Just When I Thought I Was Out… They Pull Me Back In!

One of my coworkers explained the other day that socialist countries like to wall people in — that way they’re able to enjoy the benefits. America is not quite that way, but it’s getting there — if you’ve got the means, and try to leave, they think it’s to avoid American taxes. And by God, they’ll extract their pound of flesh if they have to chase you to the ends of the earth to do it:

The American Jobs Creation act of 2004, passed by the Republican-controlled government, amended section 877 of the Internal Revenue Code. Under the new law, any individual who has a net worth of $2 million or an average income-tax liability of $127,000 who renounces his or her citizenship and leaves the country is automatically assumed to have done so for tax avoidance reasons and is subject to some rather unbelievable tax laws.

Any individual who is declared to have expatriated for tax reasons is forced to pay US income taxes on all US based income for 10 years following expatriation, regardless of the country in which the individual resides. Additionally, in the 10 years following expatriation, if a qualifying individual spends 30 days in the United States during any year, he or she is taxed as a US citizen on all income derived from any place in the world. To make matters worse, if an individual happens to die in a year in which he or she spent at least 30 days in the United States, the entire estate is subject to US income tax law.

I’ve heard of the social contract… But the United States is one of the few countries in the world that will try to charge you alimony for exiting the contract.

  • http://www.belowthebeltway.com Doug Mataconis


    This gets thumbs up if only for using one of my favorite Al Pacino lines for the title.

  • David

    Flipping that last sentence around, the United States is one of the few countries where that party breaking the contract gets the alimony. (CDC statistics show that 75% of divorces are filed by women, yet women also receive 96% of all alimony).

    In essence, thanks to our marriage/divorce law, the party breaking the contract gets the windfall payments, and the presumably innocent party still trying to honor the contract saying “wtf?” gets to pay the damages.

    It’s like Alice in Wonderland.

  • Merf


    So, some one decides to leave the country and renounce citizenship, and the USA still has the right to act as though this person is a resident citizen?

    Through the rabbit hole, indeed.