By Susan Beverley
Have the terrorists won?
One of the most common reasons for wanting to expatriate from the United States is the concern about government overreach. Many feel that the expansion of government in recent years has been chipping away at the freedom and liberty that the country was founded upon. What with more and more agencies, regulations, surveillance, and mandates, the right to privacy and self-determination is steadily shrinking right along with financial outlooks.
So, are you among the increasing number of people who feel that the only real solution is to get out of the country? Well, using the exact same tactics that are driving you away, the government appears intent on preventing you from leaving. Changes that have recently been put in place as well as proposals for future changes in rules and regulations might be intended to discourage. But they might also drive your resolve to take your destiny into your own hands and do whatever it takes to make your move overseas.
1. Escalating Cost of Passports
From $35 a few years ago the fee for a US passport has ballooned to today’s $135 for adults (16 and older) and $105 for minors. Renewals cost $110. If you need it in a hurry, there is another $60 expediting fee, and you have to provide a preaddressed prepaid express mail envelope, if you want it back in less than the 6-8 weeks required. The Passport Agency of the Department of State in 2010 issued 13,883,129 passports as well as 1,596,485 items of a new product called the “passport card,” which is good for reentry from anywhere within the Western Hemisphere. This product, which costs $55 for adults, $30 for previous adult passport holders, and $40 for all minors, was created at the behest of heavy lobbying by the cruise industry.
2. Proposed Biographical Questionnaire
In February 2011, the US Department of State proposed the use of a new biographical questionnaire “to supplement the DS-11 only when the applicant submits citizenship or identity evidence that is insufficient to meet his/her burden of proving citizenship or identity.” The estimated burden to fill out proposed Form DS-5513 is 45 minutes, but such details as your mother’s places of residence one year before, at the time of, and one year after your birth are only the beginning of a long list of obscure information that it would be impossible to ascertain in that amount of time or possibly any amount of time. Despite the State Department’s reassurances that it is all about preventing terrorists and other treasonous individuals from gaining US passports, this is very problematic because an unapproved version of the form is already being used to deny passports to US citizens, and there are no set guidelines as to who will to be subjected to it.
3. Air Travel Difficulties
In their supposed pursuit of would-be terrorists and other criminals, the US authorities have overreached their jurisdiction. Recently they forced an international flight from Europe to Mexico to land in the US because one of the online gambling impresarios from Costa Rica was on board. But violation of international law and sovereignty has become an everyday occurrence.
In another recent case, a flight from Mexico to Spain was denied access to American airspace and turned back ninety minutes after takeoff because a Mexican citizen who was once accused of involvement in a guerilla uprising in Bolivia was on board. She suspects that she is on the infamous passenger blacklist. But it is kept secret, so there is neither a way for travelers to find out if they are on the list nor any way to clear their names.
4. Airport Security
One of the most glaring cases of government overreach is of course that of the highly invasive “enhanced screening procedures.” If having to remove shoes and belts to walk through metal detectors and being subjected to the Advanced Imaging Technology units were not degrading enough, “anomalies,” refusals to enter the unit, or metal detection alarms require further thorough pat downs that are justifiably upsetting.
But think twice about complaining. Behavior Detection Officers are stationed at the security checkpoints to watch for “behavioral indicators” such as stress or fear. Other indicators that they look for are attitudes toward security, so anger and resentment about having to surrender the right to privacy becomes the evidence for why your right to privacy should be surrendered. The circular reasoning is dizzying.
5. World wide of invasion of privacy
Whilst outrage over TSA airport screening has amplified the accusations of government tyranny, little is being said about the NSA’s continuing surveillance of electronic data – domestic emails, Internet searches, and social network activities. The USA Patriot Act also gives the NSA the power to conduct surveillance of domestic financial information such as bank transfers and credit card transactions as well as travel and telephone records, and the World Wide Web has globalized their reach. Some may excuse these unconstitutional invasions of privacy as being necessary in these dangerous times, where anyone who is not engaged in illegal activities should have nothing to hide. But again, the arbitrariness and the potential for abuse of power based on private information gleaned from all this surveillance can be yet another impediment to freedom of movement and the right of individuals, wherever they are on the globe, to conduct their lives without the constant fear of interference from Big Brother.
