2014: TOO LATE TO LEAVE THE U.S.?

Share this article on:

Tweet

[Editor's Note: The following post is by TDV contributor, Wendy McElroy]

The Ex-PATRIOT Act lies like a coiled snake on a table in the U.S. Senate. The longer title of this unenacted bill from 2012 is the Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy Act. Its self-description is, "A bill to amend the Internal Revenue Code of 1986 to provide that persons renouncing citizenship for a substantial tax avoidance purpose shall be subject to tax and withholding on capital gains, to provide that such persons shall not be admissible to the United States, and for other purposes."

The Ex-PATRIOT Act seeks to impose a perpetual exit tax and a re-entry ban on “specified expatriates.” A specified expat is anyone with a net worth of at least $2 million or a tax liability averaging at least $148,000 over the last 5 years. A renunciation of citizenship would be automatically viewed as a tax dodge. The person would need to prove his innocence to the IRS to become exempt from a permanent and annual 30% tax on all earnings from U.S. investments. The net worth level at which the tax triggered would undoubtedly sink over time and, perhaps, quickly so.

(Even the Nazis were not so extreme. Until 1941, the third Reich used the Reichsfluchtsteuer (Reich Flight Tax) to charge emigrating Jews a one-time 25 percent exit tax. Schumer wants 30% in perpetuity.)

The Ex-PATRIOT Act would also ban “former citizens” from U.S. soil unless he received a waiver. The waiver requirements are to be determined at a later date. Current expats have no legal right to return, but they are rarely banned from doing so. 

The Act was introduced in May 2012 by Senator Charles Schumer (D-NY), read twice, and referred to the Senate Committee on Finance. It is likely to pass in 2013.

THE LIKELIHOOD OF PASSAGE

Reason #1. When the Act emerged from the Democrat-dominated Senate, John Boehner – the Republican leader in the House of Representatives -- was luke-warm. He would back the Act if it was “necessary,” he stated. But he asked, is this really necessary? Since then, the two parties have feuded bitterly over a budget bill, with the Republicans accused of serving millionaires at the expense of America. The mud stuck. Boehner caved; despite a vow to never do so, he allowed taxes on millionaires to rise. 

If he opposes the Ex-PATRIOT Act, Republicans will be excoriated for  pandering to jet-set tax evaders. Democrats will chortle with joy. In fact, they have already played the embarrassment card. A co-sponsor of the Act challenged Boehner through a press conference, “Washington needs to work together in a bipartisan manner. I request that you introduce the Ex-PATRIOT Act in the United States House of Representatives and call for an immediate vote on this important legislation.” The political dynamic favors passage of the Act in both the Senate and the House.

Reason #2. The average trapped American is resentful of expats...and, most especially, rich ones. As long as the rate of expatriation was small, it could be dismissed as an aberration. After all, who would flee from the land of the free? That was something Europeans did. But the annual rate of expatriation has been rising sharply since Obama's first term (2009-2012). In 2008, 231 Americas went through the complex and expensive process of officially leaving. In 2009, 750 left; in 2010, 1534; in 2011, 1782. These are official numbers from the Taxpatriate Lists published by the IRS. 

The real numbers would be much, much higher. Consider a series of Zogby International polls conducted between 2005 to 2007. The polls focused on households, not individuals, and excluded households in which any member went abroad as a part of work for the government or a private company. Zogby found that “1.6 million U.S. households had already determined to relocate abroad; an additional 1.8 million households were seriously considering such a move, while 7.7 million more were 'somewhat seriously' contemplating it.” Zogby concluded, “If the data collected in the seven polls...are fairly representative of the current decade, then, by a modest estimate, at least 3 million U.S. citizens a year are venturing abroad."

The polls were pre-Obama. If the post-Obama rate of household relocation tracks the Taxpatriate List rate, then household relocation increased more than eight-fold from 2008 to 2011. No one knows the real numbers but the “expat problem” is now too large to ignore.

[Editor's Note: If you would like to become part of this "problem"...then take this necessary step to free yourself from the increasing burden of belonging to the US...]

Reason #3. Even if the expat numbers remained small, Eduardo Saverin was a game-changer. On May 11, 2012, a Global Post headline announced, “Eduardo Saverin, Facebook co-founder, to renounce his US citizenship ahead of IPO.” Bloomberg estimated that Saverin might well save $67 million in taxes by renouncing prior to Facebook going public. 

