Schumer Casey bill removes all doubt about U.S. insanity – may accelerate pace of renunciations!

Cross posted from RenounceUScitizenship

The following comment from the Isaac Brock Society about the Schumer Casey Ex-Patriot Act is deserving of a separate post and discussion:

foxyladyhawk

Interesting to see the various responses to the new bill on how it will affect renunciations.
@Eric: you quote Simon Black saying: “More importantly, this bill is also a major deterrent for people who are thinking about renouncing US citizenship today. The passage of this law will undoubtedly cause many people who were considering expatriation to abandon the idea altogether as the thought of being permanently barred from entry is too much to bear.”
@Gabriel says: “Previously I was conflicted about renouncing. I have no need of my citizenship, but it seemed foolish to close a door unnecessarily. Now the message is loud and clear – get out while you still can.”
Both are undoubtedly true. This will cause major anguish to people whose future will be profoundly altered by this bill in ways they are utterly unable to predict. Even the threat of banishment is cruel and unusual punishment. It has placed many many people, myself included, at a clear fork in the road of our lives.
I hear tell that many conservatives are furious about the bill and are letting Boehner know it. If he backs off his support for the bill, it won’t pass. Wouldn’t it be nice if we could all just put this catastrophe behind us and go back to the mere nightmare we were living in a few days ago?

Your thoughts and comments?

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53 thoughts on “Schumer Casey bill removes all doubt about U.S. insanity – may accelerate pace of renunciations!

  1. Thanks for posting the video. The audio was a little weak, but I was able to watch it. My favourite part was watching the anchors’ reactions. My impression is they think US tax policy DOES NOT encourage immigration and this politician is acting ridiculously.

  2. There’s a version of the video here, with clearer audio:

    http://www.bing.com/videos/watch/video/the-ex-patriot-act-aimed-at-facebooks-saverin/3xo5719x?cpkey=5433c839-10aa-4196-a534-db84ec82341b%7C%7C%7C%7C

    At 05:01 you can clearly hear the Brit half of the presenter duo laughing at Casey’s overblown rhetoric. What pity these two didn’t put Casey on the spot more firmly.

    Now, anyone up for a new abortion law, aimed at grandstanding Senators and retroactive to cover the past 65 years or so?

  3. If anything we see the good Senator getting redfaced and mealy mouthed at the line of questioning that exposed his lack of logic.

  4. The English presenter was perplexed by the Senator’s position. It was one of those “what are the Americans on about moments.”

    The Ex-patriot Act to the presenters seemed so vindictive and short-sighted certainly lacking any sense of fair play. Congress left open a loop hole where someone could ex-patriot, and avoid capital gains taxes, However in Congress’s arrogance they never imagined anyone would renounce their US citizenship to avoid taxes. Well times have changed people are willing to do just that.

    The Englishman didn’t seem to be in any rush to queue up and get his US passport.

    The Senator doesn’t get it. The Congress made the rules, Saverin followed them, and got caught with their pants down. Now Senators Bemis and Butthead are retrospectively trying to change them in mid-stream to gain some cheap political shots.

    I hope in future companies decide America is not the place for them and set up in Canada or Mexico via NAFTA instead.

    Well we wait for next quarter’s renunciations report eagerly.

  5. Got to love the British reporter’s expression when The Senator was going on about spitting on people!

  6. Obama just finished peddling his “you’re the most free in America” rubbish at the US Air Force Academy until you want to emigrate and stop being liable to US taxes! It’s a joke.

  7. http://valensiroselaw.blogspot.ca/2012/05/dramatic-rise-is-us-expatriations-may.html
    Tuesday, May 22, 2012
    ‘Dramatic Rise is US Expatriations May Have its Roots in Foreign Asset Disclosure Laws’
    by Geoffrey Weg

    “The Federal Register does not reveal an individual citizen’s purpose for expatriation (nor is any citizen required to provide a reason to the government). However, for tax professionals, one huge change in tax law stands out like a sore thumb – FATCA – the Foreign Account Tax Compliance Act.”…..

