A Simple Tax Treaty Fix To Citizenship Taxation
The problem of citizenship taxation for Americans abroad is acute. Many people agree that citizenship taxation must end. Citizenship taxation is a combination of the U.S. Internal Revenue Code (imposing punitive taxation on non-U.S. assets and income streams), Regulations (the Internal Revenue Code gives Treasury broad regulatory authority) and tax treaties (the treaty “saving clause” denies U.S. citizens most of the benefits of the tax treaties. Unsurprisingly, various remedies have been proposed.
Legislative Fix (a change to the Internal Revenue Code):
Examples of proposals that are legislative fixes include the 2018 Holding bill and the 2024 LaHood bill. Significantly, neither bill ends citizenship as a sufficient condition for U.S. tax residency.
Regulatory Fix (mitigating the problems of citizenship taxation by regulation):
In 2020, Dr. Laura Snyder, Dr. Karen Alpert and John Richardson published “A Simple Regulatory Fix For Citizenship Taxation”. In this paper we demonstrated how Treasury through its regulatory authority could change the impact of the U.S. (domestic) Internal Revenue Code on on Americans abroad.
A Tax Treaty Fix To Citizenship Taxation:
In 2025, Dr. Laura Snyder, Dr. Karen Alpert and John Richardson published “A Simple and Unilateral Treaty Fix for Citizenship Taxation”. Both the paper and discussion is available at the SEAT site. Notably, this approach changes neither U.S. domestic law nor regulations. Rather, it simply argues that U.S. Treasury could refrain from exercising its rights under the “saving clause” found in U.S. tax treaties. The “saving clause” gives the United States the right (but not the obligation) to impose U.S. taxation on U.S. citizens abroad as though the treaty did not exist. Notably, this prevents U.S. citizens from using “tax treaty residency tie break” provisions to elect to be treated as tax residents of ONLY their country of residence. Incredibly, Green Card holders ARE permitted to (effectively) “opt in” to residence-based taxation.
The SEAT argument is that:
The United States could end the double taxation of Americans abroad simply by electing to NOT exercise its rights under the “saving clause”. This would allow President Trump to fulfill his pledge to end the “double taxation” of Americans abroad by NOT invoking the “saving clause”.
The argument is explained here:
Join us for discussion on October 8, 2025 – Two opportunities
1. Wednesday October 8, 2025 Youtube – 7:30 am Eastern (Toronto and New York) time
2. Wednesday October 8, 2025 – X. Spaces – 10:00 am Eastern (Toronto and New York) time
Slides for both presentations …
This is important! Hope you can make one or both of the discussions.
John Richardson – Follow me on X.com/@ExpatriationLaw