Want to secede? The IRS has news for you
Departing Americans will find it hard to escape the long arm of Uncle Sam.
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
- Why McDonald's will top $100 again
- Will 'Car of the Year' award power Tesla?
- 800 million Facebook shares hit the market
" 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.
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.
Breaking up big banks is an untested solution to the too big to fail problem that attempts to isolate and dismantle large, troubled institutions while protecting the rest of the economy.
VIDEO ON MSN MONEY
[BRIEFING.COM] The stock market capped the trading week with losses across the major averages. The S&P 500 fell 0.5% to surrender its weekly gain, while the Dow Jones Industrial Average (-0.7%) and Russell 2000 (-0.9%) underperformed. The two indices posted respective losses of 0.8% and 0.6% for the week.
Equity indices were pressured from the get-go after several heavyweights disappointed the market with their earnings and/or guidance, which led to some broader profit-taking. After ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'