The Grassroots Corner February 19th, 2024

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  • Source: FAIRtax
  • 02/19/2024

Meet Reginald Callaway

This week’s Grassroots Corner goes back overseas and introduces Reginald Callaway, a U.S. Citizen living in New Zealand.

Reginald writes:

“… The focus of Congress remains fixed on the concerns of its resident voters, a fact frequently communicated to me. In correspondence loaded with contradictions, these lawmakers simultaneously express disinterest in revisiting citizenship-based taxation.”

Reginald is talking about the unique worldwide reach of our Internal Revenue Code.  Under citizenship-based taxation, Americans who live outside the United States, maintain no residence in this country, and earn all of their income from foreign sources still owe taxes to the Internal Revenue Service.  There are credits for foreign taxes, but these credits do not equalize the tax treatment for Americans. 

Outside of the African nation of Eretria, no other country in the world does this to their citizens.  For example, a German living in New York needs only to deal with the U.S. tax system without worrying about the Bundesfinanzamt, the German version of the IRS.

Reginald continues:

“Meanwhile, a cadre of ill-intentioned scholars, legislative aides, NGOs, and governmental functionaries lobby Congress vigorously, advancing the argument that substantial money lies untapped overseas—asserting that stringent financial reporting by expatriates is imperative to unlock these funds.”

Then Reginald makes a smart observation:

“The adoption of a FairTax system could rectify this unconstitutional conundrum. By transitioning to a consumption-based tax model, FairTax would eliminate the complex financial reporting web. This would align the tax code with a more equitable and simplified structure that does not penalize citizens for their global mobility.”
He is right. The FAIRtax taxes only the consumption of services and new tangible goods in the United States. Income becomes none of Uncle Sam’s business, whether one lives in the United States or not.

Reginald may have been reading our Chairman’s reports:

“I have also monitored the Moore case with keen attention, recognizing that its resolution carries significant implications. Academics and tax professionals have expended considerable effort in gaslighting the public regarding the case's merits, often clouding the discourse with strategic ambiguity. Should the Supreme Court uphold the appeals court decision, it will almost certainly embolden both state and federal legislatures to extend taxation to a broader array of unrealized gains and assets.”

Reginald answers the question of why Americans who live in the United States should care about what happens to American citizens abroad:

“Congress first implements the unlawful tax abroad, waits for a favorable court ruling, then push similar taxes and similar anti-privacy surveillance domestically. The MRT (Mandatory Repatriation Act, which hit the Moores), Venmo, Paypal, and the new S-Corp reporting, etc., fit this dangerous pattern.”

Moore, you may recall, imposed an income tax on phantom “dividends” never received by a holder of ten percent of the stock of an Indian corporation. The period of taxation was retroactive to periods when no such tax existed.  The Moores argued that such taxation was unconstitutional.  So far, the lower courts have ruled against them.

If the Supreme Court sustains the lower courts' rulings, the IRS may soon be coming after you to pay taxes on money that you don’t have.  This could be a devastating development for some taxpayers.  For example, suppose you’ve lived in your home for forty years.  In that time, it has appreciated to the point where it’s now worth ten times what you paid for it.  Since you’re still living there and haven’t sold the house, you don’t have any of this gain in value in your pocket.  It exists only on paper.

If the Supreme Court doesn’t stop them, the IRS could be sending homeowners in this situation a hefty tax bill that they may not have the money to pay.

We thank Reginald for his insight.

If you know someone like Reginald, I would love to hear from you.
We need more of you to send in pictures and news. If you have something to share, please send your material to me,, (908) 578-4975, or fax (908) 598-2888. When others see your activity, they are inspired, and the process snowballs. When the process snowballs, Congress Members, Senators, and even the President start to listen.
Jim Bennett
AFFT Grassroots Coordinator & Secretary


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