Passport confiscation supporter Harry Reid “cautiously optimistic” about highway bill

Here’s an update on S. 1813, the “highway bill” which would ban credit cards and wire transfers from non-FATCA banks and confiscate passports of U.S. Persons abroad who refuse to pay thousands of dollars per year to accountants to file forms like 3520, 8621, and 8858 that no one in the Homeland has ever heard of.

In the past few weeks, while we’ve all been distracted by Eduardo Saverin’s renunciation and the Ex-PATRIOT Act, Congress has been quietly continuing its efforts to gnaw away at the other rights of U.S. Persons abroad. On 8 May, the House and the Senate held the first meeting of their joint Surface Transportation Conference. The conference aims to achieve bicameral agreement on a “highway bill” before the 30 June expiration of existing transport funding measures. According to an article in The Hill, Sen. Harry Reid (D-NV), the author of the passport-confiscation amendment (S.A. 1761), is “cautiously optimistic” that the Conference can make that deadline.

In a press release last week, Sen. Barbara Boxer (D-CA) stated that 80% of the bill was “uncontroversial”, and that the Conference is continuing to make progress on the remaining 20%. (American Citizens Abroad issued a position paper last week and a press release a few days ago to remind Congress that the passport-confiscation provisions are hardly “uncontroversial”). No transcript of Boxer’s remarks is available, but you can watch the video on YouTube. Details are very slim as she refuses to discuss specific provisions, but apparently some sort of compromise has been reached on the revenue offset provisions of the bill. As the NationalJournal Transportation Experts Blog puts it:

The pay-fors in a compromise bill will still most likely closely resemble what’s in the current Senate bill, a fact underscored by the Joint Committee on Taxation’s Friday release comparing the revenue provisions in the House and Senate bills, showing that, well, the House bill doesn’t have any.

However, some House Republicans apparently still oppose the Senate bill; in particular, as far as I can understand this report from The Hill, Rep. Paul Broun (R-GA) is opposed to all of the revenue offsets and wants to limit highway spending to what can be brought in by the federal gas tax. The Hill suggests that this is a sign that he and his allies will take a hard line against the Senate bill during the upcoming negotiations.

The JCT report about the “highway bill” makes for amusing reading. It includes revenue projections for each portion of the bill. For Reid’s “Revocation or Denial of Passport in Case of Certain Tax Delinquencies”, it predicts $69 million of additional revenue in 2013, rising to $159 million by 2015 and totalling $743 million by 2022. For Levin’s “Authorize Special Measures Against Foreign Jurisdictions, Financial Institutions, and Others That Significantly Impede United States Tax Enforcement”, it predicts $45 million of additional revenue in 2012 and a total of $1 billion over the next decade.

In both cases, their revenue projections peak around 2015 and then hold steady at around half to two-thirds of the peak value. Apparently they expect there’s a sort of “backlog” of taxes that are not being collected right now that could be collected in the future under these measures, and that afterwards collections will continue at a steady level. This of course misses the fact that taxpayers are undoubtedly going to alter their behaviour in response to these new provisions.

It’s obvious what the response to the passport provisions will be. Right now, five to seven thousand Americans naturalise in European Union countries each year; faced with the threat of their U.S. passports being taken away for missing out on obscure tax forms when no taxes are actually owed, more U.S. Persons abroad will likely pursue naturalisation in their countries of residence. Even if they do not renounce U.S. citizenship at the same time, this will remove some of the leverage that the IRS has to hold them hostage in order to extract fines.

The response to Levin’s attack on non-FATCA banks will be more complex. Certainly one obvious effect is that tourism spending in the U.S. will decrease. A lot of non-Americans who have never heard of FATCA are going to come to the U.S., try to check into their hotels or pay for dinner, and find that their credit cards get declined and their ATM cards get eaten; they’ll return home confused and angry and with far fewer U.S. purchases. Beyond that, it’s an open question whether affected customers will blame their banks and put pressure on them to cooperate with FATCA (the outcome Levin hopes for), or whether this will cause large numbers of tourists to choose another destination for their next vacation after hearing their friends’ credit-card horror stories.

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17 thoughts on “Passport confiscation supporter Harry Reid “cautiously optimistic” about highway bill

  1. I worry that the dual citizen will be at the brunt of anger resulting from all of those caisse populaire cards getting eaten in S Florida (even though some may unwittingly be US persons due to the substantial presence test). When this, compounded by FATCA unleashes itself on 1st class Canadians there will be those who will blame the victim, the US person in Canada. I expect a lot more anti-Americanism and I don’t think that our friend, David Christiansen, will be alone in demanding we get compliant. The Canadian government has to be aware of things going in this direction, and this may at least in part account for its deafening silence. This is a time for diplomacy, certainly.

  2. I find all of these anti-expatriate laws ridiculous in light of the fact that the U.S. clearly needs tourism dollars judging by how aggressive their “Discover America” (www.discoveramerica.com) campaign has been. The campaign’s theme song (as sung from the heart by Roseanne Cash) is entitled “Land of Dreams.” Too bad the “Land of Dreams” has turned into the Land of Nightmares for those of us living abroad. All I can say is that in all of the travelling my husband and I have been doing over the past six months (on Canadian passports, thankfully!), we’ve been meeting many Europeans and Asians who choose other countries for vacations and business. The U.S. doesn’t even realise their xenophobic attitudes and laws have steered them further into financial free-fall.

  3. Levin is reading the situation over here in Europe wrong. If tourists over here start to believe they need FATCA approved bank cards, many will vote with their feet and tell the US tourism to stick it or bring prepaid cards VISA cards etc. However people don’t like to travel nowadays without full access to their money, the US will lose out.

