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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsSenators to Unveil the ‘Ex-Patriot Act’ to Respond to Facebook’s Saverin’s Tax ‘Scheme’
Sen. Chuck Schumer, D-N.Y., has a status update for Facebook co-founder Eduardo Saverin: Stop attempting to dodge your taxes by renouncing your U.S. citizenship or never come to back to the U.S. again.
In September 2011, Saverin relinquished his U.S. citizenship before the company announced its planned initial public offering of stock, which will debut this week. The move was likely a financial one, as he owns an estimated 4 percent of Facebook and stands to make $4 billion when the company goes public. Saverin would reap the benefit of tax savings by becoming a permanent resident of Singapore, which levies no capital gains taxes.
At a news conference this morning, Sens. Schumer and Bob Casey, D-Pa., will unveil the “Ex-PATRIOT” – “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy” – Act to respond directly to Saverin’s move, which they dub a “scheme” that would “help him duck up to $67 million in taxes.”
The senators will call Saverin’s move an “outrage” and will outline their plan to re-impose taxes on expatriates like Saverin even after they flee the United States and take up residence in a foreign country. Their proposal would also impose a mandatory 30 percent tax on the capital gains of anybody who renounces their U.S. citizenship.
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http://abcnews.go.com/blogs/politics/2012/05/senators-to-unveil-the-ex-patriot-act-to-respond-to-facebooks-saverins-tax-scheme/
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Woody Woodpecker
(562 posts)And I don't do Facebook.
GoneOffShore
(17,339 posts)And renounce my citizenship here, my meager assets (and they are meager) would be subject to 30% capital gains?
I hope they put a lower limit in that bill. Say under $2million.
drm604
(16,230 posts)
KatyMan
(4,190 posts)You can have dual citizenship, assuming you qualify for French citizenship in your scenario.
GoneOffShore
(17,339 posts)Then I would renounce my citizenship.
Right now every time I leave American soil I seem to breathe easier.
KatyMan
(4,190 posts)In your scenario, you are legally able to live in France (citizen or whatever). You don't plan on moving back to the US and never will. Why renounce? Unless you make a ton of money, you're not liable for US taxes, plus even if you're retired in France, you can still collect the Social Security you paid in all these years.
I understand what you're saying, but I'm saying there's no need unless you are very wealthy and want to avoid taxation.
47of74
(18,470 posts)Like they do now with estate taxes.
HotRodTuna
(114 posts)Tells what Chuck thinks of you. Not much.
JDPriestly
(57,936 posts)Why would you renounce your citizenship just because you are moving to France?
You wouldn't. Saverin is most likely renouncing his citizenship not to move to Singapore, but rather to avoid taxes.
You would not be moving to avoid taxes but to enjoy a quality of life more to your liking. Two completely different things.
You would continue to pay your fair share of American taxes. That's the difference between you and Saverin.
ingac70
(7,947 posts)your either with us or against us. 
AnotherMcIntosh
(11,064 posts)Trillo
(9,154 posts)It's right in the beginning.
AnotherMcIntosh
(11,064 posts)power to impose a 100% tax?
Are you operating under the belief that there is a limitation upon Congress and that it can only impose a 100% tax on those who fail to "pay over" certain amounts?
On its face, even 26 USC 6672 doesn't provide that. If you are suggesting that, no court has ever imposed that limitation.
Trillo
(9,154 posts)Neither do I. That was the purpose of the question.
Maybe someone else does.
dairydog91
(951 posts)It concerns people who are legally obligated to "collect, truthfully account for, and pay over any tax imposed by this title." An example would be an employer who is obligated to collect, account for, and pay withholding taxes on behalf of his employees. The statute penalizes such a person for tax evasion.
