Cook v. Tait 20: Bernard Schneider: “The End of Taxation Without End: A New Tax Regime for US Expatriates”

I was glad to see that Bernard Schneider’s paper was referred to at one of the Facebook groups frequented by Americans Abroad. Dr. Schneider’s was summarized as follows:

This paper was specifically mentioned by the SFC about two years ago after they received a round of submissions on tax reform (just like the current round). The SFC also mentioned an interest in Canada’s model of Residency Based Taxation.

In his paper, Schneider introduces the Cook vs. Tait (benefits justification) which is the current legal basis for CBT on page 4.

On page 6 Schneider identifies 5 types of expats (short-term, long-term, accidental, citizens by descent and unaware citizens by descent).

On page 52 Schneider begins an in depth discussion (for several pages) about the lack of “benefits” expats receive from the USG. He tears the Cook vs Tait “benefits” argument to pieces where he concludes with, “Thus only short-term expatriates and U.S. government employees and military personnel can be said to have, as a group, the nexus to the United States that justifies including them in the U.S. tax net.”

On page 73 Schneider writes, “In most cases, renunciation is driven not by a desire to escape taxation unjustly, but by the unjust imposition of taxation. U.S. taxation of long-term expatriates and accidental, nominal, and unaware citizens is unjustified; they should not have to renounce their U.S. citizenship in order to escape U.S. tax and reporting burdens….. More fundamentally, the use of citizenship as a jurisdictional basis for taxation of nonresidents is unsound because it distorts and devalues citizenship. Worldwide taxation of, and the ever-increasing compliance burden on, nonresident U.S. citizens constitute a real and increasing citizenship penalty. As the cost of U.S. citizenship rises, and the perceived benefits decrease, many are likely to see the U.S. passport as a passport of inconvenience.”

Schneider’s paper is long, but well worth the read. It provides the tools for overturning Cook vs Tait.…/schneider_wg_comment_2.pdf


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