Politics

Trump Should abolish citizen-based taxation

Donald Trump and his administration should move to abolish America’s long-standing and highly controversial citizen-based taxation (CBT) policy, affirms the boss of one of the world’s largest independent financial services organizations.

The founder and CEO of deVere Group, Nigel Green, is speaking out as Republicans move forward with an overhaul of the tax system.

citizen-based taxation cbt policy
27707 / Pixabay

Mr Green comments: “Trump claims he wants to overhaul the tax system of the U.S. If he is true to his word on this, he should move to abolish America’s long-standing and highly controversial citizen-based taxation (CBT) policy. Now is the time to act.”

He continues: “The U.S. shares the dubious ‘honor’ of being the only country in the world, apart from the tiny east African country of Eritrea to tax its citizens on the basis of their citizenship. Yes, Eritrea, a war-torn nation under dictatorship which declared independence from Ethiopia in 1991 after a sustained and bloody civil war, and the United States are the only nations on earth to have citizenship-based taxation.

“The U.S. can implement its tax regime anywhere in the world. Indeed, the government uses threats of imprisonment and enormous fines for not correctly filing a huge amount of complex forms – even if no taxes are due or have ever been due.”

“Given the enormous global reach and the stiff penalties, it is hardly surprising that many of the estimated 8 million U.S. citizens (and ‘Accidental Americans’, where one parent’s place of birth happens to be the U.S.) living outside America are now increasingly calling for CBT to be scrapped in favour of standard residence-based taxation.”

He goes on to add: “President Trump should now make good on his promise that he will be “president for all Americans” including “the forgotten men and women of our country” who “will be forgotten no longer” by abandoning this achingly un-American policy once and for all.

“Americans live under one of the worst tax systems in the entire world. And it’s now time that the President should recognise the embarrassment of this draconian regime and join the rest of the civilised world, which has long acknowledged that residence and/or territoriality are the only criteria upon which a fair income tax system should be founded.

“The American tax policy is not the global norm. And there’s a reason for this: it is fundamentally unjust to tax people for their national identity alone.”

The deVere Group CEO concludes: “It is beyond the time that America releases her citizens from the CBT shackles and implements a new, modern fairer tax system so that all U.S. citizens can enjoy the same freedoms and prosperity as everyone else in the world.”

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  • http://www.citizenshipsolutions.ca/ John Richardson

    The message should be: The USA should NOT imposes taxation on the residents of other nations (people who do not live in the USA).

    It’s hard to frame the discussion in terms of “citizenship-based taxation”. Unless you already live outside the USA, it’s hard to understand the difference between a “citizen” and a “resident”. Nowhere was this more apparent than Representative Connolly’s statement at the April 26, 2017 FATCA hearings when he said:

    “CONNOLLY: […]
    While acknowledging there are problems with the act and with its implementation, the United States taxes the foreign income of its citizens.
    And we’re not alone. Most countries with income taxes do the same. Citizens pay taxes on all the income they earn regardless of where they earned it.”

    Mr. Connolly’s statement is false. Only the USA (and Eritrea sort of) imposes taxation on non-resident citizens. He is clearly confusing WHAT income is taxed (worldwide taxation) with WHO should be subject to taxation (only residents of the USA or U.S. citizens living in and subject to the tax jurisdiction of other countries).

    The message should be: “Stop taxing the residents of other countries on income earned in those countries!”

  • DoubleTaxed

    JFK famously said in Berlin ‘we don’t need to build walls to keep our people in.’ Fast forward to the present day, and the US has done precisely that with its compliance and tax laws assuming all US persons live in the US (even the ~9 million who live overseas), with extra penalties restrictions and disincentives for money, accounts, and investments in countries other than the US; even if you live permanently overseas and this money, earned income, accounts, and investments, are local to you.

    In an increasingly global and mobile world the US should not punish US persons living, working overseas, and expanding US influence and trade overseas. This is in complete contrast to all other OECD nations, thus disadvantaging those with US Citizenship.

    While Trump has not mentioned “FATCA” or “territorial” or “residence based” taxation in regards for individuals overseas U.S. persons do hope that the new administration will address and alleviate the following situation of U.S. persons tax resident abroad:

    Double Taxation (county of residence plus US tax via tax treaty gaps).

    Without Representation (would never have agreed to it all).

    Without US Government Services (that US resident US persons may receive).

    Without a Care By The US Government For One’s Well Being (only about stick and compliance).

    With Unfathomable Compliance (obligation to overlay the 74,000+ page US tax code on top of the tax code of one’s country of residence – with inevitable tax treaty gaps through which double taxation flows through).

    With Excessive Compliance Cost (see above – it all requires highly specialized assistance and can’t be done with TurboTax, and you don’t use that because of the potentially bankrupting penalties (that US residents do not face for their everyday accounts in the US if not done right).

    With Excessive Compliance Penalties (The U.S. tax rules punish accounts and investments that are foreign to the USA. The compliance penalties for not reporting accounts right could be bankrupting even if no US taxes are owed).

    It is all un-American, has nothing to do with ‘liberty and justice for all”, it is unfair, and wrong!

    Any US persons living overseas caught up in this must visit the message boards of The Isaac Brock Society , Facebook Citizenship Based Taxation and American Expatriates Groups, citizenshiptaxation dot ca and FixTheTaxTreaty dot org.

    The US should join the OECD and adopt Residence Based Taxation.To align the terminology in Congress in regards to tax reform for U.S. companies and U.S. persons, Republicans Overseas is advocating for “territorial taxation” for U.S. persons overseas. Those impacted are hoping this translates to the equivalent of residence based taxation.