You might have been looking for something like Glenshaw Glass, a case in which SCOTUS ruled that Congress's power to collect income taxes under the 16th Amendment was very broad. Essentially, the court found that Congress may tax anything that is "income," very broadly defined. "undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion" would be the definition of income. So yes, Congress can impose a tax of whatever it wants on income. Of course, the problem with ex-pats is that they are no longer citizens, and countries normally do not tax the citizens of other countries, for obvious reasons of basic national sovereignty.
AnotherMcIntosh
(11,064 posts)The words within the statute speak for themselves. Tax evasion, or even an intent to engage in tax evasion, is not an element. A person can subject to liability without seeking to evade taxes. (2) The issue as raised by me is clearly whether Congress has the authority to impose a tax of 100%, not whether 6672 is applicable to ex-pats.
Glenshaw Glass is only tangentially related. Although there are cases which have upheld the Constitutionally of imposing a 100% tax, Glenshaw Glass is not one of them. (Actually, if you are truly saying that "Congress can impose a tax of whatever it wants on income," that was not the holding in Glenshaw Glass. There is no court opinion of which I am aware which has held that.)
If you are saying that "Congress can impose a tax of whatever it wants on income" and I have said that "Congress has the power to impose taxes of up to 100%," why do you want to disagree?
dairydog91
(951 posts)US Code - Section 6672: Failure to collect and pay over tax, or attempt to evade or defeat tax
(a) General rule
Any person required to collect, truthfully account for, and pay
over any tax imposed by this title who willfully fails to collect
such tax, or truthfully account for and pay over such tax, or
willfully attempts in any manner to evade or defeat any such tax or
the payment thereof, shall, in addition to other penalties provided
by law, be liable to a penalty equal to the total amount of the tax
evaded, or not collected, or not accounted for and paid over. No
penalty shall be imposed under section 6653 or part II of
subchapter A of chapter 68 for any offense to which this section is
applicable.
Where are you getting the notion that this statute authorizes 100% taxation? This is genuine curiosity on my part, not combativeness. I think I agree with your argument, but I'm trying to figure out how this statute works into it. This looks like a penalty section to me, with the penalty capped at 100% of the tax evaded. Are you talking about a penalty in the amount of 100% of the tax avoided, or an ex-pat tax of 100% of all of the ex-patriate's capital assets?
Also, I merely raised Glenshaw to point out that broad notion of income under modern Constitutional interpretation. The case does not concern rates, rather just the definition of income. This would, presumably, include all income realized upon liquidating assets before leaving the United States. It is not about the amount of taxation, I raised it to support the idea that Congress probably could consider all money made at point of expatriation to be income. Since I am unaware of any case which has fixed the maximum rate Congress can tax something at, I assumed this could allow Congress to tax at 100%.
AnotherMcIntosh
(11,064 posts)whether as capital gains or ordinary income.
Section 6672 is a penalty section. A civil penalty. It is, of course, commonly referred to as the "100% penalty." It was referred to only to illustrate the power of Congress to adopt a tax at a rate that would remove the financial incentive for the super-rich to become ex-pats.
Comrade_McKenzie
(2,526 posts)zzaapp
(531 posts)
yesphan
(1,587 posts)You'll still be grotesquely rich and you can go the grand canyon and stuff....
FailureToCommunicate
(14,013 posts)
SunSeeker
(51,550 posts)The middle class already pays 30% --and hasn't betrayed their country.
jp11
(2,104 posts)And a bunch of marbles short.
Where is the 'ex-patriot act' for US BUSINESSES? Oh yeah that's right our government gives them financial INCENTIVES to move jobs offshore.
loudsue
(14,087 posts)taking protections from our courts, and buying our congresscritters through the electoral process.
WOW they piss me off. This is a tiny, unsubstantial step in the right direction, but SHIT!! When are the damned politicians going to get a CLUE???
lutefisk
(3,974 posts)This is insignificant compared with what the large corporations' employees in Congress allow large corporations to get away with.
Oldtimeralso
(1,937 posts)Didn't the extreme court say that corporations were people too!
How about romney saying that at a campaign stop!
If corporations are people I want to see the day they execute one!
