[Congressional Record Volume 142, Number 141 (Thursday, October 3, 1996)]
[Senate]
[Page S12297]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             EXPATRIATION PROVISION OF THE IMMIGRATION BILL

  Mr. MOYNIHAN. Mr. President, the immigration bill signed into law on 
September 30 includes the following provision:

     SEC. 352. EXCLUSION OF FORMER CITIZENS WHO RENOUNCED 
                   CITIZENSHIP TO AVOID UNITED STATES TAXATION

       (E) Former Citizens Who Renounced Citizenship to Avoid 
     Taxation.--Any alien who is a former citizen of the United 
     States who officially renounces United States citizenship and 
     who is determined by the Attorney General to have renounced 
     United States citizenship for the purpose of avoiding 
     taxation by the United States is excludable.

  The wording of the statute is embarrassing. How can an alien renounce 
U.S. citizenship? In what capacity would said alien do so officially? 
One assumes that a court of law would find the language incoherent and 
unenforceable. Still, the intention is clear and needs to be addressed.
  This is the way we legislate at 5 o'clock in the morning 4 days 
before adjournment. One wonders how many other similar items ended up 
in the continuing resolution passed by the Senate less than 6 hours 
before the end of the fiscal year.
  The provision imposes an extraordinary penalty on certain persons who 
exercise the legal prerogative of expatriation: permanent exile from 
the United States. Wealthy individuals who renounce their American 
citizenship to avoid U.S. taxation--expatriates, as they are called--
have now been added to the list of terrorists, convicted criminals, 
persons with communicable diseases, and others who are by statute 
deemed unworthy of admission to the United States.
  It occurs infrequently, but expatriation to avoid taxes is even so a 
genuine abuse. By renouncing their U.S. citizenship, individuals may 
avoid taxes on gains that accrued during the period in which they 
acquired their wealth--and while they were afforded the benefits and 
protections of U.S. citizenship.
  This issue was considered by the Finance Committee early in the 104th 
Congress. In March 1995, a measure to address the problem was included 
in Senate legislation to restore the health insurance deduction for the 
self-employed. Prior to the House-Senate conference, however, concerns 
were raised about whether the expatriation provision comported with 
article 12 of the International Covenant on Civil and Political Rights, 
which states: ``Everyone shall be free to leave any country, including 
his own.'' The United States is a party to this treaty, and it is 
accordingly law. We consulted a number of scholars, but there was no 
immediate consensus on the matter.
  Because of the urgency of the underlying legislation, which had to be 
enacted before the April 17th tax return filing deadline, the conferees 
chose to drop the expatriation provision so that the questions of 
international law could be studied. That decision by the conferees was 
met with criticism in the Senate. This was surprising, since I 
believed--and I said on the Senate floor more than once--that it was 
our duty to act with special care when dealing with the rights of 
persons who are despised.
  The issues of international law were later resolved, and on April 6, 
1995, I introduced S. 700, the first Senate bill to tax expatriates on 
gains accrued prior to expatriation. Subsequently, Chairman Archer 
introduced a bill that did not follow the accrued gains approach, but 
instead built on current law. In my view and that of the Treasury 
Department and most other tax experts, the House bill will not 
effectively deter tax-motivated expatriation. However, the Joint 
Committee on Taxation estimated that the House bill raised more 
revenue, and it was included as an offset in the recently enacted 
Health Insurance Portability and Accountability Act of 1996.
  Now, having failed to adopt the preferable--in my view--Senate 
expatriation measure, we have compounded our error by enacting an ill-
advised provision to punish tax-motivated expatriates by banishing them 
from the land.
  The appropriate response to exploitation of a loophole in the Tax 
Code is to close the loophole. Just 6 months ago, the Deputy Attorney 
General of the United States agreed. On March 13, 1996, Deputy Attorney 
General Jamie S. Gorelick wrote to House Speaker Gingrich in opposition 
to the provision. She wrote:

       The Administration believes that tax issues should be 
     addressed within the context of the Internal Revenue Code, 
     and that it would be inappropriate to use the [Immigration 
     and Naturalization Act] to attempt to deter tax-motivated 
     expatriation.

  A short while later, however, the administration reversed its 
position. On May 31, 1996, Ms. Gorelick wrote another letter in support 
of the provision. I ask unanimous consent that excerpts of both letters 
be printed in the Record.
  Mr. President, we were unable in this Congress to secure needed 
changes in the tax laws to resolve, again in my view, the expatriation 
problem. We ought to have enacted S. 700. Instead, we have enacted a 
measure that does not reflect well on a free society. I do hope we will 
reconsider this matter early in the 105th Congress.
  There being no objection, the excerpts were ordered to be printed in 
the Record, as follows:

                                                     Office of the


                                      Deputy Attorney General,

                                   Washington, DC, March 13, 1996.
     Hon. Newt Gingrich,
     Speaker, House of Representatives,
     Washington, DC.
       Dear Speaker Gingrich: This letter presents the views of 
     the Administration concerning H.R. 2202, the ``Immigration in 
     the National Interest Act of 1995,'' as reported by the 
     Committee on the Judiciary on October 24, 1995.

