In a press release on his website, Jack Reed announces that he and Chuck Schumer have moved an amendment to the immigration reform bill to make “covered expatriates” — people who give up U.S. citizenship and meet certain asset thresholds, or who have missed some of the ridiculously time-consuming piles of tax paperwork required of citizens living abroad within the past five years — into permanent exiles from the United States, in similar terms as Schumer’s failed Ex-PATRIOT Act last year.
Contrary to Reed’s mendacious claims, this amendment does not just affect people who “accumulat[e] wealth and benefit from the greatness of the United States and then renounc[e] their citizenship to avoid paying their fair share of taxes”. As even a cursory glance at Wikipedia confirms, the overwhelming majority of people who give up citizenship have lived abroad for many years and became successful thanks to the countries in which they actually live, not the United States which they made a conscious choice to leave behind.
Under Reed’s new amendment, if you have lived abroad all your adult life and got lucky buying a house in the right neighbourhood, or even if you simply have missed some tax filings in the last five years, and you dare to exercise your human right to change your nationality as guaranteed by the International Covenant on Civil and Political Rights to which the United States is a signatory, then you too will be banished from the United States and refused the right to visit your relatives who still live in the country or the old stomping grounds of your early childhood.
It would seem that Chuck Schumer, the Democratic Senator from the carried interest loophole State of New York, has learned a few tricks from Carl Levin about gaming the U.S. legislative process. Now, instead of trying to get his bill to pass on its own merits, he’s snuck it into an existing bill with a greater chance of passing — just as FATCA died in committee before being snuck into the HIRE Act. His co-sponsor on the amendment, Jack Reed (D-RI), is of course the author of what even his fellow Democrat Daniel Moynihan referred to as the “incoherent and unenforceable” Reed Amendment to the 1996 Illegal Immigration Reform and Immigrant Responsibility Act, the United States’ first failed attempt to ban former citizens.
Other countries both developing and developed — ranging from the Philippines to Denmark to South Korea — have easy-to-obtain diaspora visas for their former citizens, a simple humanitarian gesture to allow emigrants to come back to attend their high school reunions, see their nephews grow up, attend a higher education course in the language of their childhood, and care for their parents in their dying days. The United States, on the other hand, is once again proposing exile for its own former citizens. “Greatest country in the world” indeed.
Update: The amendment number is SA1233; you can find it at page S4420 of the Congressional Record for 12 June 2013. Here’s a link to the THOMAS page for the amendment, but you may find it easier to go to the THOMAS search page, search for “expatriate”, and pick the most recent result:
SA 1233. Mr. REED (for himself, Mr. SCHUMER, and Mr. CASEY) submitted an amendment intended to be proposed by him to the bill S. 744, to provide for comprehensive immigration reform and for other purposes; which was ordered to lie on the table; as follows:
At the appropriate place, insert the following:
SEC. __. INADMISSIBILITY OF INDIVIDUALS WHO RENOUNCE CITIZENSHIP TO AVOID TAXES.
Section 212(a)(10)(E) (8 U.S.C. 1182(a)(10)(E)) is amended to read as follows:
(E) FORMER CITIZENS WHO RENOUNCED CITIZENSHIP TO AVOID TAXATION
(i) INADMISSIBILITY — The following aliens are inadmissible:
(I) Any alien who is a former citizen of the United States who officially renounces United States citizenship and who is determined by the Secretary of Homeland Security to have renounced United States citizenship for the purpose of avoiding taxation by the United States.
(II) Subject to clause (ii), any alien who is a former citizen of the United States and who is a covered expatriate.
(ii) REVIEW FOR COVERED EXPATRIATES — A covered expatriate shall not be inadmissible under clause (i)(II) if the Secretary determines that the covered expatriate has established by clear and convincing evidence that avoiding taxation by the United States was not one of the principle purposes that the covered expatriate renounced United States citizenship.
(iii) COVERED EXPATRIATE DEFINED — In this subparagraph, the term ‘covered expatriate’ means an individual described in section 877A(g)(1) of the Internal Revenue Code of 1986 and to whom section 877A(a) of such Code applies.
The approach here is somewhat different from Schumer’s previous attempt. The Ex-PATRIOT Act by default classified all “covered expatriates” as “specified expatriates” and then banned all “specified expatriates”; it made the Secretary of the Treasury responsible for processing applications from “covered expatriates” who wanted to be reclassified as otherwise than “specified expatriates” so they could visit the U.S., but did not allow the Secretary of Homeland Security to grant them a waiver of inadmissibility. In contrast, the Reed–Schumer Amendment bans all covered expatriates and then makes Secretary of Homeland Security responsible for processing waivers.
