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Tag Archive for Worldwide Taxation

Are the Psychological Benefits of U.S. Citizenship An Adequate Justification For The Worldwide Taxation of Nonresident U.S. Citizens?

I recently wrote a two-part series about the inadequate justification for the United States’ worldwide taxation of its nonresident citizens (Part I is available here; Part II is available here). Professor Michael S. Kirsch offers a different perspective in defense of this system. Instead of assessing the propriety of U.S. worldwide taxation on the basis of the legal benefits associated with U.S. citizenship, which lies at the heart of the “benefits rationale,” Professor Kirsch argues that, “it is reasonable to conclude that the retention of U.S. citizenship reflects a self-identification with the population of the United States (or the belief that the benefits of citizenship are worth the tax cost).”[i]

In justifying the worldwide taxation of U.S. citizens, Professor Kirsch relies on the psychological benefits of U.S. citizenship, namely, the ability of nonresident citizens to Read more

Have You Thought About Being Taxed In The United States And Yemen, Too? Double Trouble International Taxation

TaxConnections Picture - Dollar In OceanU.S. citizens and residents are taxed on their income from all sources worldwide. Worldwide taxation by the U.S. does not disarm the taxing power of other countries. Americans pursuing income outside of the U.S. are bound to encounter tax collectors asserting their own national claims. The world is awash in possibilities of double taxation. Below is a hypothetical illustrating international double taxation and its main cause: inconsistent sourcing rules in different countries imposing overlapping taxes.

A CONTRACT IN YEMEN

John is a lawyer who practices in NYC. One day, he gets a call from Ali, a client in Yemen. Ali asks John to do some research on a question and to send his findings in the form of a memorandum. John goes ahead and does the work, consisting of some research and some writing, which takes twenty hours of his time.

John’s final product is a memorandum, which he sends to Ali, along with a bill for $ 4,000 reflecting his hourly rate of $ 200. A check for $ 4,000 arrives by return mail and John gives the matter little further thought.

At the end of the year, John receives an official-looking letter from the Treasury of Yemen, adorned with a seal and crests, asking him to pay $ 2,000 in income tax to the Yemeni Treasury with respect to his $4,000 of Yemen-source income. The letter explains that the rate of Yemeni income tax on the Yemen-source income of foreigners from professional services is 50%. Read more