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Sunday, April 27, 2014

Two Faces of American Emigration/Expatriation

I think it is fair to say that the face of American emigration/expatriation today is Eduardo Saverin.  That is the name that consistently comes up when I talk with homelanders about Americans abroad and our relationship to the U.S. tax system.    This is the face, the poster child if you will,  that supports the narrative that Americans abroad have all fled the US to escape taxes.  That's right, folks, American emigration is all about criminal behaviour unless we can prove otherwise to the satisfaction of our compatriots.

How powerful is this narrative in the homeland?  Powerful enough that two senators tried to get a law passed based on that one highly publicized case.  The bill, called the ex-Patriot act, was introduced in reaction to Saverin's renunciation and had a very clear objective:  it was mean to punish past, present, and future expatriation - to prevent (or at least strongly discourage) Americans from leaving the US for other lands and cutting their ties to the American political community.

The first goal seemed to resonate with the homelanders since they are still talking about how ungrateful Saverin was and how he got away with something. The millions he paid to expatriate (yes, Saverin paid the Exit Tax - the tax on emigration) seems to be either forgotten completely or dismissed as a mere token amount that did not sufficiently compensate the US (and US taxpayers) for the benefits he received as a US citizen.

It was the fact that the Exit Tax and all the other ugly aspects of US emigration policy like the Name and Shame list (1996 Reed Amendment) are not turning out to be a sufficient deterrent that three senators decided to up the ante with a law that would, in addition to the stiff Exit Tax,  banish these expatriates forever from American soil. Senators Robert Casey (D-Pennsylvania), Jack Reed (D-Rhode Island) and Charles Schumer (D-New York)  introduced the act in 2012 and in spite of all the headlines it generated, it didn't go anywhere.  That didn't stop them, however, it just slowed them down for a few months.  According to AngloInfo they reintroduced their proposal hidden inside a 2013 immigration bill which just goes to show that these fellows are deadly serious and if they can't get what they want openly, they are perfectly happy to do so by stealth.

With all the anger over emigration and expatriation in the US, why didn't this bill pass?  I don't think it had anything to do with the right to expatriate that is enshrined in international law since the US Congress has never shown that they give two hoots about that.  It was the possible impact on Americans living in the U.S. that I'm pretty sure was the deal-breaker.

Homelanders suffer from a two delusions relevant to our discussion.  One  is that every American is simply a "temporarily embarrassed millionaire."  The other is that Americans living abroad are all living the good life outside the US. "Good life" is a very nebulous concept but if you listen to the homelanders carefully you'll hear them place so many of their personal yearnings and desires into that term and it can be anything from security, opportunity and better health care to personal growth and adventure.  One way to look at it is that it is an expression of all the things that they think they can't find or can't have in the United States.

The vast majority of Americans may never ever leave (many Americans don't even have passports - the esseential document that makes leaving any country possible) but they still dream emigrant dreams.  How else to explain their eagerness to buy books about Americans restoring old stone farmhouses in Provence or life on the beach  "Down Under" or retirement in Belize/Mexico/Thailand any of the other autobiographical adventure tales that do very well back in the States?  And every American who lives vicariously through these stories feels the tug. "That could be me," he or she thinks before coming to his senses and listing all the reasons why it just isn't possible "right now."  But perhaps, once relieved of the "temporary embarrassment" of  limited means, it could happen. In any case, the idea that there might be impediments to leaving the United States (whether that means just taking a trip, settling permanently outside the US or renouncing) just doesn't sit well with Americans.  Is not the "freedom to leave" the very essence of freedom?  If Americans couldn't be mobile (and global) - if they could not become citizens of other countries and choose to attach themselves to other political communities elsewhere -  then they would join the captive citizens and subjects of other states who are, most agree, not free at all.

So how to explain the countervailing desires of homelanders to punish people like Saverin (and the unrelenting characterization of American emigrants as suspected tax evaders) while rejecting anything that would close the door (even partially) on their own right to emigrate or expatriate?

One answer, I believe, can be found if we look at the very different reactions to two well-known expatriations.  On one hand we have Saverin who is still being vilified for leaving the US and renouncing his citizenship.  In fact the anger was so high that Americans lawmakers are still trying to make political hay out of it.  On the other we have another very rich citizen who relocated to  Switzerland and gave up her citizenship, Tina Turner.  Ms. Turner is not as rich as Mr. Saverin but she's still up there with 200 million USD in assets (which meant that she most likely had to pay the Exit Tax).

