Does Renouncing US Citizenship Make You a Bad Person?

by Kevin Jon Heller

Josh Marshall at Talking Points Memo certainly thinks so:

Which brings us back to Roger Ver, variously known as a “Bitcoin entrepreneur” or the “Bitcoin Jesus.” Ver is now a citizen of Federation of Saint Kitts and Nevis. He was so excited about avoiding taxes that as soon as he became a Nevisian he set up yet another start up that would allow you to use bitcoins to buy a Saint Kitts and Nevis passport so you too could avoid US taxes. Alas, it folded after a few months, apparently because the St Kitts government disavowed it.

Unlike Facebook billionaire Eduardo Saverin who renounced his citizenship to avoid US taxes back in 2012, I don’t get the impression that Ver is remotely that rich. He may be worth a few or even many millions of dollars. But he does not seem remotely in the category of 100s of millions, let alone billions. In any case, now he wants a visa to return to the US to speak at a Bitcoin conference this weekend in Miami. But the US has repeatedly denied his requests. And he’s extremely upset at “the tyrants [who] won’t allow me to attend #CES2015, #TNABC or anything in the US.”

Here’s Roger with his “Borders are Imaginary Lines” t-shirt he wore for his appointment at the US Embassy Barbados to apply for a Visa. He even seems to be selling these shirts as a way people can express their opposition to the tyranny that is keeping him from visiting the US.

As I’ve written before, I don’t think American citizens who renounce their citizenship for tax purposes should be allowed to return to the country ever, except possibly under highly extenuating circumstances. Ver is upset that he cannot ditch his US citizenship to live in a tax haven that is – let’s be frank – under the de facto US security and economic umbrella and come back whenever he wants to hang out or hawk bitcoins.

Ver seems like a rather loathsome fellow, but I do not understand Marshall’s position. Why should renouncing citizenship for selfish economic reasons bar someone from entering the US for life? Paying taxes is the price of citizenship; if you don’t pay taxes, you obviously should not receive the benefits that being an American citizen provides. But if you are willing to give up the benefits of American citizenship, why should the reason for renouncing your citizenship matter? Why should you never be able to set foot in the US again? (Especially given that like everyone who spends time in the US, you will still have to pay sales taxes when you’re there.)

In other words, I don’t see any reason why a former citizen should be treated differently than any other foreigner when applying for a visa. Or, perhaps more precisely, I don’t see any legitimate reason. Marshall’s position seems to rest on the problematic idea that being a US citizen is so inherently wonderful that only a terrible person would voluntarily renounce his citizenship for economic reasons. To me, that’s American exceptionalism of the worst kind.

PS: Does any other country have an equivalent to 8 USC 1182, which automatically excludes former citizens who renounced citizenship for economic reasons? Professor Spiro?

http://opiniojuris.org/2015/01/16/renouncing-us-citizenship-make-bad-person/

8 Responses

  1. Hey Kevin, 8 USC 1182 has never been enforced. It was enacted in the wake of the somewhat comical case of a Campbell Soup heir living in Tampa who renounced his US citizenship, bought Belizean citizenship, and then had Belize appoint him its consul in . . . Tampa. But the US has since dealt with tax renunciants by (in effect) charging them an exit tax — they have to pay capital gains as if they had liquidated all assets as of the date of renunciation.

    My understanding is that Ver was denied a visa on a much more prosaic basis — that US authorities were worried that he would violate the terms of his non-immigrant admission, ie, that he would overstay his visa.

    As for Josh Marshall, he is an ur-liberal nationalist, emphasis on the latter (also hates dual citizenship).

  2. I’m no Public Law expert – I’m not even a lawyer but it seems to me that citizenship is a fact. There’s some kind of unspoken contract between state and subject that can be abrogated by agreement but not by mere unilateral declaration.

  3. I was told by quite a few Australian, Canadian and American born Chinese that they find it hard to get a visa to go back to China after they renounce Chinese nationality. However, as far as I know, there is no law preventing them to do so.

  4. Marshall is surely arguing on grounds of providing a disincentive. The US Government doesn’t want people to avoid taxes by renouncing citizenship, as that means reduced revenue receipts. This policy provides an additional cost of renouncing US citizenship, therefore discouraging the undesirable behavior.

