At the State of the Union address on Tuesday, President Obama proposed a change to the tax code that, in his words, “truly helps working Americans trying to get a leg up in the new economy.” Whether or not you agree with the president’s plan, it is clear that America’s tax policy is far too complicated and unfair to millions. Perhaps the most staggering aspect of American taxes is the concept of taxation by citizenship rather than residency. In other words, US citizens and green-card holders must pay the IRS no matter where they live. The US essentially stands nearly alone in practicing this bizarre approach to taxation; Eritrea is the only other country with a similar policy, according to the Wall Street Journal. 

There is no compelling argument that justifies penalizing Americans who have made the decision to work and live overseas. A large number of US citizens abroad are ambassadors for American enterprises, researchers at the forefront of their fields or retirees enjoying their post-work years. They are not all, as the Democratic Party would have you believe, fat-cat billionaires seeking to use offshore havens to hide their money. There seems to be an illusion amongst the political class, both left and right, that the sole purpose of moving abroad is tax avoidance. Now, I do not dispute that Americans who reside permanently in the United States should pay taxes based on their wealth, no matter where it may be held in the world. But to suggest, as this policy essentially does, that a tycoon is somehow analogous to a middle-level manager at a major international firm is laughable.

Americans who live overseas are unnecessarily burdened by a tax bill twice over: once from their country of residence and once again from the IRS. In some cases, treaties between the United States and other countries help to mitigate the yoke of double-taxation. But this does not change the fact that these hard-working Americans are subject to a financial cost greater than that of their neighbors and of their compatriots stateside. Unfortunately, a recent law has only made their lives more difficult. In 2010, the Democratic-controlled Congress passed FATCA, the “Foreign Account Tax Compliance Act.” Ostensibly, the law sought to prevent US taxpayers from concealing their wealth in offshore accounts and shell corporations. This is, in and of itself, an entirely reasonable proposition. If you live in a country, you should pay the taxes that are required of you. But the law has had an unintended consequence: Global News has reported that this act has made it more difficult for millions of Americans to open bank accounts, begin mortgages, or take out loans overseas. Indeed, FATCA includes extremely harsh penalties for banks that, in the IRS’ determination, have allowed Americans to avoid paying taxes, an issue The Economist has reported on. Again, I wish to emphasize that Americans residing in the United States have to pay their fair share, and the financial institutions that enable them to dodge their due should be rightly punished. By making it tougher for overseas Americans to support themselves, Congress has essentially said that Americans should just stay home. What kind of message is that for the small startup that wants to expand? Or for the young woman recently promoted to her company’s head office in Singapore?

In response to these growing challenges, many Americans have decided to follow a drastic path: renouncing their citizenship. As the vice has tightened, more and more Americans are casting aside an important part of their identity. At U.S. diplomatic posts in several countries, the waiting lists for renunciation are many months long, according to Forbes. Rather than recognize that an idiotic tax policy is at the heart of Americans coming to this painful decision, the government recently increased the fee for renouncing citizenship by 422 percent from $450 to $2,350; which strikes me as a cynical attempt to squeeze out every last dime before you stop feeding the IRS. In recent years the number of renunciations has exploded, from only hundreds annually in the 1990s to a record 3,000 in 2013, according to the Washington Post. It is unreasonable and cruel for the government to place so many Americans in such a difficult position.

Some may argue that paying taxes is a sign of continued patriotism to the United States. But if we are going to be using tax payments as a metric for loyalty, then quite a few individuals and corporations should probably be charged with treason! And besides, if you are not using the fruits of taxation on a regular basis, why should you have to pay for them? Except for Eritrea, every other country on Earth knows that this is too much to ask in our modern, interconnected world. It is time that the United States realized that as well.