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Monday, July 1, 2013

More on Exile from the 'Land of the Free'

In a previous post, Exile from the 'Land of the Free', we talked about the Reed-Schumer Amendment that proposes permanent exile for any former U.S. citizen deemed to have renounced to avoid taxes.  The way the amendment is written those who give up U.S. citizenship are "guilty until proven innocent" which means that the onus would be on the renunciant to prove that he or she gave up U.S. citizen for "good" (i.e. politically correct) reasons.

There were some excellent comments on this post and I encourage you to read them.  One of the latest is a story that is more common than many know:  a former American married to a foreign national who is a stay-at-home mother.  Her choice came down to her marriage/family or her citizenship.  Honestly I would make the same choice:  there is nothing more precious and irreplaceable than one's family, one's health and one's peace of mind.

To those who react rather bitterly to U.S. citizens who have renounced and those who are thinking about it, I have to ask them what they would do in the same situation?  Given a choice between U.S. nationality (and that pretty blue passport) or your spouse and children, which one would you give up?

Homeland Americans, I and many other Americans abroad are waiting to hear your answer.

In her comment, this former American asked a very good question:
Would the Schumer amendment apply to people who have renounced in the past, or only those going forward. What if the person becomes "covered" at one point in their life ( or if they lower the limit, if the dollar crashed, etc...)
Can the Schumer amendment be applied retroactively to those who "got out before"? And can they re-evaluate your covered status later in your life?
This is something that has us all scared.  We've seen three attempts already to exile the expatriates:  the Reed Amendment, the Ex-Patriot Act and now the Reed-Schumer Amendment.  Remember, folks, that the first, the Reed Amendment, actually passed and is U.S. law.  However the way it was written made it unenforceable so the law exists but there are no regulations to implement it.  I believe that they will keep trying until they can make it stick.  I speculate that if the number of renunciants skyrockets, they will succeed.  

Could they make it retroactive?  They could try.  However, (and take this with a grain of salt because I am not a lawyer) for those who renounced or relinquished under the prevailing laws at the time, any attempt by the U.S. government to go back and punish them further would certainly go straight to the courts.  And could you imagine the headlines if these people were denied entry into the U.S. to care for aging or sick family members?  What if some of those homeland Americans with exiled sons and daughters end up as burdens on the American social welfare system?  Something tells me that this would get everyone's attention.  I honestly don't think they would go there.  If anyone disagrees, please give me your take on it in the comments section. 

In my original post I quoted Phil Hodgen.  His blog is really extraordinary and well worth the read.  This post, in particular, is very pertinent to our discussion:  Why people expatriate?  It's a sober, dispassionate look at how expatriation from the U.S. works and why people are doing it.  He also offers his unvarnished opinion about where he thinks all this is going.  Clearly, the messages that are coming from Washington are leading many of us to think it might be best to, "Get out while the going is semi-good".  Hodgen concurs:
I expect the future to be more of the same. Expect the same exit tax rules, but more of them, and worse. Expect more expatriations. The floggings will continue until morale improves.
Can anything stop the trend?  I don't know.  Yes, it's discouraging to see American emigration framed entirely as a story about "evil rich tax evaders."  On the other hand my impression is that the media in the U.S. is starting to pick up these stories and some are being reframed to introduce homeland Americans to the idea that people do give up U.S. citizenship for reasons that are related to the citizenship-based taxation/FATCA dilemma but not in the way most homelanders think it is.

Is that going to be enough?  I don't think so.  Fundamentally, I see the problem as one of recognition/legitimacy.  Very few homeland Americans are aware that there 6-7 million of their compatriots living outside the U.S.   Myths about us abound:  we are only "temporarily" abroad, we always come "home" after a few years of fun, we are all rich, and so on.  Those of us who are long-term residents of other countries are viewed with suspicion by homelanders by just about every group along the U.S. political spectrum,  from the Right-wingers to the Progressives.  What we need, in my humble opinion, is recognition that we are simply the U.S. "Domestic Abroad" - America's very own Diaspora.  Look, living outside the U.S. doesn't make us any better or any worse than Americans in the homeland.  We aren't necessarily smarter, skinnier, prettier, richer or happier than our counterparts in Wisconsin or Nevada.  We're just people doing all the things that other Americans do - we're just not doing them on U.S. soil.  

