Coyote Blog

Though I would not want to trade my income taxes with those paid by Europeans, there is at least one area where the US has the worst tax regime in the world.  The specific area is the double standard the US applied on eligibility of income when other countries are involved.  For citizens of other countries, the US applies the standard that taxation is based on where one earns their income, so citizens of, say, France that are working in the US must pay US taxes.  However, for citizens of the US, the government reverses its standard.  In this case, the US applies the standard that taxation is based on citizenship, so US citizens must pay taxes on their income, even if it is all earned living in a foreign country.  Since most countries of the world apply the first standard  (which is also the standard individual states in the US apply), US expats find their income double taxed between the US and the country they are living in.

But now, it is just getting worse:

Queues of frustrated foreigners crowd many an American
consulate around the world hoping to get into the United States. Less
noticed are the heavily taxed American expatriates wanting to get out "”
by renouncing their citizenship. In Hong Kong just now, they cannot.
"Please note that this office cannot accept renunciation applications
at this time," the consulate's website states. Apart from sounding like
East Germany before the fall of the Berlin Wall, the closure is
unfortunately timed. Because of pending legislation on President Bush's
desk that is expected to become law by June 16th, any American who
wants to surrender his passport has only a few days to do so before
facing an enormous penalty.

"¦Congress has turned on expats, especially those who, since new tax
laws in 2006, have become increasingly eager to give up their
citizenship to escape the taxman. Under the proposed legislation,
expatriates surrendering their citizenship with a net worth of $2m or
more, or a high income, will have to act as if they have sold all their
worldwide assets at a fair market price.

"¦That expats want to leave at all is evidence of America's odd tax
system. Along with citizens of North Korea and a few other countries,
Americans are taxed based on their citizenship, rather than where they
live. So they usually pay twice "” to their host country and the
Internal Revenue Service. As this makes citizenship less palatable,
Congress has erected large barriers to stop them jumping ship. "¦[I]t
may have the opposite effect. Under the new structure, it would make
financial sense for any young American working overseas with a
promising career to renounce his citizenship as early as possible,
before his assets accumulate.

This is simply awful, and is another example of fascism in the name of egalitarianism (the fear is that a few rich people will move to tax havens to avoid US taxes).  Add up your net worth - equity in your house, retirement savings, etc - and imagine having to pay 35% of that as a big bribe tax to the US government to let you leave the country. 

Years ago, I, without really knowing what I was doing, established a bunch of my URLs through Network Solutions.  I didn't understand at the time that Network Solutions was both irritating and the high-cost provider. 

Now that I know more, I have doing my registrations via a much lower cost supplier (GoDaddy).  A few weeks ago, I did a mass transfer from Network Solutions.  Apparently, Network Solutions locks the domains down, ostensibly for security (which is probably true) but also to make it harder to leave them, which makes sense as given their prices there must be a serious net drain of business out of the company.  Most of my domains cleared this Berlin Wall to freedom, but I screwed up on a couple, one of which was CoyoteBlog.com.  As a result, the domain ended up expired, and email dead.

Thanks for all of you who have tried to notify me of the problems.  Nearly two days ago I went ahead and renewed at Network Solutions for another year, just to get things back up ASAP.  Unfortunately, the URL still seems to be marked expired.  I don't know if that is their poor service or because I am in Hawaii and at the absolute end of the earth for name server updates.  Hopefully all will be right tomorrow.  For those who visited CoyoteBlog this weekend, I am sorry about the flurry of tacky popups Network Solutions was dealing out at the URL (as many as three at a time, the losers).  For those of you who access via http://www.coyoteblog.com/coyote_blog/ you should have been able to read the blog but without formatting.  I believe that RSS access was unaffected.

It is often said that capitalism won over socialism in the late 20th century, with the fall of the Berlin Wall and the rise of powerful Asia market economies.  Be that as it may, this statement certainly does not apply to American university campuses.  In the ivory tower, capitalism is still the number one whipping boy. 

An interesting illustration of this is Jacob Sullum's review of a pair of books that attempt to debunk the myth that being mildly overweight is deadly.  This is a rich topic, given some of the really bad science that has gone into trying to make being overweight the next smoking, and the review is worth a read.  However, this part caught my eye:

Both he and Campos blame the unjustified obsession with weight and the
cruel vilification of fat people on capitalism, which, they say, prizes
self-discipline and stigmatizes those seen as lacking it. To be fair,
Campos more specifically blames a pro-capitalist Protestant asceticism
that encourages the pursuit of wealth but frowns on those who enjoy it
too much. There's an element of truth to this analysis; a similar
ambivalence regarding pleasure helps explain American attitudes toward
sex, drugs, and gambling.

