On 12 July 2021 Tax Notes Federal published an article entitled “Should Overseas Americans Be Required to Buy Their Freedom?” Its authors are three of SEAT’s co-founders: Laura Snyder, Karen Alpert, and John Richardson.
In this article, the authors argue that the United States must end its practice of taxing the foreign source income of U.S. citizens resident abroad, and they challenge the idea that any proposal to eliminate U.S. extraterritorial taxation must be revenue neutral.
The article is now available outside of a paywall, via SSRN, at this link.
3 thoughts on “Revenue neutrality: Where good legislation goes to die”
Great essay! It cuts to the core where tax scholars fail to go: The US tax system as it applies overseas is a 21st century Jim Crow practice. There is nothing just about it. Unfortunately, Congress and the Treasury are doggedly determined to keep overseas tax residents as slaves.
Those advocating for “revenue neutral” are operating in bad faith. They know they have no leg to stand on. What they are doing is inferring an opening is possible so as to boost membership. Being non-transparent in their operations is a strong indicator of their motives, which are not good.
As to the MMT reference, it is highly rebuked by Yellen and others in the White House. These folks started their careers when the US was on the gold standard. The gold standard meant the monetary system was fixed to gold. In other words, each dollar in circulation was in theory backed by metal. For the Yellen’s of the world this was fiscal discipline. Recall Yellen was raising interest rates during her reign at the Fed when unemployment was still high particularly in the African American community. This was her way of restraining money circulation because in her mind debt spending is bad. To be clear, there is nothing immoral about federal deficit spending.
Interesting article in the Washington Post about the massive infrastructure bill including how to pay for it. What’s fascinating is that there isn’t even an attempt to justify this in terms of revenue neutrality. See the following from the article:
“In the years ahead, the deal will generate significant economic benefits. It is financed through a combination of redirecting unspent emergency relief funds, targeted corporate user fees, strengthening tax enforcement when it comes to crypto currencies, and other bipartisan measures, in addition to the revenue generated from higher economic growth as a result of the investments.” That’s embarrassingly flimsy. ”