Today’s Wall Street Journal (link to the article is here
, Rupert Murdoch, and be damned
) there is non-tax verification of what I am seeing here.
What we’re seeing
We take people all the way through the process until they have no more U.S. passport and are completely–and legally–logged out of the U.S. tax system forever. Same thing for people with green cards. We take them all the way through the process. (Side note: at the California Society of CPA’s International Tax Conference last week in Costa Mesa a speaker asked a room of 100 people who had direct experience with Section 877A, the IRS rules for people who give up their citizenship or permanent resident status. Two people raised their hands. I was one of them. I giggled. Inwardly, of course.)
We’re seeing a noticeable uptick in inquiries from people who are interested in getting out. More to the point, we’re seeing a noticeable uptick in people who are actually doing it.
Who is leaving the U.S.
The people we talk to are people with significant skill sets in business and technology. In other words, these are the people who Get Things Done.
What they don’t like
They see better economic opportunities abroad. The recent Troubles brought about by the Voluntary Disclosure Program hit many of them — they are immigrants and have family and money in their home countries. The enforcement program has made many of them bitter about the fairness and intelligence of the U.S. tax system. Many of them mention issues with Homeland Security.
I can’t do anything about the other stuff. But in tax matters, it is seems to me that the river is flowing in the wrong direction. We’re chasing productive people and businesses out of the country with tax policies and enforcement. (Tax law is also discouraging U.S. companies from doing business abroad, but who cares about that — export earnings are for sissies, right, Congress? That’s a rant for another day.)
Law of unintended consequences
The United States was — and is — built on the strengths and energy of immigrants. A country is no more and no less than its people. Of all of the people in the world, the people you’d want living around you are immigrants. They are go-getters. It takes a special strength of character and personality to leave your home — forever — and put down roots in a new place. (Shameless disclosure: my parents are immigrants.)
My job is in taxland. All I can say is that in the last 12 months I have seen Stupidity on Stilts in taxland. And there is more coming in the form of the new Foreign Account Compliance Tax Act of 2009. This has the effect of creating new economic incentives. Who do you think moves first and fastest in response to these incentives? Yes. Exactly the person you’d like to stay. The Ph.D working in the research lab. The entrepeneur. The hardworking, thrifty saver.
It’s good business for our firm. But I hate being in the export business when the export consists of brains, strength, and determination.