One week later, on May 17, Schumer announced the Ex-PATRIOT Act as a direct response to Saverin's “outrage.” Even Boehner was politically compelled to denounce Saverin. Then Denise Rich – a prominent songwriter, socialite and political fundraiser – went expat for tax advantages. And, now, it is rock legend Tina Turner. The United States cannot permit mega-rich and famous people to make expatriation trendy, especially not for tax reasons. 

Reason #4. The Ex-PATRIOT Act is another in what seems to be an irresistible juggernaut of repression against expatriates and Americans abroad. 

Some of the totalitarian measures are well known, such as the Foreign Account Tax Compliance Act. Others fly under the radar. For example, a provision was buried in an unrelated and 1676-paged Transportation Bill entitled “Moving Ahead for Progress in the 21st Century Act” (MAP21). Section 40304 allows the IRS to unilaterally revoke the American passport of anyone it believes "owes" $50,000 or more in taxes. There is no hearing or due process. The IRS can now prevent Americans from fleeing abroad by slamming shut the exit door. And that's that.

Reason #5. Expats and unobtrusive Americans abroad have no hand. Politicians do not care about exiles who do not vote or about people who expose “America, the beautiful” as a lie. Politicians need to demonize them as being greedy, unpatriotic, and thieving elitists. By accusing expats of their own sins, the politicians create a scapegoat.    

CONCLUSION

As it is currently written, the Ex-PATRIOT Act would not be retroactive in its tax provisions. But 2013 may be the last year to use the old tax code. If you are thinking about leaving the U.S., then do it NOW! The legislative pipeline in Congress has been clogged during much of 2012. Do not wait until measures like the Ex-PATRIOT Act or another Section 40304 pass the blockade and land directly into your life. 2014 may be too late. 

Wendy McElroy is a renowned individualist anarchist and individualist feminist. She was a co-founder along with Carl Watner and George H. Smith of The Voluntaryist in 1982, and is the author/editor of twelve books, the latest of which is "The Art of Being Free". Follow her work at http://www.wendymcelroy.com.

Why are you still in the US?!

It's a question your American heartland-based editor gets a lot. After all, I do work for an organization whose urgent and sincere message is "get the hell out of the US while you can"...and whose members have either taken that advice or at least live in nothing worse than Canada, the USA's geographic and spiritual hat. 

Well, I will have to leave eventually. That much is clear. I don't want to allow these thugs to keep stealing my money in order to fund their child-exploding operations. Plus, at some point in the next year or so, all the smack I talk and write against the state -- especially the US state -- will be illegal and punishable by blackbagging, torture and execution. 

(If you think that's hyperbolic, then may I politely suggest that you stop reading this immediately, go check out some mainstream news source and be assured that everything is fine, that the economy is recovering and that your government loves you and wants only the best from you. The rest of you keep reading...)

But like many of you reading this, I have loose ends in the US that need tying and attachments here that persist. Unlike many of you, however, I already have a non-US passport.

To be accurate, this is my only passport, not a second passport. (As a resident alien, I am only owned conditionally by the US government.) But this non-US passport lets me sleep a little sounder at night even as I malinger while the totalitarian police state advances. It offers the same kind of assurance for me that a second passport would for a US citizen. When the time comes for me to renounce US personhood, I will have to jump through as many costly loops as a full citizen...but at least I have the option to renounce my attachments to the US at all because I have another nation-state to call my permanent home (even if I don't really plan to live there ever again). This is an option whose value will only become obvious to most after it's too late. 

To be honest, while I'm glad I have a non-US passport, a passport from my country doesn't make the best travel document. That's one of the reasons I have my eye on one of the many passports offered by TDV. There's one passport in particular which is especially popular with TDV clients right now...and for good reason! To find out why...and to get started on getting your second passport (or as we like to call it, your "get out of jail" card), just click here. 

Many "experts" will tell you that you don't need a second passport. And they're right! You don't need a second passport...or retirement savings...or life insurance...or some kind of home security or fire protection. In the end, these are all really just optional. But they all allow you to sleep a lot better. When the time comes, you'll want to be able to escape the US as something other than a US subject. 

And as Wendy made clear, time is running short. The US is getting more audacious, more aggressive in its  attempts to keep its subjects on the tax farm and extract ever more of their money. You need to stop stalling and start taking steps forward in your plans to protect yourself and be ready to escape. 

Regards,

Gary Gibson
Editor, The Dollar Vigilante