-out.

It’s a pretty safe bet that the vast majority of the people who are leaving are those whose income is well over $100,000 per year. Many would place that number even higher. But I’m trying to be as conservative as possible, so as not to give detractors reason to say that I inflated the numbers. So, based on the latest IRS Collections Data an income level of just $100,000 would put those people in about the top 12 or 13 percent of income earners or more importantly, the group of people who pay more than 71% of all personal income tax collected in the USA.

Have I got your attention?

When the people who pay most of the taxes leave, who’s going to make up the difference in lost taxes?… The poor?

Who’s going to create new jobs when the job creators are gone?… The poor?

More than likely, many in the middle class will be reclassified as rich and their taxes will go up. Of course, they won’t be able to pay the huge tax rates that the rich used to pay. So ultimately, it will be everyone, including the poor and middle class, who will be required to make up that difference. And as for jobs, just ask yourself when was the last time you heard of someone being hired by a poor person.

Now let’s be clear. We’re not talking about tax cheats. When people renounce US citizenship that’s perfectly legal. In fact, when they renounce, they must report all of their worldwide assets and pay George W. Bush’s Exit Tax (110th Congress H.R.6081 Sec 301), which can be quite heavy. They also give up any benefits that U.S. citizenship may offer. But in return, their future U.S. income tax liability is suddenly limited to only that income derived from within the USA. For most expats, that U.S. sourced income is effectively zero. That’s because they tend to move most or all of their money offshore, with them, and invest it offshore. So for all but a few of the expats on the Taxpatriot Lists, we lose their entire tax base and most or all of the jobs that their investments create.

We’re also not talking about just billionaires, either. Sure, there are some billionaires who have renounced in recent years. Songwriter Denise Rich (ex-wife of billionaire tax evader, Marc Rich, who was pardoned by Bill Clinton) comes to mind and of course, Facebook co-founder Eduardo Saverin. But for the most part, those taxpatriots aren’t spectacularly rich or even somewhat so. They’re just ordinary somewhat rich people… people who may earn from $100,000 to a few million dollars every year. Very few of them earn either less or more than that and even fewer are billionaires.

So why are these ordinary rich people so important? Well consider this. Many of them are small business owners. So why should that make a difference? Well according to the Small Business Administration, 64% of net new private sector jobs are created by small businesses – not mega-corporations. We’re talking about “new” jobs – jobs that didn’t even have a name or description before a small business created it. Without them, the creation of new jobs would drop dramatically.

Is a picture beginning to develop here?

Since the day Obama took office, he has overseen a steadily increasing exodus of that group of people who pay almost all of the taxes and create the lion’s share of the jobs in the United States. Zogby International reports that more than 3 million Americans relocate offshore every year. But worse yet, as this recent data shows, more and more of those expats are now choosing to formally renounce their citizenship. This means that they will no longer pay U.S. taxes on income earned outside the USA. But worse yet, after renouncing (or perhaps just before) most of the new jobs that they create will be created in their new country of domicile – not in the USA.

“Oops!”

That’s why losing these people is so catastrophic. In fact, it’s a lot worse than just an “Oops!” If just half of the top 10% of income earners were to leave (distributed proportionately across the top 10%), it would mean that we would lose more than 35% of our personal income tax base and probably half of all new job creation would go with them. No nation could recover from such a disaster, especially one that is already $17 trillion in debt.

Obama’s futile attempts to punish success shows that he doesn’t understand two of the most basic principles of dealing with successful people – principles that any leader needs to understand thoroughly, if he is to successfully deal with the economy.

The first principle is that successful people are like a handful of sand. The tighter you squeeze, the more will slip through your fingers. They are the people who have the wherewithal to leave and as a result of Obama’s “Soak the Rich” agenda, that’s exactly what they’re doing. In fact, the Foreign Account Tax Compliance Act of 2009 (FATCA – finally inserted into the HIRE Act), signed into law by Obama in 2010, is one of the driving factors, as we’ll address later.

The second principle is that we need those successful people, because they are the people who pay the vast majority of the tax load and provide the majority of all new jobs.

Obama’s failure to grasp these simple truths and deal appropriately with them clearly demonstrates his economic incompetence.

Based on the renunciation rate for the first nine months of this year, the total number of formal renunciations for the year 2013 will likely be in the neighborhood of 3159 expats or more than 14 times the level that Obama inherited. But that’s based on a stable renunciation rate, which is likely to produce too low a number. A “stable rate” assumption ignores the fact that renunciations have been growing at an “exponential rate,” since Obama took office. Of course it doesn’t include the effects of the new FATCA regulations that takes effect next year.

A polynomial trend line, with a 5 year spread (for 5 years of Obama Administration), based on past annual renunciation totals and extended to 2016, indicates that by the time Obama leaves office, the renunciation rate will be well over 7,000 per year. But this doesn’t include the dire effects of FATCA. Hover your cursor over the image below to see the full size chart in a scrollable frame.

Expat Chart Projection
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Renunciation Projection (This frame may be scrolled.)

You see, FATCA imposes harsh compliance requirements on foreign banks that hold accounts of U.S. citizens. So as predicted by economists, before it was even voted on in Congress, many foreign banks are telling foreign domiciled U.S. citizens to come in and close their accounts. It seems that it’s cheaper for the banks to close a few U.S. accounts than to deal with FATCA compliance. The result is that many U.S. citizens, who have lived overseas for years or even decades and yet, have been diligently paying U.S. income tax, are finding their U.S. citizenship to be a huge detriment to their continued life offshore, instead of the benefit that it used to carry. The only option that FATCA leaves for these people is renunciation of U.S. citizenship or moving back to the USA. Now consider that most estimates and surveys put the number of U.S. expats living offshore at well over 6 million and some studies suggest that it could easily be more than 12 million.

Then consider that, the various estimates of those who just establish foreign citizenship, identify themselves to the banks as citizens of some other country and simply cease paying US taxes, range from hundreds to thousands of silent expats, for every formal renunciation. This nation cannot possibly afford to lose that many of it’s top taxpayers and job creators.

So how do we stop this disastrous trend?

It’s going to be difficult, since it’s a safe bet that Obama isn’t going to suddenly figure out that it’s his own policies that are driving out our most prolific job creators and taxpayers. But there is one thing that would stop this devastating trend cold. It’s a bill that is due to be voted on soon, in the Ways and Means Committee. It’s called the FairTax (HR-25). It would replace all federal income taxes with a single-rate national retail sales tax that includes provisions to un-tax poverty. By eliminating the income tax and IRS – abuses of which are the primary driving factors in this rush to what has become knows “taxpatriation” – there would be far less motivation for successful investors and job-creators to leave.

But if Obama doesn’t soon have an epiphany or the FairTax isn’t passed into law, then this taxpatriation will continue at far higher rates and it will not be the rich who will feel the pressure. They’ll be gone. All that will be left will be the poor and the middle class, who have neither the money to pay excessive taxes nor the wherewithal to leave.

Call your congressman and senators now and tell them to pass the FairTax, unmodified, today.

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