    ….”both tax practitioners and US citizens living abroad now face a huge administrative burden in order to comply with FATCA. …… anecdotal evidence from tax practitioner and taxpayer advocate groups indicates that it is this burden – FATCA – that is directly responsible for the dramatic increase in US expatriation. “…..

    “……..these are individuals with significant income and assets, and they are deciding to leave our country, taking their skills, assets and tax-paying abilities with them. Moreover, the number of people doing this is simply skyrocketing. If it continues, at some point there will be a noticeable impact on the US economy. Congress and the Department of Treasury should take this new trend seriously, and think long and hard about whether to continue to impose this burden on these taxpayers, and ultimately, on all Americans.”

    The article seems also to say that it is only ‘covered’ expatriates that are listed in the Register – so that the real number is actually higher – as the IBS has speculated.

  8. If you don’t like chuck you can “like” this Facebook page: chuck schumer=disgrace
    Sorry I don’t know how to copy the link from my iPhone. The page was created over another boner of his, but it may be an opportunity to get our message out to more people.

  9. In the link I posted above, http://valensiroselaw.blogspot.ca/2012/05/dramatic-rise-is-us-expatriations-may.html the dots are connected in terms of REPORTING and administrative burdens correlated with rising rates of expatriation, rather than concerns about TAX per se. Hope others will pick this up, and see that it is FATCA and the myriad of other ever-growing incomprehensible and labyrinthine extraterritorial reporting and layers of penalties that are driving people away from acquiring or keeping US citizenship.

  10. On December 14, 2008 the New York Times published an article on Schumer’s role in the Wall Street meltdown. The article stated that Schumer embraced the industry’s free-market, deregulatory agenda more than any other Democrat in Congress, even backing measures now blamed for contributing to the financial crisis.[94] Schumer took steps to protect industry players from government oversight and tougher rules, a review of his record shows. Over the years, he has also helped save financial institutions billions of dollars in higher taxes or fees. He succeeded in limiting efforts to regulate credit-rating agencies. This article also charged that Schumer blocked ratings agencies reforms proposed by the Bush Administration and the Cox SEC.[94] [Wikipedia]

  11. @badger, This article is right on the stop. I can’t think of any other reason that could explain the sudden increase in expatriations. I believe that the additional revenue that FATCA could bring is smaller than the loss in revenue due to the expatriations. I guess Congress didn’t think that people would “dare” to leave the system. The biggest loss is to the US itself.

  12. @badger: “If it continues, at some point there will be a noticeable impact on the US economy. ”
    Previous idiotic tax laws have already done so, as Roger Conklin has amply described, but of course the adverse effects blend in with so many adverse effects from other factors that they are invariably blamed on the policies of the opposition party.
    The result is the slow train wreck we are seeing now, with the locomotive crew blaming each other, blaming the previous crew, blaming the passengers who are jumping off, and oblivious to the fact that they took the wrong branch line long ago thinking it was a short cut to Utopia.

  13. @foxy, @shadow, @mona, and @all, problem is that it is the other distorted sound-bites in the headlines that get repeated over and over – ex. Shulman’s repetition of the mantra that ‘customer satisfaction’ with the IRS is high (who and what was the sample?), or the mantra that those expatriating are doing so to avoid paying ‘their fair share’ of US taxes (when they already pay in their country of permanent residence or other citizenship), etc. very few other voices out there. : (

  14. The fair share comment by Sen Casey just exemplifies his lack of understanding beyond US borders, he’s a true homelander. Senator of course we pay taxes abroad, but our fair share goes to the country of our residence (hint: other countries collect taxes too), and often more than US rates.

    Senator Casey’s wikipedia page doesn’t mention anything about him going abroad even for college. it looks like his biggest “foreign adventure” was teaching 5th graders at an inner city Philadelphia school. Otherwise it’s probably swift Congressional trips abroad staying in nice hotels completely cut off from the locals wondering what all this foreign monopoly money is worth.

    I guess that qualifies him to make judgements on ex-pat issues.

  15. I believe Casey has done some foreign traveling. When asked by Charles Smolover whether he had ever visited Israel (October 2005 interview) Casey replied: “I’m happy to tell you that I’ll be making my first visit there this November. I’m really looking forward to it.”

