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.