K.T.M.
(9 posts)And this guy thinks he can just walk away from it all with billions of dollars.
That money belongs to us all, it belongs to the goverment, he has stolen from us and stolen from the goverment.
We need to make a law that says people can have their money taken and used for good purposes.
What makes these bastards think they can have billions...and not help anyone and not pay for the goverment?
K.T.M.
(9 posts)But I don't think anyone really needs anymore than $100,000 a year. If I was king, any amount you make (steal) over 100,000 would go straight to the goverment. If you can't live on 100,000 you are evil. All mansions that people could no longer afford to pay for by themselves could be shared by the poor, they would be able to live nice in these 10 million dollar homes!
pinboy3niner
(53,339 posts)tru
(237 posts)I would rather over $100,000 go to charities of the earner's choice. I don't want my money to fund stupid wars.
dairydog91
(951 posts)First of all, why would anyone make over $100,000 if that money is taxed at 100% marginal? Amusement? Take, for example, a guy who builds up a construction business and would normally make $150,000 per year, post tax (And I know guys who make this kind of money, doing exactly this kind of work). Why would he ever put in any more time than is necessary to generate $100,000 per year, post-tax, if any time beyond that will be rewarded with 0 extra dollars? Also, it's quite a presumption to imagine to imagine that somehow $100,000 is the maximum value of all the work a human being could do in a year. Some ways of making that kind of money are more attractive than others, (Competent Surgeons come to mind). Even countries with much steeper rates of taxation don't approach a 100% marginal rate. If the rates do go that high, people invariably find a way to earn the income in a way that is immune to such a high rate. Or they leave.
HotRodTuna
(114 posts)Wow, thanks for that broad based judgement. Very insightful.
fascisthunter
(29,381 posts)too bad ya got the boot....lol
Myrina
(12,296 posts)... who do/plan to do the same thing.
Swede Atlanta
(3,596 posts)If the scum is living outside the U.S. we can levy any amount of taxes we want and there is precious little the U.S. can do about it. I believe extradition treaties are limited to violent crimes against persons and not property crimes like tax evasion. The U.S. could probably seize any assets he/she under U.S. control.
One thing we could do is to require anyone who has renounced their citizenship to prove they do not owe any taxes to the U.S. before being allowed entry back into the country. We should require anyone who has renounced their U.S. citizenship to obtain a visa prior to entry, even if they are now a national of a country in the Visa Waiver Program.
DeSwiss
(27,137 posts)
SpankMe
(2,957 posts)Not that I have sympathy for tax-dodging shenanigans, but I see this as another episode of overemotional US indignation that could push companies to incorporate outside the US so their officers and stakeholders don't get this heavy-handed treatment.
If Facebook were incorporated/HQ'd elsewhere, Saverin wouldn't be facing all this villainy and saber-rattling. This sort of thing could chase business from the US.
Sorry if this makes me sound like a pro-business whore of a Republican. But, it is what it is.
jp11
(2,104 posts)higher tariffs on their goods, services, and ability to operate in our country most especially their ability to pour their money personal and corporate into our elections. That would be the best thing to happen to this country in years, getting rid of the people who only care about maximizing their profits and buying laws that favor them while screwing over the rest of us. We'll keep their stuff for them right here in the US of course.
Businesses that leave the us would be replaced by ones that want to be here and probably actually hire people since they wouldn't be motivated by the lowest common denominator of paying people the least possible, paying the least possible in taxes through shell corporations or off shore accounts, and generally using up the country/workforce till they find someone else cheaper to use up etc.
I don't really think going after this one ass is the best idea, but I'd be happy if Saverin upon renouncing his citizenship can never return to the US for more than a week or just in dire emergencies to see dying loved ones/etc. Since I learned the details of how/why he came to the US I have no pity for someone like him as it appears his life isn't worth the what 67 million he'd pay in taxes while netting some 3-4 BILLION dollars. That is not the kind of person I want creating/owning businesses in the US because that is exactly the kind of person who buys politicians and laws to favor their ends which mean destroying our environment our privacy our livelihood etc. How much money is enough for a greedy selfish ungrateful person like this?
