Quote:
Originally posted by Tyrone Slothrop
The government taxes income from non-citizens in the country. I have no problem with that. I just see the justification for the taxation as relating to economic activity within the sovereign's jurisdiction, not a claim on the sovereign's part to reach into the wallet of its citizens wherever they may travel in the world. If I'm a U.S. citizen living in Milan and working in a factory there, I don't understand why the U.S. government should have a claim to take part of my wages. Italy, yes -- the U.S., no.
eta: I'm not hung up on the prospect of double taxation -- I just don't get the justification for the exercise of U.S. jurisdiction. What power should the government have to claim a share of economic activity in another country, simply because one of the participants is a U.S. citizen? I have the same problem with the idea that the U.S. government can send you to prison for deciding to smoke a Cuban cigar when you're in Brazil. Borders mean something, don't they?
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There are two bases for imposition of a tax burden. One is residency. The other is citizenship. Most countries rely solely on residency; the US relies on both.
This is actually more theoretical than factual. In practice, wages earned overseas by a US citizin resident in the counrty where the wages are earned are not subject to US tax. Treaties, certain provisions of the Code, and foreign tax credits ensure this.
But, there still remains a framework for non-wage income from certain activities not subject to treaty to be taxed in the US, especially if they are not taxed elsewhere. It's the price you pay for citizenship.
