Judge Ashford echoes the immortal words of Sir Paul McCartney (ably assisted by the late great John Lennon) in the 1966 hit of that name, as she examines the overreach of Article 6, Paragraph 3 of the Convention between the Government of the United States of America and the Government of Israel with Respect to Taxes on Income, U.S.-Israel, Nov. 20, 1975.

Elazar M. Cole, 2016 T. C. Sum. Op. 22, filed 5/16/16, resides in Israel but is a US citizen when he unloads some US stock for a big capital gain. Elazar claims he owes no tax based upon Article 15, Paragraph 1, which exempts from US income tax an Israeli resident’s capital gain on sale, exchange or disposition.

But Article 6, Paragraph 3 (the “savings clause”) says that notwithstanding anything but a couple enumerated items (hi, Judge Holmes) like grants, Social Security, governmental function income, diplomatic and consular officers, teachers, students and trainees, and nondiscrimination, the US can tax its citizens and residents as if the Convention never existed.

Judge Ashford goes over the France, Canada and Finland Conventions (as for Finland, see my blogpost “The Price of Residency,” 6/9/14), and they all say the same. Elazar’s capital gain is not safe from US taxation.

So the US can tax its citizens here, there and everywhere.