Month: February 2011

The right of expatriation

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Thanks to a reader comment I was able to find an excellent resource for expatriating from the United States:  http://renunciationguide.com .  The website is by US expatriates who wish to extend the wisdom of their experience to others who are contemplating the voluntary loss of their US citizenship.  In addition, they provided some interesting research on the history of expatriation in the United States.

According to renunciationguide.com, the United States is only one of two countries that requires not only residents but citizens living abroad to pay income taxes.  The only other country is Eritrea, which has made it a practice to harass loved ones in your country until you pay up.  The authors write:

Interestingly, a Canadian court in Toronto ruled in 2007 that the imposition of the 2% tax on its citizens abroad was illegal and that a dual Canadian-Eritrean citizen should be paid back the money he had given.

So in becoming a Canadian citizen on Monday, I will also hope that the Canadian government would protect me, if necessary, from the tax regime of the IRS, which may attempt to tax my Canadian sources of income, and if I were to die, to tax my inheritance in such a way as would strip my wife’s rights as a Canadian citizen to inherit her husband’s property (nearly all my assets are Canadian based).

Renunicationguide.com, however, asks the question if there is a right of expatriation in the US Constitution:  “It’s not there. And it’s not in the Declaration of Independence, either.”  Now here I have to differ.  Consider these lines:

When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

So begins the Declaration of Independence.  Now in asserting the right of the people of the 13 colonies to expatriate from England, the Declaration of Independence sets an important precedent that makes it clear that liberty is a God-given right and that to be able to loose oneself from the shackles of government which constrict that liberty is the right of the people.  It is therefore not explicitly stated, but the precedent of declaring independence from the King of England would justify any individual who in the course of seeking life, liberty and the pursuit of happiness wished to be released from obligation to his native country; everyone has that right, given to him not by the Congress nor by the country of his choosing, but by the Creator Himself.

Thus, the right of expatriation, while not explicitly argued for by the founding documents of the US, is nevertheless a premise enshrined in the Declaration of the Independence.

Renunciation of US citizenship: On avoiding the new $450 renunciation fee (update 2)

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UPDATE:  Please note that my belief in this post, that by indicating that I’d relinquished my US citizenship by becoming a Canadian citizen, I could avoid the $450 renunciation fee panned out, and I received the CLN without paying).

I’ve been pretty upset that it would cost me $450 to renounce my citizenship now that the US consulate in Toronto has instituted a fee.  But today I was looking at the various government websites:  Consider this website from the US state department and its explanation of how to renounce US citizenship:

Section 349(a) of the Immigration and Nationality Act (8 U.S.C. 1481) governs how a U.S. citizen shall lose U.S. nationality. Section 349(a) states:

A person who is a national of the United States whether, by birth or naturalization, shall lose his nationality by voluntarily performing any of the following acts with the intention of relinquishing United States nationality:(5) making a formal renunciation of nationality before a diplomatic or consular officer of the United States in a foreign state, in such form as may be prescribed by the Secretary of State; or(6) making in the United States a formal written renunciation of nationality in such form as may be prescribed by, and before such officer as may be designated by, the Attorney General, whenever the United States shall be in a state of war and the Attorney General shall approve such renunciation as not contrary to the interests of national defense.

Now perhaps it would interest readers to know that this government website is not telling the whole story: The U.S.C. 1481 lists several other ways that a natural born US citizen may lose their citizenship. Here is the full text (emphasis mine):

§ 1481. Loss of nationality by native-born or naturalized citizen; voluntary action; burden of proof; presumptions

(a) A person who is a national of the United States whether by birth or naturalization, shall lose his nationality by voluntarily performing any of the following acts with the intention of relinquishing United States nationality—

(1) obtaining naturalization in a foreign state upon his own application or upon an application filed by a duly authorized agent, after having attained the age of eighteen years; or
(2) taking an oath or making an affirmation or other formal declaration of allegiance to a foreign state or a political subdivision thereof, after having attained the age of eighteen years; or
(3) entering, or serving in, the armed forces of a foreign state if

(A) such armed forces are engaged in hostilities against the United States, or
(B) such persons serve as a commissioned or non-commissioned officer; or
(4)

