Why was ADCT formed?
The Alliance for the Defeat of Citizenship Taxation (ADCT) was formed due to the (lack of) response of the Senate Finance Committee to the well-documented harm that CBT with it’s vicious tentacles has done to “U.S. Persons” abroad. It is undeniably clear, that U.S. citizenship-based taxation is fueling the largest number of renunciations in U.S. history. Ironically, the government is not permitted to take actions which cause Americans to lose their citizenship:
In Afroyim v. Rusk, a divided Court extended the force of this first sentence beyond prior holdings, ruling that it withdrew [p.1567] from the Government of the United States the power to expatriate United States citizens against their will for any reason. “[T]he Amendment can most reasonably be read as defining a citizenship which a citizen keeps unless he voluntarily relinquishes it. Once acquired, this Fourteenth Amendment citizenship was not to be shifted, canceled, or diluted at the will of the Federal Government, the States, or any other government unit.
Short History of CBT
Citizenship-based taxation has been an issue throughout the 150-year history of the U.S. income tax. Interestingly, the United States started with a residence-based tax system. The first income tax enacted by Congress, passed in 1861 to help fund Civil War efforts, Rep. Justin Morrill, proponent of Revenue Act of 1861 only taxed citizens abroad on their income from U.S. investments; overseas income was specifically excluded. In 1864, Congress moved to citizenship-based taxation and passed a new law which taxed non-resident citizens on their non-U.S. income as well. The tax, both for residents and non-residents, was only in effect until 1872. Congress introduced an income tax law in 1894 which included taxation on all income of non-resident citizens. The law was ruled unconstitutional by the Supreme Court the following year (for reasons unrelated to non-resident taxation). Fourteen years later, the 16th Amendment to the Constitution was passed to overturn this Supreme Court decision, and the modern federal income tax was begun. The new income tax regime forming the basis of the modern system of U.S. taxation, created in 1913 and revised in 1916, applied to “every citizen of the United States, whether residing at home or abroad.” The provision of the new law taxing non-resident citizens on their global income was immediately controversial. Already by 1914, U.S. citizens in London had begun to renounce citizenship in order to escape double taxation, and American Abroad groups challenged the legality of the new provision. The challenges reached their climax in 1924 when the Supreme Court ruled in a case brought by a U.S. citizen living in Mexico that taxing non-resident citizens on their global income was indeed constitutional.