A run for the border
By Diane Alden
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 is stalled in Congress held up by the Democrats which would allow more high tech workers into the US. So you ask isn't that good? Shouldn't these jobs be held for Americans? That would be nice but there are too few Americans who go into the sciences and math. Did you realize that nearly half the young Turks in Silicon Valley are Indians or Asian-Americans of Chinese descent? No, our educational system has been too busy teaching diversity and self-esteem and environmental myths as science rather than math and technical subjects. In addition we are not reproducing ourselves in sufficient numbers to take care of the baby boomer bulge down the road. A baby dearth is going to be supporting the 60s generation and one wonders if they will put up with that situation before there is abortion on the other end of life. 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 with Mexican police coming into the United States and acting like Emilio Zappata on a border raid before Pershing went after them.
Everyone hears about those immigration problems. However, there is another that is not talked about either by government or the press. That dilemma is the out emigration of the wealthy, dissatisfied, or adventurous. Include those going abroad for corporations as American on their way up and the numbers are climbing. In regard to the wealthy who are emigrating out, many leave because of the IRS and high taxes. However, reports indicate they are more concerned with IRS misrule than 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, which have fewer rules. Conditions where big brother is not constantly trying to find new ways to keep track of them and their assets.
Government doesn't discuss the situation in public very much. Nonetheless they obviously recognize that there is a problem because they have created draconian laws to deal with it. The wealthy are leaving at the highest rate ever despite the good economy. In addition they are taking their investment capital with them when they leave. The information which can be gathered from tax haven countries shows that the number of US citizens requesting permanent resident status is doubling every two years. Estimates place these permanent expatriates at around 100,000 a year. The State Department shows approximately 2.5 and 3 million register with them each year. Many of these expats are business or government employees sent over on assignment. However, 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 to 6 million living abroad. They have there own web sites, magazines, and system of communicating with each other.
Congress doesn't want to talk about it much but they are largely responsible for many of these people choosing to find home outside the United States. 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. Followed by the Immigration and Nationality Act of 1996, which permanently denies expatriates entry into the United States if, the government has "reason to believe" that the expatriate renounced citizenship for tax reasons. Then there is the Civil Asset Forfeiture Reform Act of 1999. This cutie pie asks that US citizens disclose all their financial information or they lose all future right to challenge any property forfeiture in any US court. It makes one wonder whatever happened to the 4th and 5th 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% of US taxpayers pay one third of all federal individual income tax collected. The top 1% of taxpayers pay one third more than they did in 1990.
Expert and scholar on the subject of why people leave the United States John Gavers 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 would leave the US, they left much of their wealth in tax sheltered investments. But since 1996 Americans who are leaving are taking all their wealth with them rather than leave it and risking IRS confiscation. Many US citizens do not renounce their citizenship but neither do they mention that they may be part of the estimated $2 trillion held in offshore accounts. He concludes that it isn't just taxes and the IRS causing them to leave but the frivolous and irresponsible lawsuits brought against both small and large companies. Local and state government have also 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 the verbose nature of his contemporaries among the Hollywood left he stays 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. The late Sony Bono became a politician when silly regulations and red tape made him so angry he ran for office. This is the situation most small business owners face. It isn't just the mega-corporations having trouble, they have the funds to fight these lawsuits. However, small business does not and that is one reason many are choosing to liquidate their assets and head for the border.
Each week I get e-mail from some of them who tell me of their plans to leave the United States because they see no relief in sight. Plus they are sick and tired of the moral climate and the education that their children are getting. Not even the Republican Congress was of much help. They tried to reduce regulation and agency intrusion without much success. So rather than fighting the leviathan government they have become part of it. They have been less than effective.
When Ronald Reagan lowered tax rates in 1981 no US citizens renounced their citizenship. However, the pace of renunciation has picked up ever since. A few notables are billionaire John Dorrance III heir to Campbell Soup fortune who now lives in Ireland. In Dublin alone there are approximately 46,000 Americans who have taken up residence. Then the very interesting and billionaire Mark Mobius obtained a German citizenship through his parents and now lives in Hong Kong and Singapore. In addition Ted Arison, founder of Carnival Cruise Lines kept his Israeli citizenship.
