Senators to Unveil the ‘Ex-Patriot Act’ to Respond to Facebook’s Saverin’s Tax ‘Scheme’
The Saverin fall-out, as expected, has begun:
Key quote:
The senators will call Saverin’s move an “outrage” and will outline their plan to re-impose taxes on expatriates like Saverin even after they flee the United States and take up residence in a foreign country. Their proposal would also impose a mandatory 30 percent tax on the capital gains of anybody who renounces their U.S. citizenship.
The plan would bar individuals like Saverin from ever reentering the United States again.
What does this mean? Can we never be free from these people? Is this implying that if you renounce citizenship now even with under the 2 million in assets that you will end up paying capital gains taxes anyway? And what is this about “re-imposing taxes on expatriates”? Does that mean that renouncing citizenship doesn’t do anything and that there would be no way to get out of the US net? Personally I couldn’t care less if they ban me from travelling there, but this has me very alarmed at what is going on. I just want to get rid of this unwanted, accidental citizenship and get about living my life in my own country!
@recalcitrantexpat, I agree. I’m just trying to calm everyone down by showing that this bill is not as bad as, for example, FATCA and FBAR. But I still think that it would be better if it didn’t exist.
Most politicians are impulsive and irresponsible, and in the end don’t care about the constitution, human rights, morality of a legal system, or any of the noble ideas that you mentioned. If the majority of voters doesn’t object, politicians do whatever they want. Even the most basic rights can be revoked at any time when all branches of government agree. I think I’ve lost faith in democracy.
I’m still trying to convince US politicians to abolish citizenship-based taxation, but I view this task as something as hard as (perhaps harder than) trying to convince an absolute king.
The Reed Amendment required a determination to be made by the attorney general. The Ex-Patriot Act assigne that responsibility to the IRS
Article 1 Section 9 USCONST “….No Bill of Attainder or ex post facto Law shall be passed…..”
I don’t think this Ex-Patriate bill is constitutional at all. Saverin has already renounced, so they cannot increase his tax bill or bar him entry any more than under what was already part of the Reed amendment.
http://usgovinfo.about.com/od/usconstitution/a/attainder.htm
“As James Madison wrote in, Federalist Number 44, “Bills of attainder, ex post facto laws, and laws impairing the obligations of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. … The sober people of America are weary of the fluctuating policy which has directed the public councils. They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators, and snares to the more-industrious and less-informed part of the community.”
These two Senators are out of control. Their action is clearly intended as a bill of attainder against Saverin and others who have recently renounced.
Reblogged this on Stop Unconstitutional Double Taxation and commented:
I don’t think this Ex-Patriate bill is constitutional at all. Saverin has already renounced, so they cannot increase his tax bill or bar him entry any more than under what was already part of the Reed amendment.
http://usgovinfo.about.com/od/usconstitution/a/attainder.htm
“Article 1 Section 9 USCONST “….No Bill of Attainder or ex post facto Law shall be passed…..”
“As James Madison wrote in, Federalist Number 44, “Bills of attainder, ex post facto laws, and laws impairing the obligations of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. … The sober people of America are weary of the fluctuating policy which has directed the public councils. They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators, and snares to the more-industrious and less-informed part of the community.”
These two Senators are out of control. Their action is clearly intended as a bill of attainder against Saverin and others who have recently renounced.
@Jefferson, You’re right, this is a bill of attainder and therefore unconstitutional. The FBAR penalties are excessive and therefore also unconstitutional. FATCA violates the laws of many countries where it is to be applied. But if the majority of Congress approves these things, the president signs them, and the courts uphold them, what can we do?
It’s incredible that the very ideals that caused the creation of the US are now being disregarded by the US government itself.
I just posted the same argument at hodgen.com you might want to check back there to see if Phil responds. (But remember, he is not your lawyer).
See this article with update about letter from Senator Reed:
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/05/17/bloomberg_articlesM46BMG6K50ZL01-M470D.DTL
I have to make a correction to what I wrote earlier. The value of about $630,000 is an exemption on the unrealized capital gains, not a credit to the exit tax. It doesn’t imply assets of at least $4.2 million as I wrote. Even if the assets are barely above the threshold of $2 million it’s possible that they include capital gains of more than $630,000. The gains above this amount are taxed, currently at 15%, when a person renounces or relinquishes US citizenship, or abandons US permanent residence of at least 8 years. (The 8 years are calendar years, so 6 full years and a small portion of the first and last year of residence already satisfy the requirement.)
These two Senators should see it from a foreigner’s point of view. Would you as a foreigner take US citizenship after Chuckie’s tirade yesterday?
These Senators talk big about solving unemployment, but it would be to the US’s benefit to quietly encourage emingration to get the unemployment rate down faster.
The crux of the problem is the US is governed by third of fourth generation Americans that have no real connections with their ancestral homelands. Today Congress is made of people who buy into the “we’re the most powerful nation on Earth” and “they can’t do without the US” crap.
In my opinion a good dose of emigration would benefit the US if it can grow up and change the ex-pat tax situation.
