The USA and Eritrea: Soulmates?
10/05/12 12:29
What does the United States of America have in common with Eritrea? These are the only two countries on the planet that tax income based on citizenship rather than residency. In case you haven’t heard of Eritrea, it’s on the Horn of Africa and ranked 178 (of 178) in terms of Press Freedom at the last (2010) survey. This placed Eritrea right after North Korea. The United States should be embarrassed.
The concept of income taxation based on citizenship was introduced during the American Civil War because “The only reason any American would work abroad is to avoid taxes or avoid the draft.” Disclaimer: I was more than 40 years old during my first assignment in Europe, so I wasn’t too worried about the draft. I also had a high lottery number. If I went to avoid taxes, I was sorely disappointed.
There are unintended consequences of the law. It is expensive for Americans to work abroad, it is expensive for companies to hire Americans abroad, it is difficult for Americans abroad to do simple things - like get a local bank account in Switzerland. While the State Department represents the American government, expatriates represent the American people. Laws and regulations enacted and enforced by people who have never lived abroad have an unfortunate impact. There will be fewer Americans abroad and more British, Australians, French, Chinese... everyone expect Eritreans. It is not good for the country.
The concept of income taxation based on citizenship was introduced during the American Civil War because “The only reason any American would work abroad is to avoid taxes or avoid the draft.” Disclaimer: I was more than 40 years old during my first assignment in Europe, so I wasn’t too worried about the draft. I also had a high lottery number. If I went to avoid taxes, I was sorely disappointed.
There are unintended consequences of the law. It is expensive for Americans to work abroad, it is expensive for companies to hire Americans abroad, it is difficult for Americans abroad to do simple things - like get a local bank account in Switzerland. While the State Department represents the American government, expatriates represent the American people. Laws and regulations enacted and enforced by people who have never lived abroad have an unfortunate impact. There will be fewer Americans abroad and more British, Australians, French, Chinese... everyone expect Eritreans. It is not good for the country.
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