Revisiting the Tax Treatment of Citizens Abroad: Reconciling Principle and Practice

107 Pages Posted: 30 Oct 2013 Last revised: 9 Dec 2014

Date Written: October 28, 2013


In an increasingly mobile world, the taxation of citizens living abroad has taken on increased importance. Recent international administrative developments — most notably, the weakening of foreign bank secrecy and expansion of global information sharing norms — have further raised the profile of this issue. While U.S. law traditionally has taxed U.S. citizens living abroad in the same general manner as citizens living in the United States, a number of scholars have proposed abandoning the use of citizenship as a jurisdictional basis to tax. In its place, they would apply residence-based principles — i.e., exercising full taxing rights over U.S. citizens only if the citizens reside in the United States. Citizens residing outside the United States would be taxed in the same limited manner as non-citizens residing outside the United States.

This Article examines the impact of the recent international administrative developments on proposals to eliminate citizenship-based taxation and replace it with residence-based taxation. It also discusses a number of substantive concerns with the residence-based taxation proposals. While the Article concludes that the United States should retain its citizenship-based taxation regime, it acknowledges that a number of practical steps could be taken to ameliorate unnecessary burdens faced by overseas citizens.

Keywords: tax, international tax, citizen, citizenship, FATCA, expatriation, exit tax, international, expatriate, bank secrecy, tax havens

JEL Classification: K33, K34

Suggested Citation

Kirsch, Michael S., Revisiting the Tax Treatment of Citizens Abroad: Reconciling Principle and Practice (October 28, 2013). 16 Florida Tax Review 117 (2014), Notre Dame Legal Studies Paper No. 1457, Available at SSRN:

Michael S. Kirsch (Contact Author)

Notre Dame Law School ( email )

P.O. Box 780
Notre Dame, IN 46556-0780
United States


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