(A) accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years if he has or acquires the nationality of such foreign state; or
(B) accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years for which office, post, or employment an oath, affirmation, or declaration of allegiance is required; or
(5) making a formal renunciation of nationality before a diplomatic or consular officer of the United States in a foreign state, in such form as may be prescribed by the Secretary of State; or
(6) making in the United States a formal written renunciation of nationality in such form as may be prescribed by, and before such officer as may be designated by, the Attorney General, whenever the United States shall be in a state of war and the Attorney General shall approve such renunciation as not contrary to the interests of national defense; or
(7) committing any act of treason against, or attempting by force to overthrow, or bearing arms against, the United States, violating or conspiring to violate any of the provisions of section 2383 of title 18, or willfully performing any act in violation of section 2385 of title 18, or violating section 2384 of title 18 by engaging in a conspiracy to overthrow, put down, or to destroy by force the Government of the United States, or to levy war against them, if and when he is convicted thereof by a court martial or by a court of competent jurisdiction.
(b) Whenever the loss of United States nationality is put in issue in any action or proceeding commenced on or after September 26, 1961 under, or by virtue of, the provisions of this chapter or any other Act, the burden shall be upon the person or party claiming that such loss occurred, to establish such claim by a preponderance of the evidence. Any person who commits or performs, or who has committed or performed, any act of expatriation under the provisions of this chapter or any other Act shall be presumed to have done so voluntarily, but such presumption may be rebutted upon a showing, by a preponderance of the evidence, that the act or acts committed or performed were not done voluntarily.
On Monday, February 28, 2010, I will complete the naturalization process of applying for Canadian citizenship, having attained 18 years of age.  I did this application with the intention of relinquishing my US citizenship. I will then take the following oath of allegiance to the Queen Elizabeth and her heirs:
I swear or affirm that I will be faithful and bear true allegiance to her Majesty Queen of Elizabeth the Second, Queen of Canada, Her Heirs and Successors, and that I will faithfully observe the laws of Canada and fulfill my duties a Canadian Citizen.
I will therefore have committed the first two acts listed of a possible seven which make it clear that I am no longer an American citizen.  No oath before a consular authority is necessary according to the current statute.  As evidence of this act, I will create a video tape before swearing that my intention in taking the oath of Canadian citizenship is to relinquish my American citizenship.
UPDATE 1:  the following website deals with this manner of relinquishing citizenship and says that the presumption is that the person taking on citizenship in another country is not doing so to relinquish his US citizenship.  However, there is a procedure to indicate to the State Department, as in my case, the intention is to lose citizenship:
An individual who has performed any of the acts made potentially expatriating by statute who wishes to lose U.S. citizenship may do so by affirming in writing to a U.S. consular officer that the act was performed with an intent to relinquish U.S. citizenship. Of course, a person always has the option of seeking to formally renounce U.S. citizenship abroad in accordance with Section 349 (a) (5) INA.
This website thus verifies that the act of taking the oath of citizenship in Canada, if done with the intent of relinquishing US citizenship, counts as one of the seven ways of losing one’s US citizenship according to USC 1481.
Update 2:  Today a consular officer called me from the US consulate in Toronto.  She confirmed what I’ve said in this post, that relinquishing US citizenship and renouncing US citizenship are two different processes that are treated in a different manner by the consulate (including the fee structure).

Headlines that make laugh: Discerning the agenda behind the headline

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I have started this  series of post, “Headlines that make laugh” to discuss how one might determine the quality of financial news, its biases and whether its judgments are based on anything like expertise or knowledge.  The questions I ask when I read the financial news are:

(1) How does the writer know or what is the basis of the claims that he makes?  Is he an expert?

(2) What are the writers biases?  Does he have an ax to grind?  Is he promoting a false narrative? (Such as” Obama saved Egypt from the tyrant Mubarek”)

Let’s consider this headline about Petrobakken which I follow because I own shares:

The headline focuses on a negative point and the Thomson Reuter’s article begins:  “Canada’s PetroBakken Energy Ltd said fourth-quarter production fell 9 percent due to operational delays and natural production declines from wells.”  Now this is interesting.  It is a negative headline, and one would assume that the author doesn’t like Petrobakken and he wants to see the shares plummet.  Perhaps his real agenda is a hatred of the Canadian oil industry, so he wants to bad mouth it.  Or perhaps, because the author of the Thomson Reuters article is the world’s export on petroleum companies, he’s decided to highlight the press release’s most salient point, cutting through all the crap in the report which was full of bewildering statistics, numbers and assertions.  So we really must congratulate Thomson Reuters for having such perceptive writers!

Many other headlines that I read focussed on something a teensy bit more positive (e.g., Marketwire):  “PetroBakken Replaces 274% of Production and Increases Reserves by 18% in 2010”, but of course, this headline is coming straight from the company press release, so this is the “propoganda” that the company wants to present, spinning bad news into good.  Or perhaps, the press release focuses on the 274% production replacement and 18% reserve, because these are the really important numbers which affect the long term prospects of the company.

