Friday, June 28, 2013

The Departure Tax

There is no such thing as a “departure tax” per say. However, the estate or “death tax” is a good example of a “departure tax”. In 2012, people worth more than 5 million dollars had to pay a 35% tax (1 million dollars and 55% tax rate in 2013 if an agreement is not reached to change the law) on their assets when they die. Hence, people can only inherit up to 65% of the assets owned by the deceased. The “gift tax” prevents people from avoiding the “death tax” by transferring their assets to someone (other than their spouse) before they die. The problem with these taxes and many tax laws is that income and assets do not mean wealth. A farmer may pass his business to his children upon his death. This farm family may be middle class based on income and wealth, but because the farm has millions in land assets, the children may be forced to give up half its property to pay for the death tax. In doing so, this reduces their crop size and their income in future years. The same can be said of any business – assets and income do not necessarily equate to wealth. Hence, the “death tax” can destroy small businesses from being passed down to future generations.

If the government can tax an individual when they die (depart from earth), then what is to stop them from implementing other departure taxes? Nothing! If the Supreme Court says the government can tax you for not buying a product (ObamaCare), then the government pretty much has ultimate powers when it comes to taxing individuals and companies.

So what are some “departure taxes” we may be able to expect from local, state, and federal governments in the future? How about a tax to depart the nation, state, or locality? California is losing about 200,000 people per year since the recession hit. The primary reason people are leaving the state is to avoid high taxes. To further complicate tax issues, Californians recently elected super majorities of Democrats in both their house and senate, essentially giving their ATM passwords to the legislator. People fleeing California are costing the state millions in lost tax revenues. Hence, what is to stop them from levying a tax on people leaving the state? This type of tax can have two effects 1. It can stop people from leaving the state and 2. This will help the state to recoup possible lost revenues – this is a win – win for the government.

What about a departure tax for people rescinding their citizenship? Thousands of Americans each year of are giving up their U.S. citizenship mostly to avoid paying income taxes. In fact, there is nothing stopping the government from making the fine (tax) for rescinding their citizenship some grotesque amount to ultimately stop people from taking this action.

What about the departure tax that Obama wants to place on corporations that move manufacturing jobs overseas? Even though his policies and ideology are creating the hardships and the reasons for these jobs moving overseas, he wants to prevent it by doing what? Yes, by creating more hardship on these companies by taxing them more. This makes absolute sense if you are a pro-government supporter.

As Time Magazine states the reason for picking Obama as their Man of the Year – he is the “architect of the new America.” Yes, this is the new America, one where it not only uses taxes to force Americans buy products they do not want and distribute wealth to pay for a welfare and dependent state, but to strip Americans of their freedoms to choose where to live and how to die.