New Democratic-led legislation aimed at penalizing those who would renounce their U.S. citizenship to dodge taxes has provoked fiery criticism from influential conservatives and is putting Republican leaders in a politically precarious situation.
Inspired by the actions of Eduardo Saverin, the Facebook co-founder who renounced his citizenship ahead of a large tax payment associated with the company’s much-ballyhooed initial public offering, Sens. Chuck Schumer (D-NY) and Bob Casey (D-PA) unveiled a bill Thursday to force such tax-dodgers to pay a 30 percent tax rate on all future U.S. investments and ban them from ever setting foot in the country again.
Anti-tax activist Grover Norquist compared it to the actions of Nazi Germany.
“I think Schumer can probably find the legislation to do this. It existed in Germany in the 1930s and Rhodesia in the ’70s and in South Africa as well,” Norquist said, as quoted by The Hill. “He probably just plagiarized it and translated it from the original German.”
The Wall Street Journal editorial board derided the legislation as “Soviet-style exit taxes” that resemble “what oppressive and demagogic regimes do, and it’s humiliating to see U.S. Senators posture in such fashion.”
The Journal argued that the proposed Ex-PATRIOT Act would turn away the best and the brightest, bashing Schumer and Casey as “a pair of envy specialists” who are trying to “score political points by punishing the fleeing rich.”
Rush Limbaugh lamented, “It’s this whole class envy thing rearing its head again.”
“[The] president’s out there demonizing successful people every day, targeting successful people every day, running a presidential campaign based on class warfare, trying to get the 99% of the country who are not in the top 1% to hate the 1%, to literally despise ‘em,” the radio host told his millions of listeners Friday.
The election-year context is important because tax fairness is a central theme for Democrats. They have fueled the issue by criticizing presumptive GOP presidential nominee Mitt Romney, who is worth hundreds of millions of dollars, for paying a lower tax rate than most middle-class Americans.
The Schumer-Casey legislation is an easy opportunity for Democrats to return to that broad theme and challenge Republicans to oppose punishing wealthy Americans who renounce their citizenship to duck their legal obligations. The intensity of conservative opposition to the senators’ legislation reflects how deep-rooted this belief is on the right.
“Expatriates like Saverin cannot continue to receive the benefits of doing business in the United States without any tax responsibility,” Schumer said upon unveiling the bill. “Citizenship is not for sale. The despicable trend that Saverin exhibits must be stopped dead in its tracks.”
That message has left the nation’s most powerful Republican singing a different tune than the right-wing base he is typically careful not to cross.
“This is absolutely outrageous … that somebody would renounce their citizenship to avoid paying taxes,” House Speaker John Boehner (R-OH) said on ABC’s “This Week” Sunday. The speaker didn’t rule out supporting the Democrats’ bill but pointed out that moves like Saverin’s are “already against the law.”
“I’m not sure it’s necessary,” Boehner said of the so-called Ex-PATRIOT Act. “If it’s necessary, I — sure, I would support it.”
Sahil Kapur is a congressional reporter for TPM. He previously covered politics and public policy for numerous publications including The Guardian and The Huffington Post. He can be reached at sahil [at] talkingpointsmemo.com.