Granted we're still stuck with all the other greedy pigs who do all I've mentioned and won't leave the US because they've invested too much in THEIR government already.
DeSwiss
(27,137 posts)...and I've known Schumer was an asshole for a long time.
Swede Atlanta
(3,596 posts)Schumer is simply suggesting that someone who amasses a fortune in our economic system which provides tremendous opportunity and legal advantage to entrepreneurs MUST pay a fair share for that opportunity.
Companies have tremendous advantages in our system. They take advantage of our limited liability protections. They have access to our largely unfettered open markets. They benefit from roads, bridges and other infrastructure that allow employees to get to work, transport goods, etc.
They benefit from education, the majority of which is public.
I could go on and on.
And this little not dry behind the ears dweeb wants to escape his taxes? Fine, seize his assets wherever we have access. Permanently deny him access to this country until he pays.
DeSwiss
(27,137 posts)...the approval of the assassination of U.S. citizens sans ''due process',' the unwarranted reading of our emails, snail mail and listening in on our phone calls -- that maybe this is a little too much. Especially when they say they'll hound a person to the ends of the earth to get even with them for abandoning such a wonderful place in the first place. Although I know there are those (not unlike yourself) who would gladly love for the government to have even more power than that aforementioned.
- But as you can 'prolly see, I ain't one of them.......
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Spider Jerusalem
(21,786 posts)Article I, Section 9: No Bill of Attainder or ex post facto Law shall be passed.
47of74
(18,470 posts)But it could stop the guys in the future who plan to cut and run.
LynneSin
(95,337 posts)What scum
girl gone mad
(20,634 posts)contributed next to nothing, then nearly destroyed the company in its infancy.
Think of all of the people who put in countless low-paid hours actually designing, creating and building the infrastructure that Facebook is dependent on, and then think of this dope raking in billions solely by virtue of a personal connection. our system rewards the worst players.
ieoeja
(9,748 posts)He is living in Singapore and the banks are dropping all US clients. As he is a Brazilian by birth and Singaporan by residence, he really has no reason to retain his US citizenship.
And the purpose of these regulations the overseas banks want to dodge is less about collecting more taxes and more about money laundering for drug dealers and terrorists.
That said Schumer's plan still seems like a good idea whether people are doing it to avoid taxes or not.
Swede Atlanta
(3,596 posts)He was a refugee in this country. We gave him the opportunity to amass the fortune he has. I'm not saying he didn't have anything to do with that including working hard, etc. but for the jerk to now say, "thanks for the money now go blow yourselves" is over the top.
I suggest the U.S. attach any and all assets he has until he settles his dispute with the U.S. and should he attempt to set foot on U.S. soil or any of our territories, he is incarcerated at hard labor.
whistler162
(11,155 posts)SpankMe
(2,957 posts)...no matter what you think of opportunist troll Saverin.
Their proposal would also impose a mandatory 30 percent tax on the capital gains of anybody who renounces their U.S. citizenship.
So, 2 guys own shares of IBM and each sells $1M worth of IBM stock. One guy is a US citizen, and the other is a British subject. The US citizen renounces his US citizenship to avoid the cap gains tax - but gets whacked for 30% cap gains anyway just for trying and is further banned from ever returning to the US.
But, the UK guy - who conducted the exact same size and type of sale and derives the exact same proceeds - skates on the US tax by default and still retains the ability to visit the US and to possibly become a US citizen in the future? All this simply because he wasn't a US person to begin with?
