William Worster Argues that the US Expatriation Tax Violates Human Rights
William Worster presented his article “Human Rights and the Taxation Consequences of Renouncing Citizenship” at the 3rd Annual Academic Investment Migration Seminar in June 2018. His IMC Working Paper on the topic was subsequently published in the St. Louis University Law Journal.
In this article, he claims that the taxes that the US imposes on individuals who renounce their US citizenship violate international human rights. The US taxation system is somewhat unique in the world, because the US is essentially the only state in the world that taxes its nationals even when they live outside of the US. This practice inspires many US citizens to expatriate, i.e. to renounce their nationality, and avoid this extraterritorial tax. As a result, the US attempts to discourage renunciation by applying an “exit tax” to persons giving up US citizenship.
Worster argues that there is an international human right to renounce one’s nationality, so applying an exit tax is a violation of that right. He bases this right on the explicit statement of the right in the Universal Declaration of Human Rights and the implied right to renounce nationality contained within International Covenant on Civil and Political Rights (ICCPR). This right to leave is repeated in various other treaties in addition to the ICCPR.
Renunciation is implied in the ICCPR and other treaties, because it is implicitly contained within the right to leave any state. Any person has a right to leave any state, protected by the ICCPR, but it does not expressly cover the right to give up nationality. Worster examines the negotiating history of the ICCPR and statements made by the states when preparing the ICCPR. He also examined the decisions of the Human Rights Committee interpreting the ICCPR ina variety of similar cases. All these sources point to an underlying right to renounce within the overall notion of the right to leave any state.
Also, Worster provided a large collection of domestic laws that show that most states permit individuals to renounce their nationality because it is seen as a fundamental human right, including the US. This extensive practice established that the right to renounce nationality was not only a treaty right, but also a right under customary international law.
Lastly, Worster cited to numerous statements in US Congressional committee reports and court judgments showing that the exit tax was primarily intended to discourage the exercise of the fundamental right to renounce nationality and punish individuals viewed as traitors to the US. These statements show that the exit tax was not enacted as a proportionate response to a compelling government need, and, therefore, that the exit tax could not be a lawful exception to the right to renounce.
His conclusion is that the US exit tax is therefore prohibited by international human rights law.
Author: William Worster, The Hague University of Applied Sciences