Many US citizens hold their assets in off shore accounts. But interestingly it is no longer merely the super rich who are heading for the border. Hundreds of thousands now live in Canada and Mexico. An estimated 550,000 live in Mexico with the largest community located in Guadalajara and Lake Chapala. An estimated 627,000 live in Canada. But countries ranging from Britain to Japan to Israel have growing numbers of Americans.
Living in Mexico can be relatively cheap. Costs 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 which most Mexicans earn in rural areas. One couple said that they live comfortably on $600 a month. Crime in some areas is extremely high just as it is in the US but most of that crime is committed on Mexicans by other Mexicans. Crimes and kidnappings on Americans happen but not in significant enough numbers to keep people from moving there. The new President, Vincente Fox would like to open the borders even more and encourage more Americans to make a home in Mexico.
Living abroad is not just for retirees or the very wealthy. 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 it will be made up with an influx of foreign intelligentsia to take their places.
Some American expatriates prefer the Bahamas and the Caribbean islands or Costa Rica, Panama, Dominican Republic, Israel, and Spain seem to be the destinations of choice as well. The highest living costs are in Japan and Korea.
The exchange rate in Canada vis a vis the American dollar gives Americans 150 percent on the dollar. Take a Canadian home price of $150,000 and subtract about 45 percent. A home in Canada with lake or ocean frontage can be purchased dirt-cheap. A large home on Cape Breton Island with an ocean view can be had for an average of $125,000 American. Smaller homes or cottages can be found for a third of that. 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 permanent immigration status is, unless you have a critical skill, are young, or have enough money so that you would not be a drain on government resources.
Though the cost of living has sky rocketed 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 they don't tax writers and artists.
The popular expatriate magazine "Escape from America" interviews and explains the reasons why 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 US 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 government says, "so what let them leave we have foreign capital to take up the slack." However, that attitude will only go so far. As the Northeastern United States found out years ago the exodus of businesses which began in the late 1960s and early 70s to the south and west cut into the economic health and growth prospect of the Northeast. The centers of power are still there but the demographics and viable businesses are moving out. The south offered low taxes, non-union shops, infrastructure deals which attracted business by the thousands from all over the world. The Midwestern rust belt suffered a similar fate as companies moved overseas because of cheaper labor and fewer union hassles. There were fewer regulations and rules and a less rigid demand for conformity.
Places such as 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 headquartered in the Northeast or California. Delta Airlines was once synonymous for being an outstanding employer. The company conducted itself like a small business. The result was tremendous loyalty between management and labor. Along with Coke and CNN headquarters in Atlanta, the town 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, climate, and a less restrictive mind set. It is becoming a new silicon valley. The West is also experiencing record growth. Not California as much as places like Colorado, New Mexico and Arizona. But as western and southern states lose control of their destiny to the central government in Washington, business 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 see the growing tendency towards socialism-fascism in the United States. Chile has a privatized social security system and there is every indication that nearly everyone in the country with a job will retire as a millionaire. The US can't get its statists to recognize the truth that social security as presently constituted is bankrupting us. The Democrats, particularly the progressive caucus is socialist and do not want to admit that what will happen in the future. Fewer people will be supporting more old people unless the system is drastically changed. However, like all statists they do not want to give up too much power. Some Republicans recognize this but the Democrats are stuck in the 1930s and hung up on a New Deal which has turned into a bad deal.
As the United States becomes less free and more addicted to huge taxes and government style big brother snooping into business and personal lives more people will look elsewhere for opportunity and freedom. I would bet that if some country indicated 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 Ends
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? It is very seldom that government removes or ends a tax. Recently Congress got rid of one tax but as sure as the sun rises they replace it with another. The Gore phone tax is one example of taxes created out of whole cloth and slipped into the system and which makes business a tax collector for the government. 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 them on temporary hold. Neither political party will get rid of that tax so don't count on the Republicans for help here.
