Wednesday, April 21, 2010

First casualty

On Day 2 of Overseas Americans Week, we had some very productive meetings on the tax issue.

For those of you not familiar with the issue, here is a brief summary: Overseas Americans are subject to double taxation by the countries they live in and the United States. No other industrialized nation does this. A French, English, Japanese or other businessperson who leaves home to work abroad is taxed locally, but not by his or her country of origin. This not only creates an undue burden on people who want to work overseas, but it also puts American businesses at a disadvantage compared to their trade competitors. So it is bad for us and bad for export industries that should be generating new jobs back home. For details, see www.overseasamericansweek.com.

Fortunately, a bill has been introduced that would largely solve this problem. Congressman Gregory Meeks (D-NY) has introduced the Working American Competitiveness Act (HR 1798) to remove the cap from the foreign earned income exclusion provided by Section 911 of the Tax Code. He has one co-sponsor on the legislation, Congressman Ron Paul (R-TX). One of our goals is to find other co-sponsors for that legislation, particularly among members of the Ways & Means committee, which would need to approve the legislation before it could be considered by the full House. We met with several such offices today and, while we received no specific commitment of co-sponsorship, we feel that we have made inroads that may turn into support soon. One staffer in particular remembered us from last year’s visit, remembered our arguments on the tax issue and seemed much more able to help us this year than a year ago.

We were also able to meet with Congressman Jim Clyburn (D-SC), thanks to my friend Lindy Birch Kelly, who works in his office. Congressman Clyburn is the Majority Whip, one of the most powerful leadership positions in Congress. By stopping by the Majority Whip’s office each year, we are guaranteed to receive invaluable advice on our issues, as we did this year.

One funny thing happened on Tuesday. Following a meeting in the Hart Senate Office Building, two other OAW delegates and I were heading for the elevator, each loaded down with our laptops, position papers, and books. As we struggled with our materials, we saw a man walking towards us who very obviously was a Senator. If the hair, suit, and purposeful walk weren’t clear enough signs, then his “Good afternoon. How are you today?” and wide smile made it obvious. As he passed us, one of the women I was with (whose identity will be withheld, for her own protection) accidentally bumped into him, throwing him to the ground. We apologized profusely as he awkwardly got up, smiled and hobbled back to his office. So if you see anything on the news about a Senator suffering an unexplained broken leg, then please give me a heads-up: he’s the first casaulty of OAW 2010.

4 comments:

Bernard said...

Keep up the good effort. I know you have to focus on the art of the practical but not all Americans overseas are working. For those retired, the tax issues relate to pensions, investment income, tax deductions (or lack of them) the cost and complexity of meeting US requirements as well of those of where we are resident without the support of a corporate employer to pay the bills and provide the expertise can be overwhelming. Just finding out what US regulations must be complied with is daunting. The old FRAB instructions were opaque enough - the new ones incomprehensible.

Andy Coyne said...

Thanks, Bernard. This is exactly the kind of feedback we need. Keep it coming. You can also always contact me at andy@aaro.org.

Anonymous said...

An increasing number of Americans overseas are seriously contemplating giving up their citizenship, not so much because of the tax burden per se, but because of:
- the incredible complexity even if no tax is due
- the cost of preparation exceeds the tax due
- the injustice at being treated as criminals simply because we live overseas
- the increasing banking difficulties that point to a situation in the near future of being unable to bank anywhere (US or host country). How can one live, work or run a business if you can't bank where you live? Is the goal to make American expats an extinct species? Dual nationals are treated the very same way.
- the lack of reciprocity in the bilateral treaty: no access to tax-sheltered investments in the US and whatever tax advantageous opportunities exist in our host countries (to save for retirement for example) are not accepted under US rules (let's not mention the reporting requirements that are so out of synch with realized income!)
- the double whammy of TIPRA + host countries using our worldwide income to set the tax rate for our locally-earned one is blatant double taxation.
- the FBAR requirements are such that all of us are left wide-open to identity theft.
And on and on.
The policy is short-sighted and shall boomerang. None of this is in the US' economic or political interests.

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