The Ex-patriot Act and America's Fading Freedoms..
by Bob Bauman JD, Offshore and Asset Protection Editor
The Ex-PATRIOT Act is a deeply troubling assault on your libertiesâ€¦ but itâ€™s not the only one. No matter who wins the elections this fall, the government will continue to launch attack after attack on your wealth and your freedoms. From warrentless searches to secret monitoring of your accounts: there is nothing they consider off-limits anymore.
If the last 30 years of accumulated assaults on the constitutional rights of U.S. citizens have not convinced you to make plans to escape America, perhaps the reactionary political demagoguery surrounding Eduardo Saverin will do the trick.
Saverin, the billionaire Facebook co-founder, recently ended his U.S. citizenship as a legal means of avoiding U.S. taxes.
As I have explained many times, U.S. laws, unlike most nations, impose taxes on U.S. persons (citizens and resident aliens), no matter where in the world they live and without regard to their income sources. Terminating citizenship is the only way to avoid U.S. taxes.
The vast majority of other national tax systems impose taxes only on income earned within their borders. A Canadian or British citizen, for example, can move offshore and legally leave most domestic taxes behind. A Panamanian is taxed only on income earned within his country, none offshore.
The Perfect Target for Politicians
The leading publicity hound in the U.S. Senate, Charles E. Schumer (D-NY), and his PR apparatchiks regarded the Saverin news as a great chance to make headlines and they pounced.
On May 17, "ultra-liberal" Schumer and the usually reasonable Sen. Bob Casey (D-PA) unveiled the Ex-PATRIOT Act (Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy Act). This legislative disaster would impose a 35% tax on U.S. earnings on anyone who ended U.S. citizenship during the last 10 years.
To add juice to the story, Saverinâ€™s 4% stake in now publicly traded Facebook was estimated to be worth $3 billion to $4 billion. This made him the perfect target for politicians â€“ an ungrateful tax-dodging billionaire skipping out on America and its suffering taxpayers.
Indeed, by ending U.S. citizen status, Saverin probably saved hundreds of millions in eventual estate and gift taxes. If he remained a citizen, he would not have owed U.S. capital gains tax on his income until he sold his shares. Wealthy American shareholders often borrow against their shares and live tax-free off the unrealized appreciation for years.
Anyone in Saverinâ€™s position would be insane not to act legally to save all the taxes possible, and thatâ€™s just what he did. As it is, he will probably pay $150 million because of the Exit Tax the U.S. imposes on expatriates.
Saverin, 30, who was born in Brazil, came to the U.S. as a teenager and became an American citizen, reportedly to avoid being kidnapped from his wealthy parents. Exercising his legal right as an American, he filed to surrender his U.S. citizenship in January 2011 and it became official last September. He also was among the 1,780 Americans who ended U.S. citizenship last year.
He now is a resident of Singapore, where, unlike the U.S., the government welcomes wealthy foreigners with low taxes and eventual citizenship. Saverin will benefit from major tax savings by becoming a permanent resident of Singapore, which imposes no capital gains taxes.
Perhaps the most atrocious part of Schumer's proposal is the attempt to bar re-entry into the U.S. forever. This ban would be retroactive and apply to anyone who ended citizenship during the 10-year period before 2012.
The only other regimes to have adopted similar punitive laws are Nazi Germany, the Soviet Union under Stalin and apartheid South Africa.
Perhaps Schumer needs to be reminded where he is and whom he was elected to represent.
It is ironic that back in 1996, Chuck Schumer was a U.S. congressman from Brooklyn and his Democrat leader was the distinguished senior Senator from New York, Daniel Patrick Moynihan.
Are You Ready to Face Facts?
On October 4, 1996, in the last hours before final adjournment of the 104th U.S. Congress, Senator Moynihan rose to speak in the Senate, his face flushed with anger over the so-called Reed Amendment, a radical provision sponsored by Rep. Jack Reed of Rhode Island (now a U.S. senator).
He said: "Enacting an ill-advised provision to punish tax-motivated expatriates by banishing them from the land does not reflect well on a free society. It is our duty to act with special care when dealing with the rights of persons who are despised."
Is America a â€œfree societyâ€ today? Are you ready to face facts and act accordingly?