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A Republican congressman has introduced a bill to move the U.S. from a citizenship-based taxation system to a residency-based one — and it’s receiving support from both Democrats and Republicans.

Congressman George Holding (R-North Carolina), a member of the House Ways and Means Committee, introduced the Tax Fairness for Americans Abroad Act (H.R. 7358) on Dec. 20.

Under this bill, non-resident citizens could elect to be taxed as qualified nonresident citizens, exempting them from tax on their foreign source income. All non-resident citizens would remain subject to tax on U.S. source income.

The proposal defines a non-resident citizen as a person that:

  • is a U.S. citizen;
  • has a tax home in a foreign country,
  • is in full compliance with U.S. income tax laws for the previous three years; and
  • either establishes that he has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or is present in a foreign country or countries during at least 330 full days during such taxable year.

Democrats Aboard praised the bill for its contents while criticizing its timing. “H.R. 7358 is not a perfect bill and, coming on the eve of adjournment, it cannot be given serious consideration or debate,” the organization said in a release. “That said, it is a milestone for advocates of a switch from the current [system] to the globally accepted norm of residency-based taxation, and raises to attention important issues that Congress must address with hearings in the 116th Congress.”

In a release, American Citizens Abroad acknowledged the timing challenge, saying, “The current bill language only provides an outline and basic understanding of the new regime. […] As legislators review the bill, there will be areas and topics, we believe, that will be spelled out in greater detail. Clarifications, for example, with respect to the treatment of certain income will probably be added.”

The U.S. is one of a handful of countries that tax based on citizenship, not residency. This rule has been a longstanding source of grief for Americans in Canada, who are subject to the Foreign Account Tax Compliance Act (FATCA) and can face double taxation.