Signs of a Dying Economy

The flight of both intellectual and actual capital was predictable and predicted. Our tax and regulatory policies are driving what we need out of the country. Furthermore, external capital often decides not to enter the U.S.

Tracking capital flight, particularly intellectual, is difficult, often limited to anecdotal rather than statistical evidence. An example is this lead  from an article in the Financial Times:

At the US Embassy in London, there is a waiting list that none of the officials likes to discuss. On the list are Americans hoping to give up their citizenship, as they seek shelter from the Internal Revenue Service.

This article deals primarily with expatriates. But their numbers and motives are clear, at least to the FT:

The backlog at the US Embassy, where no appointments are available until February, stems from a rise in the number of American expatriates living in the UK who have been seeking to escape paying US tax on their worldwide income and capital gains since the simplification of US tax laws in 2008.

This is just one example of how bad economic policies destroy an economy. The best and the brightest, who are normally targeted, adjust their behavior(s) so as to avoid onerous regulation and taxation. They are mobile, more so in this world of the internet and accompanying communication technologies than ever before. Brains and investment capital are like water. They will seek their level. In this case, their “level” is where they are treated reasonably.  We are beginning to see the first signs of what may become a “Reverse Brain Drain.”

Alex Jones, a director at Deloitte, the professional services firm is quoted:

Being American presents you with a very particular and peculiar set of problems from a tax perspective and over the next few years, it could get worse for the wealthy.

If you are energetic, motivated and aware of what is occurring in the U.S., you might want to explore your options regarding living and working abroad, retaining vs. renouncing your citizenship and the possibility of dual citizenship. The world is a big place and in a state of flux. Some areas are rising while others are receding.

For young people, even in normal conditions, I would recommend exploration of such issues. Given the ominous signs regarding the U.S., it might be prudent for those embarkiing on their careers to become aware of their options. If I were younger, I surely would and I have advised my children to do so.

If things continue on the current path, these options are likely to be altered. Capital and travel restrictions are easily  imposed.  It is necessary for authoritarian regimes to impose such restrictions, and they always do.

But remember, decisions should be thought through clearly and not made lightly:

People are tied to their country of birth in deep and complex ways, and severing these links has consequences. If you grow to regret your decision to resign as an American, advisers warn that is difficult to become one again as you will be treated like any other non-resident alien of the US.

Young go-getters, get going and start exploring opportunities outside the U.S.  This is/was the best country in the world. It may continue to be so. However ominous signs continue to build. Your life is your own and not owned by any state. You have a duty to protect yourself and your family. At least look into these options in case the time arrives where you might have to move quickly. To not do so is irresponsible.