Recently by Bob Bauman: Superman Ends His U.S. Citizenship
There is a line from a marching anthem in an old Hitler Youth songbook that goes as follows: Denn heute gëhort uns Deutschland; Und morgen die ganze Welt. A rough translation: For today Germany belongs to us; And tomorrow the whole world.
Now I hasten to add that I am not comparing agents of the U.S. Internal Revenue Service (IRS) with the Nazis, but their policies, tactics and attitude too often provide grim reminders of a superior cult that believes they are unstoppable – even by the clear words of the U.S. Constitution or the laws of other sovereign nations.
A few years ago in one of my books I wondered if the day would come when armed IRS agents would be wading ashore on the beaches of Caribbean tax havens, ready to enforce demands for bank records and other information about American with offshore business and bank accounts.
Invasion of the Agents
Two years ago I read a news story stating that IRS agents would be stationed in the U.S. Embassy in Panama. When I asked our veteran Panama attorney and member of the Sovereign Society Council of Experts, Rainelda Mata-Kelly, about this her response mirrored my thinking: “I don’t know why IRS agents would be stationed here. Panama’s territorial tax law applies here, not U.S. tax laws.”
Well, we were both wrong.
We could hardly have guessed that the U.S. Congress. momentarily dominated by Obama and his radical left Democrats, would enacted the pending FATCA law, the basic premise of which is that U.S. tax laws apply to every bank and financial institution in the entire world.
That the country in which an offshore bank may be located, such as Switzerland, Austria or Panama has existing laws against revealing such financial information is not even considered by the IRS – “They are only nations. We are the IRS!”
We’re Here to Help You!
Recently PricewaterhouseCoopers warned U.S. taxpayers with offshore financial operations that the IRS may send agents into foreign jurisdictions. It appears that the IRS historically has sent agents to a foreign country for interviews and to review books, ledgers and other documents, but only with the foreign jurisdiction’s permission and under its rules.
As we all know only too well, U.S. law holds citizens resident elsewhere liable for paying U.S. taxes in addition to those they file and pay to another country, one of the only countries in the world to impose this extra-territorial tax reach on non-resident citizens.
If you are a U.S. person with an offshore business your records and U.S. tax and other reporting had better be in very good order.
The major problem as I see it is that the IRS has an ingrained prejudice against U.S. persons with offshore bank accounts and business interests. Add to the arbitrary application of a complex U.S. tax code two major factors: 1) an obvious IRS prejudice against taxpayers – the attitude that the taxpayer is always wrong, that taxpayers are guilty until they can prove themselves innocent; 2) a well known IRS opinion, shared by most U.S. government bureaucrats, that any American who dares to engage in offshore financial activity is probably a tax evader or worse.
Soak the Rich Again
The President, whose salary is about $400,000 a year, has been consistent and clear in his demagogic attacks against “millionaires, billionaires and corporate jet owners paying their ‘fair share“– tax them more, he says.
He knows but ignores the fact that the wealthiest top 10% of households, earning an average of $366,400 in 2006, paid 73% of the income taxes collected. The bottoms 45% of Americans, on average, make a profit from the federal income tax; they get more money in tax credits than they would otherwise owe in taxes. Those people get government payments subsidized by the taxes others must pay.
That’s what the late, assassinated U.S. Senator Huey Long (D-LA) cheerfully called for; “redistributing the wealth.”
As the Republican Leader of the U.S. House of Representatives, Eric Cantor (R-VA) has said, Obama calls for others to ”stop playing politics” but he repeatedly engages in “the politics of division…fueled by efforts to incite class warfare.”
Meanwhile, Obama the Hypocrite aggressively is courting Wall Street donors to support his shaky re-election campaign, trying to fool them that, despite his repeated attacks on corporate jet owners, his policies remain favorable to the “investor class.” No doubt a number of bailed out banks that got billions would agree.
Legions of GHWIGs
Implementing the Obama philosophy of “spreading the wealth around,” U.S. IRS Commissioner Douglas Shulman has adopted IRS policies aimed right at what he described as “high wealth individuals and their related entities.”
Especially targeting the wealthy and offshore American financial activity, Shulman launched what he calls the IRS “Global High Wealth Industry Group,” (GHWIG) described as a “game-changing strategy” to centralize and focus IRS compliance expertise involving rich folks who supposedly don’t pay enough taxes.
IRS Imaginary Numbers
This IRS assumption of more taxes collected offshore runs counter to a 1998 U.S. Senate Committee on Finance report that stated: “Nearly 50% of the returns filed by overseas citizens or resident aliens report no tax liability, primarily as a result of sections 911 and 901 of the Code [the foreign earned income exclusion, which I have explained before].
The new IRS and onerous FACTA programs make no distinction between hidden, unreported fraudulent offshore accounts and the accounts of U.S. citizens or green card holders who are residents of other countries and who regularly declare their financial assets and pay taxes to these governments.
The late Will Rogers once observed: “The crime of taxation is not in the taking it, it’s in the way that it’s spent.”
I think Will was only half right on that one.
Reprinted with permission from The Sovereign Investor.
Robert E. Bauman is a former Member of the United States House of Representatives from Maryland, (1973–1981). He is also a former federal official and state legislator; Member, Washington, DC Bar; Graduate of the Georgetown University Law Center (1964) and the School of Foreign Service (1959), Washington, DC. Robert currently serves as legal counsel for the Sovereign Society.