Law that is wholly punitive in nature and meant to extract vengeance is bad law.
dairydog91
(951 posts)Fixed it for you.
a2liberal
(1,524 posts)If you're renouncing US citizenship, it's should be like effectively "dying" to the tax code. Tax the wealth and inherit it as the new non-citizen you. Couple that with a reasonable estate tax and it solves the problem and still preserves people's "freedom" to start anew outside the US if they want. I don't know exactly why, but that feels very much like the right approach to me.
erpowers
(9,350 posts)I was surprised to learn that Saverin would only have to pay $67 million in taxes. When I first heard the amount I thought the number might be wrong. I was also thinking it is stupid for someone to give up their American citizenship over $67 million. If I were to acquire his wealth and all I had to do was pay $67 million to continue to live in the United States I would gladly do so.
dairydog91
(951 posts)Last edited Thu May 17, 2012, 05:37 PM - Edit history (3)
Upon renouncing, Saverin paid an exit tax. Essentially, he paid capital gains taxes as if he'd sold all of his Facebook shares for profit. Essentially, he was left with entirely-post tax assets. He has paid, in full, what the system demands. He did not skip out and leave the US hanging (In tax terms, he paid taxes on all of his gains at the time of exit); at the time of exit he owed $0 in US taxes. However, capital gains he would have made in the future are a different story.
His reason for doing so is probably that Singapore has a 0% capital gains rate. Say his base in the shares is 4 billion. Let's say they double in value to 8 billion, and he wants to sell everything (Unrealistic, but simple model). In the US, the gain is 4 billion dollars, taxed at 15% capital gains. Eduardo pays $600,000,000 in taxes if he's a US citizen. In Singapore, capital gains is 0. Eduardo pays $0 in capital gains taxes.
Note: I've really simplified calculation of base on his capital assets. Still, it gives you an idea of what kind of money is in play.
He may be something of a weasel, but at some point you should be able to finalize your tax obligations, leave, and become a citizen of another country if you wish to do so.
stockholmer
(3,751 posts)
Dont call me Shirley
(10,998 posts)dairydog91
(951 posts)Mittens pays capital gains taxes on his capital gains (I think!). Eduardo is now a Singaporean, and pays an exciting 0% tax rate on his capital gains.
HotRodTuna
(114 posts)From a purely business standpoint, I can't blame the guy. He wasn't born here, he's still going to pay a lot of taxes, and he doesn't live here now. He almost lost it all, now he's hanging on to everything he can. That's life.
And Chuck Schumer is a complete tool. What a friggin grandstander this guy is.
Posteritatis
(18,807 posts)
MattSh
(3,714 posts)Why can't a bill be just a bill, instead of some kind of lecture?
Posteritatis
(18,807 posts)It's exactly why the Patriot Act or No Child Left Behind or any number of similar bills got their names, and the more loaded and emotive a bill's name is the more likely it is to be something on the continuum between kneejerk and ex post facto.
If legislation has to stand on its name rather than its merits - especially for something as absurd as this - then it shouldn't stand in the first place. There's less childish ways to do things.
avebury
(10,952 posts)is the fact that there are Americans and Corporations who have been hiding wealth outside of the US for decades and getting away with it. There are wealthy Americans and Corporations who routinely buy members of our Government in order to protect themselves as they pillage and loot their way through this country. And people are getting their panties in a wad over one person (most likely because he was not born in the US but another country). It seems like the argument is a day late and a dollar short.
Posteritatis
(18,807 posts)Like, well, all legislation that's introduced a handful of days after the offensive action.
stockholmer
(3,751 posts)Before anyone accuses me of defending oligarchs, let me reply that all one needs to do is look at my journal. I think the systemic controllers of the global banking complex (who indirectly and directly control nation states (via central banking and sovereign debt), global militaries, multinational corporations, the prison/drug/security complex, the for-profit health care/insurance complex, educational/research complex, etc etc) are the nexus of vast majority of humanity's ills in the present day world.
