Tax Laws, Corruption and Other Reasons to Expatriate

Here’s a meaningless abstraction for you, Fellow Reckoner. You ready?

US GDP grew at an annualized rate of 1.7% for 2011.

Now, what does that sentence actually tell us? What does it reveal about life or the quality of it; about the long arc of history and where we are along it; about the Heavens above us, the Hells below and our place in the present somewhere in between? What useful piece of information does this arrangement of letters and numbers divulge that has this morning’s news wires so abuzz with excitement?

What, if anything, does it really say?

Nothing. Well, nothing important anyway. It simply tells us that a measurement with no meaningful connection to reality has, in an attempt to quantify the size of something that does not exist, moved in a direction that does not matter.

Frank Shostak, an adjunct scholar at the Mises Institute, sums the GDP fraud up nicely:

“The GDP framework gives the impression that it is not the activities of individuals that produce goods and services, but something else outside these activities called the ‘economy.’ However, at no stage does the so-called ‘economy’ have a life of its own independent of individuals. The so-called economy is a metaphor — it doesn’t exist.”

But let us imagine for a moment that there was such thing as an economy independent of the individuals who comprise it. The GDP metric still provides, at best, a shoddy way to measure “it.” There is no accounting, for example, for the immense time, effort and natural resources that go into building a good/providing a service that nobody actually wants. Consider the infamous Cash for Clunkers disaster that goosed 2009’s GDP reading…or the payroll numbers of Census employees that pumped up 2010’s read.

According to the first example, the more goods that get destroyed prematurely…the higher GDP goes up! Likewise, in the second example, the more people are employed to perform meaningless tasks…the higher GDP does soar! Following this twisted logic, why not simply bulldoze every house in America and put the population to work rebuilding them from scratch?

Sure, nobody would have a roof…but everybody would have a job fixing one! Plus, GDP would be sky-high. Welcome to your workers’ paradise, comrade!

But we’ve been down this rabbit hole before. And it’s Friday. The sun is shining here in Argentina’s capital city and the pretty people have already taken to the plazas for their afternoon cafés and cervezas. We’re not in the mood for tussling with statist newspeak jargon, for disentangling the government’s web of misleading euphemisms and dysphemisms, for straightening out crooked statistics and setting right wrongheaded theories.

We’re in the mood for some good news today…something to welcome the weekend along a bit. Thankfully, this world is rich with uplifting stories. Ah, why here’s a piece of news that brought a smile to our dial earlier in the week:

According to National Taxpayer Advocate Nina E. Olson, approximately 4,000 people gave up their [US] citizenship from fiscal year 2005 to FY 2010. Numbers were up sharply since the Great Correction began in 2008, “from 146 in FY 2008 to 1,534 in FY 2010” said the article we read. The rate quickened further last year, with 1,024 Americans ditching their citizenship during the first two quarters of FY 2011 alone.

To be sure, the number of Americans “making the chicken run” is, in absolute terms, still very small. But the trend is still young…and, in our opinion, likely to continue to gather pace as the empire crumbles. Not that we have anything against one or the other government in particular. They’re all comprised of thugs and phonies. Only to say that, as a general rule, people find themselves treated much better as guests in one country than slaves in another. Besides, freedom takes small victories when and where she can find them these days.

The study cites the “confusing complexity” of the US tax code and “bait and switch” tactics used by the IRS to lure in victims behind on “payments” as the primary two reasons for the uptick in permanent expatriation.

As to the first reason, we harbor no doubts. Last year’s US tax code weighed in at 71,684 pages in length. According to the website, Political Calculations, that’s up from roughly 500 pages too many (read: 500 in total) in 1940. We have no idea if those numbers are correct…but they seem sufficiently absurd to be at least approaching the truth. Which causes us to wonder, as it did a Fellow Reckoner earlier in the week… If something that takes the equivalent of 55 War and Peaces to explain does not satisfy the qualifications of void for vagueness, we’re not sure what does.

“As a business owner who has survived 2 IRS audits,” writes our tortured reader, “I can personally attest that no one person alive on this earth understands the entirety of the IRS code; no lawyer, tax advisor, IRS agent or justice of the court. Literally thousands of terms and conditions in the code are so convoluted and confusing to the point that 5 accountants (or agents, or judges) considering the same point in question come to 5 differing conclusions proves my point.

“After both of my audits I received a nominal refund from Uncle Sam, and wrote a larger check to my CPA. The US tax code is completely corrupt, and certainly should be ruled ‘Void for Vagueness’.”

Nor do we doubt, for a moment, the second reason cited for the increase in citizenship renunciations. Apparently, reads the article, the naughty boys and girls at the IRS have been “telling Americans they can resolve their unpaid taxes under…‘older voluntary disclosure programs with the promise of reduced penalties, only to find themselves subjected to steeper penalties.’”

Well, what did you expect, Fellow Reckoner? It’s called honor among thieves, not honorable thieves. These are people who would turn in their own grandmothers if they found a dotless “i” or a crossless “t” on the ol’ dear’s tax return. You have to be among them if you don’t want your own pockets picked.

But then, what kind of horrible fate is that…where one becomes the very evil they despise in order to protect themselves from it?

Hmmm…we don’t know. Try writing your congressman. He surely will.

Joel Bowman
for The Daily Reckoning