by Peter Schiff, Schiff Gold:
There has been a tremendous amount of debate about building walls to stop illegal immigration. But the IRS is building walls to keep Americans in.
The US government is cracking down on Americans with outstanding tax bills by revoking passports.
The IRS says 362,000 Americans with “seriously delinquent” or overdue tax payments will be denied passport renewal if they don’t pay up, according to a report by Time.
A law passed in 2015 empowered the IRS to block passports if a person owes more than $51,000. As former congressman Bob Barr put it, the IRS is starting to use this hammer.
According to the Time report, the IRS has been sending the names of tens of thousands of “violators” to the State Department. You could even find your passport revoked if you’re already overseas, although you may be eligible for a limited passport for a direct return to the US.
If this wasn’t troubling enough, Barr raises the specter of other federal agencies getting similar authority, such as the power to stop a citizen’s ability to “secure a driver’s license, obtain[…] a loan from a federally-insured financial institution, or clear[…] a background check prior to purchasing a firearm?”
Meanwhile, more and more Americans are considering renouncing their citizenship due to onerous taxes. Last year, 5,132 gave up their citizenship. That was just 277 below the all-time record of 5,409 set in 2016.
It’s no mystery why Americans living abroad willingly sacrifice their citizenship. United States tax laws are extremely onerous. The US is one of the few countries that forces its citizens to pay taxes on income earned abroad, no matter where the individual permanently lives. On top of that, the tax paperwork is extremely complex.
Peter Schiff left the US and established residency in Puerto Rico for this very reason. Since it is a US territory, Puerto Rico offers some of the tax advantages of living abroad while allowing residents to maintain citizenship. Peter talked about his move in a 2015 Gold Videocast.
Ryan McMakin at the Mises Institute put together an interesting history of US emigration control published at the Mises Wire. It is reprinted in full below.
With this sort of behavior, the US government has joined the long list of governments which over the centuries have attempted to use their coercive powers to control the flow of emigrants outside their jurisdictions. Historian David Fitzgerald has noted:
While the academic tendency to ignore emigration policies implies that they either don’t exist or don’t matter, all major European states had significant emigration controls at some point.. States can execute those who attempt to leave, force emigrants to pay stiff exit fees, refuse to issue passports, prevent departure with personal property, and strip emigrants of their nationality. … Discursive techniques are also available, like publicly deriding emigrants as traitors to the motherland. Local governments have multiple pressure points where they could limit the transmission of vital records, assistance with lost or stolen remittances, and other bureaucratic transactions with emigrants. In short, governments have a potentially large and effective tool kit to make emigration an unpleasant experience, especially as many emigrants leave home with at least the illusion of returning
We don’t hear much about emigration controls anymore, though, thanks to the (partial) success of laissez-faire liberalism:
Most Western European states stopped trying to restrict emigration in the nineteenth century because of a shift from a mercantilist policy of hoarding population to laissez-faire capitalism allowing workers greater freedom of movement to sell their labor, and the related ascendancy of a right to exit in liberal political philosophy.
Fitzgerald’s work specifically focuses on pre-1970s Mexico as a case study in emigration control. Mexican nationalists had long yearned to prevent emigration by a variety of means, fearing both domestic labor shortages and “national humiliation” caused by large outflows of emigrants. In 1904, for example, “Mexican federal and state authorities ordered municipal governments to stop issuing travel documents used by U.S.-bound workers.” Similar measures were used over the years, but Mexico’s liberal constitution, and the realities of a decentralized political system, made it difficult to control emigrants.
Mexico was hardly alone in its nationalism-inspired opposition to emigration, especially during the late nineteenth century and early twentieth century.
In Europe, efforts to refuse emigration outright, and in general, were usually rejected, but efforts were made to prosecute those who facilitated emigration.
In the late nineteenth century, for example, these so-called “emigration agents,” who usually were in the business of helping people relocate to the United States, sometimes faced criminal prosecution. According to Tara Zahra in The Great Departure: Mass Migration from Eastern Europe and the Making of the Free World, “In 1914, over three thousand agents faced criminal charges in the Austrian half of the monarchy… They were clearly orchestrated as a warning to would-be emigrants about the hazards of leaving home.”