Time to bid farewell to citizen-based taxation policy in the U.S.

Grover Norquist, the influential President of Americans for Tax Reform has recently sent a letter to Congressman Kevin Brady, Chairman of the House Ways and Means Committee, endorsingRepublicans Overseas’ Territorial Taxation for Individuals proposal.

This is a move I fully support – as I recently wrote in a column for Newsmax -and I wholeheartedly champion Mr Norquist’s bold stance on this importance issue.

Such support from Mr Norquist is crucial to the ongoing campaign we’re backing to eliminate the highly contentious citizen-based taxation policy.

Indeed, if President Trump stays true to his word, as Republicans are now advancing with an overhaul of the tax system, he must take action and bring down CBT.

Currently, under this policy, the U.S. can execute its tax regime anywhere across the globe. Indeed, they can even use the threat of jail time and massive penalties for incorrect filing. This is the case even if no taxes are outstanding, or have ever been due.

As Mr Norquist states in his letter: “Today, the U.S. is one of the few countries in the world with a system of citizenship-based taxation. This system affects an estimated eight million Americans that live abroad.

“Under this system, American citizens residing abroad must comply with complex IRS rules and are double taxed on income – once when they earn it overseas and again by the U.S. government solely because they are citizens”.

As such, it comes as little surprise that a large number of these Americans (as well as ‘Accidental Americans’, where one parent’s place of birth happens to be the U.S.) living outside the U.S. are urging for CBT to be binned in favour of standard residence-based taxation.

Mr Norquist adds: “Currently, American citizens working overseas face a disadvantage compared to expatriates from other countries, as it is substantially more expensive for a business to hire an American. Implementing residence-based taxation will reduce compliance burdens associated with hiring Americans so that U.S. citizens working overseas are on a more level playing field”.

Indeed, citizen-based taxation is profoundly unjust. Why should people be taxed purely for their national identity?

Therefore, reiterating what Grover Norquist wrote to the Honorable Kevin Brady: “It is vital that any tax reform legislation includes territoriality for individuals. Implementing a system where Americans are taxed based on their residence would make tax compliance far simpler and should be part of the effort simplify the code for individuals”.

Indeed, now’s the time for the U.S. to introduce a modern, fairer tax system to enable all American citizens to enjoy the same freedoms afforded to everyone else.

Click here for my LinkedIn profile and Twitter account.

Your comment

Your email address will not be published. Required fields are marked *

Financial Health Quiz

Discover your financial well-being with the Financial Health Quiz.

In just 2 minutes, assess your finances, get personalized results, and actionable steps – all for free.

Take the quiz

Get the latest from Nigel Green