  16. So Eduardo’s additional punishment is designed to prevent him from investing in US companies. Wow, just wow.

    Internet entrepreneurs looking to access Eduardo’s 2 billion dollars worth of capital would be smart to set up shop in Canada instead.

    I run an Internet company from Canada. My American customers don’t even notice that I’m actually not in the US.

    Congress just gave Canada a huge gift!

    The CEO of Cisco said it is currently easier to do business in Canada and Russia than the United States. Awesome.

  17. @all

    Pick this video up at about the 4:30 mark. This is by far the best and most relevant part. What Casey says in response to the question of whether U.S. tax policies are causing people to leave:

    “What we want in this country are people who are going to pay their taxes.”

    Incredible, confirms the U.S. government sees the primary purpose of U.S. citizenship is to be a tax slave.

    Also, this moron (Casey) goes on and on about how times are tough in Pennsylvania, the people are having a tough time. The subtext of this BS is that therefore, Saverin should have to pay.

    No acknowledgement that he has already paid (or will pay a huge exit tax).

    Incredibly, Casey is an example of the “envy specialists” who are running the U.S.

    Just waiting for Obama to make this part of his “class warfare” theme.

  18. Eduardo seems to be saying that the primary reason he renounced his US citizenship is the fact that FATCA made it impossible to have more than a very basic bank account in Singapore. I think he has a good argument. Look at all the ordinary citizens who are renouncing because FATCA is causing them banking problems. A lawyer could go a long way with that in a court of law.

    Remember Eduardo moved to Singapore in 2009. FATCA legislation didn’t happen until early 2010. He couldn’t have predicted that he would have these kinds of problems just being a US citizen. Who knows, he may not have renounced if it weren’t for FATCA. I wonder what Timothy Geithner has to say about it now. He didn’t care when ordinary US citizens were being denied bank accounts but when a billionaire renounces for the same reason you’d think an alarm would go off in his head. Gee why didn’t he see this coming? This is a great example of Karma. The US government messed relentlessly with the little guy and now the billionaire Gods are messing with them.

    I think we’ll see more rich people following in Eduardo’s footsteps.

    Instead of bringing in $8B in additional tax revenues over the next 10 years, FATCA could actually cost the US an additional $8B in revenue losses.

    Congress never did a cost benefit analysis because they said all the cost would be paid by foreign banks. The Republicans should start demanding they do a cost benefit analysis of FATCA now. FATCA was passed by a Democrat controlled Congress.

  19. I think it may amuse all concerned to know that the proposed legislation would rarely accomplish its intended objective of taxing covered expatriates on their capital gains. The provision applies only to US-source capital gains, and the capital gains of a covered expatriate living outside the US would very rarely have a US-source. In general, gain recognized by a nonresident alien from sales of non-inventory personal property would have a US source only if she or he had a “tax home” in the US. And while it so happens that I have a client who is a nonresident ailen but has a US “tax home,” it is extremely unusual.

    So, the bottom line is that the proposed legislation is not only mean-spirited and ill-conceived on policy grounds, but also poorly thought out from a technical perspective.

  20. @MIchael: Unfortunately, when someone is vindictive, they tend to lash out in a way that hurts them as much or more than it hurts others.

    Congress would do well to remember what Mark Twain said: “Anger is an acid that can do more harm to the vessel in which it is stored than to anything on which it is poured.”

    Unfortunately, they are splashing that acid on all of us.

    @Watcher: The Beatles Fool on the Hill is perfect! I never thought of that song in the context of Capitol Hill, but the lyrics are bang on! I wonder if Paul McCartney is affected by this. Isn’t his new wife an American millionaire? What about Ringo Starr? I believe he has homes in both US and Britain.

    Do you think Paul and Ringo would reunite and dedicate a new version of Fool on the Hill to Schumler and Casey? Of course, I’m still trying to get Randy Bachman and Burton Cummings to rerecord American Woman to American Taxman with no success.

  21. @Michael J. Miller

    Thanks for your note. Can you point to a definition of a “tax home” in the US?

    My interpretation of the pre-exit tax rules — and now the proposed Ex-PATRIOT rule — was that the US would (try to) assess tax on capital gains made on any US stock held by a covered expatriate. So a non-resident non-citizen with no other US connection but who is a covered/specified expat buys AAPL at $100, sells at $200, and faces $30 tax to the US. Is this not right?

