If the US doesn’t reverse it’s downward trends in innovation, economic freedom, civil liberties, and passport value, the people with the means to leave, very well might.
January 4, 2023
By: Bobby Casey, Managing Director GWP
Something I’ve heard repeatedly as an American who is quite critical of the United States is:
- If you don’t like it, leave! (Quickly followed by: Why don’t you move to Somalia then?)
- The US is still better than anywhere else in the world!
The reality is, while these claims might get patriotic virtue points, they are not a very strong defense for the US.
As many of you know, I took their advice and left. I’ve been an expat for over a decade now.
While they insist that there isn’t better to be had anywhere else in the world, I’m not convinced. I mean if it’s better than anywhere else, then why trot out Somalia? That’s like saying you’re the fastest runner in the world and only comparing yourself to the guy who’s got powdered cheese stained fingers and gout.
I guess? The Somalia argument was chosen because they haven’t had much in the way of a centralized government. The problem with that is, they did better without one than with one; and they outdid many of their neighboring countries that have a central government.
That’s not to say that Somalia is on par with the US in every way, but being that one of the most dangerous jobs in Somalia is that of tax collector, I’d say there’s much the US can learn from them.
But why not say, if you don’t like the US, then go to New Zealand? Well, that’s probably because prior to the pandemic, New Zealand managed to be the third most economically free and the most civilly free country in the world… and pulled it off without a bloody divorce from England.
The reality is, the US is, as the younger folks like to say, Mid As Fuck. The US is good for a handful of things:
- War
- Tax haven for everyone but its own people
- Patriotic taglines.
I’ve certainly met people from much worse countries who will extol the virtues of American freedom. Which makes sense. If you image a series of shelves and each liberty or right endowed to us by our humanity occupies a space on those shelves, some people indeed hail from places where the shelves were barren.
As an American, our shelves were much fuller, and I’ve watched as they’ve become more sparse over time.
And if you keep a consistent benchmark for what constitutes “great” or “free”, and evaluate countries accordingly, what you get is a sad and slow collapse of what once was not too shabby. Great empires have a long way to fall, and the US has found the slowest, most painful and protracted way in which to do it.
Last January I wrote about the slipping status of the United States.
Now comes the real death knell to the United States: for the past twelve years, the US has not been to most innovative country. It has been a decided second to Switzerland and in a dead heat with Sweden.
The US used to be the bastion of innovation. Back in the 80s and 90s, I remember all these new ideas coming out of the US, and then Japan would make them smaller, portable, and affordable. Now, not so much.
Sweden in fact has a much freer market when it comes to innovation. Johan Norberg breaks it down in clear detail in his documentary “Sweden: Lessons for America“. Despite its massive welfare state, it allows for much more innovation.
While a complicated metric to ascertain, these are the qualifying factors used in the study:
(Source: Visual Capitalist’s Dorothy Neufeld ranks the world’s most innovative economies using data from the UN’s WIPO Global Innovation Index.)
Between the Net Zero Green Agenda regulations and taxes what sort of innovation was anyone meant to expect?
A small reprieve sneaked into an otherwise grim winter. We’d mentioned a new tax rule that would tax gig workers for earnings over $600. Gig platforms were already getting their 1099Ks ready for their users for 2023.
Coming for the gig economy would be a devastating blow to innovation. It’s a novel working model, it supplements income, and it’s a way in which entrepreneurs can test out their businesses first to gain some momentum and direction for growth.
There’s been a slight reprieve on that front:
Companies such as Venmo, PayPal, and Cash App, known as Third-Party Settlement Organizations (TPSOs), are required to provide annual Forms 1099-K to the IRS and taxpayers. In March 2021, Congress modified the requirements for reporting these transactions by lowering the minimum reporting threshold to any amount over $600 for one or more transactions beginning in 2022. Prior to the change, companies were required to report transactions for a payee if (1) they exceeded $20,000 and (2) the number of transactions with that payee exceeded 200.
The Notice creates a transition period of one year, postponing the $600 Form 1099-K threshold until the January 31, 2024 reporting date. In essence, the IRS is taking the rules back to the pre-March 2021 threshold ($20,000 and 200 transactions) for any calendar year beginning before January 1, 2023. The lower reporting threshold (any number of transactions totaling $600) remains in effect for calendar years starting after December 31, 2022. This one-year delay does not apply to any of the other Form 1099-K rules not modified by the American Rescue Plan Act.
The fact remains, this suspension is a temporary delay the IRS considers a “transition period” where taxpayers can get a better understanding of the changes. This also provides lawmakers time to potentially save gig workers from this measure.
If the US even wants a chance at leading innovation again, or improving its standing in any category, it needs to get out of the way of innovators. The spendthrifts in congress not only over spent, but tanked the economy. They are desperate. If they want taxpayers to pay for it, much less stick around to pay for it, they need to let up on the tax-and-regulate nonsense.
California already knows what happens when economic conditions get too harsh for entrepreneurs and innovators: they leave. If the US doesn’t let up, more and more people will consider the expat or nomad alternative. As they say: “If you don’t like it, leave.”
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