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Renouncing citizenship while hiding tears

by: Anthony Parent   2016-06-13

From a recent post in the American Expatriate Facebook group:

 

"Rachel Heller, a US expat living in the Netherlands, has tried to find a venue for here story but unfortunately, no major media outlet was interested in running it. Part of our mission is to give a voice to those completely overwhelmed by the over-bearing, invasive, abusive monster that is the US tax code. The monster flourishes, as it only selects a few people each year to terrorize. Most people never bear the full brunt of the IRS. This is key in avoiding an uprising."

 

US expats are the people that get the worse of it. Rachel Heller is only one such example. Here is her entire story on Medium.com, and here is an excerpt:

 

"...I was required to submit a form called FBAR (Foreign Bank Account Report). On this form, I had to report the highest balance (over $10,000 in each account or the aggregate) of the year in every local account that had my name on it. What that meant was that my husband’s salary also got reported because we have a joint account. Why is it any of the US government’s business what my Dutch husband earns? ..."

 

How this whole mess started

Along with the complete failure that is the Bank Secrecy Act of 1970, Citizenship-based taxation is actually a hold-over from the US Civil War. The Revenue Act of 1862 was passed to raise revenue for the Union to fight the Civil War; it was the first time in the US that an income tax was imposed. Many young (usually rich) men who didn't want to fight in the Civil War left the country for a "sabbatical," should we say.  Not only did the Union lose a solider, the US government lost that income to tax. So, an audible was called, and the income tax was imposed on any US person no matter where in the world they went. One might be able to escape the draft, but not taxes.

 

The Revenue Act of 1862 was thankfully sunsetting after Reconstruction was over. But you know that the Federal government love your money. So eventually, the 16th Amendment (which gave Congress the power to impose a tax based upon income) was introduced.

 

Here's the interesting thing: Where does the 16th Amendment authorize the imposition of taxes on income earned outside the jurisdiction of the United States? The answer is that it doesn't. In fact, you'll be hard pressed to find any proponent for the 16th Amendment who claimed that an income tax would extend to extra-jurisdiction transactions.

N

o one said a dang thing about.

 

But then, a very predictable result happened. You see, if you give the Federal government an inch to tax, they'll tax you by the mile. Between a government and what they covet (your stuff) you will always find the most absurd rationales. This is what I have previously wrote about this ugly history:

 

Seriously, what gives the IRS the authority to tax US citizens on income earned outside of the United States? Or anywhere else in the Universe for that matter?

 

The case is Cook v. Tait 265 US 47 (1924).

 

Here are the quick facts: Mr. Cook was a US citizen living in Mexico City. He made what appears to be rental income, on property located in Mexico City. The IRS said he owed taxes. Mr. Cook said he didn't, as the property was located outside the United States so the IRS had nothing to do with it.

 

How would the Supreme Court decide this issue? Were they influenced by the universal tax jurisdiction of the Revenue Act of 1862? In a manner that respected the rights of the individual and other countries? Or rather, in a self-serving, kind of ego-centric manner that made the US Treasury (the entity that writes the check for the Supreme Court justices) the center of the universe?

 

So here comes the court's razor sharp reasoning, explaining why the IRS gets a claim on your stuff wherever in the universe you are.:

 

In other words, the principle was declared that the government, by its very nature, benefits the citizen and his property wherever found, and therefore has the power to make the benefit complete. Or, to express it another way, the basis of the power to tax was not and cannot be made dependent upon the situs of the property in all cases, it being in or out of the United States, nor was not and cannot be made dependent upon the domicile of the citizen, that being in or out of the United States, but upon his relation as citizen to the United States and the relation of the latter to him as citizen.

 

I think a more honest opinion, less passive-aggressive, yet just as wrong, would read like this:

 

All the other governments of the world aren't doing a damn thing to protect property rights. They're a disgrace! Therefore, everything you have and everything you make is courtesy of the US government. You wouldn't be able to make a dime unless it was for the US government. So pay your taxes. On everything. Now. And be sure to tell us thank you. Or you can go to jail.


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