Liberty and justice for all United States persons abroad

The Isaac Brock Society

Posted on by Posted in Issues regarding US persons abroad 4 Comments

Introduction and background …

As reported by Helen Burggraf of American Expat Finance with a general description of the problem …

As reported by Virginia La Torre Jeker of US-tax.org with a more technical description of the problem …

The TCJA created a situation where every “resident” member (nonresident aliens excepted) of America’s unique “Tax Form and Penalty Club” who is foolish enough to use the “Married Filing Separately” filing status, is required to file a 1040 even if they have no income.

Before moving to the main point of this post, two technical observations are in order:

1. The “married filing separately” status is generally the most punitive filing category there is (America does have a tax penalty for marriage) and is generally a separate tax on Americans abroad; and

2. The “married filing separately” status is particularly common in an “FBAR Marriage” (the type of marriage where a “nonresident alien” marries an American citizen).

As the post by Virginia La Torre Jeker (in particular) notes, Americans abroad are more likely to use the “Married Filing Separately” category because they are more likely to be married to an alien (grounds for special punishment perhaps?). The “alien” spouse can file jointly with the American (See Internal Revenue Code 6013(g). Although possible, and although there may be good tax reasons to do so, generally it would not be good for the health of the marriage to invite the “nonresident alien” spouse into the U.S. tax system. For examples of what this all means from a tax perspective read here. For an example of the problems this can cause see here. (Thanks to Virginia La Torre Jeker for all of these posts.)

Main point – Does equal protection require the “equal concern and respect of the legislature”?

The discussion about the unfair treatment of people who live outside the United States and are subject to U.S. worldwide taxation has been going on for almost a decade. Most of the concerns articulated by various groups (American Citizens Abroad, etc.) have focused on the specific unfairness of parts of the Internal Revenue Code (and of course the unfairness of the Saving Clause in the standard tax treaty). I do agree with all the points made by these groups. In a general sense (although they never seem to say it): Americans abroad (whether by accident or design) are actually subjected to a completely different set of tax rules, which are far more punitive than those imposed on Homeland Americans. Those who attempt compliance will (sooner or later) be forced to renounce U.S. citizenship to survive.

I believe (although perhaps not enforceable in a court), that …

U.S. Tax Rules Violate Principles of Equal Protection For Americans Abroad

There are two basic reasons:

1. In the 1967 decision of Afroyim v. Rusk, the Supreme Court of the United States specifically ruled that Congress cannot do things that result in the forcible destruction of citizenship.This was the subject of an earlier post on Brock (how time files).

2. Adopting Analysis By Ronald Dworkin – Congress Does Not Give American Abroad Equal Concern and Respect In The Legislative Process

Although I don’t have time to find exact quotations, anybody involved in this problem knows that members of Congress are responsive (if at all) ONLY to:

A. Those with money; and

B. Those who live in their district (those who can vote them out of office).

Because Americans abroad have ZERO representation in in the political process they are an irrelevant political minority – which is part of the reason why they don’t receive “equal concern and respect”.

Those Brockers who are inclined, might find it interesting to read the parts of Dworkin work that speak to this issue.

Also to be clear: the argument is NOT the “Taxation Without Representation” argument. Believe me taxation with representation can be far worse than taxation without representation.

Rather the argument is: No taxation without equal concern and respect for the group subject to taxation.

Which brings me to a possible (while I am thinking about 14th Amendment issues) argument …

3. Americans abroad are arguably a “distinct and discrete political minority for which special judicial solicitude may be appropriate”. No I didn’t think this up myself. These are the words of Justice Stone in what is called the “Carolene Products Footnote”. And yes, I once wrote a lengthy post discussing how this principle might apply to Americans abroad – those who are inclined can find it here. (At the very least, this principle would subject the rules applying to Americans abroad to a much higher scrutiny than would normally apply.)

Conclusion …

At the end of the day the best argument for moving from citizenship-based taxation to residence-based taxation is is simply this:

Congress doesn’t care about Americans abroad. They are not part of the country’s political conscience. Americans abroad are significantly damaged by legislation that applies to them. Therefore, they should be exempted from these laws.

Put another way:

If you con’t care about them. Then don’t make laws that destroy their lives!

4 thoughts on “As all #Americansabroad know, they do NOT receive the “equal concern and respect” of the US Government”

  1. @USCA

    Thank you for your very informative post. The situation for American expats who file does only get worse it seems. It’s important for this reason that Brock continue to play an important role as an information source for those who choose to file US tax, and until or even after they no longer have to. The continued presence of those who have renounced shows that it is a valuable resource regardless of whether one pays US tax or not. Many of those who have renounced know the true cost of compliance, and bless those with the fire in their bellies to advocate for change even though change can no longer help them.

    The objective now is to make those responsible for their sacrifice hear.

  3. Thank you, Pacifica. My apologies for allowing myself to be led off topic.

    FYI, USCA. The IRS has yet to publish anything for Article 54. Clicking on the link comes up with an IRS notice “This product will be posted on IRS.gov soon.”

    Again, US taxpayers overseas are left out in the cold.

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