Emigration changes a nation when suddenly loved ones are at the end of a phone thousands of miles away when their days are your nights. I’ve seen its effect first hand in Ireland during the 1980s. Ireland survives because people even today (30,000 a month) are leaving and keeping the unemployment rate otherwise lower until the economic tide turns again.
@omghesstillanamerican, I’m so happy that you got the all-clear. Stressful, wasn’t it? But even if it had been otherwise it’s treatable. I speak as someone who got the opposite diagnosis. 🙂
Which puts me in a very interesting situation because at this point I’m not sure I could go back to the US – what private insurance company in its right mind would offer me health insurance? Let’s all say, “pre-existing condition” three times really fast….
About the proposed law. More idiocy but it just might be a bridge too far. The comments I’ve read so far seem to be very unfavorable because it is a restriction of homelanders’ freedom – the right to leave. There may not be much sympathy for us who have already exercised the option but Americans seem to be a bit testy about having their own options limited. And letting the IRS decide who is a tax evader and who is leaving for legitimate reasons? Not even the most patriotic Right-wing friends and family back in the US would trust the US gov to make that call. 🙂
@Victoria – move to Massachusetts with the Health Care Reform several years ago there are no more “pre-existing” conditions and the insurance company can’t charge you more they have to accept you. If you’re on a low income the coverage starts at zero.
https://www.mahealthconnector.org/portal/site/connector/
Don’t pay attention to those prices if you apply for MassHealth or Commonweath Care it’s more than affordable.
Again, I really just don’t see the teeth in this at all.
Ok, so they don’t want an expat to get the foreigner benefit of tax-free capital gains. But what exactly is standing in the way of a legal name change in the new home country on the downlow, going by the old name in public, and using said new name to submit that W8-BEN? Or apply for a visa for that matter. Unless they are considering slapping microchips into all expats, I really don’t see how they can have any chance of success.
@harold, If the assets are already in the US when the person renounces, as Eduardo Saverin’s Facebook shares, it would be hard to escape the taxes. I think the senators are more concerned about the assets already in the US, not so much about future investment.
And apparently, they don’t think people can lie. I always laugh when forms ask if I’m a terrorist or if I want to overthrow the government. Would anyone answer yes, even if it were true? Recently, a US terrorist was asked how he could have recited the oath of allegiance when he naturalized, but later tried to make a terrorist attack in the US. He said that he lied. People were puzzled that someone could do that!
The current way to enforce the Reed amendment is a question on the visa application form that asks if the person ever renounced US citizenship to avoid taxes. Again, would anyone answer yes?
@John, that is really good to know. Thanks!
@shadowrider, my understanding is that these questions are designed to nab you on extra charges if you do eventually do any of those things. They know people lie but having explicit questions means that they can catch you in your lie and bring the hammer down twice as hard.
@Victoria, I see, more penalties for perjury. This is Form Nation, as renounceuscitizenship says.
@shadow – why even have anything to do with that place? W-8 Ben, nada! Why would someone want out of there, and then want back in fake names, etc..? I think it’s bes to definitively cut the ball and chain and never do anything that could give them the excuse of reinstating your US citizenship.
@jeffersond.tomas- Senator Charles Grassley seems to be the only one who gets it. The other two Senators who are quoted- Orrin Hatch and Schumer- are stuck in the same old song, this is the greates country on earth, so why would anyone leave?
Putting the IRS in charge of making the determination on what was a person’s intent is a conflict of interest. How can the IRS be objective when it stands to benefit from an adverse ruling? They need to just acknowledge that “intent” can’t be addressed and leave things as they were.
Barring that then the should take Senator’s Grassley’s position and address the tax code. Afterall something has to be up when the U.S. is the only Western country that is experiencing its citizens voluntarily giving up citizenship in the greatest country on earth.
It is so sad that when even the one effective vote that you can make as a citizen is ignored and used against you.
Grassley would “address” the tax code by eliminating the FEIE entirely. I don’t put any faith in the idea that he actually understands what the problem here is; he sees someone from the other side of the aisle offering a proposal, so his natural reaction is to insult it.
ExxonMobil has this interesting initiative I saw advertised on CNN this morning. A wake up call to many who think the US is number one in everything it does. I wonder how the trolls in the US watching this film clip feel about a corporation telling them they aren’t as smart as they think they are (at least in math).
http://www.exxonmobil.com/Corporate/community_math_nmsi.aspx
@john- the problem with means testing for access to any publicly subsidized health insurance program is that it limits your choices. You can either choose to stay at or below the income level that is necessary to qualify for the public subsidy or you can improve your income but then see health care costs cancel out any income gains.
When it comes to the affordability of health care coverage in the States your are either all out or all in. If you are in between those two extemes you suffer with both bad health and poor economics.
National health care is one of the main reasons why Socialist countries have more class mobility than does the IRS.
I’d hate to live in the States and be confined to living in Massachussets because of its affordable health insurance program.
@Bubblebustin’, hmmm, methinks ExxonMobil is about to get audited…
@outraged, with THOSE math skills, lol?
I’m not familiar with this daily online newsletter but it had a very interesting response to Schumer and Casey’s proposed bill. Find it here: http://dailyreckoning.com/run-saverin-run/
@eric- I didn’t know that. I guess that Grassley is just as bad as the other two.
America is hopeless.