Americans on the East Coast of the U.S. are not punished if they move to California.  So why punish Americans who want to move to Canada or Mexico or Europe or Asia?  The former doesn't cause anyone to blink twice - the latter is subject to all kinds of judgements and misconceptions.  

We have a serious PR problems, folks, and I'm open to any ideas about how to fix it.

Off to the garden to clear my head.


Blaze said...

Victoria, I usually agree with you. This time, I'm going to disagree on a couple of points.

First, you say: We aren't necessarily smarter, skinnier, prettier, richer or happier than our counterparts in Wisconsin or Nevada.

I don't know about the other points, but on the issue of skinnier, we probably are skinnier than those in Wisconsin or Nevada.

Anyone who has been to the US recently has seen how obesity is becoming a bigger problem all the time (literally). Obesity rate in US is now 35.9%.

That figure is much lower in other parts of the world. Fortunately, this is one area where Canada is a bit behind (24.2%), almost at a tie with Britain (24.5%), the most obese country in Europe

Here are the list of the Fattest Countries in Europe. All are well below the US. France didn't even make the list. So, that book French Women Don't Get Fat must be right!

I suspect people in the rest of the world are also "skinnier" than those in US.

Canadians are also better educated, fitter, live longer and have more net worth than Americans. We also have more sex. I suspect some of those points are also true of other countries.

On the topic of whether attempts to exile exapts who expatriate would be retroactive, I don't know if it ever would be or not.

However, from personal experience, I can say I don't trust the US on this any more than I do on anything else now.

When I became a Canadian citizen 40 years ago, US Consulate was clear, firm and direct (almost hostile!). I was "permanently and irrevocably" relinquishing US citizenship.

For four decades, I have believed I was not a US citizen. That was until FATCA decided to intrude into my life. Now, IRS expects me to prove to my bank, where I have been a customer for 32 years that I am not a "US person."

I did not receive a CLN in 1973. Like others, I had no idea such a thing existed until two years ago. I could probably get one, but I am determined not to go anywhere near a US Consulate. Past experience has shown me I can't trust them.

So, would exile of Americans be retroactive? Based on my experience of US trying to reclaim me and my money (all earned, saved, invested and taxed outside US),I think anything is possible.

They are desperate.

bubblebustin said...

Our fears are not unfounded, for many of us feel as though we are under siege and find it necessary to be constantly vigilant about what the US government will do next to make our lives even more impossible to live abroad. Under tax reform, the FEIE will soon be on the chopping block (again).The only feasible remedy for any of this would be to move to a residency based system of taxation that even citizens of countries 'less free' than the US are allowed to enjoy.
Without that occurring, my fear is that as bad as CBT is, it may soon become the 'devil you know' and the more attractive option than facing the ever changing unknowns when renouncing. This is a very dismal prospect for me. With no other options, will many US citizens living abroad consider suicide to spare themselves and their families the continuous harassment from the US government?

Blaze said...

Victoria, I'd like to add a couple of points. It used to be US punished people who became citizens of other countries by stripping them of their US citizenship.

Then, without our knowledge or consent, they decided to punish us by reinstating our citizenship. They didn't bother to tell us until their Gotcha moment. They decided to FATCA us just as many of us entered retirement, claiming they have the right to know everything there is to know about our financial lives in other countries.

Does that sound angry and hostile? Well, there are reasons for that.

If anyone thinks US should be trusted about what they will do, just look at the fact there are reports NSA has been bugging EU offices and computers as well as EU and other diplomatic offices in US and at UN.

Amidst the outcry from Europe (i.e. We thought we were friends!),John Kerry has been less than reassuring:

"All I know is that is not unusual for lots of nations."

How's that for true friendship?!?

Now, let's look at an interview with Bill Yates, former IRS attorney focusing on offshore compliance. (Thanks Just Me for tweeting this)

He was asked "Where are all those FBARs kept, anyway?

Yates reply: Let’s talk about that later, OK?

The interviewer did come back to it.

