Eventually, job creators and those that support the country already, will get fed up with being punished for their success and will either quit or leave.
Data shows that over 7 times the amount of people renounced U.S. citizenship in 2011 than did in 2008 before Barack Obama took office.
The chart below shows the 2012 Tax Rates by level of income.
May 1, 2012, Bloomberg, headlined with "Wealthy Americans Queue to Give Up Their Passports."
Bloomberg reports:
About 1,780 expatriates gave up their nationality at U.S. embassies last year, up from 235 in 2008, according to Andy Sundberg, secretary of Geneva’s Overseas American Academy, citing figures from the government’s Federal Register.
More recently it was announced that FaceBook co-founder, Eduardo Saverin, is one of those expatriates, who in September 2011 filed to to give up his citizenship in the United States.
This kicked off a firestorm of speculation, despite Saverin's personal choice to decide to live and work elsewhere.
ABC News reports:
“My decision to expatriate was based solely on my interest in working and living in Singapore, where I have been since 2009,” Saverin, 30, said in a statement released to ABC News. “I am obligated to and will pay hundreds of millions of dollars in taxes to the United States government. I have paid and will continue to pay any taxes due on everything I earned while a U.S. citizen.”
Saverin, who helped Mark Zuckerberg develop the social network as Harvard students, is expected to save millions of dollars by not paying capital gains taxes on his shares of Facebook, which is expected to have the largest technology IPO ever on Friday.
His stake in the company is estimated to be worth over $3 billion of Facebook once the company goes public on Friday.
Last week, reports revealed Saverin filed in September 2011 to give up his citizenship which became official in September, before Facebook announced its plans in February this year.
“It is unfortunate that my personal choice has led to a public debate, based not on the facts, but entirely on speculation and misinformation,” he said in the statement.
Saverin paid a standard “exit” tax, which included approximately 15 percent of the pre-IPO value of his shares. Saverin is likely saving millions of dollars because he will not pay capital gains taxes while he lives in Singapore.
Bloomberg, via Washington Post:
Facebook Inc. co-founder Eduardo Saverin will save at least $67 million in federal income taxes by dropping U.S. citizenship, according to a Bloomberg analysis of the company’s stock price. Those savings will keep growing if Facebook’s shares increase.
Saverin renounced his citizenship around September and he lives in Singapore, according to his spokesman, Tom Goodman. Saverin, 30, was part of a small group of Harvard University students who started the social networking site. He owns about 4 percent of the company, according to whoownsfacebook.com.
The would-be savings underscore why more people are giving up U.S. citizenship before potential increases in taxes for the highest earners. The value of Saverin’s stake has swelled along with increases in Facebook’s share price before its planned initial public offering. The company plans to sell shares for as high as $38 apiece this week, compared with $32.10 in private auctions on SharesPost Inc. on Sept. 26.
More:
Americans who give up their citizenship owe what is effectively an exit tax on the estimated capital gains from their stock holdings at the time of the renunciation. Saverin’s bill would be about $365 million, though even that can be deferred indefinitely until he actually sells the shares.
In the mean time, Saverin could choose to only pay interest to the U.S. government during the deferral period -- now at an annual rate of 3.28 percent.
His savings may be even greater because Saverin’s tax advisers could argue that the value of his stake in September was less than the $2.44 billion used in Bloomberg’s calculation because selling such a large amount of stock at the then-market price wasn’t possible.
By locking in his liability last year, Saverin may enjoy one more benefit: The capital gains tax rate is set to increase to 20 percent or even higher.
Despite Democrats being warned for decades about the ramifications of punishing those that are successful instead of encouraging them, and with full knowledge of the massive increase of people lining up to renounce their citizenship, Democrats are now manufacturing "outrage" when confronted with the reality of their attacks on the wealthy in the United States.
Sen. Chuck Schumer, D-N.Y., said Sen. Bob Casey, D-Pa., have called Saverin’s move an “outrage.” Their proposed legislation calls for re-imposing a 30 percent tax on capital gains on expatriates like Saverin who take up residence in a foreign country.
Wall Street Journal, who has no sympathy for Saverin, addresses Schumer and Casey's outrage:
Whatever Mr. Saverin's motivation, the more important point is that it is his decision, however misguided. America was built on millions of similar individual decisions to come to our shores. It is precisely that ability to decide for oneself that has made America such a magnet for two centuries.
The way to continue to be a magnet for the best and brightest is not to impose Soviet-style exit taxes to punish people who want to leave the country. That is what oppressive and demagogic regimes do, and it's humiliating to see U.S. Senators posture in such fashion. The way to punish Mr. Saverin is to make the U.S. so appealing and dynamic again that he'll be sorry he ever left.
It is extremely doubtful Schumer and Casey's optical political ploy will pass Congress and only Saverin really knows whether his renouncing citizenship is for the reasons he stated or just his being one in a long line of people that have decided being a U.S. citizen is no longer worth being attacked by Obama and liberals across the board and his bank account being used as if it were Democrats' personal wallet, but the fact is Saverin and over 1,700 just last year alone will no longer be here. This makes it harder on those staying.
In February, billionaire heiresses Anna Getty, joined a handful of her family members in also cutting permanent ties to the U.S, which Politico describes as possibly being done for tax reasons.
[Update] A few more names of high profile wealthy that made the choice Saverin and Getty made;
John “Ippy” Dorrance (Campbells Soup) - Ireland
Kenneth Dart (Dart Container) - Belize
Sir John Templeton (Templeton Fund) - Bahamas
Mark Mobius (Templeton Emerging Markets Fund) - Germany
Fred Freible (Locktite) - Turks & Caicos
Michael Dingman (Abex & Ford) - Bahamas
Joseph Bogdanovich (Star-Kist & H.J. Heinz)
4 of the J. Paul Getty grandsons, Richard Minns, Ted Arison
They will be buying homes, land, cars, food, clothing etc.... somewhere else. The taxes they were already paying will now benefit another country, not ours. Businesses will be created and people will be employed...... somewhere else.
So I go back to the question I asked in April of 2011: "Who Are They Gonna Tax When The Rich Fall Or Move Or Simply Quit?"