Introduction and purpose
In 2010 few people even knew what citizenship taxation was. It is now 2025. Awareness of the existence of citizenship taxation has expanded. An understanding of WHAT citizenship taxation actually is (it’s the the U.S. applying its worldwide tax, reporting and penalty regime on non-U.S. source income received by nonresidents) and how it impacts the lives of Americans abroad is still not understood. The nature of citizenship taxation is more fully explored in the following post:
The Road To Tax Reform For Americans Abroad: Part 2 – What Is US Citizenship Taxation?
How tax academics view citizenship taxation
Although, there have been articles about citizenship taxation written by various academics, few if any, have included a description of how U.S. citizenship taxation results in the U.S. imposing a more punitive form of taxation on Americans abroad. Of course, one must have actually experienced the reality (as opposed to the theory) of citizenship taxation to understand it.
To put it another way:
Generally, academics view citizenship taxation purely from the perspective of a U.S. tax return and a U.S. citizen living outside the United States. There is no consideration of how living as a tax resident of another country impacts U.S. tax filing.
Generally, U.S. citizens living outside the United States view citizenship taxation from the perspective of building a live outside the United States (that includes taxation) with the U.S. tax imposed on that life.
These are TOTALLY different perspectives!
Professor Ruth Mason On Citizenship Taxation
Professor Ruth Mason explored citizenship taxation in a 2016 article. On balance she was not convinced that citizenship should be a sufficient condition for nonresident individuals to be taxed on their worldwide income. The Covid years increased the awareness and reality of remote work. As a result, some scholars are once again considering the appropriateness of using citizenship as a sufficient condition for tax residency. Scholars are by definition “academics” whose instincts are to consider issues on a theoretical level without understanding the practical implications of their thinking. The scholarship generated by the academic community does not consider HOW citizenship taxation impacts individuals living outside the United States. In 2024 Professor Mason was joined by Professor Dagan in a paper “Reconsidering Citizenship Taxation“. Although a good theoretical discussion. once again, the paper fails to explore what it actually means when the United States applies its tax to treat tax residents of other countries people who do NOT reside in the United States as though they do live in the United States!
Professors Ruth Mason And Tsilly Dagan – “Reconsidering Citizenship Taxation”
Professor Mason and Dagan’s “Reconsidering Citizenship Taxation” explores the appropriateness of using citizenship as a sufficient condition for tax residency. Although not dismissing the possible relevance of citizenship, they conclude that:
As people increasingly work, live, and invest across multiple jurisdictions, it becomes harder for states to maintain their tax bases and social contracts. Although citizenship taxation—which involves taxing citizens on their worldwide income regardless of where they live—could help address these challenges, citizenship taxation alone is too crude a basis for worldwide taxation and therefore requires adjustments. Neither citizenship nor residence alone perfectly reflect membership in a national community, which is the traditional fairness justification for the imposition of tax obligations for redistribution. Instead, combining elements of both citizenship and residence might better align tax obligations with actual community membership.
The abstract of the Mason Dagan paper includes:
16 Pages Posted: 22 Nov 2024 Last revised: 4 Jul 2025
Tsilly Dagan
University of Oxford, Faculty of LawRuth Mason
University of Virginia School of Law; Max Planck Institute for Tax Law and Public FinanceDate Written: January 01, 2024
Abstract
The pressures of globalization undermine the ability of states to collect taxes and pursue distributive justice. Free movement and other opportunities for people to engage with different jurisdictions on a personal and economic level are essential for liberty. But unrestrained market competition between states to provide the world’s wealthiest and most skilled a fragment of the social contract in exchange for a reduction in their tax obligations imperils the welfare state.If the duty to pay taxes for redistribution exists within self-defining communities, then our new world of multiple and partial community allegiances raises fundamental questions. People are increasingly mobile, frequently live outside their state of nationality, and interact with multiple jurisdictions in a variety of ways. Although what constitutes membership may be decided by each such community independently, human mobility and interstate competition erode the ability of a single community, acting alone, to enforce its view of membership. As the community loses the ability to define itself and to bind people it considers members to that choice, the community also loses the material support it needs to sustain itself. In such a world, the very definition of community becomes subject to the rules of supply and demand, under which diverging elasticities and the relative attractiveness of both jurisdictions and taxpayers become paramount.
The strongest states may be able to overcome these challenges unilaterally with the aid of citizenship taxation. We emphasize, however, that the United States may remain an outlier in assessing citizenship taxation. US citizenship has proved extremely sticky, and therefore capable of sustaining a lightly administered form of citizenship taxation characterized by toleration for what is presumed to be widespread noncompliance. But weaker and less attractive states may be unable to sustain even a limited form of citizenship taxation, and they may therefore lose their tax base as they lose residents.
A cooperative accord on the global level could tame some interstate competition over migrants. Such a global accord would, however, face difficulties, including setting the desirable balance between personal liberty and community responsibility; determining the duty of justice between states; and defining the procedures that will determine the arrangements. States would also face accountability, legitimacy, and practical difficulties in implementing any such arrangements. These difficulties should not be underestimated, yet overcoming them is one of the challenges of the next 100 years of taxing people.
Yes, this is well worth the read. An AI generated podcast discussing the paper is found here:
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