On Tax Day 2012 we’re greeted with the news that some 1,800 Americans, a record number, last year renounced their citizenship or turned in Green Cards . The principal reason was to avoid high American taxes. Particularly onerous is the fact that the United States, unique among advanced countries, taxes its citizens on income that they earn while working overseas.
This is yet another example of Atlas shrugging, of individuals opting out of systems that penalize them for seeking their own prosperity through their own productive efforts. In recent years, for example, Norway lost its richest citizen, who decided he would rather be a citizen of Cyprus than the target of a government that saw him as a cash cow to be milked dry. (See my article “ Ragnar Shrugged ” May 24, 2006. )
Of course, opting out leaves the looters empty-handed. They don’t like that. This is why European Union governments, aided by the United Nations, seek to cut off all avenues of escape through “tax harmonization,” meaning agreements that all countries will tax at confiscatory levels . And this is why the United States targeted peaceful Switzerland, a country that takes banking privacy seriously and refused to enforce American tax laws on depositors that American tax collectors claimed owed American taxes.
But countries that punish producers will collapse, as Greece and many European countries are doing now, for in the end only freedom works.
Edward Hudgins is research director at the Heartland Institute and former director of advocacy and senior scholar at The Atlas Society.