Let’s reform taxation for expats

 [[{“value”:”That is the topic of my latest Bloomberg column.  We should tax on the basis of residency, not citizenship.  Only Eritrea shares with us the practice of doing the latter.  Here is one excerpt: There is another possible gain, one which may have more appeal to the incoming administration than to economists like me. Trump
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That is the topic of my latest Bloomberg column.  We should tax on the basis of residency, not citizenship.  Only Eritrea shares with us the practice of doing the latter.  Here is one excerpt:

There is another possible gain, one which may have more appeal to the incoming administration than to economists like me. Trump and his advisers have long worried about the US trade deficit, and there has been talk of taxing foreign direct investment to weaken the dollar and boost US exports. Rather than discourage foreign investment in the US, why not do something more positive — and encourage US investment abroad?

If Americans leave and start new businesses around the world, using previously domestic capital, that too will bring downward pressure on the dollar. Thus could Trumpian ends be achieved by more constructive means. As a bonus, such a plan would not alienate foreign countries, as they tend to view a tax on FDI as a tax on their citizens.

This tax reform also might benefit US exports more directly. Say a US company wants to send an employee abroad to do market research and explore distribution channels for future sales. The US tax system should not turn this into a difficult ordeal.

Encouraging more Americans to work abroad also is a form of foreign aid, as many of them will grow or start businesses, creating jobs and tax revenue for the foreign country. And it is a form of foreign aid that benefits US citizens rather than costing them money. In fact, given the prowess of US business, it may be one of America’s most effective forms of foreign aid.

This one we should just do.

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