Exclusive Citizenship Act: Unintended Consequences Continue To Emerge

I have previously written how changes to U.S. citizenship and expatriation rules often produce consequences far beyond what legislators appear to anticipate. Whether in the tax arena or in the administration of federal benefits, citizenship status functions as a foundational legal concept, not a standalone policy.

Senator Moreno’s proposed “Exclusive Citizenship Act” underscores this point. While the bill is framed as an effort to eliminate dual citizenship, its structure raises serious and likely unintended risks in many areas.  These may include harsh exit taxes for those losing U.S. citizenship and transfer taxes imposed on U.S. persons receiving gifts or bequests from certain expatriates.  There is also the possible loss of Social Security benefits, diplomatic tensions, citizenship concerns among members of the Native American community and among those who have had a foreign citizenship restored after loss during the Nazi regime.

Now there is one more.

A reader alerted me to another vulnerable population who might face catastrophic financial consequences (aside from the expatriation tax issues) as a result of Senator Moreno’s proposed legislation: U.S. military retirees with dual nationality.

Exclusive Citizenship Act: A New Approach To Losing U.S. Citizenship

The “Exclusive Citizenship Act” introduces a mechanism that is unheard of in modern U.S. nationality law. Individuals who hold dual citizenship would be given a one-year grace period to take steps to retain exclusive U.S. citizenship. If they fail to do so, Senator Moreno’s bill would treat them as having voluntarily relinquished U.S. citizenship at the end of that period.

This approach does away with the intent-based framework that has governed U.S. expatriation law for decades. Under existing law, loss of U.S. citizenship generally requires a voluntary and intentional relinquishment of nationality. That determination rests on either the taking of a voluntary oath of renunciation of U.S. citizenship, or the commission of a potentially expatriating act as defined in the Immigration and Nationality Act.  In each case the individual must have voluntarily intended to relinquish U.S. citizenship at the time the act was performed.

Moreno’s proposal abandons this individualized, fact-specific inquiry in favor of a time-based legal fiction, under which inaction itself is deemed to constitute voluntary expatriation by operation of law. In reality, however, the individual is not choosing to relinquish citizenship at all; the relinquishment is imposed by statute.

Given that U.S. citizenship cannot be lost under the U.S. Constitution without a voluntary and intentional relinquishment, a legislatively imposed or “deemed” expatriation should not be allowed to bootstrap itself into other areas of federal law as though it were a genuine voluntary loss of nationality.  Nonetheless, if the bill were enacted, many are concerned about the devastating and unintended consequences that could arise in the interim period between enactment and any eventual judicial determination that such a forced relinquishment violates constitutional protections.

This could be particularly troublesome in the area of military retirement benefits, where administrative action would likely precede judicial review.

Military Retired Pay And U.S. Citizenship

Losing U.S. citizenship affects immigration rights, voting, the ability to reside in the United States without restriction, harsh exit taxes and Social Security benefits. For retired members of the U.S. armed forces, however, citizenship status carries additional legal importance.

Military retired pay has long been treated differently from civilian pensions. Under Department of Defense regulations retired Regular military members are considered to remain in a form of continuing service. They are subject to recall, remain governed by aspects of military law, and are viewed as part of the armed forces even after active duty ends. Retired pay is therefore characterized not merely as deferred compensation, but as reduced pay for continued readiness and availability. While Department of Defense regulations are not statutes enacted by Congress, they do govern how military retired pay is administered in practice.  This means they determine outcomes unless and until Congress or the courts intervene.

The Department of Defense has historically taken the position that continued entitlement to military retired pay is incompatible with the loss of U.S. citizenship, because citizenship is integral to membership in the U.S. armed forces. Once citizenship is lost, the legal basis for retired military status, and therefore retired pay, falls away.

Much of this doctrine is reflected in opinions issued by the Government Accountability Office. Over the years, GAO has concluded that when a retired Regular military member voluntarily relinquishes U.S. citizenship, entitlement to retired pay ceases. These opinions are sometimes cited as authority for the proposition that expatriation and military retired status cannot coexist.

While GAO decisions are not court cases and do not constitute binding precedent, they are routinely relied upon in administering pay and benefits. In practice, they often function as the governing rule unless and until they are displaced by statute or court decision.

This distinction matters because Senator Moreno’s proposal would create a new pathway to citizenship loss that GAO doctrine was never designed to evaluate.

When “Deemed” Loss Of U.S. Citizenship Becomes Dispositive

The “Exclusive Citizenship Act” would cause U.S. citizenship to be lost automatically at the end of a one-year period if the individual fails to take action to relinquish the foreign citizenship. The statute would label that loss “voluntary,” even though it may bear little resemblance to what has traditionally been understood as “voluntary” expatriation.

From an administrative perspective, however, the label may be irrelevant.  This appears to be the case not only for Social Security benefits as discussed in my earlier article, but for retired military pay as well.   GAO doctrine focuses on the fact of citizenship loss, not on the subjective experience of the individual or the procedural mechanism that produced it. Once citizenship is gone, there is legal incompatibility with continued military retired status.  Under the bill’s proposed framework, failure to navigate a new and unfamiliar statutory process within one year could result in automatic expatriation and, under existing administrative logic, the termination of retired pay.

U.S. law makes clear that loss of nationality requires both a potentially expatriating act and the individual’s voluntary intent to relinquish U.S. citizenship.  The State Department’s policy presumes retention of citizenship unless that intent is explicitly established. GAO has similarly interpreted that a dual national may continue to receive military retired pay absent a loss of U.S. citizenship, and that retired pay terminates only upon voluntary expatriation. The Department of Defense has long recognized dual citizenship as compatible with service, and military retirees continue to receive their benefits even when holding foreign nationality, including if they voluntarily acquire foreign nationality, provided they do not intend to give up their U.S. citizenship. The issues of loyalty, which might otherwise justify concern, have not been a problem for the military.

The absence of any protective language for military retirees in the “Exclusive Citizenship Act” underscores the likelihood that Senator Moreno did not consider the downstream consequences of statutorily imposed citizenship loss.  This appears to be a product of hasty oversight.  When legislation is drafted without careful engagement with the technical legal frameworks that implement it, unintended and potentially devastating consequences are almost sure to follow.

Conclusion

As I have highlighted in prior Forbes articles, a statutorily imposed loss of U.S. citizenship could disrupt Social Security benefits, trigger complex tax consequences for expatriates, create diplomatic complications for Americans living abroad and more. Military retired pay is yet another area where this approach could have severe, unintended consequences and risks that, it seems, were not fully considered in the drafting of the bill. These risks illustrate how the bill’s symbolic objectives could translate into real-world harm for U.S. citizens, military retirees, those relying on Social Security and many others.  Clearly, there is a critical need for very careful legal and administrative review before taking this bill any further.

Posted  January 15, 2026

 

This post first appeared in Forbes December 19, 2025