  22. The applicable regualtions generally provide that “an individual’s tax home is considered to be located at his regular or principal (if more than one regular) place of business or, if the individual has no regular or principal place of business because of the nature of the business, then at his regular place of abode in a real and substantial sense.”

    But the term “tax home” was not relevant to the pre-exit-tax expatration rules (section 877). Those rules specifically referred taxed (among other things) gains arising from “sale or exchange of stock issued by a domestic corporation” during the 10-year period following expatriation. No one ever would have thought an expatriate had a tax home in the US.

  23. @Michael, but couldn’t the IRS argue that any holding in a US-stock, even if held in a non-US brokerage, be deemed US-sourced and thus still liable to US capital gains taxes?

  24. @monalisa1776,The IRS could certainly make the argument, but since there are detailed rules governing source, I think the argument would be an exceptionally poor one — at best. At the end of the day, though, it probably wouldn’t matter. If the proposed legislation actually gains some traction, I would expect the language to be corrected to solve the source problem.

  25. It seems Schumer threw a hissy fit today in response to blog coverage of his proposed law:

    http://thehill.com/video/senate/229365-schumer-i-know-a-thing-or-two-about-what-nazis-did

    One other thing that I haven’t so far seen mentioned in coverage of this — the definition of “wealthy”. There’s buying your own island rich. And there’s letting your kids order anything off the menu rich. Schumer’s idea of wealthy seems to include folk who have simply saved diligently over a lifetime of work and paid off their homes. There is of course one easy way for him to avoid being compared to a Nazi, and that’s to stop behaving like one.

  26. @ Schumer

    From your little hissy fit, it seems like you’re reading Isaac Brock:

    “The United States has become a totalitarian empire. It behaves towards its own citizens in a manner similar to countries of which it has historically condemned e.g. The Soviet Union, Nazi Germany, East Germany, Apartheid South Africa, Communist Cuba, North Korea, Eritrea etc.”

    Well Schummy old boy, as the old saying goes, “if the shoe fits, wear it.”

  27. What a hypocrite!
    On December 14, 2008 the New York Times published an article on Schumer’s role in the Wall Street meltdown. The article stated that Schumer embraced the industry’s free-market, deregulatory agenda more than any other Democrat in Congress, even backing measures now blamed for contributing to the financial crisis.[94] Schumer took steps to protect industry players from government oversight and tougher rules, a review of his record shows. Over the years, he has also helped save financial institutions billions of dollars in higher taxes or fees. He succeeded in limiting efforts to regulate credit-rating agencies. This article also charged that Schumer blocked ratings agencies reforms proposed by the Bush Administration and the Cox SEC.[94] [Wikipedia]

  28. Grover Norquist is right on target on Schumer’s Ex-Patriot Act:

    “I think Schumer can probably find the legislation to do this. It existed in Germany in the 1930s and Rhodesia in the ’70s and in South Africa as well,” said Norquist. “He probably just plagiarized it and translated it from the original German.”

    “The East Germans had the position that if you wanted to leave the country you had to pay them back for all the wonderful Communist education they gave you K through 12,” he said. “Schumer’s effort has a really distinguished history.”

    http://thehill.com/blogs/on-the-money/international-taxes/228427-norquist-compares-schumers-tax-dodger-bill-to-the-nazis

  29. “Persecution is the first law of society because it is always easier to suppress criticism than to meet it” – Unknown

    Chuck Schumer, this one’s for you!

  30. Here’s more. http://venturebeat.com/2012/05/24/senator-eduardo-saverin-tax-dodging/

    “When you renounce your citizenship to swell your bank account, you’re un-American,” Schumer said. “What Saverin is doing is free-riding on America, and dodging taxes from an IPO.”

    The Senator also called out the Wall Street Journal for labeling him a vocal spokesperson in the “age of envy”, and scalded republican opponents of his legislation, saying “they make Eduardo Saverin into their patron saint.”

    Here’s the author’s conclusion:

    “So to summarize, Schumer wants to tax people who give up their citizenship as if they were still citizens. And if they refuse to pay these taxes, they can’t come back into the country.

