The NewsMax Years #28
Still ON TARGET: July 30, 2000
Every year 900,000 legal immigrants are allowed into the United States. Many of them have critical technological skills, which corporate America and government need because not enough Americans graduate in technical and scientific fields. A bill stalled in Congress, held up by the Democrats, would allow more high-tech workers into the United States.
So, you ask, isn’t that good? Shouldn’t these jobs be held for Americans? That would be nice except for the fact that too few Americans go into the sciences and math. Did you realize that nearly half the young turks in Silicon Valley are natives of India or Asian-Americans of Chinese descent? No, our educational system has been too busy teaching diversity, self-esteem and environmental myths as science rather than math and technical subjects.
But that is only part of the problem. Americans are not reproducing themselves in sufficient numbers to take care of the baby-boomer bulge down the road. The baby-dearth generation is going to be supporting the boomers well into the next century. One wonders how long they will put up with that situation before demanding “abortion” for old people. One reason Japan has suffered an economic crisis in recent years is because it has not reproduced itself. It aborted and contracepted itself into a crisis. The deeply homogenous Japanese are finding themselves faced with importing talent from elsewhere, including America.
Every year millions come to the United States illegally. Nearly every small town in America now has its fair share of immigrants, mostly from south of the border. The borders of the United States have become sieves and many local residents have taken up arms to stop the flood, especially in Arizona and New Mexico. In the last six months there have been incidents of Mexican police coming into the United States and acting like Emilio Zapata on a border raid before Pershing and American troops went after him.
Everyone hears about these immigration problems. There is another, however, that is not talked about either by government or by the press: the emigration of the wealthy, dissatisfied and adventurous. Include Americans going abroad to work for corporations, and the numbers are steadily climbing. Many wealthy emigrants leave because of the IRS and high taxes, with reports indicating more concern with IRS abuses than with taxes themselves.
Some leave in order to seek a slower, more sensible way of life or because it is cheaper or the climate is better elsewhere. They usually end up living in enclaves or within comfortable distance of other Americans. Many are also attempting to find places with fewer rules, where big brother is not constantly trying to find new ways to keep track of them and their assets – and then take as much as the law allows.
Information gathered from tax haven countries shows that the number of U.S. citizens requesting permanent resident status is doubling every two years. Estimates place these permanent expatriates at around 100,000 a year. Approximately 2.5-3 million expats register with the State Department each year. Many of them are business or government employees sent over on assignment, but there are a growing number who might be considered to be escaping from America. Some are renouncing their citizenship, or keeping citizenship but staying on as permanent residents. Organizations that deal with expatriates estimate that there are more like 3-6 million living abroad. They have their own Web sites, magazines, and system of communicating with each other.
Very seldom does government discuss the situation in public. Nonetheless, they obviously recognize that there is a problem, because they have created draconian laws to deal with it. Laws created to punish expatriates include an amendment to the Health Insurance Portability and Accountability Act of 1996. That act claims the right to tax expatriates for 10 years after they renounce their citizenship. The Immigration and Nationality Act, also of 1996, permanently denies expatriates entry into the United States if the government has “reason to believe” that the expatriate renounced citizenship for tax reasons.
While Congress doesn’t want to talk about it, they are largely responsible for many of these people choosing to find homes outside the United States. Take, for instance, the Civil Asset Forfeiture Reform Act of 1999. This cutie pie requires that U.S. citizens disclose all their financial information or they lose any future right to challenge property forfeiture in any U.S. court. One wonders whatever happened to the Fourth and Fifth Amendments to the Constitution. It shouldn’t be too surprising that people are quietly packing up and leaving and telling the feds to take a hike.
It is a fact that the top-earning 1 percent of U.S. taxpayers pay one-third of all federal individual income taxes collected. The top 1 percent of taxpayers pay one-third more than they did in 1990.
John Gavers, expert and scholar on the subject of why people leave the United States, says, “The United States shares with Libya the fact that it claims the right to tax ex-citizens regardless of where in the world that income is earned. But Libya is not so tyrannical as to claim the right to tax ex-citizens for ten years after they renounce their citizenship.”
Gavers maintains that once upon a time when Americans left the U.S., much of their wealth remained behind in tax-sheltered investments. But since 1996, expatriate Americans are taking all their wealth with them rather than leaving it and risking IRS confiscation. Many U.S. citizens do not renounce their citizenship, but neither do they disclose that their funds may be part of the estimated $2 trillion held in offshore accounts.