[[Page 12298]]

       Many of the provisions in H.R. 2202 advance the 
     Administration's four-part strategy to control illegal 
     immigration. This strategy calls for regaining control of our 
     borders; removing the job magnet through worksite 
     enforcement; aggressively pursuing the removal of criminal 
     aliens and other illegal aliens; and securing from Congress 
     the resources to assist states with the costs of illegal 
     immigration that are a result of failed enforcement policies 
     of the past. The Administration's legislative proposal to 
     advance that strategy is H.R. 1929, the ``Immigration 
     Enforcement Improvements Act of 1995,'' introduced by 
     Representative Howard Berman on June 27, 1995.
       The Administration endorses a framework of legal 
     immigration reform that respects our immigration tradition 
     while achieving a moderate reduction in overall admission 
     numbers to promote economic opportunities for all Americans. 
     The Administration seeks legal immigration reform that 
     promotes family reunification, protects U.S. workers from 
     unfair competition while providing employers with appropriate 
     access to international labor markets to promote our global 
     competitiveness, and promotes naturalization to encourage 
     full participation in the national community.
       While the Administration strongly supports reform of the 
     current immigration law that affects both illegal and legal 
     immigration, and H.R. 2202 contains many provisions that are 
     similar or identical to the Administration's legislative 
     proposal, enforcement initiatives, and overall strategy, H.R. 
     2202 raises serious concerns in specific areas that we hope 
     the House of Representatives will examine thoroughly. The 
     Administration's concerns include, but are not limited to the 
     following:

                           *   *   *   *   *

       Section 301(e) amends section 212 (a)(10) of the INA, as 
     redesignated by this bill, by adding a new subparagraph which 
     makes inadmissible any alien, who is a former citizen and who 
     the Attorney General determines has officially renounced his 
     citizenship for purposes of avoiding taxation by the United 
     States.
       The Administration has proposed changes in the Internal 
     Revenue Code to remove incentives that encourage certain U.S. 
     citizens to avoid U.S. taxes by renouncing U.S. citizenship. 
     The Administration approach has been passed by the Senate 
     twice and is being considered in the ongoing balanced budget 
     negotiations. The Administration believes that tax issues 
     should be addressed within the context of the Internal 
     Revenue Code, and that it would be inappropriate to use the 
     INA to attempt to deter taxmotivated expatriation.

                           *   *   *   *   *

           Sincerely,
                                                Jamie S. Gorelick,
     Deputy Attorney General.
                                                                    ____

                                                     Office of the


                                      Deputy Attorney General,

                                     Washington, DC, May 31, 1996.
     Hon. Lamar Smith,
     Chairman, Subcommittee on Immigration and Claims, Committee 
         on the Judiciary, House of Representatives, Washington, 
         DC.
       Dear Mr. Chairman: This letter presents the views of the 
     Administration on H.R. 2202, the ``Immigration Control and 
     Financial Responsibility Act of 1996''. The Administration is 
     reversing decades of neglect in controlling illegal 
     immigration. Many of the provisions in both the House and 
     Senate bills would ratify the Administration's efforts in the 
     field to combat illegal immigration. The administration's 
     four-part strategy calls for regaining control of our 
     borders; protecting U.S. workers through worksite 
     enforcement; aggressively removing criminal and other 
     deportable aliens; and obtaining the resources that are 
     necessary to make the strategy work. Both the House and 
     Senate bills contain many provisions that support the 
     Administration's enforcement initiatives and are based on or 
     similar to the Administration's legislative and budget 
     proposals.
       We look forward to working with the conference committee to 
     craft a strong, fair, and effective immigration bill. 
     However, H.R. 2202 raises serious concerns in specific areas 
     that we hope the conference committee will examine 
     thoroughly. In addition, a number of amendments to the 
     Immigration and Nationality Act (INA) made by the 
     Antiterrorism and Effective Death Penalty Act of 1996, Pub. 
     L. 104-132, present substantial obstacles to the effective 
     enforcement of the immigration laws. The conference committee 
     has an opportunity to remedy some of those problems with a 
     careful and more comprehensive approach to amending the INA. 
     The Administration's views include, but are not limited to 
     the following:

                           *   *   *   *   *

       We strongly recommend adoption of the House provisions 
     contained in sections 301 (except 301(c) and (f)), 303, 304, 
     305, 307, 308, and 309. However, an amendment must be made to 
     strike section 241(d) (added by the AEDPA) which provides 
     that aliens ``found in'' the United States without having 
     been inspected and admitted are inadmissible. This language 
     is problematic, will lead to litigation; and is inconsistent 
     with the House immigration bill. In addition, there is no 
     waiver provision for inadmissibility under the newly-created 
     section 212(a)(9), even for immediate relatives of U.S. 
     citizens. We strongly recommend the inclusion of a 
     discretionary waiver of inadmissibility.

                           *   *   *   *   *

           Sincerely,
                                                Jamie S. Gorelick,
                                          Deputy Attorney General.
  The PRESIDING OFFICER. The Senator from Virginia.

                          ____________________