My Interest in U.S. Politics

As a Digital Nomad with U.S. citizenship, as I state often, my interest in politics are limited to four things.

1. Take care of my Social Security income stream
2. Protect the value of USD on the Forex markets
3. Don't bomb the places I visit.
4. Don't screw with expat tax treatments

The other issues are not important to me because I haven't been in the U.S. for 2 1/2 years and, other than a week's trip in 2021 to take care of some details that are difficult to do from abroad, I do not intend to ever return.  I watch the increase in lawlessness in the U.S. and while it makes me sad for my friends who live there, it is not personally relevant.

Social Security
We rely on about $2,500 per month in Social Security benefits to fund our lifestyle.  I am working on a series of self-published e-books which, with my decent and growing social media reach, I believe I can eventually eclipse Social Security as my primary source of income.  However, until then, any negative changes to the program would be distressing.

This is not something that I worry about very much.  With 43 million Social Security recipients who have a strong tendency to vote, negative impacts to current recipients would be political suicide.  Because of this, the political dialogue has mostly revolved around lowering the benefits for future recipients.

In reality, because Congress has a tendency to 'bribe' large voting blocks with better government benefits, I do expect that, somehow, over time, Social Security will likely become increasingly more generous.  The primary funding mechanism for this bribe, I believe, will be to eliminate some or all of the income cap.  Right now, income above $137,700 is not subject to Social Security retirement tax.  That has been increasing at about the same rate at incomes have increased.  I expect the rate at which the income cap is increased will increase and the additional tax raised will be used to increase social security benefits.

For me, Biden v Trump, and whether the House or Senate is in Democrat or Republican hands will probably have little impact on this item.  So, for now, I don't care who wins with regard to this item.

Forex USD
How much a USD will buy in the countries I visit is probably my most significant issue that can be affected by the upcoming elections.  Traditionally, both Republicans and Democrats, though for different reasons, have supported a strong dollar.  While Trump's policy statements would lead one to believe that the dollar would weaken under his Presidency and, for me, my standard of living would fall, that is not actually what happened.  When he took office, one U.S. Dollar bought 1.94 Belarussian Rubles (BYN).  It now buys 2.44 Rubles.  During that time, the Ruble has seen about 19% inflation, while the Dollar has seen about 8% inflation.  That means that I have seen a 14% increase in my purchasing power when I am in Belarus.  I have experienced similar increases in purchasing power in the other countries I typically visit.

So, while Trump's rhetoric makes one nervous about Forex, in reality, his policies are putting more foreign currencies in my pocket.  Congress is funded by people who want a strong dollar because it makes foreign labor and materials cheaper.  Consequently, while I think that U.S. residents should be worried about a Democratic takeover of the Presidency and both Houses of Congress, as an expat, it really isn't that important with regard to Forex issues.

Bombing my host countries
This is obviously a place where Trump shines.  I spend most of my time in Belarus, Turkey and Vietnam, at least for now, and the U.S. is not really fond of any of those countries.  Belarus had a controversial election that Lukashenko's opponents are calling rigged.  Turkey is causing problems with Syrian refugees and, now, offshore oil that, apparently, Greece thinks is theirs.  Vietnam, while a 'communist' country actually has the least contentious relationship with the U.S. among these three.  I'm in Serbia now and may spend significant time in Malaysia, so I have those countries to worry about, too.

While I am not really worried too much about this one, I guess Trump would be a better outcome than Biden.  Rather than actual bombs, I am more worried about economic and diplomatic bombs.  Those can affect me indirectly, through more difficult access, more limited product availability, more hostile locals, etc.  Here, actually, Trump is probably as bad as anyone.  He is not inclined to bomb countries, but he is very prone to sanctions and tariffs. 

Foreign Earned Income Tax Credit
For expats, there seems to always be a low level concern over public opinion being somewhat hostile toward them.  The attitude seems to mostly be, 'Don't let the door hit you on the way out'.  However, there is reasonable concern that things could turn against U.S. DNs at any time, especially if more attention comes to the phenomenon of high income expats renouncing U.S. citizenship. 

Right now, as a U.S. citizen, in theory, my worldwide income is taxable in the U.S. no matter where I live or where I work.  However, right now, U.S. DNs can set up a foreign corporation to shelter income, paying oneself a salary.  That income will be taxable, however, through the Foreign Earned Income Tax Credit, up to $240K  (joint filers and this is not tax advice) annual income can be sheltered from U.S. taxation.  However, that could go away at any time.  As I have said in other posts, my primary financial benefit comes from much lower cost of living, not tax avoidance.  That would be true, even if the FEITC disappeared.  Still, it would be a significant new expense if Congress and the President eliminated it.  Off hand, an Administration that bills itself as 'America First' would seem to be the bigger risk of eliminating expat tax preferences.

The other concern is that the Democrats, if they get into power, will increase the top marginal tax rate and then apply it to expats on their worldwide income.  That is of concern to me because my goal is, in fact, to earn substantial income from the books I am writing.  My goal is to sell 200K e-books per year at an average income of $5.50 each.  That is a total income of $1.1 million which, I suspect, is going to be pretty average for successful Polymaths.  That makes the top marginal tax rate, which starts at $612,351, relevant to me.  Some Democrats are talking about doubling it or more.

In the end, it is very likely that successful U.S. citizens with location independent income will need to renounce their citizenship as a purely defensive move.  However, the U.S. has already made renunciation more difficult for their citizens than for almost any other country.  Additionally, if it is determined that you renounced in order to avoid taxation, any future requests for a visa will be denied.  It is even possible that at some time in the future, Congress and the President will make renunciation so difficult as to make it impossible for all practical purposes.

While it is not wholly clear whether Democrats or Republicans or Donald Trump or Joe Biden would be better outcome based upon the four stated political issues, when I look to the future, the Democrats appear more dangerous simply because I strive to be financially successful and they will be more inclined to take my earnings, even if I am living and working outside the U.S.

Right now there are an estimated 9,000,000 U.S. citizens living outside of the country.  While they tend to slowly lose interest in the U.S., they can and should submit absentee ballots in order to assure that they will continue to enjoy the many benefits that they enjoy today.  

Keep in touch by subscribing to my Newsletter.  I will keep you up to date on my travels, issues for Digital Nomads, thoughts on being a Polymath and, through my companion blog, Michaelwferguson.blogspot.com, intellectually sophisticated analysis and commentary on contemporary issues.

Subscribe by clicking here