Is Saverin using loopholes in the system? Yes. Is he alone? No. Everyone (or almost everyone) who using any exemptions in the tax code at any level is doing the same thing. Look at the oligarch scum Warren Buffett, who avoids billions in taxes with his manipulation of the tax code, whilst falsely appearing to be a 'white knight'. http://www.democraticunderground.com/101727422#post1 Look at George Soro's billionaire partner Jim Rogers, who moved to Singapore around a year before Saverin did.
Now, onto the problems with this whole story, and its underlying memes:
1. Saverin, a Brasilian by birth, only became a US citizen in 1998. He has lived in Singapore since 2009. I still think that many many people (not necessarily on DU) think he is a natural born, US-citzen-only person who is now a 'traitor'.
2. Saverin already paid over $365 million dollars in US exit taxes, so the meme that he skated free is false. http://www.businessweek.com/news/2012-05-17/facebook-co-founder-turns-30-000-savings-to-3-billion
3. The US now has the world's highest corporate tax rate and it designed to crush your main job creators (SME's).
This tax rate is infested with so many loopholes that allow the huge corporations (GE, GM, etc etc etc) to pay next to nothing at the end of the day, whilst crushing small and medium sized firms (who employ over 70% of all Americans. This skewed tax scheme (especially when US state taxes are added in) is destroying the revenue intake funding mechanisms at all levels of government, thus hurting vital public services.
California keeps raising taxes, and each time they do, their revenues fall, as businesses and upper-middle class and above residents flee the state in droves. They are now facing a 16 billion dollar deficit http://www.npr.org/2012/05/14/152694872/calif-budget-deficit-nearly-doubles-to-16-billion that will explode furthernext year when there are large new tax increases coming that will drive out more business, and more upper-middle class and above families.
Between 1995 and 2005, http://www.financialsense.com/contributors/cris-sheridan/california-bow-titanic-united-states California gained over 10 million new residents, yet only added 150,000 taxpayers. Unsustainable.
4. The US is the ONLY industrialized nation in the world that taxes incomes of its citizens who live outside of the nation.
The reason that so many countries are now refusing to open bank accounts for any Americans is that laws such as FACTA and FBAR create a nightmare of reporting. AS the US debt grows and grows, and it becomes more and more desperate for revenue, the limits and exemptions for expat income tax, cap gains, etc, will lower and lower, until almost all expats will fall under its claw. There are over 6 million USA expats, so expect the 300% plus increase (in the last 4 years) of Americans renouncing citizenship to go up by rates of 1000% or more in terms of levels of increase. Many of these WILL NOT be 'rich' at all.
Here are just 2 examples of the US trying to shake down expats who are far, far from 'Saverin level' wealthy, including some who have never even lived in America other than a few years after birth:
Americans in Sweden suffer US tax crackdown
http://www.thelocal.se/39522/20120306/
snip
FBAR is the common term used to refer to what US tax authorities officially call a Report of Foreign Bank and Financial Accounts, a law which has been on the books since the 1970s, but which US tax authorities have only recently begun to enforce in earnest. Any US citizen living abroad who owns assets (checking, savings, pension, brokerage investments, life insurance, property, etc.) registered outside the US equaling a total of more than $10,000 – and that’s for all accounts, whether individual or joint ownership – is required to file an FBAR. For those living in Sweden this includes not only bank accounts and the like, but also includes items such as Coop MedMera cards, ICA cards, and Rikslunchen coupons.
Pamela's concerns about what the FBAR requirements might mean for her escalated as she kept coming across the works "FBAR penalty" as she went about completing her tardy US tax return. Previously she had always done her own taxes but to be sure she was following the requirements correctly Pamela contacted an accountant in the United States, who in turn sent her to a lawyer. The lawyer advised her that as she hadn’t filed her return on time, it meant she had undeclared income and with the current tough stance taken by the main US tax agency, the Internal Revenue Service (IRS), for non-filers of the FBAR, she should "do the math". Much to her horror, Pamela discovered that the penalty for non-compliance of FBAR is $10,000 per bank account per year, with the IRS looking back six years.
