A former student who was passed over for an engineering position was lamenting the fact that corporations and politicians complain about the United States not having enough qualified science majors for hire in order to justify bringing into the U.S. lower paid engineers from emerging economies.
It is hard enough having a worthless liberal college degree with no chance of employment. It is much harder to understand how an engineer cannot find a job in this “growing and rosy” economy.
The Bureau of Economic Analysis (BEA) released the data showing that the third quarter GDP rose to 3.1 percent. That is fantastic news say the MSM pundits. We are rolling in recovery. Never mind that much of the increase came from government spending for national defense, restocking of business inventories, consumer spending in the form of durable goods such as cars and car parts, and the higher costs of health care and of mundane commodities such as food and gasoline. For proper disclosure, I must say that food and gasoline are no longer counted in the Consumer Price Index, a.k.a. inflation. We would not want these commodities that hardly anybody consumes to mess up the rosy economic talking points.
Aside from the fact that it is President Bush’s fault, what is a college graduate to do who cannot find a job or an unemployed engineer? Should they move back in with mom and dad, should they go on welfare, or should they live from savings or a trust fund? Living from special savings, a trust fund, selling stock, a house, a car, a motorcycle, or cashing out mutual funds sounds more independent, however, there are capital gains taxes that must be paid and these are going to go up significantly after January 1, 2013.
Many companies are paying next year’s dividends to their shareholders now in order to avoid a huge tax bill increase. Costco is paying out a special dividend of $7 per share to stockholders, for a total of $3 billion. “To pay for the dividend, Costco is going to sell $3.5 billion in debt and it will buy back some shares as well.” Taxes on corporate dividends are expected to go up from the current 15 percent to as much as 39.6 percent. Costco (warehouse store), Carnival (cruise ships), Brown-Forman (liquor) are borrowing money to pay these dividends called dividend recaps. (http://finance.fortune.cnn.com/2012/12/03/costco-fiscal-cliff-dividend/)
Americans could migrate to other states without state tax or to other countries without confiscatory federal taxes. Gérard Depardieu did just that – he gave up his French passport and moved to Belgium. It was not that Gérard Depardieu, a beloved French actor who delighted people around the world with his fabulous acting and directing, is not patriotic; au contraire mon frere, he said, he had paid 85 percent of his income in taxes last year. He was just tired of being ripped off by France’s greedy socialist government who wanted to confiscate even more. After all, what is “fairer” or more “socially just” (to quote progressives) than to take from the “undeserving rich” who worked hard to create their wealth and income, and to give to the poor who are entitled to everything free for life, no effort necessary?
Americans could migrate and give up their citizenship or green card held for at least 8 years or more, but then, they have to pay the piper – exit taxes.
The Heroes Earnings Assistance and Relief Tax Act of 2008 (The HEART Act) applies to U.S. citizens who expatriate and long-term U.S. permanent residents who give up their green cards. The exit tax is levied on “unrealized gains on all assets in the U.S. and worldwide, including grantor trusts, as well as any future gifts or bequests to U.S. citizens and residents.” (http://www.isla-offshore.com/second-passport/usa-expats-exit-tax/)
Eduardo Saverin of Facebook had already paid capital gains taxes before he decided to move his fortune out of the United States. The co-founder of Facebook is said to have saved $67 million in taxes by moving out. Unhappy with the outcome, Senator Charles Schumer (D-NY) proposed a bill to tax expatriates 30 percent unless they show that renouncing U.S. citizenship was not based on tax avoidance. The proposed bill, the “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy (Ex-Patriot) would bar re-entry into the U.S. (http://www.forbes.com/sites/robertwood/2012/05/18/expats-face-steep-exit-tax-courtesy-of-facebook/)
The expatriation tax appeared first in U.S. tax law as the Foreign Investors Tax Act of 1966 (FITA). “FITA introduced Sections 877, 2107, and 2501 to the Internal Revenue Code.” According to Stephen M. Moskowitz, Esq. and Anthony V. Diosdi, Esq., the computation is quite complex and includes income such as gains from the sale or exchange of stock and property, or debt obligations issued by a U.S. person or company. (http://www.jdsupra.com/legalnews/just-how-is-the-expatriation-tax-calcula-40024/)
I came across a form of exit tax when I left my country. In order to receive a visa for permanent non-citizen residence in the U.S., I had to pay a tax for all the government benefits I had received in my first twenty years of life, schooling, medical care, subsidized concrete block housing, pot-holed road use, constant police surveillance, and other “services” I was not even aware existed or received. I was worried since I had no penny to my name and I knew I would not be able to leave without paying. The final figure was provided to me after months of deliberation and computation by the communist party apparatchiks – my freedom was worth exactly $160 U.S. dollars. I owned a Japanese boom box, it was the rage back then, which I sold quickly for $160, and paid my “exit tax.” This cleared my name – I did not owe anything to the government of Romania, for the communist care and education I had received. I was finally free.
The far reaching arm of the IRS may not be so cheap if American citizens run afoul of the proposed 30 percent exit tax. No matter how you exit the U.S., dead or alive, you are going to be taxed to the max. So, it is true, the only certainties in life are death and taxes.