A British writer challenged me not long ago to think of one instance where government ever willingly reformed itself without revolution or without the collapse of the central government. I couldn't think of one example where this has happened. Like Topsy the state and its arm the government along with taxes to support it just grow.
The Americans for a Fair Tax or the 'Fair Tax' movement have been underway for several years. Congressman John Linder of Georgia and Collin Peterson of Minnesota are two of its congressional backers. They announced H.R.2525 in 1999. The AFT indicates that some of the best economic minds in the country have backed this 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, plus the plethora of smaller taxes. All of these would be replaced by a single rate national sales tax on the purchase of new goods and personal consumption.
According to the study no American would pay taxes on necessities and it raises the same amount of money as the current system. It would also alleviate the most prominent problem driving people out of the country or offshore and that is the intrusiveness of the IRS. Now whether this bill will pass is debatable. Congress has not been quick to change policy except to make things more complicated and more expensive. Therefore, it is most likely that Americans will be driven offshore or out of the country in increasing numbers as more Americans are carry a larger and larger tax burden.
Perhaps this is how globalization will occur. The US 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.
The powers that be in the US must never forget that their subjects are the descendants of those who packed up before and headed for greener pastures. They are also the descendants of those who defeated another form of tyranny in 1776.
While people from foreign nations will come to the United States in record numbers, what of less wealthy native born Americans with a long history in the United States and loathe to leave personal property and family? As the rich leave the middle class will be forced to pay an ever- increasing share of the tax burden. Eventually they will be paying as much as Europeans in taxes. The result is always to halt economic growth and a subsequent loss of jobs. The government will kill the goose that is stuffing it with golden eggs. Reagan supply-siders tried to educate the public on how this works but the growers of government will have none of it.
The Last Best Places
The American intermountain West and the South have experienced and are experiencing tremendous growth because of low taxes and living costs and an attractive way of life. Even while the barons in DC enlarge their power by making rules which do not sit well with these independent folks. Land grabbing by the Clinton administration and the congressional monster known as CARA are symptomatic of the growth of the power of DC and the central government over the American West. It is only beginning to be felt in the East as the misuse of EPA rules shuts down anything rural and agricultural.
But if big brother continues to overwhelm America and as more Americans become more dependent on government it will get to the point where only the successful or the retired will be able to leave. Taking their money and heading for the border may become easier as countries such as Mexico, Canada, Spain and others make it comfortable for Americans to live abroad.
Some Canadian provinces are talking secession. Will Americans be attracted if they succeed and like war protestors of the 1960s head north? Or have we become so lazy and complicit that we will put up with a regulatory state with growing fascist tendencies.
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 they will do so and call it wonderful and just and American. Even our representatives will find reasons to justify it.
How many more laws will the state create which make more and more people subject to arrest and imprisonment? Will we live in an Orwellian world where "face crimes" are punished or more stupid regulations place everyone in jeopardy of being judged by the new Salem witch hunters? The new judges will not be from the Christian right but from a dark side which has no politics but reaches down into something which is not even pagan. That side is closer to Hitler and Stalin and Mao. It is the evil that would deny people 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 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.
We have an exploding prison population and once upon a time many of the crimes committed would have been considered health problems or bad judgement or insanity. More people than ever are in prison for possession of drugs or "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 the new gun laws. Additionally the provinces such as Alberta 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 on breaking the law. Additionally, there is a resurgence of the 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 business allow themselves to be sued into oblivion? Perhaps the entire US 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.
I expect in America the elections will happen. Bush or Gore will be elected but the growth of government will continue. The Republican platform does not suggest the end to one single agency or department. But the Democratic platform will be worse. As the British writer challenged me "when has government every willingly reformed itself, downsized itself?" Can YOU think of a case?
I wonder what happens when taxpayers have to pay for a government which 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 ready will people be 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?
Diane Alden is a senior writer for Enter Stage Right.
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