Her renunciation was widely reported but did not generate anything even close to the outrage that followed the news of Saverins' renunciation.  The usual anti-expat suspects in the US Congress like Reed and Schumer were strangely silent about it and the US media bent over backward to say that Ms. Turner had very good reasons to expatriate (renounce) that had nothing whatsoever to do with the US tax system.  Nor have I seen (though perhaps I wasn't looking in the right places)  homeland Americans calling Tina Turner a traitorous, ungrateful tax dodger and calling for her permanent banishment from the United States.  In a nutshell, Eduardo Saverin was presumed guilty and Tina Turner is presumed innocent.  (Or at least that's the way it looks from where I sit.)


I will give you my take on it and then I would love to hear your thoughts.

I think Americans at home can more easily identify with Tina Turner.  Here is a self-made African-American woman who did not come from great wealth and who succeeded because she is smart, beautiful and talented.  She is admired and liked by millions of Americans who grew up (like me) enjoying her music.  Her migration to Switzerland is portrayed in the media as something that happened by pure chance (an "Accidental migrant") and for a wonderful purely positive reason (romance) -  both of which resonate with Americans dreaming emigrant dreams.   And now she intends to stay permanently and retire in her adopted country with the l'homme de sa vie.  All this explains her decision to the satisfaction of  homeland Americans.

This tale is more than just satisfying,  Tina Turner's migration story is, well, something Americans can actually identify with.  It says that even someone who began life disadvantaged and with modest means can have the American Dream + which consists of succeeding in the US and then  moving abroad to do whatever one fancies out there in the world beyond the borders of the US. (And what is even more interesting is that some Americans suspect these days that the only way they can succeed is by leaving America.)

There is just one problem with Turner's story: it explains her migration but not her renunciation.   Tina Turner could have done all of the above as a dual US/Swiss citizen.  If those are the  reasons Tina Turner emigrated then she could have had every single one of them and stayed a US citizen.  Clearly there were other considerations that caused her to consider cutting her ties to the US - a process that is not simple and is likely to cost her a great deal of money.

Lex parsimoniae - the downside to living abroad and being a dual US/Swiss citizen is that lifelong relationship to the US IRS that all Americans outside the US are subject to that would have affected not only her but her husband as well.  It is simply defies common sense to think that the US tax system didn't have any effect at all on her decision to renounce.

Homeland Americans seem to genuinely believe her (or her lawyers) when they insist that the US tax system wasn't a consideration but they don't find credible Eduardo Saverin when he said of his renunciation:  "The decision was strictly based on my interest of living and working in Singapore."

Two faces of American emigration/expatriation  and dare I say it?  Deux poids, deux mesures.


Anonymous said...

Excellently written, Victoria. It is sad that American politicians and US media can not understand this. The general American public only understands what information with the slant it is presented by the media.

I grew up in America never traveling further than an hour from home. I did go to my town library and read of different places in the magazines Look, Life and Nationa Geographic. My appetite to travel was ignited.
When it came to the moment to leave the USA in 1969 I was ready to embrace a new adventure, partly through necessity but also with curiosity and a sense of adventure.

I was content to be a dual citizen but FATCA changed this. I object to my own bank accounts being reported to the IRS. I have no US income, no social security or property or inheritance. I only have my and my late husband's Canadian earned pension and RRSPs. We would borrow money to save for our retirement. I am definitely not wealthy like Saverin or Turner.

I am waiting for my Citizen loss of Nationality from the USA. This will keep my privacy and my banks from reporting to the IRS. This privacy I wish to protect.

After i retired I had been staying a couple months each winter in the USA. I had sadly turned down excellent US property offers because by that time I had found out about FATCA.
I have traveled to 35 states and would have continued to but now since I am considered a traitor I will never visit the USA again. I feel it is the USA's loss, not mine. I have the rest of this wonderful world to travel and explore while I have my health.

Anonymous said...

Nicely laid out as usual, Victoria. A couple of additional points in support of your thread occurred to me as I read it.

Firstly, Turner is a natural born US citizen. Saverin, on the other hand, is naturalized. That lets the media and pols spin the narrative that this -- and this ALONE -- saved him from certain and early death at the hands religious fundamentalists, Somali pirates, or an inferior healthcare system. And that ONLY the US could provide this protection and the later career opportunities that are, obviously, completely IMPOSSIBLE in any other country, right?

Secondly, Saverin is a younger white male, Turner a not-so-young black female. As a career barnacle senator from New York with an eye on voter reactions, which would you choose to pillory?

Donna said...

