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- Title
GROSS MISCALCULATION: TAXING EXEMPT INDIVIDUALS ON GROSS INCOME.
- Authors
MacMinn, Marielle
- Abstract
The Tax Cuts and Jobs Act of 2017 was hastily pushed through Congress amid intense political controversy. At this point, both sides of the aisle would agree that the Act was not perfect. One such imperfection is the treatment of Exempt Individuals as defined in Section 7701(b)(5). Because Exempt Individuals, also described as quasi-NRAs throughout this Comment, are treated as nonresident aliens, despite their substantial presence in the United States, they are not permitted to claim the standard deduction. As of the Act taking effect in 2018, nobody is permitted to take the personal exemptions. Therefore, Exempt Individuals are being taxed on their gross income. But Exempt Individuals are not the average nonresident alien. They are the diplomats, students, teachers, doctors, and scholars that come to the United States to live, learn, and contribute meaningfully to American society. When Congress first enacted the Exempt Individual exception in the 1984 tax overhaul, it was meant to provide them a benefit by exempting them from full worldwide taxation. The personal exemption, however, was the only tool which operated to create a zero-bracket amount for the Exempt Individuals - the only mechanism through which the tax code recognized and respected their obligations of support, It is simply bad policy to tax an individual, in these circumstances, on gross income, and may in fact violate the nondiscrimination clauses in tax treaties. The effect of the 2017 Act was not explained in the legislation's Bluebook and appears to be an unintended consequence that remains unnoticed by the Joint Committee.
- Subjects
GROSS income; DOUBLE tax agreements; TAX cuts; TAX deductions; NONDISCRIMINATION principle (International law)
- Publication
Temple International & Comparative Law Journal, 2019, Vol 34, Issue 1, p129
- ISSN
0889-1915
- Publication type
Article