The distinction may seem subtle — in both cases, you are deemed guilty and the burden is on you to prove your innocence — but it has an important implication: it very likely means that the IRS will have to share tax return information of ex-citizens with the Secretary of Homeland Security in order for DHS to be able to assess the claim that giving up your citizenship did not have the principal purpose of avoiding taxation. (Note also that the amendment empowers the Secretary for Homeland Security to use allegations of “tax avoidance” to ban even people who aren’t covered expatriates — though only on the same terms as the existing Reed Amendment empowers the Attorney-General to do.)
The other difference is in the standard used to ban ex-citizens: the Ex-PATRIOT Act banned any covered expatriate who had a “substantial reduction in taxes”, whereas the Reed–Schumer Amendment allows a waiver only for those who can prove that avoiding taxation was not “one of the principle [sic] purposes” of their choice to give up citizenship. This is a much higher hurdle to clear. If you are a U.S. Person living abroad, you very certainly would like to avoid U.S. taxation on your local retirement plan, not because the tax burden itself is “substantial” but because the paperwork is fraught with danger. But even if you clearly did not enjoy a “substantial reduction in taxes” by giving up citizenship, it might still be said that one of your “principle [sic] purposes” was to avoid taxation. After all, why else besides taxes would you choose to stop being a dual citizen of the “greatest country on earth”, or to naturalise in a country in which you’ve inexplicably chosen to live your whole adult life when neither your parents nor your spouse hail from there? Traitor!
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Recently I received an e-mail from Jason Kenney (addressed me as a “friend” — sure got that wrong). He was attempting to persuade me to sign a petition to support a private member’s bill which would strip Canadian citizenship from convicted “terrorists”. Knowing how loosey-goosey they can be at assigning that label of “terrorist” and how easy to it is to get a conviction (even when a “terrorist” plot is aided and abetted by an undercover agent) I replied as such …
I have no interest in signing your petition since I believe citizenship should be something that can be renounced by anyone wishing to do so but it should never be revoked. I would rather see the government’s efforts devoted to fast tracking Canadian citizenship for Americans who have chosen Canada as their permanent home. Many feel burdened and even threatened by the USA’s citizenship-based taxation (far more punitive than Eritrea’s small diaspora tax which the Canadian government denounced). In order to renounce their American citizenship they must first acquire Canadian citizenship and with FATCA looming, time is of the essence for them.
http://www.nytimes.com/2013/06/16/us/politics/as-immigration-bill-moves-forward-fear-of-an-id-system.html?_r=1&
I can’t believe there is no discussion about the national id card now going in the bill
Mark, comments in the NY Times or discussion in Congress? It is unbelievable that people will just let this happen / buy into it being the answer to all their fears. Will Canada be next so the shared border can be crossed?
Card or no card, there will always be those willing to subvert the system, as all the FATCAs of the world won’t stop tax evasion. Watch underground economies flourish under these top down diktats. Whether these measures work or not isn’t important, as it’s all about making money for those in the Industrial Security Complex, I’m afraid.
I see no dissent. Conservatives love this crap. It keeps the border secure. “I never do anything illegal so why should I worry? Put ’em all in jail!” Demonicrats like it because — I don’t know, why do they like an id card and why does their dominating media love it?
I have a feeling this amendment is going to die on the cutting room floor. Right now there are over 150 plus amendments to the immigration bill and the Senate has only published a list of twelve which are scheduled to come up for votes. Reed Schumer is not one of them.
The bill is supposed to have a final vote by Monday and yesterday the Senate only voted on four amendments(not included in the eleven currently scheduled). Also the US Senate RIGHT NOW is Quorum Calls where there are no Senator on the floor to speak. So they are moving very SLOWLY.
@Tim, if it dies here, it will resurface later as a pay-for in a future bill with a veto-proof name. This is exactly how HEART and FATCA passed. Rejected on their own merits, but later sneaked through as amendments to HEROES and HIRE (and who could possibly vote against those two?). Ex-PATRIOT or something like it is coming, sooner or later.
Reed running off at the mouth again yesterday (CR page S4552). Just like Schumer last year, he snuck it into a speech when he said he was going to be talking about something unrelated:
More on the Schumer-Reed Amendment:
“Law to Exclude US Ex-Citizens Judged To Have Avoided Tax”
http://www.tax-news.com/news/Law_to_Exclude_US_ExCitizens_Judged_To_Have_Avoided_Tax____61116.html
“the exclusion would be waived if the ex-citizen could demonstrate to the Inland Revenue Service that he or she had not in fact renounced citizenship primarily to avoid tax,”
Inland Revenue Service? In whose world?
The author is probably a Brit.
They are loading the bill up with lots of goodies for the Rebloodlicans.
http://www.ibtimes.com/immigration-reform-bill-dreamers-agriculture-workers-exempt-under-hoeven-corker-border-security
20,000 more border police == this will likely allow them to increase the border line from its current 50 mile thickness to 500 miles.
