This article appeared today in the American Thinker: No Civilized Country Would Ever Banish Eduardo Saverin, by Peter W. Dunn
The Ex-Patriot Act introduced by Senators Chuck Schumer and Bob Casey is a bill of attainder which would result in cruel and unusual punishment.
Eduardo Saverin’s renunciation of U.S. citizenship has angered many people in the United States. I write as one who has also relinquished U.S. citizenship. As a blogger who openly writes about the experience, I’ve attracted some media attention, including an article by Dow Jones columnist Al Lewis. Lewis starts by saying that I renounced my citizenship to avoid the IRS. So now, Saverin and I have joined the ranks of the most hated people in America — so much so that Senators Chuck Schumer and Bob Casey want to banish the likes of us from the United States forever. To that end, they have proposed a new law, the Ex-Patriot Act. But would such treatment of former citizens be in accordance with the rule of law? I would like to argue that it would be a bill of attainder, forbidden by the US Constitution.
The late Chief Justice Rehnquist explains a bill of attainder as follows (emphasis mine):
These clauses of the Constitution are not of the broad, general nature of the Due Process Clause, but refer to rather precise legal terms which had a meaning under English law at the time the Constitution was adopted. A bill of attainder was a legislative act that singled out one or more persons and imposed punishment on them, without benefit of trial. Such actions were regarded as odious by the framers of the Constitution because it was the traditional role of a court, judging an individual case, to impose punishment.
The United States already has the rarely enforced Reed Amendment, which imposes exile and ten years of taxation on those who expatriate to avoid U.S. taxation. Senators Bob Casey and Chuck Schumer want to harden this law with the “Ex-Patriot Act”; it will exile any wealthy person who relinquishes citizenship to avoid taxation, and it will single such people out for special treatment as compared to other non-resident aliens. Here are some of the tax details:
Any ex-pat with either a net worth of over $2 million, or an average income tax liability of at least $148,000 over the last five years, “will be presumed to have renounced their citizenship for tax avoidance purposes.” The ex-pat will have to demonstrate to the IRS that this is not the case if it is not. If there is a “legitimate reason” for that person living outside the U.S. no penalties will apply. But if the IRS finds that someone gave up their passport for tax purposes, they will impose a tax on that individual’s investment gains “no matter where he or she resides.”
The rate of that capital gains tax will be 30 percent — the same that non-resident aliens currently pay on dividends and interest earnings. The tax detailed [in] this act, if approved, will backdate for 10 years after its approval.
Now the Constitution absolutely prohibits ex post facto laws. But these illustrious senators also have no grasp of history. Historically, banishment is a form of punishment. Permanent exile is a vicious and vindictive form of punishment often exacted in lieu of execution. But what for? Eduardo Saverin has only exercised a fundamental human right. Thus, far from committing a crime, he and I have done nothing wrong except to assert our right to leave the United States to avoid extra-territorial tyranny in the form of tax and bank account filing requirements; this is not so different from the thirteen colonies fighting a war against the mother country to avoid taxation without representation and whole host of other abuses.
This Ex-Patriot Act and the Reed Amendment are thus bills of attainder, which apply punishment and the seizure of a person’s of wealth without the benefit of a criminal trial. Banishment is terrible and inhumane; it is in principle a violation of the Eighth Amendment, which permits no cruel and unusual punishment. Even Professor Bruce Ackerman at Yale Law, who called for banning Saverin in the LA Times, understands this and would therefore allow an exception for those who would need to visit a family member who is dying or in hospital.
Exile is torture, and torture is universally condemned around the world. The Ex-Patriot Act would permanently separate persons from their heritage and their families — children from parents, brothers from sisters, nieces and nephews from beloved aunts and uncles. It tears people away from communities and friends. Exile would destroy their lives. It is psychological warfare, condemning people to years of regret, bitterness, and rage. Saverin is lucky to be originally from Brazil. But many thousands of those who have relinquished and will relinquish citizenship are citizens by birth and have loved ones still living in the United States.
