The deadline has now passed to submit comments to the Ways and Means Committee on Tax Reform. Comments are posted here. There were (and hopefully continue to be) a large number of letters from U.S. citizens abroad. Who knows what will happen? I am hopeful that Shadow Raider’s optimism will “carry the day”. For those who missed his comment:
Shadow Raider says
@Just Me, You can keep your hopes up. The reporters who wrote that article on The Hill probably contacted both chairmen of the international tax reform working group, Devin Nunes and Earl Blumenauer, and I suspect that the Republican aide who responded is the same Devin Nunes’s assistant whom I met last year. Yes, he defends citizenship-based taxation, but he is the only aide that I met who does. His opinion is not representative of what Congress thinks about the subject, so I think we can safely ignore his comments. All other aides that I met were supportive or at least open to changing the tax system to one based on residence.
Speaking of congressional aides, most of them are young, as you noticed (20-40 years old), highly educated, motivated and friendly. Also, most of them have traveled abroad, and they live in or around DC, which has a substantial international presence. Perhaps because of these characteristics, they are open-minded about the rest of the world and are interested in new ideas. A 150-year old policy that restricts international mobility is not something that they support. I think citizenship-based taxation is not going to survive much longer.
Also, Earl Blumenauer responded himself to the article on The Hill, and his response seems positive. I think I finally found the point that makes Congress care about the subject: thecompetitiveness of Americans for jobs abroad. When Bill Alexander proposed expanding the FEIE to all kinds of foreign income in 1992, he titled his bill “Overseas American EconomicCompetition Enhancement Act”. When Jim DeMint and Gregory Meeks proposed making the FEIE unlimited in 2007, they titled their bill “Working American Competitiveness Act”. Earlier this year, Dave Camp wrote that tax reform is needed to make US workers more competitiveinternationally. Now Earl Blumenauer mentioned something similar. The Senate Finance Committee scheduled a meeting on “international competitiveness” for next month, and I don’t think they are just talking about corporations. So congressmen don’t care much about logic, simplicity or fairness in the tax code, banking problems, exports or additional tax revenue, but they don’t want Americans to be undesired for jobs outside of the US simply due to their citizenship. In the past, this problem could be mostly solved with the FEIE, but today, with FATCA and the enforcement of FBAR penalties, even excluding all foreign income wouldn’t be enough. For Americans and foreigners to be considered equally for jobs abroad, Americans abroad can’t have tax or financial reporting requirements to the US either.
The Joint Committee on Taxation should say something about the subject in its report on May 6, and the Senate Finance Committee should also say something after its meeting on May 23. I think we’re in for a pleasant surprise.
Here are some comments that really captured the life of “U.S. citizenship abroad”.
Somebody trying to live an “every day life” in Canada
I suspect that #americansabroad in Canada can relate to this waysandmeans.house.gov/uploadedfiles/… – Accurate portrayal of the burdens of US citizenship
— U.S. Citizen Abroad (@USCitizenAbroad) April 17, 2013
This is an excellent submission from a U.S. citizen in Canada who is nowhere near retirement and is faced with the prospect of trying to live and build a life. What is particularly interesting in this one is that she suggests that many U.S. citizens abroad are afraid to write because they are not compliant.
And from a person at a similar stage of life in Switzerland
Excellent description of how “US citizenship abroad” is a punishment and why #americansabroad must renounce waysandmeans.house.gov/uploadedfiles/…
— U.S. Citizen Abroad (@USCitizenAbroad) April 17, 2013
The complete community of U.S. citizens abroad owes a great debt to those who are writing to the Ways and Means Committee.
Not all letters have been posted! (at least yet)
For those who have not been following this discussion, comments on this blog reveal that at least three people have written letters that have not been posted. Hopefully they will show up. But I am beginning to wonder (some were clearly written before some that have been posted). Perhaps those who wrote and find that your letters were NOT posted should post them here.
In any case, many helpful letters have been posted.
He should have at least written:
“I will keep your views on local income outside of US jurisdiction in mind”
Contrary to what some want to believe, It is not a “cost” for America when local income is earned outside of US jurisdiction. America’s lack of loyalty and patriotism for citizens living abroad is disappointing.
@SwissPinoy; what is even stranger to me is that foreign tax credits used to offset the US tax on such income seem not to be considered as a cost, but if the foreign income in not covered by a foreign tax credit and a US tax actually paid then it is considered a tax cost to the IRS.
Strange reasoning that to me defies all logic.
Email message from ACA
Dear ACA Supporter,
Thanks to everyone who sent in their personal submissions to the Ways and Means Committee on International Tax Reform. With your help, ACA has made progress in generating awareness of the issues that impact 7 million Americans residing overseas.
Over 900 total submissions on tax reform were received by the Ways and Means committee on April 15th, 2013! Over 200 responses were specific to International tax reform of which more than 40% were made by ACA supporters! Tax reform is on the Congressional agenda and Americans Abroad now have the opportunity to let lawmakers understand our concerns firsthand. ACA continues to send you a “Call To Action” to support H.R.597, a bill supporting Americans living overseas and to respond to the Ways and Means Committee with your input on tax reform. We look forward to hearing from you on these important topics via Facebook, Twitter or on our website!
All the best,
The ACA Team
Reminder: The Joint Committee on Taxation should release its report about the submissions tomorrow.
@Shadow Raider; I wait with baited breath for what the JCT may release. International Taxation comments, most of which suppout the replacement of Citizenship-based taxation with residence based taxation, predominated in the comments submitted.
