Taxing the American Emigrant

Abstract

American emigrants face many consequences from the extraterritorial application of U.S. taxation and banking policies. Their names, addresses, and Social Security numbers are collected, placed on lists of “suspected U.S. persons,” and submitted to a “Crimes Enforcement Network.” They struggle with incompatible tax systems, resulting in penalizing taxation, the inability to make investments and save for retirement, the inability to hold title to family assets, the denial of bank accounts and other financial services, and the denial of employment, entrepreneurial, and community service opportunities.

These stigmatizing policies and their consequences are frequently justified on the basis that American emigrants are wealthy persons seeking to avoid taxation. This is evidenced by the comments that U.S. policymakers and other public figures have made about American emigrants throughout the country’s history, as well as the manifest anti-emigrant bias in the academic literature and media.

Further, the policies have consequences for the countries in which American emigrants live: they negate legal protections provided by these countries in such areas as data protection, banking, human rights, retirement, savings and investment, and succession planning. They also undermine the fiscal and monetary policies of these countries and the authority of their policymakers. In short, U.S. policies toward American emigrants jeopardize the sovereignty of many countries around the world.

Citizenship is a human right. Leaving one’s country and returning to it are human rights. Countries, also, have a right to self-determination. The extraterritorial application of U.S. taxation and banking policies—which is justified through the stigmatization of American emigrants—places all of these rights in peril.

The stigmatization of American emigrants must, like other forms of stigmatization, be identified and held unacceptable. Otherwise, there is little hope for change.

Keywords: Citizenship-Based Taxation, FATCA, FBAR, GILTI, Emigration, Stigmatization, Placism, Prejudice, Sovereignty

JEL Classification: F22, F23, F54, G21, G23, H20, H21, H24, H25, H26, H30, H87, J24, J26, J61, K33, K34