Exile also punishes those who remain in the country who may never again see their loved one, unless they are able to travel to see him or her in exile. What if my father, an octogenarian, were to fall sick, and I couldn’t visit him? Whom are Schumer and Casey punishing now? Both me and my father. But it is wrong to punish people without a trial. This has been the case since laws were first invented. No truly civilized country ever punishes people without the benefit of a trial and the right to defend themselves before an impartial jury. This is why bills of attainder are odious. Schumer and Casey, however, must know that such a punishment could hardly pass the scrutiny of jurisprudence, and so it is better only to allow a hearing rather than bringing criminal charges and requiring the involvement of the Justice Department, grand juries, petite juries, and media attention. No, let the law declare the expats guilty. Let the law itself banish them. I.e., it is indeed a bill of attainder.
The United States must not ban persons who would normally have permission to enter the country lawfully as a visitor or on a visa. The United States must treat former citizens in the same way as all other people from their country of citizenship. Other Canadians may visit the United States for up to six months without a visa. To single out former U.S. citizens for special treatment is vicious and vindictive, and it is not becoming of a constitutional democracy. I cite the Expatriation Act of 1868, which shows that the United States expects other countries to treat its naturalized citizens with fairness and respect:
And be it further enacted, That all naturalized citizens of the United States, while in foreign states, shall be entitled to, and shall receive from this government, the same protection of persons and property that is accorded to native-born citizens in like situations and circumstances.
The principle of reciprocity requires that the United States treat other nations’ naturalized citizens in the same manner as native-born citizens of their countries. As the Apostle Paul says, “You then who teach others, will you not teach yourself?” To punish ex-Americans would also be a violation of the Universal Declaration of Human Rights (Article 15, 2): “No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.”
The problem with many lawmakers in the United States is that they don’t understand the first thing about freedom, justice, or fundamental human rights. Schumer and Casey are stuck on stupid. Yet it is not these two senators alone. This Ex-Patriot Act is different from the Reed Amendment not in kind, but only in severity. It is demagoguery. It is an affront to all who cherish liberty.
But should we be surprised? Power corrupts. Absolute power corrupts absolutely. The United States is for now still the most powerful nation in the world; this power has clearly corrupted some of its leaders, who are now drunk with arrogance and pride. They obviously believe that they are above the Constitution.
Peter W. Dunn is a DIY investor, a scholar of Early Christianity, and a former United States citizen who blogs on the discrimination of United States persons abroad at the Isaac Brock Society under the alias “Petros.”
Great article – can’t agree more with the conclusions.
Also can’t wait to read the comments 🙂
“Schumer and Casey are stuck on stupid.”
You got that right, Peter. Actually you got it all right. It’s a very good article. So far, for the most part, the comments are good too. I particularly like those written by someone called Petros Telos. 😉
Now I finally understand “bill of attainder” — another plus.
@Em “Petros” is Greek for “Rock”, i.e., Peter. “Telos” means “end” or “goal”. It is a pun on “Dunn”; i.e., “done”–having reached the end. Now the inside joke is out.
I can relate to the “Rock” bit which you will understand from my e-mails. I wondered about the “Telos” but now I get that too.
Thanks for writing this article. Petros. As an American who relinquished U.S. citizenship over 40 years ago, I have been watching the U.S. slip and falter in their attempts to maintain their position. It is never wise to “burn your bridges”. Alienating former citizens is a bad idea.
Tally-ho Petros! Most commenters are with you. Those who are not have nothing new to say.
@Petros, Great Job!
Peter the Great!
BRAVO, Petros, and congratulations. Well reasoned, temperate and truthful.
The US may be the most powerful military force at present, but who pays for it. America’s people pay through because the Republicans want to maintain the same level of military spend and keep the Bush tax cuts.
You see it everytime you visit the US with the growing number of tired low income people desperate to get out of the US rat race.
The US believes that it’s better to keep them poor and hungry then it’s easier to management the populous.
Don’t if this Accounting Today story has been posted anywhere yet. I have been traveling, and unable to keep up with all posts and comments.
Senators Intro Plan to Stop Facebook Co-founder from Avoiding Taxes
Thank you Petros, well spoken.
Great article, Petros.
I still hope that, in a near future, the peoples of the democratic nations of the world will remember and restore the principles of freedom and justice on which their countries were founded.
@Petros,
As always, thank you for being our spokesperson. What else can I say — I respect you and what you’re doing out in the open immensely!
Also this from The Hill…
Boehner: New law to punish tax-dodgers for renouncing citizenship ‘unnecessary’
They insist in putting the “Tax Dodger” pejorative in the headline, while no one at “The Hill” knows that is the intention of Saverin. Avoiding Tax complexity, for sure, but “Dodging?” Hard to “dodge” that Exit tax. I think that the broader implication of dodging requires some burden of proof, but never mind.
