Want to secede? The IRS has news for you

Departing Americans will find it hard to escape the long arm of Uncle Sam.

By Jonathan Berr Nov 14, 2012 3:21PM
Image: US Capitol (Donovan Reese/Getty Images)Residents in 34 states, apparently horrified at President Obama's re-election, have reportedly signed petitions to secede from the United States. Support for such a move in Texas has reached a point where it requires an official response from the White House.

But are supporters of such an idiotic move thinking about the potential tax consequences?

Escaping the long taxing arm of Uncle Sam is difficult and can be expensive. Americans who live abroad still must pay U.S. taxes if they have yearly earnings above $100,000, a policy which has long been a sore point for expatriates. 

Americans abroad are required to file taxes with the IRS even if they don't owe the U.S. any money. Some foreign residents may even still owe state taxes. To make matters worse, U.S. citizens who renounce their citizenship are subject to a one-time exit tax of 15% on the fair market value of all their assets less their basis costs. Giving up a U.S. passport doesn't get someone out of paying any back taxes.

Seceding from the union also presents all sorts of practical problems for states. Texas, which many Texans are quick to point out was for a brief time a foreign country, is a case in point.   Do the 65,000 or so residents of the Lone Star State who have signed the petition believe that the U.S. would just hand over tens of billions in assets such as interstate highways, military bases and border crossings without anything in return? It's doubtful. 

An independent Texas would still need plenty of help from the U.S. The Texas Rangers and the state's National Guard would probably not be able to battle Mexican drug cartels on their own. Thank goodness, most Texans and residents of other states oppose this daft idea, which didn't work out so well when it was last tried 150 years ago.

Though the idea of secession from the U.S. seems tinfoil-hat crazy, wealthier Americans are increasingly renouncing their citizenship for tax reasons. According to Fox News.com, as many as 8,000 U.S. citizens are expected to give up their U.S. passports this year, more than double the 3,805 in 2011. The move can save these former Americans big bucks.

"Some are philosophically disgusted at the course our country is taking, in all kinds of ways," tax attorney James Duggan told the site. "They're making a strong protest of 'enough is enough.' But largely, it's an economic decision."

Perhaps those who want to secede also are disgusted by the direction the country is going. If that's true, they should fight for their beliefs. Those that want to quit the U.S. are like children who take their ball home when they are losing on the playground. It's the ultimate exercise in selfishness.

Follow Jonathan Berr on Twitter @jdberr

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Nov 15, 2012 11:13PM

These people are the equivalent of a bunch babies crying because they did not get their way. They thought it was a fluke that Obama won the election the first time and now that he was elected a second time they are crying even more. And they are like Romney trying to blame it on the people that they actually ignored. 

Nov 15, 2012 9:44PM

These secede people, mainly in red states, are dumb and nasty. Not very patriotic either, if they won't even get behind, and try supporting, their elected president and at least give him a chance to fix what the last group left him and our country with. Instead, seemingly, they'd rather see things go to hell than support him. Why? Because he's black? Because they've bought the "socialist" meme? What a bunch of LOSERS. If they did secede, it wouldn't take long before the fools would find out which side was  better off. 

Nov 15, 2012 8:16PM
Berr-what a scintillating view.  Do you think Texas would hand over their oil, gas, food, technology, revenue etc?  You simpleton.  Go back to crayons.  We don't work for the government
 they work for us ding dong.  If all the red states seceded who would all the boo hoo blue states get dems goodies from??? 
Nov 15, 2012 4:32PM
Since the eighties when side trickle-down voodoo economics came into vogue the federal taxes on the super wealthy, as a trend, have been decreasing. The top federal income tax rate has just about been cut in half since 1980 and the effective tax rate on the wealthiest members of our society is the lowest it has been in decades. With the tax code we have been aiding and abetting the transfer of the nations wealth into fewer and fewer hands at the very top. With this hyper concentration of the nation's wealth, much of this wealth is now hoarded and/or used only for speculation. The wealth is stagnating, it is not being spent and it is not creating jobs. Nor is it available to reinvest in the real economy, such as rebuilding the nation's infrastructure. Instead of using the tax code to send evermore wealth to the already wealthy we could use the tax code to put more money into the hands of the middle class. After all, it is not the wealthy who create the jobs, it is middle class spending which creates the jobs. This continual transfer of the nation's wealth to the already very wealthy at the very top of society is not healthy for the nation and it is not healthy for the economy.