Gavers concludes that it isn’t just taxes and the IRS causing citizens to leave, but rather the frivolous and irresponsible lawsuits brought against both small and large companies. Federal, state and local governments have found a cash cow in these lawsuits. As columnist Charley Reese stated recently, “This assault on the tobacco companies illustrates four negatives in current America. One, the rule of law is being destroyed before our very eyes by unscrupulous lawyers, dimwit judges and corrupted legislators. We, as citizens, will pay more for this than the tobacco companies will pay for their alleged sins.”
It is difficult to get Clint Eastwood to comment on politics or government abuse. Unlike his contemporaries among the Hollywood left with their verbose and mindless chattering, Eastwood is quiet. But Libertarian Eastwood came out of hiding when a frivolous lawsuit against his restaurant in California had him on Capitol Hill pleading for congressional relief against trial lawyers and for tort reform. The late Sonny Bono became a politician when silly regulations and red tape used against his business energized him to run for office. This is the situation most small-business owners face. The mega-corporations have the funds to fight these lawsuits, but small businesses do not and that is one reason many are choosing to liquidate their assets and head for the border.
Every week I get e-mail from business owners who tell me of their plans to leave the United States because they see no relief in sight. And they are sick and tired of the moral climate, the poor education their children are receiving, and the regulations and unfunded mandates that are killing them. The Republican Congress has not been much help. Though they attempted to reduce regulations and agency intrusion, they were overwhelmed and demonized in the press, so they caved. Rather than continuing to fight the leviathan government, they became part of it. Republicans in general have been less than effective.
In 1981, the year Ronald Reagan lowered tax rates, few U.S. citizens renounced their citizenship. However, the pace of renunciation has picked up ever since. The wealthy are leaving at the highest rate ever, despite the good economy, taking their investment capital with them. A few notables are billionaire John Dorrance III, heir to the Campbell Soup fortune, who now lives in Ireland. In Dublin alone there are approximately 46,000 Americans who have taken up residence. Then there is the intriguing billionaire Mark Mobius, who obtained a German citizenship through his parents and now lives in Hong Kong and Singapore. Ted Arison, founder of Carnival Cruise Lines, kept his Israeli citizenship and now lives there. The list is long and growing.
Interestingly, it is no longer merely the super-rich who are heading for the border. Hundreds of thousands of less affluent Americans now live in Canada and Mexico. An estimated 550,000 live in Mexico, with the largest communities in Guadalajara and Lake Chapala, and an estimated 627,000 live in Canada. In addition, countries ranging from Britain to Japan to Israel are seeing growing numbers of Americans.
What kind of people are we losing? Bernt Bratsberg, an economist at Kansas State University, stated, “It is the best and brightest, the innovators, who leave.” He believes that in the 21st century countries will increasingly compete for top talent. Other analysts argue that in the United States the outflow will be made up by an influx of foreign workers.
Where the Living Is Cheaper
Living in Mexico can be relatively cheap. The cost for a decent house is in the $50,000 range, and help is plentiful. A dollar an hour is the standard wage for gardeners or house help, and that is significantly more than the average $3.50 a day that most Mexicans who live in rural areas earn. One American couple said that they live comfortably on $600 a month. Crime in some areas is extremely high, just as it is in the U.S., but most of that crime is committed on Mexicans by other Mexicans. Crimes against Americans happen, but not in significant enough numbers to keep people from moving there. The new president, Vicente Fox, would like to open the borders even more and encourage more Americans to make their homes in Mexico.
The exchange rate in Canada gives Americans 150 percent on the dollar. Take a Canadian home price of $150,000 and subtract about 45 percent. A large home on Cape Breton Island with an ocean view can be had for an average of $125,000 American. Smaller homes and cottages can be found for a third of that.
Though the cost of living has skyrocketed in Ireland, one American who emigrated was able to live on $7,000 for 18 months in a stone cottage in the west of Ireland. What makes it attractive for some of us is that Ireland doesn’t tax writers and artists.
Some American expatriates prefer the Bahamas and the Caribbean islands, and Costa Rica, Panama, Israel and Spain seem to be destinations of choice as well. The living costs are highest in Japan and Korea.
