Extraterritorial Taxation #6: No Compelling Governmental Interest

Abstract

This is the sixth in a series of sixteen papers about the U.S extraterritorial tax system.

The immediately preceding (fifth) paper in this series explains and refutes the five most commonly offered rationales for extraterritorial taxation. This sixth paper confronts those theoretical rationales with the reality of the extraterritorial tax system in place today. This confrontation exposes the vacuum in which the rationales exist. Not one of the rationales recognizes the full scope and complexity of the actual tax system in place today or contends with the system’s multitude of intractable problems and injustices. Further, this confrontation exposes that the system cannot pass a “rational basis” review and United States does not have a legitimate interest in the system.

Keywords: Extraterritorial taxtion, Citizenship-Based Taxation, Residence-Based Taxation, Expatriation, Equal Protection, Emigration, Citizenship, Overseas Americans, IRS, Renunciation of Citizenship, FATCA, Exit Tax

JEL Classification: D63, E62, F22, F54, G21, G32, G28, H24, H25, H26, H87, J26, J61, K33, K34, K37