Lynnley Browning at Reuters reports that “Denise Rich Renounces U.S. Citizenship, Will Save Tens Of Millions In Tax Dollars,” prompting millions to wonder, who is Denise Rich? Celine Dion fans (I’ve never met one, but I know they are out there) will know her as the songwriter behind Celine’s “Love is On the Way,” but political junkies know her as the wife of Marc Rich, the former fugitive billionaire who stopped running when Denise pulled enough strings and spread enough cash around to get him a pardon at the end of the Clinton administration.
Her move prompted some folks to tell her not to let the door hit her on the way out, and perhaps anybody who enables Celine Dion deserves a little venom. But we should ponder for a moment why money is fleeing the country like deposits fleeing a Greek bank. Mark Steyn tells us why celebrating her departure is unseemly:
… all this “what sort of red-blooded American renounces her citizenship over tax?” stuff is a wee bit much. It is the Government of the United States, uniquely in the civilized world, that binds citizenship to tax. An American who falls in love with an Uzbek or takes a job helping starving Third World children in Southern Sudan remains liable for US taxation and has to file US paperwork that is, in fact, more onerous than that required of US residents, and is about to get more so…
Most countries tax you if you live within their borders, some tax you if you live elsewhere but earn money within their jurisdiction, but only America claims the right to tax you simply for being American – even if you, say, live in Belgium but drive over the border to work in Luxembourg every day. This is unique to the United States: Spain taxes you if you’re a resident of Spain, Slovenia taxes you if you’re a resident of Slovenia, but America taxes you if you’re an American who’s working as a teacher in Gabon. You’re at permanent risk of double-taxation, and the fines for minor and accidental infraction are arbitrary and confiscatory.
As I say, no other developed country does this – although Eritrea does.
On January 1st 2013, all this gets worse. The FATCAT act (technically, it’s FATCA, but we all get the acronymic message) makes it not worth a foreign bank’s while to do business with Americans. I don’t just mean Mitt Romney’s chums in the Cayman Islands, but an American of modest means on a two-year secondment to Hong Kong requiring a small checking account with which to pay local utility bills – or a small businessman attempting to expand his distribution in Canada.
IRS Commissioner Shulman’s shoot-the-jaywalkers approach to offshore tax compliance, combined with half-baked populist legislation against “the rich” that punishes Americans abroad and businesses for committing everyday finance, is quietly bleeding our economy with a thousand little cuts. Fabulously-wealthy people like Denise Rich can take a hike, but most of us are stuck here. We can berate her as “unpatriotic” for leaving, but when you get that $10,000 fine for being one-day late in reporting that bank account you inherited from Uncle Hans in the old country, she’ll have the last laugh.
The TaxProf has more. Update: Matt Welch on the Dark Side of Anti-”Swiss Bank Account” Politics”
But we can still move within the country: Did a Maryland Tax Increase Cause Taxpayers to Flee the State? (Russ Fox)
Nanette Byrnes: Study: Companies of Republican CEOs pay more tax than Democrats’ (Tax Break). Why? One theory is that Democratic CEOs would tend to be in industries that play the government for tax breaks, like low-income housing and renewable fuels, and that Democrats are more comfortable with politicians playing God with the economy. Unfortunately, the desire to meddle with the economy via tax breaks is one thing both parties can agree on.
But we knew that before it become official: It’s Official: Tax Gridlock Until After November Election (Janet Novack)
William Perez, Tax Reform Proposal from the Bipartisan Policy Center
Blaming the accountant: Rihanna Files Suit, Alleges Financial Mismanagement Resulted in Tax Audit (TaxGrrrl)
Anybody could lose track of $800,000 in singles. Take this hard-working Ohio attorney described by Cincinnati.com:
Sparta attorney Meredith “Larry” Lawrence will be sentenced in October on federal tax evasion charges for failing to report income from various sources – including Racers Gentleman’s Club in Sparta.
A jury found him guilty Friday on three counts of filing a false tax return for three consecutive years, starting in 2005.
Attorney by day, strip club operator by night? “Gentlemen’s clubs” tend to be open late. Maybe he was just sleep deprived?
During the two week trial, Assistant U.S. Attorney Elaine Leonhard described how federal agents found $800,000 in Lawrence’s safety deposit boxes.
She described how fees collected from women who stripped at the club would be stuffed in a white envelope and delivered to Lawrence once a week. Strippers were independent contractors required to pay “house fees” to dance at the club. The strippers even had to pay a parking fee.
“Parking fee?” Yes, the glamor has truly gone out of show business.