Spot on. I might suggest that the perception is that not only is Mr. Saverin not "really" an American because he was naturalized, but he didn't actually work for his money. Facebook founder? Internet entrepreneur? To quote Dire Straits, "Oh, that ain't workin'...." Ms. Turner's experiences are far more in line with the American work ethic, and a sensible politician would steer clear of criticising her.

Anonymous said...

Yet, I wished Tina went public about the true reason of her renunciation, which might have been due to banking difficulties in Switzerland, or to have a "normal" marriage with shared financial stuff without having the data sent to the US. Unfortunately, we'll never know...
But I am pretty sure taxes weren't the issue in this case, knowing she can pay lawyers and accountant to make that problem go away and not have to worry about it.

Anonymous said...

Also, it would have been nice for Edwardo Saverin to mention FATCA and its negative consequences on his abilities to do business abroad. He never mentioned it.

We need those people to come forward!

Victoria FERAUGE said...

@Anonymous, I hope that CLN comes soon. Seems that there are wildly different waiting times for CLN's depending on the country one lives in. I heard some folks saying they got their within weeks and others are still waiting months after. Anyone know why?

@Anonymous(s) and Donna, "As a career barnacle senator from New York with an eye on voter reactions, which would you choose to pillory?"

What a WONDERFUL way of putting it. And, yes, going after Tina would be, well, pretty dumb.

Here's the dilemma: the one thing you can't say when you renounce US citizenship is that you are doing it because of the tax system. I'm sure that both Saverin's and Turner's lawyers coached them very carefully because as I understand it, in theory if someone is renouncing to "evade taxes" they can turn you down.

So we have what is basically theater: the renunciants pretend that FATCA/CBT has nothing to do with their decision and the US government pretends to believe them. Because refusing to let them expatriate and having it turn into a huge cause celebre is the last thing they want with the US looking like the Soviet Union in its heyday. And as long as the renunciants go quietly, this works for all parties.

Except that these days the renunciants aren't going quietly. They are raising a fuss and getting their storied published all over the world. I think the US gov is still trying to figure out to cope with that. I suspect that they are hoping that it will all just go away over time.

Because going after folks like Tina Turner or any one of the thousands of lower and middle-class renunciants would be very risky.

Anonymous said...

Well, they could have said it was about being discriminated abroad due to FATCA and have a public statement with that. FATCA causes foreign banks to discriminate against Americans. That has nothing to do with the tax system.
By not coming public about it, they're not doing any of us any good. I really doubt Tina did it to avoid taxes. Saverin, let's say that might have been an added bonus, but I give him the benefit of the doubt that the main reason is because he might have had difficulties doing business overseas and difficulties with banks.
We should tell Schumer to try and open a bank account at AXA, or any German bank that openly discriminates. Then he might change his mind as to why Americans expatriate.

Anonymous said...

Tina turner obviously expatriated because of taxes. Why else? The proof of the pudding is that she married her long time boyfriend - live in partner almost immediately after expatriating. She was obviously carefully coached as to what to say. She stated that she "wanted to clarify her situation." Read into it what you want, but don't forget that she is 73 now and maybe wants to leave something to her partner without him being hit with huge inheritance taxes because he is German. Terry Gilliam of Monty Python fame maintains that he expatriated because of his political views, but he also has stated that if he had died and left his house to his wife, his wife would have to sell the house just to pay the inheritance taxes on it to the IRS.

If and when it comes to my expatriation, I will be truthful and say that it is because I don't need US citizenship. It was a useful citizenship when I did not have another one, but now I have two other European citizenships (one from birth that I only just claimed) and one from the country I emigrated to. US citizenship is useful if you want to live in the US, but otherwise it brings very little value. I think that clarifies the situation.

Anonymous said...

Look into the Jackson-Vanik amendment , and then its repeal.
Have a look at this;

and look at this statement by the US:
Congress finds the following:
(1) The Russian Federation allows its citizens the right
and opportunity to emigrate, free of any heavy tax on emigra-
tion or on the visas or other documents required for emigration
and free of any tax, levy, fine, fee, or other charge on any
citizens as a consequence of the desire of those citizens to
emigrate to the country of their choice. ”

Consider the US Exit tax regime, and the continued attempts by US elected officials to enact/enable laws to punish those who expatriate, and to ban renunciants/relinquishers from entering the US ever again , or to make the current Exit tax regime even more punitive, and the ‘covered expatriate’ sanctions if we do not ‘exit’ the US formally (ex- greencard holders as well those deemed citizens), with the paperwork exactly as they demand – even if we were born abroad to on or more US status parents, or were merely accidental USPs, or have already expatriated, or were told we were stripped of US status through naturalizing elsewhere decades ago (before the US changed the law) –

Ask yourself if the US currently “allows its citizens the right
and opportunity to emigrate, free of any heavy tax on emigra-
tion or on the visas or other documents required for emigration
and free of any tax, levy, fine, fee, or other charge on any
citizens as a consequence of the desire of those citizens to
emigrate to the country of their choice” ?


