A Proposed Pillar 3 For International Tax Reform: Individuals Should Be Tax Residents Of Only One Country At A Time

<p>December 13, 2021 - Participants Include:</p> <p>Dr. Laura Snyder - <a href='http://www.twitter.com/tapinternation'>@TAPInternation</a></p> <p>Dr. Karen Alpert - <a href='http://www.twitter.com/fixthetaxtreaty'>@FixTheTaxTreaty</a></p> <p>John Richardson - <a href='http://www.twitter.com/expatriationlaw'>@Expatriationlaw</a></p> <p>_________________________________________________________</p> <p>Tax Sovereignty: All countries (including the US) has the right to create its own domestic tax policy. The question is how to solve the problem of <a href='http://www.citizenshiptaxation.ca'>US citizenship-based taxation</a> from an international perspective.</p> <p> </p> <p>The problem: US citizenship-based taxation means that US citizens are tax residents of the United States even when they are <a href='https://citizenshipsolutions.ca/?s=tax+residence'>tax residents</a> of other countries. Interestingly US tax treaties contain a provision called the "saving clause" which denies US citizens the benefits of a tax treaties. See for example Article XXIX of the Canada US Tax Treaty. Tax treaties generally include a residence tie breaker (usually Article IV) which allocates the tax residency of dual tax residents to one country or another. See for example Article IV of the <a href='https://www.canada.ca/en/department-finance/programs/tax-policy/tax-treaties/country/united-states-america-convention-consolidated-1980-1983-1984-1995-1997.html'>Canada/US Tax Treaty.</a> The "<a href='http://citizenshipsolutions.ca/2016/05/26/savings-clause-in-us-tax-treaties-guarantees-us-right-of-taxation-on-residents-and-citizens-of-other-nations/'>saving clause</a>" denies residency tie break provisions to US citizens.</p> <p>A solution: The saving clause always contains provisions that specify circumstances where the saving clause would not apply (double taxation, pensions, etc.) If the Article 4 residency tie breaker were added to the list of exceptions to the saving clause, then under the treaty:</p> <p>1. US citizens would be e