SEAT has just one objective
When it comes to the U.S. extraterritorial tax system, there are so many different elements: different people are affected in different ways, which has led to different proposals for different solutions.
Ending the U.S extraterritorial tax system is difficult enough – these differences make it even more so.
This is why SEAT is exclusively focused on one thing and one thing only: ending the U.S. extraterritorial tax system in favor of a U.S. tax system that is only based upon residence and source.
More specifically, SEAT’s objective is the removal from the U.S. tax base of U.S. citizens living outside the United States, except to the extent they have U.S. source income. This removal must occur without the need for so-called “revenue neutrality” and without imposing any other kind of fee or penalty – tax or otherwise – upon Americans living outside the United States, regardless of whether they are currently in the U.S. tax system or not.
SEAT will not pursue partial remedies
To stress the point, this is SEAT’s only objective. SEAT has no other objective, and in particular SEAT is not interested in pursuing any objective that is not ending the U.S. extraterritorial tax system. SEAT is not interested in re-directing its limited resources, in whole or in part, in order to pursue partial remedies. This would include, as examples:
- Ending FATCA, or alleviating its effects (such as same country exception);
- Piecemeal solutions seeking to fix only specific aspects of the U.S. extraterritorial tax system (such as foreign trusts, PFICs, or GILTI) rather than the system as a whole;
- Proposals that would help only specific kinds of U.S. citizens living overseas, rather than all of them (such as short-term expats, Accidentals, emigrants, business owners, retirees);
- Reducing the obstacles to renunciation of U.S. citizenship (such as the $2350 fee, the exit tax, or the limited availability of consular appointments).
To be clear, SEAT is not, in principle, opposed to any of the above. SEAT’s opposition is to the diversion of limited resources to pursue objectives that not only are highly uncertain but that, even if achieved, would not address the fundamental problem, which is the taxation by the United States of income that has no connection to the country other than the U.S. citizenship of its recipient.
Further, it is not clear that achieving any of these so-called “low-hanging fruits” would, in the long term, be beneficial. To the contrary, it could prove harmful as it could be used as an out by policymakers. They could assert – and perhaps also actually believe – that with the implementation of a partial solution the problem of the U.S. extraterritorial tax system has been solved, and so their attention is no longer required. Nothing would be further from the truth. And it would leave those unable to benefit from that partial solution in an even worse position than they are in today.
It is important for everyone to stay focused
SEAT encourages all those who are seeking an end to the U.S. extraterritorial tax system to maintain an equal focus. Don’t be sidetracked by the temptation of a “quick win” on issues that continue most aspects of “citizenship-based taxation.” It would be illusory and would divert your limited resources away from the one objective – pure residence-based taxation – that will solve all problems for all people.
Ending the U.S. extraterritorial tax system will be a lengthy process full of setbacks. Success is not guaranteed. Perseverance is vital. Equally vital is focus. Without focus, failure is guaranteed. Only with focus is success possible!