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
 

More from MSN Money


185Comments
Nov 14, 2012 5:02PM
avatar
There is 7000 years of history that will tell everyone that when the taxpayers abandon a government that government will fall. There are usually bloody revolutions before the fall when government try to enforce taxation. It is time to consider tax evasion also. If Obama gets his tax increases watch business move out of America.
Nov 14, 2012 4:53PM
avatar
It's not selfishness.  Real americans who don't want uncle sam tucking them in at night are out numbered by  stupid people who keep voting for these losers.  I am just guessing here but I would bet 80% of the poeple who vote for Oblamer don't have a clue of who the rest of the people in office even are.  There should be a test in order to cast a vote.  If you cannot pass it you have know say in an election.  Perhaps if people were made to study and understand the issue they might make better choices. 
Nov 14, 2012 4:05PM
avatar
that is not a problem people will not pay and any agents that would try and collect taxes better be able to run fast..and no person in Texas will have income over 100,000 because they would just barter to go around that deal.
avatar

" It's the ultimate exercise in selfishness."   Or they may think the deck is stacked against them as some articles suggest.  

 

Areas with 100% Obama votes are pretty much suspect especially when an article stated a person had to try three times to get her vote cast for Romney before she could accept the ballot.  

 

Maybe these people don't like killing babies, living off the Gov't or perhaps they feel the money they earn is theirs while taxes are too high.    There are many reasons they may choose to secede other than for selfish reasons.  They just may feel overwhelmed at this time.

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

VIDEO ON MSN MONEY

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min
Sponsored by:

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The major averages hover near their respective flat lines after slumping from their opening highs.

The technology sector (+0.8%) continues trading well ahead of the remaining groups, but the earnings-driven strength of the sector has not translated into buying interest in other areas of the market. Outside of technology, only consumer staples (+0.2%), and utilities (+0.6%) trade in the green.

On the downside, the health care sector (-0.5%) lags amid renewed ... More


Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.