This is Rob Lambert with AssetProtectionTraning.com.
Today's weekly update is something I noticed when I was looking at Senator Schumer's ill-conceived effort, to ban people who have expatriated from returning to the United States.
I reported on that last week and you can watch that video at the link that's underneath this video. That's not why I'm here today, I'm here today because in his interview he dropped some information which falls of mystery that's been bugging all of us tax guys for the last 15 years.
Right before 1996, a guy named Dart expatriated. He basically is the air or owner a dart container. dart container at the time had pretty much monopoly or patent on the foam cups that you drink coffee of, he makes a lot of money he's a billionaire. He went to Belize and acquired a Belizean citizenship, in fact, I actually was looking at a fax machine when his papers came actually in.
It was a long time ago he was one of the first really rich people to eliminate the reach of the Internal Revenue Service over his personal asset. He went to Belize where there's no income tax on him and he now lives in the Caymans where there is no income tax.
Well that irritated the IRS, they enacted 877 and it was a provision designed to prevent people from expatriated. If they do expatriate, tax them for ten years just as if they remained in the United States. The problem is its senseless try to tax people who are no longer within the borders of the United States. They've consciously removed themselves from the jurisdiction of the United States but the IRS wanted attacks them.
They enacted 877 back in the 90s and in 2008, they updated it with something called the HEART ACT, I love this.
Heroes Earnings Assistance and Relief Act.
Give it a good name but picked the purpose of the Act has nothing to do with its name. The HEART ACT basically treats anybody who has expatriate, who has any money basically, two million dollars or 150,000 a year. They're presumed to be expatriated for tax reasons, they could have no money and be presumed to be expatriating for tax reasons. They are penalized, they actually can be prohibited from returning to the United States, that's been in the law since 1996. Senator Schumer is trying to enact a new set of laws to do exactly what an old set of laws should have done.
Well listen, this is the important part. Here you hear the Bloomberg reporter asking Senator Schumer about the old 877 later HEART Amendment - heart app and let's listen to what he says about that.
Bloomberg Reporter: Aren’t there laws on the books already that sort of deal with this issue?
Senator Schumer: There is one law that passed in 1996, but it had no enforcement.
Now isn't that wonderful! we have Senator Schumer admitting that these laws so carefully enacted in the 90s, and so carefully manicured, and amended and publicized and enforced apparently lease lots of regulations. He's admitting there is no enforcement. What does he want to do to correct that? He wants to enact an equally unenforceable law to try to remedy the law that is unenforceable.
I have no understanding of what's going on in these guys minds but that's what's happening. Now, I'm not presenting this to you to encourage you to not pay your taxes, you have to pay your taxes as long as you're a US citizen or resident and you are taxed on your worldwide income from whatever source. Guys that's not always the end of the world, the United States has some of the lowest tax rates of any truly civilized industrialized nation.
Now you can reduce that a lot more by expatriating and there's a lot you can do with or without an Asset Protection Plan to cut your taxes down. This is not the way to enforce a tax code in a tax regimen. People need to know that the laws make sense and they're enforced.
Well, just for fun, let's listen to him say it again and I'll see you next week.
Senator Schumer: As I said about 10,000 people in the last 10 years has renounced their citizenship, not a single one has been penalized.