Because many Swedish banks open a new account each time a stock is bought or a fund opened, Pamela had double-digit number of accounts registered in her name. By the time she'd followed her lawyer's advice to "do the math", she found herself potentially facing a penalty in excess of $1 million. According to her lawyer, the only the way to pay a smaller penalty would be to join something known as the Voluntary Disclosure Program set up by the IRS. "Because I am fully integrated into Swedish society, I thought it would be an opportunity to explain my situation," she recalls.
But the reaction she received from US tax authorities was entirely different. "I was treated like a criminal. I was told that even in the Voluntary Disclosure Program it would be assumed I was a ‘willful violator’ of the tax laws and would need to pay 25 percent of [the value of] all my overseas assets, based on the highest balance in the sum total of all my bank accounts, retirement accounts, apartment, car, etc. over the last eight years," she says. Even the total value of Pamela's apartment was to be included in calculating the "lesser" penalty, not simply the amount remaining on her mortgage. "I was told I should be happy I was not paying the seven figure penalty. But I have never even had close to seven figures in my accounts in my life!" she explains. The United States is the only country in the developed world that requires its citizens to file tax returns if they have enough taxable income, whether living in the US or not.
snip
--------------------
US government shaking down dual national foreigners
http://www.sovereignman.com/expat/us-government-shaking-down-dual-national-foreigners/
snip
There are a lot of Panamanians who, for one reason or another, have US citizenship. During Latin America’s tumultuous times several decades ago, many families with means temporarily moved to the United States so that they could watch the turmoil from their television sets instead of their living room windows. Most of these families popped out a child or two while living in the US, and, per US law, those children were automatically US citizens. A few years later, they moved back. The kids grew up in Panama, became adults in Panama, went on to take over the family business, etc. Along they way they had a number of bank accounts in Panama, owned Panamanian companies, formed Panamanian foundations, and definitely earned healthy profits. As it turns out, however, those Panamanians who were born in the US were required to file tax returns and disclosure forms annually with the IRS, as well pay the US government its “fair share” of their income. And now, with so much stink being raised about offshore tax compliance for US citizens, these dual nationals find themselves caught in a tough situation.
Most were completely unaware and were recently tipped off by their local banker here in Panama, a conversation that went something like:
“Hey don’t you have US nationality as well as Panamanian? The US government is breathing down our necks to make sure customers are in compliance. You should see these stupid regulations they expect us to follow.”
“Um… compliance for what?”
After a few uncomfortable phone calls, they find out that they’re obliged to file 10+ years’ worth of 1040′s, 5471′s, and FBARs, as well as pay steep tax bills with penalties and interest.
I have no doubt that a great many of these dual nationals are going to march down to the US embassy to renounce their citizenship. Unfortunately for them, they won’t even be ‘allowed’ to do so until they become tax compliant. It’s amazing– many of these folks have never lived in the US, have never earned a penny of US-source income, and have never even heard of an FBAR… yet literally by accident of birth, they are now obligated under penalty of imprisonment to pay a huge portion of their assets to another government despite never having been made aware of such obligations. What’s more, they can’t get out of it. They can’t even renounce this obligation without first paying off the debts that they never signed up for.
snip
-------
The bottom line is that this Saverin issue is being used to try and further laws that will (just like the current corporate tax code) eventually trickle down and crush non-oligarchic level US citizens, along with further driving businesses off shore, and attempts to put forth the false idea that you can raise revenue levels merely by increasing taxes to any level deemed 'necessary' as long as it is some easily villified single individual.
The oligarchs and corporations will always have loopholes to exempt themselves, yet will demand that people far below their level of wealth 'suck it up' and take one for the team. This must change.
At some point, if this evolution continues, you will not be able to leave the country at all, either because you cant afford an ever-expanding 'exit tax' that will be broadened to the point of non payabilty via 'future-forward-looking surcharges' and lowered rates of exemptions, OR the simple fact that no country worth going to will allow you, as an American, to open a bank account.