Anonymous said...

When I relinquished, the official at the consulate in Canada where I did so, asked twice in slightly different ways during my appointment for my reason, and when I asserted that I wanted to be only a citizen of the non-US country (which has been my home for decades - as was detailed on my forms which he had already examined), he asked me "why now"?

I refused to answer that, and noted that I was exercising my right to choose my citizenship, and that as far as I understood, a reason was not required - simply to demonstrate my voluntary intent, and to do it in the form and process that the US demands.

Judging by what I overheard from the waiting area, he had already raised the ire of the person before me who was also there for the same reason.

Is the State Department supposed to inquire about our reasons and timing of expatriation? I don't think so. The absolute right to renounce/relinquish is not contingent on giving the State Department and the Consular/Embassy staff a reason they approve of, or any reason at all. I demonstrated my voluntary intent, I attested to it in writing and in the verbal interview, and the official overstepped his bounds. But no-one official will hold them to account, and I just wanted to bring some peace to my life that the US has turned upside down. And I do not own or make enough to owe the US anything - even given the many complex US tax traps that exist for those abroad. The US tormented me and through me, my family for no end gain.

I experienced that Consular official as vindictive and oppositional. That was my last official contact with the US, along with the absurd further hours spent on hold long distance, solving a problem wherein the IRS tried to place a lien on non-existent US property, as a result of continued error on their part, even though as they finally acknowledged, it was clear that I owed nothing and the simple 1040 in question clearly showed that I was under the taxable threshold.

If it is that hard to solve an obvious error, but still receive escalating threatening letters for liens, and collection action, even when the actual agents acknowledge that there is clearly no US tax owed, then I can't see how things can get better.

They wasted US tax money and hours of IRS waged time sending registered threat letters and trying to resolve what was very obviously their error - which I had to really push them to do. If that is what they do for those who clearly owe them nothing, and have already paid taxes to a home country, what could I continue to expect if I had not expatriated?

I don't want anything to do with the US now, and they have shown that even for the completely benign, they are so hellbent on punishment that they will chase phantoms and ordinary persons no matter what the cost - to them and to us.

I look forward to hearing how anyone can calculate how I was receiving 'benefit' simply because the US exists (ala Cook vs.Tait). In fact, the US wasted a great deal of my time and money in compliance, caused me years of anxiety and fear, and anger, and wasted their own resources in the process.

The US did not 'benefit' me where I have lived abroad for over 50 years. It injured me and mine so much that for our own protection and wellbeing I had to expatriate.

And they effectively blackmailed me not to tell them why I expatriated, because otherwise they might keep me from visiting my only remaining close relatives left in the US.

As a result, I will never support any politician in my home country with my vote if they collaborate with the US for FATCA, or on other issues where there is US advantage. In fact, I will help and donate to defeat those who do.

Anonymous said...

It would be very stupid for Tina Turner or anyone else to say she/he renounced or relinquished because of taxes, even if the tax aspect did enter into the consideration. Even if the Reed Amendment has never been used, it's on the books.

When I renounced in 2011, the Consular official asked me the reasons in an entirely acceptable fashion. (They are supposed to find out if you are being "pressured" into it, for instance by a threatening spouse or the like.) The official also took some time to make sure I understood that the step was irrevocable. A potential renuncee who had been at the consulate the previous week had thought renouncing was only temporary and one could get US citizenship back at the drop of a hat.

When I renounced I did not mention taxes as a motivation. And in truth they weren't: how could they be, since I have never owed any to the IRS since I left the US? I said that it was better to be a citizen of the place you live and I wanted to be able to vote for candidates that would represent me.

Nobody asked me about the timing. But I will freely admit that the passage of FATCA affected the timing of my decision: it showed me that the US Congress does NOT represent me, whether I vote for them or not. US Congress did not care a whit whether I can have a bank account or not.

Even if FATCA/FBAR etc somehow get "fixed" because of all of the yelling and screaming or some court case, the fact remains that the US Congress will happily throw expats under the bus the next time if it gets them a few nice sound bites. And they think they ought to rule the world. THAT is why I renounced.

Anonymous said...

I think Tina Turner was not lambasted like Saverin because the Democrats don't want to be seen beating up on an iconic black pop idol. It would make Obama look bad in the eyes of his base.