Of course, it was already obvious that libertarians oppose the “Expatriation Prevention” Act, but it’s heartening to see at least one sitting politician take a public stance against the wave of demagoguery and jingoism on which Schumer is surfing. Transcript and my comments after the jump.
0:00: Hello, this is Ron Paul, with your weekly update for May 28th. The characteristic mark of a tyrannical regime is that it eventually finds it necessary to erect walls to keep people from leaving. That is why we should be troubled by the Ex-PATRIOT Act — an egregiously offensive bill recently introduced in the Senate. Following a long line of recent legislation and regulations attempting to expropriate more wealth from hard-working Americans, this new bill spits in the face of the overburdened taxpayers, and tramples on the Constitution.
0:37: Current law already dictates that Americans with a net worth of over $2 million who expatriate must be assumed to have sold all their assets and must pay a corresponding punitive exit tax on those assumed sales. The Ex-PATRIOT Act tax goes even further than current law by assessing a 30% capital gains tax on all future earnings of expatriates.
This of course is not factually correct (yet): the 30% tax only applies to future U.S. capital gains. The U.S. has not yet found a way to tax non-resident non-citizens on income they don’t earn in the U.S. — perhaps they’ll figure out a way to do this in the future, by combining it with the FATCA withholding regime
1:02: Not content just with this additional tax, the bill also grants the IRS the sole authority to determine whether individuals have expatriated for tax purposes, and allows the IRS to bar those individuals from ever re-entering the United States. Finally, the bill blatantly violates the ex post facto provisions of the U.S. Constitution by extending all of these provisions to anyone who has given up their U.S. citizenship within the past decade.
1:33: This bill and other similar bills cast a chilling effect on savings, investment, and entrepreneurial activity. The bill was introduced in response to news reports about one of the founders of Facebook, who might save millions of dollars of taxes by renouncing his U.S. citizenship
1:55: In their blind envy towards successful entrepreneurs, the bill’s sponsors ignore the fact that they will ensnare many ordinary middle-class Americans who work hard, save and invest wisely, and benefit from rising home values. These Americans may easily find themselves pushing past the $2 million mark by the time they retire, especially as inflation continues to seriously accelerate.
This is the same point that Petros and others here have made before: the $2 million “covered expatriate” threshold imposed by Section 877A does not have a cost-of-living adjustment multiplier applied to it (though the $600,000 capital gains deduction does), meaning that anyone who bought a house in the right area at the right time — especially outside of the U.S. in a hard-currency area — could eventually end up exiled from the Homeland. And of course, as I keep pointing out, you could become a “covered expatriate” without any assets at all if you answer “no” on the Form 8854 question that asks (under threat of perjury charges) about your past five years of tax compliance — since a missing Form 3520, 8621, 8938, or other obscure garbage “information return” could be counted as “tax non-compliance”.
2:26 If they wish to escape the Federal Reserve’s inflation by immigrating to lower-cost countries so their dollars will go further — as many Baby Boomers are starting to do — the Federal Government would penalize them, and would continue to penalize them for the rest of their lives, as long as they hold any money in the United States.
2:40 Unfortunately, the mere consideration of such legislation, even before it is passed, has made American banking customers a potential future headache for banks around the world. They don’t want to deal with the IRS any more than Americans do, and as American accountholders become a Trojan Horse for the IRS to insinuate themselves into their affairs, there may be more costs than benefits to extending banking services to Americans.
Of course, as Homelanders of all political stripes repeatedly fail to understand, it is not necessary to give up your citizenship to emigrate from a normal country — indeed, many people from other countries live abroad for decades or even generations while retaining their ancestral citizenships. It is only Americans who have to renounce after emigration in order to live normal financial lives in our countries of settlement. I wonder if Ron Paul is actually aware of the U.S.’ unique citizenship-based taxation system? He seems to have heard something about FATCA and the effect it is having on U.S. customers of non-U.S. banks, though he doesn’t mention it by name and seems to have confused it with the Ex-PATRIOT Act.
3:09: We live under a federal government that has eviscerated our Fourth Amendment rights, that can detain U.S. citizens indefinitely based solely on the president’s word, that assaults toddlers and grandmothers at airports in the name of security, and regulates virtually every aspect of our economic lives. No wonder increasing numbers of Americans feel that this government is engaged in outright warfare against its own citizens.
3:36 Every day, the noose grows tighter, yet everyone who sees the writing on the wall and seeks to leave must pay exorbitant taxes just for the privilege of leaving. And increasingly, the possibility looms of never completely breaking away from the government’s tentacles, no matter where they go.
3:57 Ultimately, the Ex-PATRIOT Act proposes to control people by controlling their capital. And that has no place in a free society. Thanks for following this update. The new update is placed on this number: 888-322-1414 every Monday. The written text can be found on my website: www.house.gov/paul under the heading “Texas Straight Talk”. Thanks for calling.
The transcript hasn’t been posted yet — there seems to have been a delay this time, so I did my own. Will correct any errors once his official transcript becomes available.