And the national id card with fingerprinting for all citizens.
Our advocate in the Senate soon to become Democratic leader, a “worthy successor to Ted Kennedy”:
Sen. Schumer’s stock on the rise
By Alexander Bolton – 06/25/13 05:00 AM ET
“The expected passage of immigration reform this week will hand Sen. Charles Schumer (D-N.Y.) the biggest legislative triumph of his Senate career and bolster his case to someday become Democratic leader.
Schumer strenuously avoids speculation about his political future or talk about what will happen when Senate Majority Leader Harry Reid (D-Nev.) decides to step down.
“Everyone knows he is a great political strategist and a great communicator. Now they know he’s a consummate legislator,” said Jim Kessler, who worked for Schumer before becoming the senior vice president for policy at Third Way, a Democratic think tank.
At the outset of the floor debate, Schumer set the ambitious goal of passing it with 70 votes, while Reid and Durbin argued that negotiators should focus more on passing a strong bill with 60 votes. Schumer argued a strong bipartisan majority would put more pressure on the House to act; Reid urged him not to worry about what would happen in the House.
Reid on Friday admitted Schumer’s strategy was the correct one.
“No one — no one [of] 100 senators — no one other than the senator from New York thought we could get 70 votes,” he said on the Senate floor. “I doubted he could get 70 votes. He knows I doubted that. No one in this body thought we could get 68, 72 votes except him.”
Schumer invoked the memory of former Sen. Edward Kennedy (D-Mass.), the legendary Senate dealmaker, the day he and his colleagues unveiled their legislation.
“He’s a worthy successor to Ted Kennedy, and that’s saying a lot,” Graham told The Wall Street Journal in an interview published Friday.”
http://thehill.com/homenews/senate/307509-sen-charles-schumers-stock-on-the-rise
“Senate passage of historic immigration bill in sight this week after legislation clears hurdle”
http://news.yahoo.com/senate-passage-immigration-bill-track-072413891.html
If Schumer and Reed get their way, many expatriates will be kissing the Homeland goodbye forever — America’s Berlin Wall completed just in time for FATCA to kick in.
@IRSCompliantForever &AbusedExpat,
A worthy successor to Ted Kennedy? Geez, what a crock. And yes, many more will take that final kick in the pants as just what they need to get on with it and get out.
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@IRSCompliantForever &AbusedExpat&nobledreamer
i know we all feel in our hearts for the ??[very very high] % of Americans abroad who have committed “putative form crime”, ie they didnt know or through life circumstances (illness , nothaving money to pay the professionals, completed forms in good faith but made booboos, etc etc ) fell out of compliance wiht the dozens of pages of stupid 1970s [FBAR, 3520*] and FATCA 80% duplicate forms [8938] …….super super super minnows…… “get on and get out” feasibility is dependent on the 6-7 million unique facts and circumstances of all of our global brother/sister members of the unique Tax, form and penalty club.
one quote to remember from IBS postings………”show me the [person] and I will show you the [form] crime.”….. originallly attributed to Lavrentii Beria-Stalin’;s head of Secret police in the 1930s….. US is turning this way… 197% agree that all who can should get out now while they can but continue to watch/post/work to support those who cannot yet get out.
What those who cannot yet get out , while they are prepping to get out, can do by passive is far more damaging. dont travel to US. dont invest in US. dont promote US verbally. communicate their story anonymously verbally to everyone they meet (tonight was in a pub chatting to strangers about US citizenship based taxation abuse and discovered that the guy I was talking to was a UK Home Office Admin manager……he was incredulous as to the real FATCA effects………. bought a round to celebrate life in the UK free from US retro 237 year imperialism…….) as well as banding together for class action suits, etc.
Forecast: in next few years US will have many fewer citizens abroad, thanks again to all at IBS for saving my sanity over the last year.
@crystal london
I hear you. I do my Warning all the time with everyone I meet who are abroad or even here now that I am in the States. Just had a similar conversation at a bar yesterday, and the gentlemen was just aghast and amazed. Of course, he had NEVER heard of FATCA, and I said, ‘Well you would not be alone, but google it!
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@crystal london, that makes an eye-opening tweet:
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I am on the faculty of an Asian university, and sometimes students ask me for career advice. I never thought I’d find myself doing this, but when students ask me whether they should take job offers in New York, London, or Shanghai, I tell them, if they value their personal freedom, pick London or Shanghai.
Anti-human rights activists Schumer and Reed want to make not only US citizenship, but also permanent residency like herpes – once you catch it, you will suffer from it for the rest of your life. Don’t catch this infection if you have a choice about it.