    I highly doubt this is going to prevent people from giving up their citizenship. I do, however, think the Ex-PATRIOT act (if passed into law) would end up driving investment into Europe and Asia in the long run.”

    I personally hope it drives investment into Canada as well. That’s where mine will remain.

  31. @JoeSmith,
    particularly noted this paragraph from the Huffington Post article (by Swaminathan S. Anklesaria Aiyar ‘Hearkening Back to the USSR’ Posted: 05/24/2012):

    …….”Communist states viewed human capital embodied in their citizens as state property, to be kept at home or clawed back through taxes on exit. The U.S. seems to regard the financial capital of its citizens as a sort of state property, to be kept at home or clawed back through taxes on exit.” ….. http://www.huffingtonpost.com/swaminathan-s-anklesaria-aiyar/eduardo-saverin-us-citizenship_b_1543493.html

    And, the US aggressively reserves the rights to any potential future social and financial capital of those it holds onto – even those who, like the duals and accidentals, and longterm permanent residents of other countries, who have had their entire education, healthcare and other social services paid for or subsidized entirely by non-US funds – by their non-US country of permanent residence – services funded and consumed entirely outside the US. How can other countries sit by and passively view this intrusion into their borders, and into their economies – with the US asserting claims to the social investment and capital built up entirely through non-US taxes and contributed to by fellow non-US citizens?

    Many, if not most ‘expatriates’ owe their social and physical well-being entirely to the non-US countries where they live (or were born) – with absolutely no (or de minimis) contribution by the US. Witness the million or more in Canada – many of which inherited US status, but who have been educated and cared for entirely with Canadian originated taxes – not one dollar has come from the US. Yet, the US claims their human capital solely on the basis of accidental parentage, or place of birth – no matter how nonexistent or brief the presence within it’s borders – and in spite of the substantial investment in their persons by their permanent or dominant country of residence.

  32. The Schumer / Casey Bill could also be aimed at stopping the trend of young Americans moving away from the Homeland in search of opportunities abroad. Severin serves as a convenient justification to threaten young people with never seeing their loved ones again.

    The USG has known for some time that Severin renounced. So the bill didn’t just pop up out of nowhere.

  33. Great blog and a very nice garden!

    “No occupation is so delightful to me as the culture of the earth, and no culture comparable to that of the garden.” – Thomas Jefferson

    I posted that for “Just me” a long time ago.

  34. @renounceuscitizenship, really wonderful post! And, as always the comments are great. Thanks to all who posted other links. Yep, I voted that it will increase renunciations. I also believe it will substantially decrease naturalizations. When you can do just about anything a citizen can in the U.S. with just a legal residency permit, who in their right mind would bother naturalizing? A case like Saverin’s is good in the sense that it forces full disclosure and brings media attention to the disadvantages of coming to the U.S. Not the first time the U.S. has tried to pull a “bait and switch” on immigrants. When I was doing research for a post I put up today about Canada, I found this wonderful quotation:

    “Another grievance frequently aired by Canadian agents was that American agents engaged in misrepresentation of both their own country and Canada. It was alleged that they desseminated false reports of the rigours of life in Canada as a way of diverting people to the United States. Similarly, Canadian agents claimed that American agents provided a deceptively false picture of their own country, promising abundant employment opportunities for workers of all descriptions.”

    Plus ça change plus c’est la même chose…..

    🙂

  35. @victoria: “When you can do just about anything a citizen can in the U.S. with just a legal residency permit, who in their right mind would bother naturalizing?”

    Just a note… these anti-expat tax laws all apply equally to both citizens and “long term” permanent residents. Anyone who has held a green card for six to eight years or more is already in the same unpleasant situation as full citizens. Because of this, both naturalization and taking out green cards will decrease. Immigrants will either work for short periods only in the US on a more normal work visa — H1, L1, and so on — or, increasingly, simply bypass the US and go to a more welcoming country instead.

  36. @Geeze: Here’s your chance. Contact Eduardo. Develop a business with him. Become his Brazilian partner. Say Adeus (Is that right?). Be called a traitor. Get on with your life.

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