Not that I would have necessarily expected it, but no mention here of long-term permanent residents (aka green card holders). That’s 8+ years but can be less. These folk could be just as ensnared as US citizens, only without any vote or representation at all, not even the placebo offered to overseas voters.
As far as I can tell the press on this has not once mentioned green cards in relation to this law. I wonder how many GC holders are unaware of this and are currently breathing an unwarranted sigh of relief?
Captain Obama steers toward the rocks, as Ron Paul tries to change course, while Mitt Romney is happy to keep rearranging deck chairs.
…and while Chuck Schumer and Bob Casey busy themselves by drilling holes in the lifeboats.
@Watcher, lol, I’m having some really good laughs at 3am!
Ron Paul’s failure to mention long term ex patriots is perfect proof positive to say that we as a group have absolutely zero representation in Washington. Zero, zip, nada. NO TAXATION WITHOUT REPRESENTATION! Do not tread on me.
Thank you Eric for spending the time to do that transcript. Even if Ron Paul only got it 80% correct (just a made up number) that’s actually pretty good considering how complex and convoluted this whole issue is. He obviously has a good grasp of the injustice of it all.
As someone who is in the process of becoming an ex-greencarder I wonder what’s in store for people in this category. I can’t be a covered ex-greencarder at the current threshold but they can always lower the bar in the future with the likes of Schumer and Casey lurking about. I don’t have any US holdings and haven’t had since we left the USA but I wish there was a way to warn all those who do to get those assets out and do it quickly. There could be a lot of outlander people with green cards tucked away somewhere and they don’t even know those things are still active … still ticking away and getting ready to explode.
@bubblebustin: 3:00 a.m.?!? Doesn’t anyone sleep anymore? (Actually, I think I know the answer to that. Since IRS wormed its way into our normal, honest law-abiding, tax-paying lives, the answer is “No.”
Yes, Ron Paul left out some important information, but he’s on the right track and certainly understands the issue. In some ways, I thought it was Petros speaking.
I never thought I would be cheering on a Republican. Now I know the world has gone topsy-turvy!
I just wrote Ron Paul on his website (https://forms.house.gov/htbin/formproc/paul/webforms/issue_subscribe.txt&display=/paul/webforms/thankyou.html), independantly under my nom de plume.
Dear Congressman Paul,
Thank you for your speech (please see link below) which touches on one of the current political issues that US Persons living abroad are very concerned about, many of whom are middle class, earned much of what they have in a foreign country, pay foreign taxes, and are not “FATCAts”.
I believe that it is unfair what Schumer and friends are trying to do. It reeks of “bill of attainder”. If Saverin (Facebook) wants to expatriate from US nationality and remain with another nationality, that is his right, under the UDHR. It appears to me that Saverin is trying to respect the expatriation tax provisions as a “covered expatriate” that were in effect when he renounced his US citizenship. But to bait and switch him and others with ex-post-facto laws that might tax him more and bar him entry to the US is unjust, and would certainly scare him away from further investing in the US.
Furthermore, many US persons abroad are very concerned about the current trends of FATCA, FBAR enforcement, passport confiscation, and other legislation that exacerbate the already unacceptable US policy of double taxation and reporting. For those of us that have lived abroad for a long time, earned our living abroad, paid taxes where we live, possibly obtained nationality where we live, worked hard, saved and invested, and would like to be allowed to exercise our freedoms as guaranteed by our home countries’ constitutions without US intervention, US legislation flabbergasts us.
If the US would stop meddling in our affairs in our home countries, we would be better able to serve as trade ambassadors for the US. We would be a 6-7 million-strong networking group that could help reduce the trade deficit and help bring America back to prosperity.
I would like to draw your attention to the Isaac Brock Society, at which I am an active participant (although I do not represent them in this present email). http://isaacbrocksociety.com/2012/05/28/ron-paul-condemns-ex-patriot-act-will-ensnare-many-ordinary-middle-class-americans/#comments
Please feel free to visit the blog.
Thanks again for speaking out against the Schumer-Casey Ex-Patriate bill.
Best Regards,
Jefferson D. Tomas (nom de plume)
Qualified Elector of a State in the Midwest US.
Qualified Elector in the French-Speaking region of Switzerland.
It would appear that this message was sucessfully stored:
Displayed on webpage after pressing SEND button:
“Dear Jeff D. Tom, Thank you for contacting Congressman Paul’s office using the Internet. Your message has been sent to the Congressman. Sincerely, The Office of US Representative Paul”
@Blaze. As to 3AM: I think that there are many “Brockers” who are losing sleep over unconcianable US policies. Better to act by blogging here and taking action as a group through the other means at our disposal than to lie awake all night worrying. Maybe if we get it out of our system when we can’t get to sleep, we can sleep better afterwards.
I’ve done my part for today, I think. I’ll be back tomorrow (unless I can’t sleep in the meantime).
@Jefferson: We all need to try to get some sleep. This is taking a far greater toll than anyone can possibly imagine. It goes beyond finances to health, careers, marriages and families. I learned this weekend of one person whose spouse (with no connection to US) has been talking divorce because of the intrusion of the IRS into their lives.
