I have been blogging on U.S. citizenship-based taxation since 2011. In February of 2012, I wrote the “Prologue” for this series of posts:
That post included the following poll. The results are shocking!
In January of 2013 I began a series of posts to explore the rationale (if there is one) for “citizenship-based taxation”. I simply cannot understand how the United States of America, a country that once was a leader in human rights, can treat it’s citizens (not to mention Green Card holders) so badly. I assume that Congress has simply not considered this issue.
This series of posts (including the Prologue are):
Cook v. Tait Prologue: Citizenship renunciations soaring under Obama – Renunciation as an Act of Self Defense
Cook v. Tait 2: The presumption of government benefit
Cook v. Tait 6: Taxation of Green Card holders who reside outside the U.S.
This post discusses citizenship in the context of the equal protection clause of the 14th amendment of the constitution. I will argue that the equal protection prohibits discrimination against U.S. citizens abroad based on their citizenship.
The idea for this particular post came from the following comment at the Isaac Brock Society.
What follows is a quote from Bernard Schneider’s submission to the Ways and Means Committee:
“Generally, U.S. expatriates are treated like U.S. residents and taxed on their worldwide income. However, U.S. expatriates should be compared not to U.S. residents but to nonresident aliens. But for their citizenship or immigration status, U.S. persons abroad would be treated like nonresident aliens, i.e. generally taxed at a flat rate of thirty percent on U.S. source income that is not effectively connected with a U.S. trade or business and at the regular graduated rates on income that is effectively connected with a U.S. trade or business, including on gain from the sale of real property interests in the United States. In addition, net capital gains would not be taxable unless they are fixed or determinable annual periodic income. Needless to say, the foreign source income of nonresident aliens is not taxed by the United States. In most cases expatriates could engage in the same economic activities in the United States as nonresidents without paying the higher taxes for which residents are liable. The difference between the tax imposed on nonresidents and that imposed on expatriates constitutes part of the “citizenship penalty” paid by U.S. persons abroad.”