    Such a policy doesn’t require us to say that a person who renounces his/her citizenship is “a bad person”. Just that we don’t want people to renounce their citizenship, reducing tax receipts, and therefore we want to impose additional costs on people who do so to discourage that behavior.

    Of course, there might be reasons to oppose this policy. But those arguments haven’t been made here, so I won’t attempt to guess what they might be.

  5. Zack,

    That’s definitely the best argument for the policy — US citizens shouldn’t get to build their fortune (which always involves advantages provided by the government) and then take their money and run. But as Peter notes, I don’t think that’s Marshall’s argument at all. I’m quite sure he thinks giving up US citizenship does, in fact, make you a bad person.

  6. I’ve written on this topic albeit in the context of the exit tax provisions mostly, concluding that are illegitimate and also – in my view – unconstitutional. I claim fundamental right and national origin discrimination. It’s http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1628568 if anyone is interested. One difficulty with the “build their fortune” argument is that foreign nationals build their fortune with investments in the US, but they have a completely different tax regime as non-US persons.

    I should also note that 8 USC 1182 has been enforced on a very few (not widely reported)occasions even tho there are still no regs for it as far as I know. In fact I have been called on a couple of these cases. Problem is that IRS does not have authority to share the tax info with CBP so CBP officers don’t usually have a leg to stand on. Doesn’t necessarily stop them from trying and they can easily shift to the immigrant intent ground in substitution as they seem to have done in the Ver case. In the anecdotal cases I have seen, the person usually got in eventually because they were not high profile and could get a waiver if necessary. Ver won’t be so lucky.

  7. My apologies, I wasn’t familiar with Josh Marshall. You are correct, he does seem to think renouncing citizenship makes you a bad person: “That’s what makes the plutocrat who renounces his citizenship for tax purposes really execrable and someone who I don’t think should be allowed ever to enter the country again.”

    His understanding of citizenship is confusing. In one post, he argues that NY shouldn’t let non-citizens vote in municipal elections because, effectively, non-citizens don’t have the same political commitment to the US that citizens have. In a different post, he says that the “fundamental reality that makes us citizens” is our “membership and allegiance to this political community, this country.” One would have thought that examples of individuals denouncing their citizenship would serve as an example that not all citizens do have such a strong allegiance to the US, therefore rendering citizenship a flawed test to determine commitment/allegiance. Yet, Marshall seems to be sticking to it.

  8. “PS: Does any other country have an equivalent to 8 USC 1182”

    8 USC 1182(a)(10)(E) specifically? Well, the concept of “renounced citizenship to avoid taxation” doesn’t make sense in other countries because there’s no relationship between citizenship & tax status there except as a secondary/tertiary tie breaker in tax treaties or “deemed domicile” laws. There’s one exception, Eritrea, and it doesn’t look like they have a statutory equivalent (though they may apply a ban as a matter of policy):
    http://www.eritreanlawsociety.org/els_pdf/Vol_I/Regulation%20of%20Travel%20Documents%20and%20Immigration%20No.%204_1992.pdf

    For exclusion of other kinds of ex-citizens: South Korea sort-of has equivalents to 8 USC 1182(a)(8)(B) & 1425 (ban on entry & (re)naturalization of draft evaders). The latter is Article 9, Nationality Law (re-naturalization there is otherwise quite easy); the entry ban is a policy applied on legal grounds of Article 11 Paragraph 1(3), Immigration Control Law (exclusion of foreigners whose entry could harm national interests or public order). The most famous example of this is pop star Yoo Seung-jun; in the past 12 years they’ve only let him back in once, for a funeral.

    If you think that’s a good example for the U.S. vis-a-vis its tax laws, note that Korea also has sane regulations (e.g. Article 145, Military Service Law Implementation Order) which make a clear distinction between someone who actually fled the country to skip the draft and an overseas-raised kid who visits the country once a year to see grandma. An English summary:
    http://oneclick.law.go.kr/CSM/OvCnpRetrieveP.laf?csmSeq=505&ccfNo=4&cciNo=6&cnpClsNo=1

    Contrast with, e.g., U.S. imposition of 26 USC 6048 “foreign trust” reporting requirements & $10,000 non-filing fines on both Mitt Romney’s Cayman Islands blind trust and Canadian government welfare/savings plans for disabled people:
    http://rdspresource.ca/index.php/2011/11/treatment-of-rdsps-by-the-us-internal-revenue-service/

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