Americans Helping Americans Abroad

The Tax Reformer Cometh...

At the initiative of Republicans Overseas, the Republican National Committee recently adopted a White House-approved resolution supporting the change from citizenship-based taxation (CBT) to residence-based taxation (RBT) via RO’s proposed Territorial Taxation for Individuals (TTFI). RO reports having "champions and sponsors in both the House and the Senate" and having found "tax loopholes that TTFI would close, thereby making TTFI revenue-positive".

RO has initiated a letter-writing campaign under which overseas Americans would write to the President about eliminating citizenship-based taxation.

At the same time, Democrats Abroad has launched a survey on taxation of overseas Americans and will shape its future advocacy efforts on its results.

It appears obvious that now is the time for Washington to hear from the 9 million Americans that make up its global constituency – the people subject, unlike the citizens of any other modern country in the world, to double taxation, in the country of their residence and in that of their citizenship.

There are many views as to how this situation can be corrected and there are advantages and disadvantages for someone in each of them (but whoever suggested that everything about paying taxes was "good"?).

The AARO board, with the clear support of the AARO membership, has consistently supported a move to residence-based taxation, making the hiring of Americans overseas more attractive to international companies, and reducing the need for burdensome and costly financial reporting requirements on individuals and banks, both to the IRS and under the Foreign Account Tax Compliance Act (FATCA).

In the run-up to serious Congressional efforts to achieve tax reform, we:

  • encourage readers to write now to their legislators (find them at senate.gov and house.gov) to tell them how this double liability affects them, personally.
  • encourage readers to participate in the Democrats Abroad survey (which takes around 5 minutes to complete) – deadline September 30.
  • encourage readers to contribute to the Republicans Overseas campaign (sample letter to President Trump provided, to be adapted to individual circumstances) – deadline September 30.

There is at this time no legislation proposing a move to residence-based/territorial taxation, but tax reform is clearly "in the air".  Congress and the Administration must not be allowed to neglect considering the special circumstances of the equivalent of the 12th state in terms of population: the 9 million Americans living and working abroad.

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