But in order to become a permanent resident in any of these places, one has to have lots of cash and/or assets. Buying a home is not a problem, but seeking immigrant status is. You may have a problem unless you have a critical skill, are young, or have enough money so that you will not be a drain on government resources.
The popular expatriate magazine Escape from America interviews expatriates and explains the reasons people leave the states for overseas. In the most recent issue two Americans, Tim Sheppard and his wife Yumiko, took a trip to Belize and eventually bought property there. Mr. Sheppard says, “I have been looking for my own personal spot for years. The U.S. is too crowded, expensive, and I am tired of all the damn rules. I was surprised that Belize, undoubtedly the most expensive Central American country for day-to-day stuff, had the best deals I’ve found on land.”
Of course, the U.S. government says, “So what? Let them leave. We have foreign capital to take up the slack.” That attitude, however, will only go so far. As the northeastern United States found out years ago, the exodus of businesses that began in the late 1960s and early ’70s to the South and West cut into the economic health and growth prospects of the Northeast. The centers of power are still there, but the demographics show viable businesses are moving out. The South offered low taxes, non-union shops and great infrastructure deals that attracted businesses by the thousands from all over the world. The Midwestern rust belt suffered a similar fate as companies moved overseas because of cheaper labor, fewer union hassles and less government regulation.
Atlanta, Georgia, went from being an overgrown cow town to an international city. Its suburbs are burgeoning with the names of international corporations and businesses that were once headquartered in the Northeast or California. Atlanta offers a haven for business and relatively inexpensive living costs. It has never really seen a major recession since the ’70s, and even then the housing market never went into the slump that California and the Northeast experienced.
Today the Carolinas are among the fastest-growing areas in the country because of the low taxes, good climate and a less restrictive mindset. The area is becoming a new Silicon Valley. The West is also experiencing record growth – not only California, but also Colorado, New Mexico and Arizona. But as western and southern states lose control of their destiny to the central government in Washington, businesses and people will look elsewhere for freedom and opportunity.
The day may come when some South American nation or Canada rids itself of socialism and instability and attracts those who are tired of the growing tendency toward socialism and fascism in the United States. Chile has privatized its social security system, and there is every indication that nearly everyone in the country with a job will retire as a millionaire.
It is too bad the U.S. can’t convince its statists to recognize that social security as presently constituted is bankrupting us. The Democrats, particularly the Progressive Caucus, are socialist. They do not want to admit that social security is limping along and without massive tax increases won’t be there for the generation following the boomers. Fewer people will be supporting more old people unless the system is drastically overhauled. However, this would require that statists in government give up power, and they would rather continue to tax young people into forever than change the system. Some Republicans recognize this, but the Democrats are stuck in the 1930s and hung up on a New Deal that has turned into a bad deal.
Additionally, as the United States becomes less free and government becomes ever more addicted to huge taxes and big-brother snooping, more people will look elsewhere for opportunity and freedom. I would bet that if some country promised tomorrow that they would adopt the Bill of Rights as originally written, the trickle of Americans would become a flood.
Taxes and Growing Government Never End
Have you ever noticed how temporary taxes never go away? How they become part of the entire system and then one day the government asks for another temporary tax? Have you ever noticed how government departments and agencies never disappear no matter how many promises are made to the contrary or how irrelevant they have become? It is very seldom that government ends a tax or removes a government agency. Recently Congress got rid of one tax, but as sure as the sun rises they will replace it with another.
The Gore phone tax is one example of taxes created out of whole cloth and slipped into the system. This tax can add a significant amount of money to monthly phone charges and it once again makes business a tax collector for the government. On top of that, gas taxes make up a huge part of the cost of gas. Oil company profits pale in comparison. Even when we suffer through the highest gas prices in our history, the government refuses to reduce or put gas taxes on temporary hold. Neither political party will get rid of that tax, so don’t count on the Republicans for help here. Some in Congress are attempting to address the unfair tax system, but whether or not they succeed remains to be seen.
The Americans for a Fair Tax, or the ‘Fair Tax’ movement, has been under way for several years. Congressmen John Linder of Georgia and Collin Peterson of Minnesota are two of its backers; they introduced H.R.2525 in 1999. The AFT says that some of the best economic minds in the country have backed it, including researchers from Harvard, Stanford, Boston University, Rice University, MIT and others. The Fair Tax proposal would eliminate the income tax in its entirety, including all corporate and individual income taxes, along with the plethora of smaller taxes. All of these taxes would be replaced by a single-rate national sales tax on the purchase of new goods and personal consumption.