First, Yates said a practitioner told him it was like the last scene in Raiders of the Lost Arc "The scene where two men in a big warehouse were carrying a box marked “Top Secret” down an aisle stacked high with boxes of all kinds. Other practitioners I talked to made the identical analogy."

Yates finally said: "The truth is that it was never clear to me what happened to the FBARs. But, I will tell you one thing. The 8938s are going to be carefully scrutinized."

I don't know how anyone can read all of this and trust US, IRS and NSA to do the right thing.

A German newspaper quoted in the first article perhaps sums it up best:

"Declaring the EU offices to be a legitimate attack target is more than the unfriendly act of a machine that knows no bounds and may be out of the control of politics and the courts."

Substitute US citizens and former citizens for EU offices in that statement and it describes what we are all experiencing--an out of control machine that knows no bounds in efforts to destroy lives of anyone who wants to simply live somewhere other than US.

Do I sound hostile? Well, as France's Justice Minister says:if reports are accurate: "It would be an act of unspeakable hostility"

What we are experiencing is "unspeakable hostility" towards us and towards our non-US families.

Anonymous said...

I am an American living abroad. Trying to do my USA IRS return. If I want peace of mind I have three choices: stop working, return to the USA or renounce my citizenship. This became a nightmare!

Victoria FERAUGE said...

@Blaze, Damn good point. :-) But then I come from Seattle where the Americans are quite trim.

I understand the hostility and the anger which I share. Every day I fight not to be too angry and too resentful. It's not good for my sobriety or my soul. That said, I will fight this as I can. Yep, I'm a mosquito but I believe the Dalai Lama was right and even little folks like me can keep someone up at night by buzzing very persistently.

@bubblebustin, I share your uncertainty. In my heart I think Hodgen is right though it distresses me to admit it.

@anonymous. It is a nightmare. Almost all the choices are unpalatable. I firmly believe that some sort of action is going to be necessary. Probably demonstrations or some form of civil disobedience. Not much support for these things right now. Perhaps that will change. I surely hope so.

Anonymous said...

IMHO the best approach would be commercial. Organize one day in several cities around the world to pass out flyers in front of Starbucks. Boycott Amazon. Don't go back to the US - and make it known that your tourist dollars will be spent elsewhere.

Janet said...

Victoria, the only thing that made me smile was your last line "Off to the garden to clear my head." That is exactly what I did after I read your first posting on this subject. Its taken me several days of working in the garden and escaping between the pages of a book to clear my mind and to renew my strength to start "buzzing" again.

Last year, when I turned 70 and started my fourth decade of living in Germany, I decided it was time for me to seriously consider applying for German citizenship. This is an extremely hard decision for me to make since I would have to give up my US citizenship. To help me make a decision, I bought a small notebook in which to jot down the pros and cons of applying for German citizenship.

The most compelling pro reason is to secure my right to remain in Germany for the rest of my life. It is extremely unlikely that I will ever return to the US to live. I have a permanent residency permit for Germany but it is only valid as long as I have a valid US passport. A time may come when I am either physically or mentally unable to renew my passport. What would happen to me then?

In the meantime, I don't want to give up the fight for justice for those of us who live abroad. I will once again write letters to members of Congress and to President Obama but I fear that neither the legislative nor the executive branch of government cares about us. In the end, the only recourse maybe the judicial branch.

A German TV reporter was told by an American official that the 4th Amendment of the Constitution only applies to Americans when he asked about the wiretapping of EU offices in the US. Could this mean that Constitution only applies to Americans living in the homeland?

When Congress votes on a bill, do they vote on the entire bill with all its amendments or is each amendment voted on separately? Is there a difference between a rider and an amendment?
Can anyone recommend a good book on how federal laws come into being?

Victoria FERAUGE said...

@anonymous, I hadn't thought of that but it could be promising. Perhaps Microsoft would be a good place to have that kind of demonstration.

@Janet, Thank for a really great comment. That's a consideration for me as well - I'm not going anywhere. this is my home and I'd like this to be my country. I would love to hear more about your pros and cons. Would you be interested in doing a guest post? If so just send me a mail at

I think every amendment has to be voted on separately but I'm not sure. Does anyone know of a good clear book that could shed some light on this?