I'm hoping I'm not repeating anything here as apparently there are three comments already but I can only see the bot!

In brief, this is one of the many examples of the dysfunctionality of the Nazi regime. From the moment the Nazis gained power in 1933, Jews were leaving the country in their droves to the point 10% had left in a few months. At this stage, it was something the Nazis were quite happy with and even signed a deal with Zionists in Palestine to allow their emigration to happen quicker (over half of 1933 emigrations were sponsored this way).

The year in which the passports are confiscated, 1938, is a watershed moment in a huge number of ways. Firstly, the Kristallnacht is such a horrendous attack on Jewish communities it further increases their desire to leave as soon as possible. At the same time however, there are demands that Jews need to pay 1 billion marks as "communal punishment". This is a completely random number but one which strips many families of their savings. Prior to this, Walther Funk (in the Economic Affairs Ministry) had already collected 2 million marks in stolen goods from Jewish families. It was very costly to emigrate and now very few Jews had the means to do it.

Additionally, Jewish men were now been imprisoned in the camps meaning it was up to women to apply for visas and received accreditation from the local police force. That is a life-changing shift from the paternalistic family and not an easy thing to do. Under the Nuremberg Laws, Jews are not citizens yet are given Reich passports up until this point to get them out of the country, it is horrendously inconsistent. Some 40,000 Jews end up in Shanghai because it was the one place in the world where a visa wasn't needed.

German Jews are stripped of their passports in October 1938. Ian Kershaw makes a very good observation that the yellow star was introduced a month prior to that and was deemed as insufficient by the most radical elements of the Nazi hierarchy. It is likely that the removal of passports was a shortsighted attempt at appeasing this group. In the same month, Heydrich was lobbying Hitler for forced deportation who initially disagreed but supported it following Stalin's deportation of Volga Germans.

Just to highlight the dysfunctionality further, at the same time in Austria Eichmann is leading the Central Office for Jewish Emigration and it is working well for him by hitting the numbers which Goebbels failed to do (so well in fact, another office is opened in Prague). To keep that emigration flowing, Jews who have been arrested were promised freedom if they agreed to accept a visa and leave. While Jews in Germany are finding it virtually impossible to leave, Austria is a completely different story.

I should probably add on top of this internal mess of confusion, other countries did not help the Jew's plight. Australia rejected all Jewish immigration to save itself from "a racial problem" while the Swiss often returned Jews to German authorities after demanding their passports should be stamped with a red "J". Jews who were Polish in origin had their citizenship rescinded following emigration to Germany so were in effect stateless and unable to cross the border.

Ultimately, the power politics of the Nazi elite combined with short term demands to try and make life for Jews as difficult as possible left them penniless, trapped, and in some cases stateless. The contradiction was not intentional but inevitable when the desire to inflict so much pain on their livelihoods and existence made the process of leaving a tremendously difficult undertaking.