The Cinch Review

The Ex-Patriot Act: Not the America We Used to Know

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Eduardo Saverin is a co-founder of Facebook who renounced his U.S. citizenship in advance of that company’s initial public offering on the stock exchange; in doing so he has perhaps saved himself tens of millions of dollars in U.S. tax liability on the billions he will earn. Despicable, huh? He has profited beyond most people’s dreams, thanks in substantial part to the freedom to innovate and do business that living in the the United States of America has provided him, and now, just before the big pay-off, he thinks he can just file a form, escape to Singapore, and get away without paying Uncle Sam a cent.

The political response to this has come today from Senator Charles “Chuck” Schumer (D-NY) and Senator Bob Casey (D-PA), in the form of their proposed Ex-PATRIOT Act (Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy), which would seek to tax those such as Eduardo Saverin even after they’ve left the U.S. and their citizenship behind, and would also impose a mandatory 30 percent tax on the capital gains of anybody who renounces their U.S. citizenship. That must be pretty pleasing to those outraged at Eduardo Saverin’s rude and ungrateful behavior. That’s understandable.

And I hold Mr. Saverin in no particular esteem. I don’t even have a Facebook account (can’t afford one). I probably would not like him very much, especially if his recent actions reflect some contempt he has for the good ol’ U.S.A. However, I feel sure I cannot be the only one with serious misgivings about the implications of this “Ex-Patriot Act” for what it means to be an American these days.

Back in 1989, the Berlin Wall fell. That was a physical barrier erected by the communist East German regime to prevent their citizens from escaping to a better life in West Germany. Before very long, much of the rest of the Iron Curtain came down too. Today, there are only three countries I can think of—all communistic—which still use force when they feel it’s called for to prevent their citizens from freely crossing their own borders: Cuba, China and North Korea.

America has always been known to its own citizens as “the land of the free.” There has never been a wall or fence to keep people in. The trouble has always been keeping people out. It may sound like empty cliché to the jaded, but it is fact: For most of this nation’s history, the tired, the poor, the hungry, and all those yearning to be free across the world have dreamed of coming to America, and have made the trip whenever they had the wherewithal to do so. Aside from bizarre anomalies like Lee Harvey Oswald, Bobby Fischer and—let me see—er, Johnny Depp, there is no significant history of people who have gone out of their way to turn their backs on America.

In one of the recent cycle’s Republican primary debates, Ron Paul was asked what he thought of the very popular idea of building a big fence along the border with Mexico to keep illegal immigrants out, and he indicated that he thought people ought to be worried about it maybe being used to keep people in. Everybody laughed; I think even the Ron Paul supporters. And so did I. That crazy old Ron Paul.

Yet, a few months later, here we are. It is seriously being proposed in the stately halls of the U.S. Senate that the United States pass a law that would strip those who renounce their U.S. citizenship of a substantial part of what money they may have earned, and would enable the pursuit of their assets overseas as well. It’s not a wall. It’s not barbed wire, or land mines, or an East German guard with a sniper rifle. But it is a statement to this effect: “There appear to be people who want to leave the United States, and reject their citizenship, with the aim of improving their lot. We must stop them.”

It’s rather disturbing to me that we’ve come to this pass.

Instead of endeavoring to keep people in, or punish those who would leave, I think instead that we should redouble our efforts to revive the America that no serious person ever desired to abandon. There is no way of eliminating the possibility of a rare Eduardo Saverin who cashes in his chips on a one-time basis and skedaddles, but our response to such as he should be: “Good luck on the outside, buddy.” American citizenship has long been the most desired and prized status symbol in all the world. Just maybe it still is. We should focus our efforts on assuring that it remains so, and only increases in value.

I would suggest that Chuck Schumer’s “Escapee Tax” is probably not the way to do it.

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