Are You the Property of Your Government?

As a former U.S. citizen who has given up U.S. citizenship, I've visited dozens of countries using my Commonwealth of Dominica passport.

One of the most interesting destinations has been the Republic of Cuba. Not being a U.S. citizen makes the process of visiting Cuba much easier. Due to a longstanding U.S. embargo against Cuba, U.S. citizens and permanent residents generally must obtain a license from the U.S. Treasury to visit and especially to spend money there. But, as a citizen of Dominica, I merely need to show my passport to obtain visa-free entry into Cuba.

In a recent post, I discussed reforms taking place in Cuba, as well as the loosening of restrictions on Cuban citizens. At the same time, the United States is imposing more restrictions on its citizens. Both my colleague Mark Nestmann and I have observed that from a civil liberties standpoint, if present trends continue, Cuba and the United States will pass one another…..but going in opposite directions!

One still-maddening aspect of Cuban law relates to nationality. Under current law, a Cuban citizen born in Cuba doesn't have the right to give up Cuban citizenship. Cuban nationals who acquire another passport can travel internationally on that document. However, anyone born in Cuba must use a Cuban passport to enter and exit the country. Recently, a Cuban-born friend of Mark discovered this the hard way when he was denied entry to the country using a U.S. passport. He was required to use his Cuban passport, which he no longer possesses.

Cuba retains this policy to enforce its arcane, outdated, and Byzantine migratory requirements, rules and regulations. Former Cuban President Fidel Castro has always taken a dim view of those who wish to emigrate. However, unlike the United States, Cuba does not tax its non-resident citizens on their worldwide income.

The United States, on the other hand, still permits its citizens to give up their U.S. nationality. However, it now faces the reality that the number of former U.S. citizens doing so has increased exponentially in recent years. Long waiting lists for expatriation appointments now exist at certain U.S. consulates (e.g., Berne, Switzerland). It's also clear that the U.S. government despises this trend. U.S. law and policy actively discourage expatriation and have gradually made life more difficult for those who take this step.

Could Congress amend the Immigration and Nationality Act to prevent people from giving up their U.S. nationality, thus subjecting them to lifetime taxation on their worldwide income and estate? Yes, it's a radical proposal, but similar proposals have circulated for at least a decade. For instance, in 2001, the United Nations published a report that proposed using tax policies as a tool to redistribute wealth and income. One key suggestion was to create a global tax collection authority, the International Tax Organization (ITO). This agency would “take a lead role in restraining tax competition.”

One responsibility for the ITO, the report suggested, would be to enforce the "permanent right" of governments to tax individuals who emigrate from their homeland. You would have no right to migrate from a high-tax jurisdiction to a low-tax one. The ITO would follow you wherever you go to collect tax. While the ITO hasn't yet come into being, numerous initiatives to enforce global taxation are now in force. Mark recently wrote about one involving the exchange of tax information among various high-tax countries here.

I don't think it's too strong a statement to suggest that if the still relatively small number of individuals ending their U.S. citizen status continues to skyrocket, the United States will impose much stronger measures to stem the exodus. And in doing so, it just might follow the Cuban example of forbidding expatriation. Acting under the guise of simply following a "United Nations initiative" would provide a convenient excuse for doing so.

If expatriation could be a solution for you, start making plans…now.

Copyright (c) 2012 by The Nestmann Group, Ltd.

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