April 18, 2012

Madrid, Spain

The U.S. Passport Act of 1926 is an obscure piece of legislation that was enacted decades ago when the idea of passports started catching fire around the world.

Subsequently absorbed into U.S. Code Title 22, the law was originally intended to authorize and issue passports for . .citizens to travel abroad.

Several years ago, the law was modified to provide the Secretary of State with the authority to revoke or deny a passport to any U.S. citizen convicted of engaging in immoral acts with minors overseas.

Until now, this has been the only instance of excluding a U.S. citizen from travel abroad. But if Senator Barbara Boxer gets her way, there’s going to be one more.

As part of Senate Bill 1813 (known as MAP-21), Congress has inserted language that would oblige the Secretary of State to revoke or deny a passport to any U.S. citizen who the IRS Commissioner deems as having "seriously delinquent tax debt."

For the purposes of MAP-21, "seriously delinquent tax debt" is defined as an amount in excess of $50,000 in which a notice of lien or levy has been filed in public records.

Bear in mind, this is strictly an administrative procedure; there is no due process. By comparison, even pedophiles go in front of a judge before losing their passports.

Something is wrong with this picture.

News of the 1676-page bill has broken across mainstream media outlets. Forbes, Fox Business, the Atlantic, BusinessWeek … everyone is reporting on this now.

So far, though, no one in Washington has shown any intention of backing down.

I’ve taken the time to actually read the entire bill myself … I wanted to ensure that I understood it fully before telling you about it. And believe it or not, there are even dumber provisions within.

For starters, in what may be one of the most depraved Big Brother moves on record, section 31406 of the bill makes it mandatory for "black box" event recorders to be installed in every new passenger vehicle starting with model year 2015.

Section 31504 requires the development of special alarm systems designed to remind drivers that there are other passengers in the vehicle. Duh.

Then there are provisions for more taxpayer funding to subsidize the massively loss-making Amtrak … plus calls to develop more national, regional, and state-owned railways across the country.

Perhaps most important, though, is Title II of the bill – "Stop Taxhaven Abuse."

Long story short, if the U.S. government decides in its sole discretion that a foreign jurisdiction is impeding tax enforcement, Uncle Sam can shut them out of the U.S. financial system, no questions asked.

It’s just another measure to turn foreign banks into unpaid spies of the federal government … and limit financial freedom for U.S. citizens.

This is a bully move, plain and simple. Most of the global financial system depends on U.S. banks for correspondent accounts. When you wire money from Cambodia to Brazil, for example, the funds pass through New York.

But these kill switch provisions are actually on very shaky legal ground. As several banker and attorney friends of mine in popular offshore jurisdictions like Panama and Labuan have told me, the new bill violates a host of trade agreements.

Moreover, it may prove to be the final nail in the coffin for U.S. dominance in global banking … it’s almost as if Congress is daring the international community to come up with a better alternative.

As China opens its currency and economy more and more each day, it seems painfully obvious that a new solution is coming soon.

Meanwhile, U.S. citizens would do well to start focusing on taking action while the window is still open. This involves seeking a second passport (lest you have yours revoked), moving gold out of the country, and establishing a foreign bank account.

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