What A Decision On Affirmative Action Teaches About Taxation

Laura Snyder (Stop Extraterritorial American Taxation; Association of Americans Resident Overseas), What a Decision on Affirmative Action Teaches About Taxation, 51 Rutgers L. Rec. 102 (2023):

The U.S. nationality-based tax system discriminates based on nationality (or country of origin). Of all persons living outside the United States, U.S. tax rules classify them based on nationality and subject U.S. nationals to far more onerous federal tax burdens as compared to those who are not U.S. nationals.

Most of those who assume the constitutionality of the current U.S. nationality-based tax system support their assumption by citing the 1924 U.S. Supreme Court decision Cook v. Tait. However, much has changed during the past century. Those changes include a dramatic transformation of our understanding of Equal Protection rights with respect to distinctions based on race and nationality. 

When Cook was decided, Plessy v. Ferguson was the law of the land, and the Court’s review of legislation was so deferential, it was “incapable of identifying and addressing contemporary prejudices.” Today Plessy has been thoroughly discredited. Further, a long line of U.S. Supreme Court decisions adopted during the century since Cook denounce laws which classify persons based nationality or country of origin, on the grounds that the laws violate Equal Protection. In a recent (2023) decision concerning affirmative action, Students for Fair Admissions v. Harvard, the U.S. Supreme Court made clear that race and nationality are inextricably linked, and that distinctions based on either are to be treated with “antipathy.” Such distinctions are inherently suspect and thus subject to strict scrutiny.

The current U.S. nationality-based tax system cannot be assumed to be constitutional. Citing Cook v. Tait to support an assumption of the system’s constitutionality at best ignores and at worst denies an entire century of development of Equal Protection rights as well as other constitutional and human rights.