Who knows?  In any case, the two headlines have two different effects on the reader:  One is intended to be decidedly negative with the intent of forcing the share price down; the other is decidedly positive whose authors hope to give the share price a boost.  The DIY investor must never discount bias in the sources of information at his disposal.  Many would say it is necessary to read between the lines of press releases and of course this is true.  But I wouldn’t put it past Thomson Reuters to attempt through their headlines to hurt the evil Canadian oil industry—what with their carbon footprint and oil sands which is “dirty oil”.  See what I mean?

The New Berlin Wall II : New fee for those wishing to renounce US citizenship

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One year ago, I announced that I had applied for Canadian citizenship with intention of renouncing my American citizenship.  I wrote that the US has tried to erect a Berlin Wall to keep American citizens from expatriating:

Since 2008, the US has placed particular restrictions on wealthy people who wish to expatriate.  If I were to own 2 million in assets or if my average net income tax over the last five years were $139,000 , I would be a “covered expatriate” upon renouncing my citizenship.  The law penalizes these individuals with exorbitant expatriation tax that boggles the mind.  Why?  To keep them in the USA.  So it is a Berlin Wall designed to keep people from leaving the US.

Now the US government has piled another bunch of useless rubble against that Berlin Wall.  I read in the US Consulate in Toronto’s website the following (emphasis mine):

Renunciation: We accept applications to renounce U.S. citizenship and forward them to Washington DC for a decision, which takes several months. This process CANNOT be expedited. You may contact us by mail, fax or email to request information and proper forms. Once you are ready to renounce, you must make a special appointment by emailing us … and proposing a date at least two weeks in advance. All renunciation appointments are at 10:30 a.m. We will respond and confirm the date and time of your appointment or propose a new date depending on staff and appointment availability. Note that there is now a US $450 fee to renounce U.S. citizenship, payable at the time the renunciant takes the Oath of Renunciation from the consular officer inside the Consulate.

Well, this is embarrassing isn’t it?  The US prides itself in being the best country in the world, the one where everyone and his brother wants to live.  But now they will just add one more insult to injury to their citizens living overseas: in order to escape the jurisdiction of the US, escaping citizens must pay $450.  Well, from the standpoint of fleeing the greediest government in the world, that will soon become desperate for revenue because of hyperinflation, it’s probably a small price to pay.

In any case, my citizenship application to Canada was accepted, I took the citizenship test Wednesday February 16, and I have been invited to a citizenship ceremony next Monday, on February 28.  I’ll be contacting the US Consulate in Toronto tomorrow.  Au revoir.

Hyperinflation is now here II: Food prices

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Bruce Walker writes today at the American Thinker that food prices are what is going to do in President Obama’s chances in the next election.  One of the signs of hyperinflation is spiraling out of control food prices, and Walker points out that the food commodities are up 27% over the last six months.  I don’t know about you, but a 54% annualized increase in food commodities looks a lot like hyperinflation to me.  I wrote a post in August 2010 that dealt with food prices, which I reproduce here:

August 3, 2010

What’s wrong with inflation? Do you have enough to eat?

Monty Pelerin has a excellent article on inflation this morning.  He maintains that the great temptation for government will be to try to solve the problem of debt and unfunded obligations by inflating it away, and that, since politicians are cowards, they will not make the tough decisions to avoid inflation.  He writes, however, about the consequences of inflation:  “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.”

I believe that the real danger of inflation may lie in the consequences it will  have on the food supply.  Never mind that food shortages have never been a problem in the living memory of most North Americans (unless they are over 75 or immigrated here from a war zone or something).  Today, obesity in developed countries is feared more than starvation.  So I made the following comment on Pelerin’s blog:

I am reading Adam Ferguson, When Money Dies (1975). He tells the story of Frau Eisenmenger, an Austrian who at the end of WWI had sufficient investments to live on and care for her family (31). She went into her bank in 1918 to withdraw some funds and her banker advised her to buy Swiss Francs, but it was illegal to hoard foreign currencies, and so she declined. Eventually, her savings became worthless. Her situation was greatly helped by her daughter working in the “American mission” paid in dollars, renting a room in her apartment to an American, and speculative investments in the Austrian stock market.

I fear that what will happen is similar to Europe in that period, when food was scarce and required a large percentage of income to procure. Eventually, the price of food will sky rocket and so more dollars will be created ex nihilo. Then the farmers will refuse to supply their food to people for worthless dollars and food stamps from the government, and they will have to stop producing–because their costs have to be covered too. Then, we will see shortages like never before. A farmer offered Frau Eisenmenger three month’s provision for her grand piano (33); and an acquaintance of hers sold her own piano for a sack of wheat flour.