@blaze and @jefferson. The divorce potential – due to the IRS threat to a whole family – which includes non-US persons, and the toll on health and mental health is very real. If one starts thinking that the waves of overwhelming anxiety and fear are too much to bear for yet another minute, or another day in a series of endless days, then who knows what alternatives, however dire, will pop up in the darkest times? An animal caught in a leghold trap might gnaw off it’s own limb in a bid for freedom.
@eric, yes thank you for this post. I’m glad that we’re discussing R Paul’s platform. He may be America’s man if enough citizens realize the nation needs a completely different course direction. Many dismiss him for that reason, although he’s gained traction with young people. I have been posting as a non-resident US citizen on his Fb page, but my voice is lost in the chorus of complaints. Thanks for the link @Jefferson, I will be writing to him in my voters name.
Rather than toss and turn in the night (which was familiar to me prior to the US governments Jihad against citizens living abroad-btw, I think it’s important that we always make the distinction that it’s the US who’s against us when using the J word so we don’t end up like tweet boy),
http://isaacbrocksociety.com/2012/01/31/welcome-to-the-united-states-lesson-i-watch-what-you-tweet/
I like to read what comes from the other side of the world. For me, it’s comforting to know that I’m not alone working toward a solution to our problems as US persons living abroad. That is our objective, isn’t it?
@Badger, Like divorce, I know some who have contemplated other dire alternatives due to the bullying of IRS on honest, responsible, law-abiding lax-paying individuals. We need to stick together and support each other (as we have been doing).
Just in the two hours since I posted above, I learned of another minnow who went into OVDI out of fear and was assessed over $50,000 in penalties. She is a friend of a friend. I told my friend CRA won’t collect for IRS, but his friend has already paid it out of terror that IRS will come after her Canadian husband’s business. I told my friend to tell his friend about TAS and Brock. Does anyone know if TAS can get money refunded after it’s already been paid?
Here’s an interesting story; exploring the outcome if other countries seek to apply extraterritoriality to their citizens – like the US does.
http://www.vancouversun.com/entertainment/pne/accidental+Kenyan+What+would+happen+African+nation+copied+policy/6689987/story.html
‘The accidental Kenyan: What would happen if the African nation copied U.S. tax policy?’
By Don Whiteley, Special to the Sun May 28, 2012 9:02 AM
““Enough,” says Obama. “I want an immediate appointment at the Kenyan Embassy to formally renounce my Kenyan citizenship to stop this BS.”
“A renouncement done for tax purposes won’t be recognized until you’ve paid an exit tax,” Ruemmler explains. “Again, sir, they have mirrored the rules we passed in 2008 in the HEART Act. Their exit tax is 30% of your total assets – money, property, investments. We’re a little nervous about where they might go with that one.
“You have to pay your fair share of Kenya’s taxes before you can renounce. Now there is a bit of a break here. Kenya’s Foreign Earned Income Exclusion deducts the first $95,000 annually. Unfortunately, you make $400,000 and you’ll have to pay both US and Kenyan income tax on $305,000. Oh, and you’ll have to pay Kenyan tax on all your investment income. And you have to pay it all in Kenyan shillings – they won’t accept US dollars.”
Right on. Next will be Indonesia–where Obama lived as a child–and where his mother took out citizenship for him.
Don Whitley neglected to mention GATCA–which will require anything Obama has signing authority for also must be reported to Kenya and Indonesia.
@Blaze, TAS has given us hope that the penalty associated with the capital gain tax can be eliminated with First Time Penalty Abatement within the IRM (and without opt-out)
http://www.irs.gov/irm/part20/irm_20-001-001r.html
Brockers may note sections “Encouraging Voluntary Compliance” where the IRS states: ” Voluntary compliance exists when taxpayers conform to the law without compulsion or threat” and “Fair and Consistent Approach to Penalty Administration”.
However, our TAS agent has not officially opened a file for us, because we’ve yet to receive a response to our submission.
@Jefferson, that link to R Paul seems to be incomplete…
@bubblebustin. crossing our fingers for you. thank you for sharing your struggles – information that could help others as well.
@badger, at the risk of sounding schmaltzy, it helps having friends like those I’ve found here.
@Bubble and @Badger, indeed it does! Though I haven’t said it, Bubble, I am really feeling for you now. Must be a nerve-wracking time.
Thank you @mona, at times I wished we would have pulled an ostrich, but then I would have no voice. It’s funny, in the 44 years I’ve lived in Canada, I’ve never felt so much camaraderie with other Americans. I only wish it was under different circumstances.
@site administrator – sorry to clutter up the site, but the Whiteley article is now posted x3, twice the links by me, once in separate post by Petros. Might be too confusing to take one of mine out though – would leave comments without any reference.
@badger, don’t worry. The article has it’s main posting. Congratulations coming all around. Cheers.
I don’t know who to attribute this saying to, but I think you will all like it:
“America is the only country that went from barbarism to decadence without knowing civilization.”
@bubblebustin
Great quote!