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IRS Building Walls to Keep Americans In

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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.”

Often the agents were accused of human trafficking or of swindling their customers. It is likely that these accusations were true some of the time, but the motivation behind efforts to discredit these travel agents appears to have been more nationalism than consumer protection.

According to Zahra, over time, these attacks on emigration agents were only one part of a wide variety of anti-emigration laws in Europe:

The English Passenger Vessel Act of 1803, initially intended to monitor shipping firms, were gradually expanded to regulate emigration agents, labor brokers, and rooming houses, in order to protect migrants from unscrupulous brokers. Laws passed in France in 1854 and Belgium in 1876 required emigration agents to obtain licenses. The Swiss government was the first to ban advertising for emigration completely. Closer to home, Bohemian authorities banned emigration agencies in the 1850s. Other laws regulating emigration followed in Japan (1896), Germany (1897), Italy (1901), and Hungary (1903). The Hungarian law was the most restrictive to date, and it became a model for legislation across East Central Europe after World War I.

In the Hungarian legislation in question, “Hungarian men were not legally permitted to emigrate after their seventeenth birthday without written permissions from the Defense and Interior Ministries.” The stated purpose of many of these laws was the “protection” of citizens who exposed themselves to potential danger and impoverishment by emigrating. More likely real motivations included 1

Anticipating the American policy of revoking passports of alleged tax delinquents, German states required that emigrants “settle all debts and taxes” before being allowed to leave.2

In some cases, as in Russia, an “emigrant” passport was available only after paying a stiff “fee” and the document was a one-way ticket out of the country. Return was forbidden, and ensured an emigrant was cut off from family ties. It also meant the emigrant risked statelessness if unable to enter the destination country.

The Russian distaste for emigration, of course, brings to mind the years of the Iron Curtain when emigration controls were used across Eastern Europe. Indeed, when modern people think of recent emigration-control efforts, they tend to think of the Berlin Wall and the communist world in general. But these controls weren’t limited to communist countries. The Nationalist Chinese regime in Taiwan was known to use emigration controls up until the 1980s.

Often, these laws were selectively enforced. Emigrants with property were often stripped of their property or simply barred from emigrating. Less desire potential emigrants were allowed, or even encouraged to leave. In multi-national Austria-Hungary, for example, local officials often encouraged minority ethnic groups to leave, in order to solidify the majority of the locally dominant ethnic group. The was sometimes then accompanied by efforts by ethnic nationalists to prevent emigration by members of the locally-dominant ethnic group. Then as now, migration policy, whether involving immigrants or emigrants, was employed with the hop of manipulating demographics.

The American Embrace of Emigration Surveillance and Control

In turning to greater use of emigration controls, the US is embracing ever greater control of its domestic population and its resources. Such oversight of US citizens, however, was almost completely unknown in the nineteenth century. As McElroy notes:

passports were not mandatory [in the United States] except for a period during the American Civil War (1861–1865) and during World War I (1914–1918). The latter can be seen as the beginning of the current American passport. On December 15, 1915, President Woodrow Wilson issued Executive Order No. 2285, “[r]equiring American citizens traveling abroad to procure passports” and advising the “Secretary of State, in co-operation with the Secretary of the Treasury, will make arrangements for the inspection of passports of all persons, American or foreign, leaving this country.”

Passport law varied between permissive and restrictive until World War II, after which passport mandates became nearly universal. As is so often the case, the state uses war and foreign policy interests as excuses to crack down on domestic freedoms.

Nor did taxation of non-citizens exist until the twentieth century with the advent of the income tax. There had been efforts to tax all emigrating American citizens indefinitely before this. But it was only after the passage of the sixteenth amendment, and the Supreme Court’s ruling in Cook v Tait, that taxation of American emigrants became well-established in American law.

During the Cold War, politicians were often keen on comparing the United States to the Soviet Union and pointing out how many freedoms Americans enjoyed compared to the Soviet. Free emigration was one of the freedoms.

In the United States of 2018, though, you’re only free to leave if the IRS says so — and as long as you keep paying taxes to the US government indefinitely, no matter where you are. Many of the anti-emigration laws of nineteenth-century Europe looks positively enlightened in comparison.

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