As you are undoubtedly aware, I spent last week in the lovely Uruguayan seaside resort town of Punta del Este, where I was MC of our 2016 Offshore Investment Summit. Besides spending time in that lovely country and interacting with dozens of sovereign-minded attendees, I also enjoyed a week with my father, our own Bob Bauman.
As is usually the case, once we’d exhausted family talk, Dad and I got down to our favorite topic: U.S. politics. This year, of course, is the annus horribilis of old-school conservatives like him — a 60-year veteran of the Republican Party. Love him or hate him, everyone knows that the rise of Donald Trump signals the end of an era for the Grand Old Party.
But my dad has a unique ability to connect the dots. He mentioned something that hadn’t occurred to me — something that instantly increased the urgency of our mission to Uruguay…
Most of us are aware that Mr. Trump offers no specifics about his proposed policies. We only know that they will be “great.” Nevertheless, from his overall approach, it’s clear that a Trump administration would be no friend to liberty … especially the offshore variety.
If you have inklings in that direction, a Trump administration might be very bad news for you indeed — making it important to act now before it’s too late.
To understand why, consider that Mr. Trump’s core constituency is made up of disaffected voters who haven’t prospered in the modern era and tend to blame others for this fact. Immigrants, the Mexican government, China and lobbyists (there I agree!) all work tirelessly to undermine “real Americans.” Real Americans, presumably, bear no individual responsibility for their situation. It’s always someone else’s fault.
Dad’s insight was to extrapolate from this mindset to predict what a Trump administration might do in regard to the offshore activities of U.S. citizens. The prospect is horrifying.
For years now, politicians of both parties have used Americans who live, bank and/or invest offshore as punching bags. That’s why we have grotesqueries such as the Foreign Account Tax Compliance Act. Since presumably anyone who is interested in the rest of the world is “un-American,” congressmen and senators can always score a few cheap political points by criticizing us and proposing rules that hurt us.
My dad believes that a Trump administration would seek to resurrect the Ex-Patriot Act — initially introduced by Senator Chuck Schumer (D-NY) in 2012, but never enacted. The act is intended to strengthen INA 212(a)(10)(E) (commonly known as the Reed Amendment), which makes U.S. citizens who voluntarily give up their citizenship permanently inadmissible to the U.S. if the attorney general determines that they did so to avoid taxation.
The Reed Amendment has never been enforced because the attorney general is not a mind-reader and has no way of knowing why people give up their U.S. citizenship. The Ex-Patriot Act would allow the attorney general to presume tax avoidance as the intent if the individual’s net worth at the time of expatriation exceeds certain thresholds.
Déjà Vu All Over Again
It’s easy to envisage a Trump administration supporting the Ex-Patriot Act. If it were law, many people who give up their U.S. citizenship would never be allowed to set foot here again. But why stop there? Congress could strip citizenship from people like me who have second passports, or impose punitive taxes on Americans who obtain permanent residence in other countries, like Panama. After all, there’s a precedent: The Nazi Reichsfluchtsteuer (Reich Flight Tax) of December 8, 1931, imposed taxes of up to 96% on Germans who left the country, even if they kept their German citizenship.
The point is that Trumpism is fundamentally hostile to Americans who choose to operate outside the U.S., seeing us as traitors unworthy of protection just as the Nazis did. There’s no way of knowing how far a Trump-ruled U.S. would go to punish those of us who exercise our natural right to operate globally.
Now, one could react to this in two ways. On one hand, you could avoid offshore activity in fear of future punishment. On the other, you could act now to secure your offshore base before it’s too late. After all, you need a minimum of three years’ permanent residence in a country like Uruguay to obtain citizenship and a passport. You can’t give up your U.S. citizenship until you have another one.
I prefer sovereign action to living in fear. I have a second passport already, and assets offshore, but if I didn’t, I would be making plans right now to obtain both.
Uruguay — bless its radical heart — is the only country on the planet that guarantees in its constitution the right of foreigners to become residents and citizens. You can apply for residence on the day you arrive as a tourist, and stay without restriction for the six to 12 months it takes to get your cedula (national ID). After three years (if you’re married), you can become a citizen. I have no doubt whatsoever that the Uruguayans would make their rules even easier for U.S. citizens if President Trump were in office.
Whether Donald Trump becomes president or not, the trend in the United States is decidedly against those who seek the liberty that natural law grants us. That’s why it is more urgent than ever to explore one’s options in places like Uruguay that are on the opposite path.
After all, the clock is ticking.
Offshore and Asset Protection Editor