6. Taxation of foreign income
By taxing foreign income, the United States considers all citizens, wherever they are in the world, as subject to taxation. There are foreign earned income exclusions and foreign tax credits, but they only apply when you either spend 330 days abroad earning your income or you meet the bona fide residency test by proving that your principal residence is in a foreign country for at least one full tax year beginning on January 1.
A strangely named provision called the Tax Increase Prevention and Reconciliation Act (TIPRA), enacted in May 2006, actually raised the amount of taxes due after the foreign earned income exclusion. The changes brought by TIPRA also capped housing allowances, affecting those in higher cost housing markets the most.
7. Financial reporting requirements
According to American Citizens Abroad, US requirements for banks both foreign and domestic have turned expats into “toxic citizens.” A law incorporated into the 2010 Hiring Incentives to Restore Employment Act (HIRE Act) has caused foreign banks and financial institutions to deny services to US citizens because of intrusions by the US government that make servicing those accounts too difficult and burdensome. The Foreign Bank and Financial Account Form (FBAR) calls for foreign institutions to submit account details of all Americans with a cumulative balance over $10,000 at any point during the year to the US Treasury or face major withholding penalties on their US assets. The result has been that many American’s accounts have been closed.
Yet, Title III of the USA Patriot Act, known as the “International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001” enacted requirements concerning how US banks verify their clients’ identities, making it more difficult for those without a permanent US address to maintain accounts from abroad.
The right to privacy in financial matters has been further invaded by new banking rules that the United States has been pushing for through the Organization for Economic Cooperation and Development. The OECD compiled a blacklist of countries it deemed “uncooperative tax havens.” To be removed from the list, these countries were required to sign bilateral tax information-sharing treaties with other countries and adhere to an international taxation standard that is eliminating privacy in banking everywhere in the world.
Then there is the requirement to report the amount of money you are taking out of the country to the US government. Here is the text from the Customs and Border Protection website:
You may bring into or take out of the country, including by mail, as much money as you wish. However, if it is more than $10,000, you will need to report it to CBP. Ask the CBP officer for the Currency Reporting Form (FinCen 105). The penalties for non-compliance can be severe.
“Money” means monetary instruments and includes U.S. or foreign coins currently in circulation, currency, and travelers’ checks in any form, money orders, and negotiable instruments or investment securities in bearer form.
This requirement goes back to when President Nixon removed the last vestiges of the Gold Standard from the US currency in 1971. The explanation for it is that drug dealers were taking millions in illicit gains out of the country. Threats of fines work on institutions, but as for drug dealers, I can just see them declaring those suitcases of money out of fear of a fine.
This rule affects mostly people wanting to move abroad for a better and freer way of life. But when you fill in that FinCen 105, you immediately draw attention to yourself. If you want to take your fortune out in the form of cashier’s checks or bearer bonds, and you declare it, you will probably end up being detained while the CBP calls your accountant and your bank to have them send proof of it being legal and properly taxed.
All of these requirements, along with all the documentation necessary for expats to pay their taxes (the guide to the Foreign Tax Credit for Individuals is 39 pages long), constitute major bureaucratic hurdles to living and working overseas.
8. The IRS is becoming even more aggressive
The IRS was not satisfied with the power it already wielded over international financial institutions, so the government has recently been instituting and considering even more aggressive measures for collecting taxes on Americans who wish to live and keep their assets overseas.
One such measure being considered by the Justice Department is whether it can apply FBAR penalties on foreign banks and institutions that they determine to have violated US tax laws. While the $780 million in fines that Swiss banking giant UBS paid in 2009 were for selling illegal offshore financial products to Americans, the FBAR penalties would dwarf this amount.
Federal prosecutors are already going after a former Credit Suisse banker for $19 million in FBAR penalties for personally aiding and abetting American clients who failed to disclose their foreign accounts to the US government.
Another onerous tactic that the US government is considering is to deny passports from citizens with unpaid taxes.
A farewell gift
So if you have had enough of the US government imposing its will on you, treating you as if you were a terrorist, infringing on your rights and limiting your freedoms, enslaving you with its crushing debt, and impeding your ability to live and work abroad, and you have decided once and for all to renounce your citizenship, you will have to fork out $450 to the US government for this irrevocable privilege. But be aware that under Section 212(a) of the Immigration and Nationality Act, if the Attorney General decides that the renunciation was undertaken to avoid paying taxes, you are ineligible for a visa or admission back into the United States.
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