Nov 15, 2012 4:24PM
As if the federal government is doing anything about the drug cartels or the borders anyway.
Nov 15, 2012 4:13PM
The secessionists will have ZERO impact! Frankly, the secessionists are a tiny minority of the silly and the foolish, 122 million Americans just voted in the general election that is what counts. This will be a news item for about ten days or so, then the notoriety will be over, you will very rarely hear of it again and the secessionists will be history.
Nov 15, 2012 3:45PM
What would really solve all this acrimony, is to reinforce states rights.  All those responsibilities assumed by the federal government but not given to it by the Constitution would be returned to the states.  Education, commerce, health care, etc.  If Oregon wants a expansive health care program great, if Colorado wants to legalize pot great, let each state determine it's own course and compete.  We would not be on here calling each other names and forcing our opinions and policies on eveyone else.  Could we agree on this approach?
Nov 15, 2012 1:54PM
They can take the 15% off the end of my gun. And for all you uninformed out there. The idea behind the United States of America was the fact that any state could choose to withdraw from the union at any time. That is why Lincoln was a traitor to the very ideals that founded this country.
Nov 15, 2012 1:00PM
Look at all these Texans in this comment feed. Smh. Never seen so much ignorance in one place. You can't secede. Period. Texas v. White decided this in 1869 and it became the law of the land that this feigned constitutional right of which Texans continually speak was purely null and void. This futile attempt will go down in history as the day Texas got dumber. You are all dumb mother effers without a clue. Choads galore. Wow. You look at the electorate and Obama won every major city and metropolis in Texas, and only the hickvilles out in BFE went red. Jesus. Do you really think your bread and butter Houston, Austin, Dallas, San Antonio, and Beaumont, are going to let you guys break away? LOLOLOLOLOLOLOL...
Nov 15, 2012 10:34AM
The UNTIED States of America! Like a child running away from home, nothing has been said how any of these petitioning States would "improve" their situations by leaving the Union. All this kicking and screaming with no plans, no resolutions, and no grasp of the consequences; just a stick with a bandana full of peanut butter sandwiches tied to the end.
Nov 15, 2012 7:47AM
The rich don't want to pay taxes like everybody else does.   paying your fair share of tax probably will not leave you homeless. you will still be wealthy.  the more you have the greedier you become 
Nov 15, 2012 7:38AM
How about the tens of billions the people of those states had paid?  Or do you think that the money used for the highways was grown on trees??? Last time I saw the federal government need to tax in order to give away money, the reason they are signing a petition to secede is because they are sick and tired of the federal government high spending that is out of control.
Nov 15, 2012 7:32AM
Think of it this way: There is a reason that people want renounce their citizenship and others want their state to secede from the union. Not saying anyone is right or wrong, just trying to look at it from a different perspective. If we think things are that bad in our country, how does it look to the rest of the world? 
Nov 15, 2012 2:01AM
One note about an exit tax mentioned in the article. Actually, only a "covered expatriate" is subject to an exit tax. At Artio Partners we see more clients who want to renounce citizenship, however, each tax situation is unique. www.artiopartners.com
Nov 15, 2012 12:32AM
Nov 14, 2012 11:10PM
You forget what the Texans give the US in federal taxes - I'm sure that the tax dollars are more than what was paid for the "federal" expenditures made for highways and etc.

I think the movement is "in fun" with some element of a protest against the government.  However, I think Texas and the "middle" of the country would do better.  Think oil, agriculture, work ethic and etc.  I would assume that the "coasts" would then pay more for food and energy.  OH!  don't forget the water in Colorado going to California - it would not be free!

This was a fun exercise - Jonathan needs to look at everything before writing an article like this!
Nov 14, 2012 11:05PM
Take a good look at yourselves, you are part of the problem. If education or the lack of an education is why people voted for President Obama, what's your excuse for keeping the same old crooks in congress. One man does not control everything, that is why we have a judicial, legislative and expectative system for checks and balances. Our congressional leaders are millionaires who pay minimum rates for insurance, but refuse to allow the american public that same benefit. This country has turned away from it's traditional God given values for the micro wave lifestyle, If the taxes go up, all the blame does not fall on the presidents shoulders, look at all the fat that goes to things like the bridge to nowhere, the rain forest project to be built in Iowa (wrong state) saving beetles or owls etc. Every congressman wants money for his state and will get it at any price. Before you complain about one man take a good long look at the other 500 or so in congress, boycott their decisions. Now that is where change is really needed.  
Nov 14, 2012 11:01PM
I find it interesting that the author calls the people leaving selfish. The people that elected Obama are the selfish ones. They are in two camps: 1. Those that want the government to take care of them and give them everything, and 2. Those that don't want to help the needy themselves, so they relegate their responsibilities to the government. Electing a socialist as president does not relieve us of the job of helping others. It is still our duty to help those less fortunate.
Nov 14, 2012 9:39PM
My grandfather walked out of Russia in 1920 so we wouldn't have to put up with this.
The family that stayed behind made a lot of money selling gas, food and toilet paper under bridges.
Business is Business
Now try to tax that type of a market.
The Democrats should watch what they wish for.  They may accidentally get there wish.

Nov 14, 2012 8:29PM
When presidents are elected by bribing certain segments of a society with taxpayer money, inre taxpayer paid birth control, free healthcare(nothing is free), etc,, this is what happens. The arrogant clueless president believes he has been appointed King. Whatever happened to Americans who admired successful people, you know, those who built this country? The clueless one thinks compromise and capitulation have the same meanings.
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