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Would You Ever Leave The US If Taxes Got Too High?

by Mike

It’s a hypothetical question of course…but one worth considering. After all, many people move to Florida when they retire to avoid state income taxes, but will federal tax rates ever reach the point where people actually decide to pack up and leave the country?

As I write this the current US deficit is $13,734,305,801,350.45.

That’s close to 14 billion dollars…and growing. If you divided that equally across the estimated population of the United States, each of us would owe over $44,000!

Now there are all sorts of stories on the news about tax increases, the reduction of Social Security benefits, and various spending cuts to get our budgets in line (I think all politicians should have to take a class on how to budget). So basically we’re looking at a situation where we could be spending more and getting less in return. That’s not exactly a formula for success and contentment.

But what are the alternatives? We can’t just continue digging ourselves deeper and deeper into debt can we?

Would you ever consider moving to another country to avoid taxes? How much would taxes have to increase before you start researching various tax rates by country to find a new place to live?

And where would you go? My wife has family in Italy and I’ve always wanted to visit, but I’m not sure I’d want to up and move. What about you?

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{ 9 comments… read them below or add one }

Invest It Wisely

The U.S. government reserves the right to tax you on your worldwide income for up to 10 years after you leave the country IIRC. Also, if you have beyond a certain number of assets, you are AUTOMATICALLY considered a tax evader if you leave the country and renounce citizenship. Not only that, but you will immediately be forced to pay a confiscatory “exit” tax.

I’m not a tax expert so I don’t know all of the details, but it sounds pretty bad. You can find out more with some searching; I found this article: http://internationalliving.com/2010/03/10-renounce-citizenship/
Invest It Wisely´s last [type] ..Remembering the Fallen

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Mike

Wow…excellent points. Thanks for sharing!

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Judy @ Tax Expert

US government can tax your worldwide income forever, however you can deduct about $80,000- of your income every year with form 2555.
Judy @ Tax Expert´s last [type] ..Jan 13- Tax Deductions for Rental Property

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ctreit

The US does tax on worldwide income but you can offset foreign taxes against US taxes. Right now there are not many countries that tax a smaller share of GDP than the US does. So, where would you move to? Italy would not be a good place if you only considered current and prospective taxes. Italy’s current taxes are much higher than taxes here in the US. Italy’s federal deficit is at around 115% of GDP right now versus 75% for the US. They will have to raise taxes much more than we will have to raise taxes in the future to pay off debt. Now, if you were to think about good espressos and fresh, tasty food,…..
ctreit´s last [type] ..Mortgage Blues – An Exercise in Critical Thinking

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Jake Stichler

I would leave the US right now if I was rich enough to do so. Not for tax reasons, but for political reasons, which I won’t get in to further here. I’d definitely go ex-pat, too.
Jake Stichler´s last [type] ..How To Calculate Your Effective Interest Rate

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Tim @ Faith and Finance

I wouldn’t leave this country because of the financial reasons. ctreit makes a great point about other countries and their very own debt problems.

You’ll have greedy politicians in just about any government outside of the US. There’s no way I’d give up the freedoms I have in America to avoid a few percentages in taxes.

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Crystal

I can’t imagine ever wanting to live in another country again (I wasn’t a fan), but if we did, I’d only consider Canada or Australia, which are both worse than the USA tax rate anyway, lol. I guess we’ll just stay in Texas and be happy we don’t have state taxes…

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Mike

Where other country did you live in Crystal?

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Crystal

Holland for 6 months in 1997 and Argentina for 2 1/2 years from 1997-2000. It was during my last 3 years of high school while my dad was a civil engineer. Awesome places to visit (we also got to visit other countries like Austria, France, Spain, Chile, and Brazil), but I really missed my own culture despite how great other cultures can be. :-)

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