Schumer's War on the Rich
While discussing Facebook's partial owner Eduardo Saverin's decision to renounce his U.S. citizenship, Senator Chuck Schumer (D-NY) recently said, "There should be no financial gain from renouncing your country."
I think the three-term senator from New York said something we should all be able to agree on. The U.S. tax code should be written to encourage producers like Saverin to keep their talents, ability, and money in this country.
Instead, we have exactly the opposite. The U.S. tax code is so oppressive that smart and successful people like Saverin are compelled to renounce citizenship in order to keep more of their own hard-earned wages.
On May 17, Schumer held a press conference to publicly scold Saverin for his decision to turn in his passport. That prompted Schumer to make Saverin the poster child of the evil rich class.
I find it ironic that Schumer never once in the press conference looked inward at himself and the Congress for creating the very environment that makes it possible to get "financial gain from renouncing citizenship." He failed to address his 30-year opportunity since 1981, serving as a member of Congress or United States senator, to make changes to the tax code. Congress and the tax code should incentivize people to keep their innovative thinking and investment gains in this country, which educated and protected them.
Not surprisingly, Senator Schumer is quick to point his finger at the person trying to keep more of his wages rather than analyze his own philosophy of oppressive taxation.
If it is true that Saverin renounced his citizenship in order to pay less tax, let us consider what he is really doing. For those who pay taxes, it is natural to attempt to lower the tax bill.
Do you not fight the local property tax appraiser if you feel the value of your property is too high?
Do you not take mortgage, investment loss, and charitable contribution deductions?
Senator Schumer and other "tax the rich" advocates should be alarmed to know that many people are catching on to this idea of renouncing citizenship. According to the IRS, in 2008 only 226 people chose to renounce their U.S. citizenship. After three years of the Obama presidency and the very real threat of capital gains taxes increasing next year, the number of people turning in their passports has skyrocketed almost 800%.
To continue indulging the insatiable appetite of the federal government, Senator Schumer has proposed the "Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy," or Ex-Patriot Act for short. This tax would impose a 30% capital gains tax on an individual's future investment income if the person could not prove that he renounced citizenship for any reason other than to save money on taxes. If the investor chooses to not pay that tax bill, he or she will be banned from entering the U.S.
I applaud Senator Schumer for identifying the very real problem of people wanting to avoid the high tax rate in this country. Unfortunately, his solution to the problem is to initiate a new tax and ban those people from returning to the country.
Instead of looking for ways to threaten the producers in the world with more taxes, our country would be better-served if Senator Schumer and Congress would aim to retain people like Saverin and his future investments by lowering taxes.