The trampling of the fundamental human rights of US citizens living outside of the US comes through loud and clearf in these comments. Thanks to all who stuck their necks out and submitted comments.
@Roger Conklin, my submission was heavily self-censored out of fear that it could be used against me, since I renounced directly in response to banking discrimination resulting from US policy. I could imagine that without such fear of being punished, there would have been far more submissions with a much more accurate picture of the real situation. It is sad that normal and moderate law-abiding Americans have valid legal reasons to fear the government due to existing policy.
Let us see if they water them down or hide them like the quarterly numbers of renunciations / relinquishments.
Swisspony, You are not the only one who did not put in writing a number of your concerns out of fear of retaliation. It is tragic that this intimidation was so real because it is the true human suffering that this Committee needs to know about. Not being able to express it out of genuine fear is one of major tragedies of this whole citizenship-based taxation and how it has literally destroyed the lives of so many law-abiding US citizens living and working outside of the United States, and served to drastically diminish the positive influence American abroad used to have in the countries where they live. I say “used to” because the US Government has done irreparable harm to itself and to all Americans through this policy.
Thank you for stating it so well Roger. In a time when the US can use as many friends it can, it is turning its own away. There’s almost what seems to be a self-loathing in its policy choices that would cause, and continue the harm its its own citizens, economy and reputation. This inability to look into the mirror will be its undoing I’m afraid.
Americans living outside the homeland are heretics. They are to be persecuted.
https://www.jct.gov/publications.html?func=startdown&id=4517
released?
Yes, the report from the Joint Committee on Taxation about the submissions was released today as scheduled. The section on international issues mentions residence-based taxation for individuals, mostly ACA’s proposal (pages 521-522). As expected, the report only summarizes the comments sent, but doesn’t make any recommendations. The Ways and Means Committee announced that it will study the details of the report in the coming weeks. And the suspense continues…
Interestingly, while in the case of corporations the report lists comments for and against territorial taxation, in the case of individuals it only lists comments supporting residence-based taxation, because not a single comment was sent supporting citizenship-based taxation.
page 521 (as marked on the page numbers of the document) unemotionally summarize the multittude of submissions.
Whitewashed to technicality level.
page 521, Only. Weak. US Citizens overseas are screwed and sent to hell by the reigning administration. You have witnessed the end of the financial health of US Citizens overseas.
ok, let’s take it as it is
“As expected, the report only summarizes the comments sent, but doesn’t make any recommendations”
Let’s not get our hopes above the reality of a technical process.
Shadow Raider wrote: “Interestingly, while in the case of corporations the report lists comments for and against territorial taxation, in the case of individuals it only lists comments supporting residence-based taxation, because not a single comment was sent supporting citizenship-based taxation.”
Maybe Ways & Means is dispassionate but I found that part in bold quite heart warming. Way to to go ACA and all overseas contributers! And thanks Shadow Raider for the quick summary.
The contents of the report are very good news. It is an acknowledgment that there is great concern and dissatisfaction with citizenship-based taxation applied to US citizens abroad. Therefore, a failure to make changes will be proof of malicious intent on the part of Congress. It is no longer necessary to ask:
“What did Congress know, and when did it know it.”
@USCitizenAbroad
Yes, that all important acid test for wilfulness.
I think the content of the JCT report on pages 520 and 521 is quite okay. Kudos to ACA’s letter writing campaign. Job well done!
I also think it is now critical for ACA to post as many of the snippets of “submissions” as possible on its website — time is of the essence. There is no doubt that journalists will be wanting material (real life anecdotes) for their stories about the JCT report. The more accessible the material the better.
It is now time for ex-pats to set the record straight about their plight. All the BULLSHIT about fatcat ex-pats drinking champagne on the French Riviera needs to be put to rest once and for all.
The window of opportunity is NOW!
Victoria has given us a great heads up on some of what we can expect from the expat study some of us participated in last year. More:
http://thefranco-americanflophouse.blogspot.ca/2013/05/more-data-about-americans-abroad.html
@Patrick Henry
It certainly is now or never for me.
I agree. It is time to “turn the tide of battle” in the war that has been waged against expats.
Don’t consider the battle is won. Tax laws are not based on the majority vote by those submitting comments. There are still many enemies of residence-based taxation in Congress. Citizenship-based taxation IS the status quo,
So do not slack off or relax the pressure.
Several have commented that they were deliberately reserved in the comments they submitted because of the real fear of reprisals. Others did not submit comments for the same reason.
Very wise words from Roger. Gotta keep the pressure on.
There is a chance that what has been a discussion among US persons abroad will morph into a dialogue between US Persons Abroad and Congress. This will be a first and is the result of lots of work by lots of people.
The side who successfully defines the issue will carry the day. This is NOT an issue of taxation. It is an issue about whether US persons abroad are able to live normal, productive, happy and purposeful lives. The way that the US practices citizenship-based taxation is NOT about taxes. It imposes so many practical life restrictions that what some call “citizenship-based taxation”is really a prison (as Badger and Roger articulate so well).
Therefore, I suggest that we work on a redefinition of the issue. Instead of calling it “citizenship-based taxation” it should be called “residence based life restrictions” (or something similar). Why should US citizens who opt to live outside the United States be prevented from seeking the same happiness and fulfillment that Homelanders are?
This issue should not be defined with the word “tax” as part of the definition. It should be seen as an issue of: “Life, liberty and the pursuit of happiness!”