Time to end double tax on Americans

Freedom New Mexico

America long has been, and remains, a refuge for “your tired, your poor, Your huddled masses yearning to breathe free,” as Emma Lazarus’ poem on the Statue of Liberty puts it.

But, increasingly, Americans are going the other way — to foreign countries — to escape the U.S. government’s repressive tax laws.

“Amid mounting frustration over taxation and banking problems, small but growing numbers of overseas Americans are taking the weighty step of renouncing their citizenship,” the New York Times reported April 25. The numbers currently are not large, but are growing fast, nearly tripling, to 743 last year from 235 in 2008.

“American expats have long complained that the United States is the only industrialized country to tax citizens on income earned abroad,” notes the Times. Americans can deduct the first $91,400 of foreign income from their U.S. tax levies.

But if an American lives in France and makes, say, $1 million a year, here’s what happens. That country’s top income tax rate is 52.75 percent. And America’s top income tax rate (in 2010) is 35 percent. Total: a combined 87.75 percent marginal tax rate. Take-home pay: 12.25 percent of income.

At that rate, it’s hardly worth working.

“American citizenship was once a very highly prized possession,” said Walter Block, an economics professor at Loyola University in New Orleans. But, Block added, America now maintains an expensive imperial foreign deployment of “some 800 military bases in about 150 foreign countries,” even in prosperous, free Germany and Japan. Some of these forces are used for “invading countries that do not constitute the slightest threat to us.”

“In order to fund these ventures” he added, “the American tax system is rapacious: targeting U.S. citizens who live abroad. It is no wonder to me that more and more people are giving up their citizenship in America.”

The Times article includes a heartbreaking story of a woman who has fond recollections of serving in the Marine Corps and now is an executive at a Swiss company. Speaking anonymously, she said she agonized for 10 years about renouncing her U.S. citizenship. Yet she finally got tired of paying double taxation, and of seeing that her children would pay a double tax, too, while receiving little in return.

“I loved my time in the Marines, and the U.S. is still a great country,” the woman said. “But having lived here 20 years and having to pay and file while seeing other countries’ nationals not having to do that, I just think it’s grossly unfair.”

“It’s taxation without representation,” she said.

Indeed. And didn’t we fight a War of Independence against a distant tyrant who imposed on America “taxation without representation”?

When such Americans as the former Marine renounce their citizenship, they not only deny the U.S. Treasury a double-tax that never should be assessed, they deny America their brains, their productivity and their good citizenship. It reminds us of the “brain drain” from the Soviet Union in the 1970s and 1980s, as scientists and artists defected from communism to free America.

Whatever else it does on taxes, Congress should end the only double income tax in the industrial world, letting Americans abroad be taxed only in the foreign land until they return here. This again should be the Land of the Free.