A fair tax code fails if the largest fortunes can route around it. The Accord closes the conversion games that turn labor into capital gains, income into unrealized appreciation, a sale into a tax-free "swap," inheritance into tax-free basis step-up, philanthropy into donor-controlled tax avoidance, and gifts into estate-tax escape.
The exit tax (38% on net worth above $10M exemption + realization of accrued gains) prices the patriarch's expatriation. It does not, by itself, price the generational round-trip. A family that expatriates the patriarch — paying the exit tax on then-current assets — can hold those assets abroad through one or two generations of growth in low-tax jurisdictions, and send heirs back to the US to deploy the now-grown wealth. The original expatriation paid the toll; the heir's later re-entry, with sheltered intergenerational growth, today pays nothing.
The route is structural: it requires only that the family be willing to live abroad for a generation. At very high net worth, that opportunity cost is small relative to the tax savings.
The Generational Repatriation Tax is a US-side excise levied when a returning heir re-establishes US tax residence and the heir's wealth derives in part from a patriarch who previously expatriated. The excise prices the foreign-sheltered growth between expatriation and return — the period during which US-source institutional infrastructure (deepest capital markets, contract enforcement, NIH/DARPA research stack, dollar reserve currency) was inaccessible to the family but available again at the moment of return.
Reach: two heir generations from the original expatriation, parallel to the wealth-and-estate heir-extension architecture (HARO statute reach: life of holder + two generations of heirs). Calibration: rate set against the foreign-sheltered growth, not the inherited principal — the patriarch's exit tax already priced the principal at departure.
Heirs of patriarchs who expatriated under the exit-tax regime, when those heirs re-establish US tax residence within the two-generation reach. The architecture targets the specific multi-generational tax-avoidance pattern, not casual returnees or families with no expatriated patriarch. Most international families face no exposure.
Heirs whose patriarch never expatriated. Heirs returning beyond the two-generation reach. Heirs whose foreign-sheltered growth is below the de minimis threshold. The architecture does not punish international mobility — it prices the specific arbitrage where expatriation served as a tax-planning waypoint.
Pending canonical scoring.
Modest direct revenue. Primary effect is closing the rate-arbitrage incentive that today makes generational expatriation a viable estate-planning route at the largest fortunes. As the round-trip pays roughly what staying would have paid, the planning math no longer favors the multi-generational departure.
See tax ladder · fiscal scoring
- One-generation skip
- Heir returning within first generation pays the repatriation excise on the foreign-sheltered growth period.
- Two-generation skip
- Reach extends to grandchildren of the original expatriate. Beyond two generations, the architecture's reach ends.
- Naturalization-then-return
- Heirs born abroad to expatriated parents who later naturalize and re-enter face the same trigger as ordinary heirs.
- Citizenship gymnastics
- The trigger is US tax residence, not citizenship. Renouncing-and-re-acquiring citizenship does not avoid the residence test.
The expatriate-then-return-the-heirs route closes through reach-extension to heirs.
- Exit tax
- 38% exit tax + accrued-gain realization prices the patriarch's departure. Generational Repatriation prices the round-trip on the heir's return.
- Estate-tax prepayment
- Wealth-and-estate heir-extension reaches two generations for undeclared assets. Generational Repatriation reaches two generations for the expatriation route. Same architectural reach pattern, different avoidance route.
- HARO statute
- Whistleblower bounty applies to undisclosed expatriation-then-return arrangements.