Tear Down This Wall

By Kevin D. Williamson

Sunday, October 18, 2020

 

If you know how to read the ether, you can hear whispers of what is really happening, what is wrong, and, sometimes, what is coming.

 

The Wall Street Journal is an indispensable daily firehose of facts and figures: new unemployment claims, GDP growth, IPO prices, movements within asset classes. If you were like the hero of William Gibson’s Idoru, you could construct a pretty good model of the world from the pages of the Wall Street Journal, which on Friday published a fascinating fact, perhaps a signal fact: More Americans have renounced their U.S. citizenship over the past ten years than in any other ten-year period in our history.

 

Even though it is unusually high, the number is not a huge one: about 37,000 over ten years in a country of 330 million. Some of those are people who were only lightly connected to the United States, such as the New York City–born Boris Johnson. Others are immigrants who settled in the United States mainly for economic reasons and then, after having become citizens or permanent residents, decided to return to their home countries. Some of them are iconic Americans such as Tina Turner, formerly of Nutbush, Tenn. Some of them expatriate for economic purposes, very probably including tax avoidance. Brazilian-born Facebook cofounder Eduardo Saverin expatriated shortly before the firm went public but insists that his decision was not made for tax purposes, and everybody knows that you can be 100 percent confident in everything you hear from Facebook.

 

How big a role money actually plays in these decisions is impossible to say. But there are many reasons to think that they are not exclusively or even principally about money. A while back, I was talking with a U.S.-born friend who had been living abroad for most of his adult life and debating whether to return with his children, who had been raised entirely overseas, to the United States. His concern was not money but culture: He is by no means a fanatic but has grown more religiously orthodox and socially conservative over the years, becoming one of those corporate progressives who call to mind Milton Himmelfarb’s quip about American Jews, that they “earn like Episcopalians and vote like Puerto Ricans.” American materialism, anti-intellectualism, and entitlement, the declining work ethic, the vulgarity of our popular culture, the chaos in family and sexual affairs — these were not what my friend wanted for his children, and he was not confident that he and his wife would be able to effectively counter them. On the other hand, your dollar goes a lot farther in Dallas or Scottsdale than it does in Copenhagen or Singapore.

 

And the dollar is what Washington has its eye on. Even as tiny as the number of expatriating Americans is, the U.S. government has seen fit to build a financial Berlin Wall to keep Americans in — or, at least, to punish them for leaving. Americans who renounce their citizenship face heavy taxes on certain assets. As the Wall Street Journal puts it, “The rules are complicated, but, in general, an exit tax is calculated for individuals with a net worth of more than $2 million as if they sold all of their assets the day before expatriating.” That tax currently runs as high as 37 percent.

 

It could be worse — and probably will be.

 

Behind the prim, schoolmarmish demeanor of Senator Elizabeth Warren lurks one of the champion authoritarians in current American political life. Senator Warren has proposed increasing the penalty on those who renounce their U.S. citizenship, in part because she has proposed the imposition of a 2-percent annual tax on the savings of wealthy Americans and knows that such a measure would encourage many of those subject to it to consider relocating abroad. There are any number of places in this world where wealthy people can live comfortably.

 

Whatever money the U.S. Treasury loses to American citizens renouncing their citizenship and moving abroad is many places to the right of the decimal point when compared with the many billions that Democrats would channel back to wealthy and heavily taxed blue-state residents by repealing the cap on state and local tax deductions, in practical terms amounting to approximately squat.

 

But Washington has long been entranced by the idea that fat cats are somehow getting over on the taxman: The Foreign Account Tax Compliance Act (FATCA) has made it all but impossible for many Americans to obtain ordinary banking services abroad, because our class-warrior politicians believe that private citizens are squirrelling away gazillions of dollars in numbered Swiss bank accounts. (The impregnably private Swiss bank account is mostly a myth.) Washington would, given a chance, subject Americans to a financial panopticon. And the power of financial surveillance is easily abused: Keep in mind that as attorney general in California, Kamala Harris attempted to extort conservative activist groups into disclosing their donors to her office, a transparent act of political intimidation and coercion. The federal courts stopped her — if you are wondering why Republicans fight so hard for judges, there is your answer.

 

What eludes the authoritarians, petty and otherwise, is that they can expect only limited success in using financial coercion to counteract what probably is, at heart, a nonfinancial development. The COVID-19 epidemic has changed many Americans’ relationship with the workplace and hence with the metropolis, and the Left’s campaign of riots and arson has made many American cities less attractive to some people — people who have options — than they were a year or two ago. New York City may well recover (and I hope it does, though I do not have Jerry Seinfeld’s confidence), but Americans making decisions about where to live right now must necessarily find less to love about a version of New York, N.Y., that has more crime and less theater. For some people, that will mean the suburbs, or upstate New York, or Utah. For others, it might mean distant shores.

 

And surely I am not the only American who has thought: “I am at the moment tired of my country, its people, their rages and ecstasies, their talk.” Our unresting cultural convulsions are exhausting — and exhausting to no good end, at that. I do not expect that this will change, and it may in fact get much worse, after the election.

 

There probably won’t be an exodus of Americans any time in the near future. And the current high number of expatriations may be a blip. But still there is something to be learned from that blip and from Washington’s reflexively heavy-handed attitude toward it. Even if it never amounts to much, the fact that the U.S. government would try to fence us in with financial coercion is dispiriting and grotesque, and it ought to be unbearable.

 

So, if anybody is listening: Mr. President, tear down this wall.