Made a quick comment there too. Shutting down, and getting back on the freeway! 🙂
Good article, Petros. 🙂
Has anyone seen this yet?
http://thehill.com/blogs/hillicon-valley/technology/228139-sen-hatch-tax-code-at-fault-for-facebook-founder-renouncing-citizenship-
“The root cause of the problem — an archaic tax code and massive tax burden that incentivizes people to do something like this — must be fixed,”
“Tax reform would not only be a more effective way of discouraging people from emigrating from the United States, but would also ensure that the United States remains competitive in the global economy.”
Finally someone in Congress understands! Orrin Hatch seems powerful as he is the ranking minority member of the Senate Finance Committee. The most senior Republican senator currently, Richard Lugar, has lost the primary election, so if Orrin Hatch is re-elected, he will become the most senior Republican senator. This means that he will also become President pro tempore of the Senate, if the Republican Party obtains a majority of the Senate in this election.
This was posted a couple of hours ago, Reuters. It *almost* sounds like it is in direct response to Petros’ article? It says it was posted yesterday, but google tells me 2 hours ago…
http://www.reuters.com/article/2012/05/20/tagblogsfindlawcom2012-lawandlife-idUS416669376320120520
@Just Me: That Accounting Today article is a big disappointment Cohn seems to have cribbed Schumer’s press release and rearranged a few sentences while keeping all the same basic wording. Right down to the bizarre description of emigrants as “fleeing” the United States and the fallacious argument that the 30% capital gains rate is “in keeping with the rate that is already applied on non-resident aliens for dividends and interest earnings” (NRAs don’t pay cap gains tax).
Wouldn’t it be much more simple to just tax capital gains of US assets held by foreigners? This way, there would be no need for an exit tax, no way for a renunciant to avoid US taxes (and thus no assumption that renunciation was based on tax avoidance), no bill of attainder, no ex post facto law, no exclusion of former citizens, and gains on all US assets would be treated the same way regardless of the status of the owner. And as a bonus, more tax revenue to the US, without the risk of losing foreign investment because most foreign investors can use the US tax paid as a credit to the usually higher taxes in their countries. What is currently happening is that foreign investors pay the entire tax on capital gains to their country of residence, while the US doesn’t excercise its right to tax income generated in the US. Why can’t Congress see this?
Could Accounting Today perhaps have a vested interest in keeping tax laws too complex and penalties too draconian for average people to do their own taxes and accounting? Considering who would subscribe and who advertises on their site?
@Shadow: “Wouldn’t it be much more simple to just tax capital gains of US assets held by foreigners?”
Your “as a bonus, more tax revenue to the US” is a clue to the problem here. For the US to gain, someone else must lose. That would be either the investor, or the investor’s government. Many, many countries don’t have a capital gains tax. Or have allowances that minimize them (the UK, for example, allows the first £10k or so of annual capital gains before CGT kicks in). Such a move would make US capital markets very unattractive to many foreigners. And the US relies on foreign money to keep it afloat.
@Watcher: “And the US relies on foreign money to keep it afloat.”
So isn’t it ironic that they penalize Americans abroad who earn money which they often sink into US investments, send money to the US, and would happily repatriate their foreign funds if they wanted to come back? Ironic that they only encourage the flight of US talent by taxing business income when it is repatriated, although apparently many countries do that. You’d think they would recognize the value of welcoming people and their money into the US, where most of their money is likely to be spent and invested.
“The United States must not ban persons who would normally have permission to enter the country lawfully as a visitor or on a visa. The United States must treat former citizens in the same way as all other people from their country of citizenship.”
When you sever your connection to the United States giving up your citizenship you lose the automatic right to re-enter the country, your permission is now completely up to the desire and whim of the US Government. I don’t think any of you would agree to removing the ability of your new home country’s to prevent someone from entering would you? Then why are you so upset about the US Government’s desire to control our borders?
I totally agree the law is draconian and extremely harsh, but I also think there should be consequences to actions, so the US isn’t right for you and you’ve made your life elsewhere that is completely fine, but don’t expect to have your cake and eat it too.
and therefore anyone who has emigrated to the USA is now banned from their native land…
Is the 30% tax on capital gains proposed in this new bill limited to U.S. sourced income, or does it apply to all gains that a renunciant earns regardless of the source?