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Discussion Starter · #1 · (Edited)
No, the United States is not the only CBT country. That's a common mythology. De jure China has had citizenship-based taxation (CBT) on its law books since 1993, but its overseas citizens de facto simply ignored that part of Chinese tax law. Chinese authorities never bothered to enforce their CBT regime.

....Until now. According to this New York Times article from earlier this year, China is now starting to enforce its CBT rules, starting with the highest income Chinese citizens living overseas. Why? China needs the tax revenue, quite simply. Also, as a special bonus, it's an effective way for Chinese authorities to go after corrupt Chinese government officials decamping outside China who siphoned vast fortunes from the public purse.

China probably has the most strict CBT in the world -- more strict than other CBT countries such as Hungary, Eritrea, and the United States. China's top marginal income tax rate is 45% and applies to taxable income over about US$12,900 per year, according to the Times (above about US$22,200 per year after exemptions, according to my calculations). The U.S. tax code allows its overseas citizens to exclude $100,800 in earned income (tax year 2015) from U.S. income tax, typically above about $10,000 in exemptions plus a housing exemption. The Chinese tax code's only concession to overseas residents is an extra US$210 per month (US$2,520 per year) in personal allowance versus their domestically resident counterparts. Both countries' tax codes allow foreign tax credits, though the U.S. is at least unusual in allowing accumulation and subsequent "spend down" of excess FTCs.

The greatest number of people subject to CBT are not Americans: they're citizens of China!

On edit: The Isaac Brock Society has a different view, though their "correction" appears to be incorrect (Hungary).
 

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Discussion Starter · #2 · (Edited)
Also, China's 45% marginal income tax rate kicks in at about $164,100 per year according to my revised calculation. The New York Times corrected an error in the figure, but I missed their correction and carried their error forward in my calculation. The NYT and Isaac Brock Society still disagree on other points in the article, though. The NYT thinks China has a CBT regime and the IBS doesn't. I find the IBS's arguments on that point reasonably persuasive.

FYI, Hungary's CBT regime exempts overseas Hungarians who possess another citizenship or who live in a country that has a tax treaty with Hungary. But it is clearly a CBT regime -- even if the IBS sometimes ignores it.
 

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FYI, Hungary's CBT regime exempts overseas Hungarians who possess another citizenship or who live in a country that has a tax treaty with Hungary. But it is clearly a CBT regime -- even if the IBS sometimes ignores it.
Hungary's CBT sounds like what I would call "mild CBT." If the US did the same thing, I think there would be much, much less complaining. (At least, as long as the US eliminated or vastly simplified filing requirements for exempt citizens, and reduced threatened penalties, from what they are now.)
 
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