National Sales Tax: The Fair Tax Book: Saying Goodbye to the Income Tax and the IRS
According to the studies, no American would pay taxes on necessities, and the tax would raise the same amount of money as the current system. It also would alleviate the most prominent problem driving people out of the country or to offshore accounts, and that is the intrusiveness of the IRS. In the past Congress has not been quick to change policy except to make things more complicated and more expensive – Reagan’s tax rate cut was an aberration. Therefore, it is most likely that Americans will be driven offshore or out of the country in increasing numbers as more wealthy and middle-class Americans carry a growing tax burden.
Perhaps this is how globalization will occur. The U.S. government will make life such hell for Americans that more and more of them will look elsewhere for living space, lower taxes and less government interference in their lives.
What Will It Take?
How much will Americans put up with? How much taxation is enough? How much abuse by government agencies of private citizens and business will the people stand for? Many of the wealthier and more independent-minded have already answered that question by leaving.
Poorer Americans have the income tax credit at the moment. But what happens when the top 10 percent paying most of the taxes take their money and go elsewhere? That tax burden will be passed down from group to group until there is no more tax credit and every American is doing little but supporting government. Count on it, government will survive and use any means at its disposal to stay alive. If that means confiscating what belongs to the poor, government will do so and call it wonderful and just and American. Even our representatives will find reasons to justify it.
We have an exploding prison population. Once upon a time many of the crimes committed would have been considered due to health problems or bad judgment or insanity. Now more people than ever are in prison for possession of drugs or perpetrating “crimes” against the environment or government or the new class of “hate crimes.” California is about to make gun owners a criminal class as well. Outlawing and confiscating the collector’s SKS is a beginning.
Canada is finding that some provinces are talking open rebellion because of its new gun laws. Additionally, the western provinces have poured money into the socialist programs of eastern Canada. Some Canadians in Alberta and Saskatchewan have had it as their natural and human resources are controlled and wasted by those who return nothing to them. A recent poll showed that thousands of Canadian gun owners are planning to break the law.
There is a resurgence of separatist movements all over the globe. Will the new socialist-fascists in the Northern Hemisphere make criminals and secessionists of us all? Or will people finally decide they have had enough.
How much longer will large and small businesses allow themselves to be sued into oblivion? Perhaps the entire U.S. will have a giant one-time national “sue-athon” and just hand over the proceeds to all levels of government and the trial lawyers, because that is what is happening now.
How many more laws will the state create, thus making more and more people criminals? Will we live in an Orwellian world where “face crimes” are punished as yet more stupid regulations place everyone in jeopardy of being judged by the new Salem witch-hunters? The judges will not come from the Christian right, as some predict. They will come from a dark side of human nature that has no politics. That dark side is closer to Hitler and Stalin and Mao. It is the evil that would deny people the right to be at liberty in their persons and property and more importantly in the way they think and believe. This evil would be a thousand times worse than anything a Jerry Falwell or Pat Robertson could EVER dream up. What is amazing is that it will call itself truth and good and it will be a tyrannical horror.
I expect in America the elections will occur. Bush or Gore will be elected, and the growth of government will continue. The Republican platform does not suggest the end to one single agency or department, and the Democratic platform will be worse. As a British writer challenged me, “When has government ever willingly reformed itself, downsized itself?” Can YOU think of a case? I can’t.
I wonder what happens when taxpayers have to pay for a government that no longer takes the Bill of Rights seriously. How long will people accept a situation where government agencies become more powerful and adversarial and their apologists in the Congress and White House allow it? How much longer will people be willing to pay for the destruction of their liberty? Will America put up with it or will millions of Americans eventually be running for the border?
This column was first published at NewsMax.com on July 30, 2000. Copyright © 2000-2011 Diane Alden.
The Moral Liberal Senior Editor, Diane Alden, was one of NewsMax.com’s most popular and outspoken pundits ( 1999–2008), and before that, a wonk for The Nevada Policy Institute. A former DJ in Georgia, Diane of late has been a weekly guest on the East Coast hit program, The Marc Bernier Show. Diane is loved for her quick sense of humor, creative vocabulary, independence of mind, and her penetrating analysis of a wide range of political, economic, and cultural issues.