But wait!  Aren't most of the folks like the food nazis who are launching government obesity campaigns leftists?  They are, and Sullum makes this point:

But it does give you pause when you consider that the obesity
obsessives also blame capitalism, for precipitating the current crisis
by making food plentiful, inexpensive, appealing, and convenient. New
York University nutritionist Marion Nestle, for example, blames
America's adiposity on "an overly abundant food supply," "low food
prices," "a highly competitive market," and "abundant food choices,"
while Kelly Brownell claims restaurants exploit consumers when they
give them more for less, since "people have biological vulnerabilities
that promote overeating when large portions are available, a strong
desire for value, and the capacity to be persuaded by advertising."

Great.  So capitalism causes obesity as well as anti-obesity.  You can't win.

I had seen some Internet posts on this before, but I thought it was from the "Aliens were behind the 9/11 attacks" crowd.  But it does appear to really be Big Brother at work:

The pages coming out of your color printer may contain hidden information that
could be used to track you down if you ever cross the U.S.
government.

Last year, an article in PC World magazine pointed out that printouts
from many color laser printers contained yellow dots scattered across the page,
viewable only with a special kind of flashlight. The article quoted a senior
researcher at Xerox Corp. as saying the dots contain information useful to
law-enforcement authorities, a secret digital "license tag" for tracking down
criminals....

Yesterday, the Electronic Frontier Foundation, a San Francisco consumer privacy
group, said it had cracked the code used in a widely used line of Xerox
printers, an invisible bar code of sorts that contains the serial number of the
printer as well as the date and time a document was printed...

The EFF said it has identified similar coding on pages printed from
nearly every major printer manufacturer, including Hewlett-Packard Co., though
its team has so far cracked the codes for only one type of Xerox
printer.

The U.S. Secret Service acknowledged yesterday that the markings, which
are not visible to the human eye, are there, but it played down the use for
invading privacy.

This kind of stuff really scares me.  Is there anyone out there that thinks that this won't be used to trace a leak, track down a whistle-blower, or identify an anonymous political critic?  And, even if you are able to conjure up trust that the US government will not use these codes for anything other than fighting counterfeiting, what about use of these codes by private parties?  Or, even more depressing, remember that these printers are being sold today in China, Syria, Iran, Zimbabwe, etc.  Does anyone at all doubt that these governments will use the print codes to identify and silence dissent?

Shame on the government for instituting this program.  Double shame on HP and Xerox for going along in silence, joining the ranks of Microsoft, Cisco, and Yahoo in making adjustments to their technology to make government surveillance and censorship easier.  I don't know of any legislative mandate that requires these printer companies to go along with this, so they are doing this voluntarily - sort of (see below).

For those on the left feeling smug that this is solely a right-wing Bush-is-a-fascist problem, shame also on those who built the economic regulatory state that we live in.  In a truly free economy, HP and Xerox would likely have told the government to take a hike.  However, the government holds a huge regulatory hammer over corporations' head in so many realms that companies in our society find it difficult to tell the government off when they get this type of request.  Its the same story with airlines and banks, who feel compelled to share otherwise private customer data with Homeland Security under the threat of having government retribution fall on them from any number of directions.  We have got to start realizing that government control of economic activity is just as much an imposition as government control of speech or the press.  Freedom of expression does not become voided just because money changes hands.

Many thanks to Marginal Revolution for the link.  Their comment:

Would the Berlin Wall have fallen if East European governments had access to
this kind of technology twenty years ago?

From David Ignatius in the Washington Post (via Captains Quarters):

The leader of this Lebanese intifada is Walid Jumblatt, the patriarch of the Druze Muslim community and, until recently, a man who accommodated Syria's occupation. But something snapped for Jumblatt last year, when the Syrians overruled the Lebanese constitution and forced the reelection of their front man in Lebanon, President Emile Lahoud. The old slogans about Arab nationalism turned to ashes in Jumblatt's mouth, and he and Hariri openly began to defy Damascus....

"It's strange for me to say it, but this process of change has started because of the American invasion of Iraq," explains Jumblatt. "I was cynical about Iraq. But when I saw the Iraqi people voting three weeks ago, 8 million of them, it was the start of a new Arab world." Jumblatt says this spark of democratic revolt is spreading. "The Syrian people, the Egyptian people, all say that something is changing. The Berlin Wall has fallen. We can see it."

I opposed the war in Iraq not because I thought there was any ethical problem in throwing out Saddam, but because it seemed to require an awful lot of time and energy and lives to overhaul one country.  I support a strong US role in the promotion of democracy, but given the long list of totalitarian states in the world, the approach in Iraq seemed inefficient.

However, my argument loses power if our efforts in Iraq start to cause spontaneous changes in other countries in the region.  To be fair, many made this very argument for the war, but I have been skeptical.  I would love to be proved wrong.