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Sunday, December 06, 2015

Gulag America

A few years back, Congress passed FATCA. While purportedly aimed at reaching money of tax evaders hidden offshore, a practical effect has been it is nearly impossible for U.S. persons to hold or open bank or brokerage accounts outside of the U.S. That is, for a tax policy objective, the freedom enjoyed by U.S. persons to hold their liquid assets wherever they want in the world has been substantially curtailed.

The construction of Gulag America under the guise of tax policy continues apace with the passage and signing of the Fixing America’s Surface Transportation (FAST) Act in the last few days. The Act adds new Section 7345 to the Internal Revenue Code. This provision provides that if the IRS Commissioner certifies that a taxpayer is delinquent in his her federal taxes to the tune of $50,000 or more, the Secretary of State can take action to deny, revoke or limit the taxpayer’s passport. That is, persons with delinquent taxes may now be barred from leaving the U.S.

The U.S. has enforced its taxes for over one hundred years with civil and criminal enforcement mechanisms. Apparently, that enforcement arsenal is no longer sufficient, and U.S. citizens in financial straits will now lose their travel “privileges.” I wonder how many federal government employees, including members of Congress, will feel the heat of this provision (Federal employees owe $3.3B in back taxes).

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