PREP Podcaster - ”Success Favours The PREPared Mind”

Four Attitudes Of Americans Abroad Toward US Citizen Tax: Ending, Ignoring, Escaping Or Improving

Broadcast on:: 21 Jan 2023

January 20, 2023 - Participants Include:

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This informal discussion was the result of two separate (but contextually related) discussions on social media discussing US citizenship taxation.

First - Keith Redmond's American Expatriates Facebook group. The discussion thread is here:

https://www.facebook.com/groups/AmericanExpatriates/posts/2370830776416314/

Note this thread is discussed until approximately the 30:35 mark.

Second - Discussion on Twitter

https://twitter.com/RonSteenblik/status/1614669507590496259

Note this thread is discussed from approximately the 30:35 mark until the end.

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Interestingly both discussions illuminated the fact that those subject to the US extra-territorial tax regime are clearly impacted in different ways. These differences make it very difficult to unite Americans abroad in a common goal of ending US citizenship taxation.

Generally, those subject the US extra-territorial tax regime fall into one of the following four groups. Each group is characterized by a dominant goal (although there is some overlap):

Ending Citizenship Taxation - This group which is symbolized by SEAT is focussed on ending US citizenship taxation. This means that citizenship is never relevant for the purposes of taxation.

Ignoring Citizenship Taxation - It is clear that there are any individuals who approach the problem of citizenship taxation by simply ignoring it. It is clear that many people who are subject to the citizenship tax regime are simply not "in the US tax system". Typically these are people who have no economic centre of gravity in the United States and have no plans of living in the United States.

Escaping Citizenship Taxation - Members of this group are concerned with solving their specific problem. For example, they would want the Taxation of capital gains on principal residence, PFIC, CFC or Foreign Trust rules changed. Once that issue is solved they believe their problems are solved.

Improving Citizenship Taxation - These individuals are NOT concerned with ending citizenship taxation as a general principle. They are concerned with reforming citizenship taxation in a way that reduces the kinds of non-US source income that is taxable by the United States. But, US citizens abroad would remain US tax residents. An example fo this would be the "Beyer Bill".

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Why should the US entertain a transition from citizenship taxation to residence taxation when Americans abroad are NOT united in the goal of ending citizenship tax?

To put it simply:

Americans abroad have divided and conquered each other!