Will Congress and the President Finally Act in 2015 to Repeal or Modify U.S. Citizenship Based Taxation?

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U.S. citizenship based taxation has been the law since its origins from the U.S. civil war.  See, The U.S. Civil War is the Origin of U.S. Citizenship Based Taxation on Worldwide Income for Persons Living Outside the U.S. ***Does it still make sense?

Throughout most of the last 100+/- years, there has never beeExpatriates US citizens renounced chart through 2014n a repeal of U.S. citizenship based taxation.  Indeed, it is difficult to locate any legislative proposals from years past (if there were any) that proposed such a modification.

However, it is worth noting the following string of events over the last 18 months, which may indicate U.S. citizenship based tax reform could be possible:

  • For the first time, both political parties and the President have identified issues with the current U.S. citizenship based taxation rules which they have proposed to modify;

This is the first time in my career, where both political parties and the President are at least talking about the possibility of tax reform in this area.

There is one key piece of the legislative puzzle missing from the above picture.  The House has not weighed in on a proposal to modify substantially or repeal U.S. citizenship based taxation.  See, former House Ways and Means Committee Chair Camp’s proposal to modify substantially international tax policy and rules (Making America A More Attractive Place To Hire and Invest:  International Tax Reform).  These House proposals do not include U.S. citizenship based taxation reform.  In addition, I am not aware of any Democrats in the House who are pushing such a reform.

Even if there is approval in both the Senate and with the President (as there has been in other major legislative reform proposal, such as immigration), it is entirely possible the House will block any such U.S. citizenship based tax reform.

2 thoughts on “Will Congress and the President Finally Act in 2015 to Repeal or Modify U.S. Citizenship Based Taxation?

    John Hanson said:
    March 8, 2015 at 10:30 am

    What has the president said about CBT? As far as I can tell, he’s in the dark.

    impuestosypatrick responded:
    March 9, 2015 at 3:10 pm

    See, “The President’s Proposal is NOT the Same as Current Law – Section 877A(g)(1)(B)
    POSTED ON FEBRUARY 19, 2015

    Some individuals are mistaken that the Obama proposal to exempt certain U.S. citizens from taxation (including the “mark to market” exit tax), is the same as the exception in IRC Section 877A(g)(1)(B).

    It’s not.”

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