    While the US has slept and allowed the itself to fall into disrepair, the rest of the world has been developing a tourist industry.

    Unlike Americans who whinge when the service at a foreign hotel isn’t perfect, or the shower isn’t perfect, most European tourists understand it’s all part of the adventure. Americans expect the rest of the world to be like America (although the danger today is Americans will find the world has newer better infrastructure than the US), Europeans don’t.

    From a European point of view, the world is changing, expanding, growing, and the US was once a great power with 1970s infrastructure (because that’s about when the US stopped investing in itself).

  4. All of this absurdity and wasted effort when the IRS announced earlier this year that over $3 billion in unpaid taxes were owed just by employees of the Federal government, including 21 of Obama’s WH adivsors! How about they lose their job and security clearances AND passports if they don’t pay THEIR taxes!!

  5. @calgary, on what basis would any of us end up on this list? Speaking out against US policies? I’d don’t think we’re alone in that, and the numbers are increasing.

  6. I watched Condoleezza Rice speak at Harvard last year and she said the glue keeping the US together is the American Dream, being able to work hard, step up to the plate and have a fair chance of making your dreams come true. If that glue becomes unstuck there is no telling which direction the US would head.

    Unfortunately for Carl Levin the American Dream is available in other countries in 2012. They say the smart ones leave a troubled company first, leaving the conformists to manage down its demise.

    Is this what’s happening to the US today?

    Levin instead of competing and making the US more attractive, is trying to “force” people to need the US through regulation, exterritorial laws, harsh fines and penalities etc. The only problem is the US, apart from military power, it doesn’t really offer anything that isn’t available elsewhere in the world today.

    The US has gotten comfortable living in a post WWII world with the only economy intact with Europe and Asia trying to rebuild.

    Carl WWII is over and the world has rebuilt itself and the communists are almost gone except for command capitalism in China, full strength in North Korea, and evolving in Cuba.

    Can someone tell me a country that has succeeded in the long term with such a strategy? With the rate of change increasing, long-term may only mean 10 years not decades as in the past.

    Not many people thought the USSR would tumble in 1991 or did I mean the USSA?

  7. @ bubblebustin’

    Leaves the door open and could be a small step from one list and to another in punitive actions:

    http://www.state.gov/documents/organization/113465.pdf

    a. The Bureau of Consular Affairs (CA) coordinates closely with various
    offices in the Department of State and other Federal agencies, and with
    U.S. States, on issues related to expatriation. Much of this interagency
    coordination is mandated by Federal law and policy guidelines.
    CA/OCS/PRI provides copies of approved Certificates of Loss of
    Nationality (CLNs) to the following Federal agencies pursuant to statutory
    requirements:
    (1) U.S. Citizenship and Immigration Services (USCIS);
    (2) Federal Bureau of Investigation (FBI);
    (3) Internal Revenue Service (IRS).
    b. In addition, loss-of-nationality cases involving threats against the United
    States or U.S. officials may also be brought to the attention of the U.S.
    Secret Service, consistent with the Warren Commission
    recommendations. (See 7 FAM 1245.)

    a. CA/OCS/PRI provides copies of all CLNs approved under INA 349(a)(5) to
    the FBI, National Instant Criminal Background Check System (NICS).

  8. @calgary411, thank you for that post. Important reminder of the complexity of Hotel California.

  9. @Eric,

    Thanks for this detailed update on the Surface Transportation bill. I was wondering about the status, and hadn’t gone on line looking myself, so this really simplifies the effort for me. You do good work!

  10. @John, glue loses strength after many years. I don’t wish the US a major downfall. After all, I still have relatives that live there. Re-thinking their current strategies towards expats would be a nice start.

    Take my situation for instance: I could live and work abroad for many years and then retire in the US, since the cost-of-living there is lower. But instead of taking the sensible approach, Schumer and Levin, and the likes force people like me to cut my ties permanently. So the possibility of me going back there to contribute to their economy will not be a possibility. It’s kind of sad many uninformed Americans have to lose due to a handful of knucleheads in Congress.

    What most Americans fail to realise is that the “dream” exists in many different places nowadays. In some places, like here, it’s even easier since the work ethic is more slack. If someone is dedicated, works hard, and strives to increase quality, it would be hard for them to NOT make money.

  11. @geeze – I agree. The US has a large pool of ex-pats (an army of salespersons so to speak) abroad who presently will only look out for their own interests and scr*w the US.

    We live in a global world and people on the ground are more important than ever but there are bone heads in Congress who can’t seem to realise that.

    Collaboration is the power to more power in today’s world especially when using the internet. There are 6 million Americans abroad who don’t give a damn times how many contacts times how many contacts….you get the picture.

    Six million Americans aborad can do a lot of damage proportionally than Homelanders when foreigners are reminded about FATCA and all of the other bullsh*t it takes to invest in the US these days..

    It can be felt in real jobs for Homelanders, but doesn’t substantially appear in US unemployment figures over the meager $800M FATCA will potentially collect.

    Furthermore Outlanders “or ex-pats” are generally happy to inflict the damage to Homelanders who are deaf about our issues with pleasure.

  12. I spoke with a greencarder yesterday and he said he changed his mind. Will not become an US citizen as he had planned. And and when he returns to his country of origin he will turn his greencard in.

  13. @ markpinetree
    Your greencarder friend is making good decisions. Be sure to tell him he doesn’t have to go to a consulate (unless he wants to) to do an I-407. It can be mailed directly to Texas for processing. Use registered mail so it can be tracked to its destination. If he’s doing this many years from now, of course, he’d best check the location as these offices have a tendency to move around.
    USCIS TSC
    P.O. Box 850965
    Mesquite, TX 75185-0965

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