American Citizens Abroad (ACA) Launches Residence-Based Taxation Proposal in Washington
Director Discusses Plan with Members of Congress, Joint Committee on Taxation
GENEVA – February 20, 2012: The Director of American Citizens Abroad (ACA), a non-partisan, non-profit organization representing the interests of U.S. citizens living outside the United States, today announced a new tax reform proposal unveiled with policymakers in Washington, D.C. These reforms are aimed at increasing American jobs, exports and competitiveness, as well as addressing the specific tax situation of Americans residing overseas.
ACA’s new proposal advocates residence-based taxation instead of the present system of citizenship-based taxation, along with other reforms aimed at increasing America’s global competitiveness.
Details of the new tax reform plan can be found here”
“A Better Way to Tax US Persons Abroad”
Director Jackie Bugnion met with Democratic and Republican staff of the Senate Finance Committee and the House Ways and Means Committee as well as staff of the Joint Committee on Taxation, to discuss the new ACA proposals.
“There is already a strong movement in Congress to shift corporate taxation from worldwide to residence-based taxation in order to level the playing field for U.S. companies competing in the world economy,” said Bugnion. “Following the same logic, I met with Members of Congress to convince them that the U.S. should make this move for individuals as well, to allow Americans to compete on that same level playing field.”
Today, due to the double taxation of current U.S. tax laws, Americans abroad are simply not competitive. It is much cheaper for U.S. corporations to hire foreigners overseas instead of Americans. Fewer Americans overseas means less exports from the U.S. and fewer jobs back home. Changing to residence-based taxation for individuals would encourage U.S. corporations to send more American staff overseas to represent U.S. interests and promote American-made products. To conquer foreign markets in today’s global economy, U.S. companies need to have American feet on the ground, in the form of Americans physically present overseas.
“ACA will be systematically contacting all Congressional offices on the Senate Finance and House Ways and Means Committee to get issues concerning Americans residing overseas included in legislation on fundamental tax reform,” added Marylouise Serrato, Executive Director of ACA. “Changing to residence-based taxation would be good for Americans overseas, but also good for the entire U.S. economy.”
The U.S. is the only industrialized country in the world to impose citizenship-based taxation. The serious flaws in this system were recently highlighted by the difficulty of implementing the Foreign Account Tax Compliance Act (FATCA). FATCA imposes extensive extra-territorial reporting requirements on banks worldwide, and final regulations have still not been issued by the IRS because of the nearly insurmountable practical issues involved. Banks overseas are already closing legitimate bank accounts of American living abroad in order to avoid the potential penalties of this onerous and complicated legislation. It is impossible for Americans living and working overseas to survive without normal banking relationships, and fewer Americans overseas means less U.S. exports and fewer American jobs. ACA has called for outright repeal of the misguided and self-destructive FATCA legislation.
Contact:
For Immediate Release
February 20, 2012
Marylouise Serrato
info.aca@gmail.com
+41 22 340 02 33
As a US resident, I fully support ACA’s proposal and I will make it a political choice for this election year. I don’t care any party affiliation, this will be my top one question to win my vote.
Way to go !
@ij, I appreciate your contributions here talking about the Chinese because I know next-to-nothing about Asian culture. But why in the heck did you become a US ctiizen? This is one reason why I say that the US did/does a poor job of actually alerting people to their obligations for filing. At the very least, they should tell people upon getting a green card of their “tax obligations.”
Sadly, the US and most countries, even where I live, uses language to the extent of “you must pay taxes if you live here no matter what”. So people who are illegal end up paying taxes, and some legal residents end up disregarding it. Not a good idea for US residents.
@US Citizens Abroad – I would like it so much if the US adopted a competitive strategy. If they did, I might even ask for my citizenship back….
I’m hanging on for now, hoping they’ll reform taxation fairly soon
@geez, “But why in the heck did you become a US ctiizen?”
Well, My wife and I settled down here in US with my three little kids born in US. So, I decided to become US citizen in the summer of 2010. For me, there is very little FATCA and FBAR impact on my future as soon as I clean up my past non-compliance.
I am done at my age. However, for my three little kids, I will send the bright ones back to Canada (they are dual citizen and at age of 18 to have their US citizenship renounced). The dumb ones will stay with me here in US — that what this country really wants to keep -:)
I believe that at this time we all should support ACA. I have already done with an extra contribution. Let´s do it!
@ij
You are a Hoot my friend! You have such a sense of humor even while you are going through the IRS torture chamber. My gut feeling tells me none of your three kids are dumb because they will inherit the intelligence and integrity of their father.
As for ACA and their current lobbying efforts, I salute and applaud them. Unfortunately I will not hold my breath to see results of their efforts. In America where we live currently is governed by a tax code that is administed by monkey’s in suits.
Sheesh! I need to turn spell check on!
@Anon123,
My dear friend, welcome to join here, I guess we are the minority here as most of them are expats. I fully support their cause.
This blog has a lot good discussion and it is easy to follow the posts.
If you use Firefox or Chrome, it should have spelling check automatically on.. I would not dare to post one sentence without the spelling check -:)
Speaking of spelling check, I have another joke..
My work group had a picnic party — I was not sure when/where. So I sent a message to my boss (a nice/fine lady from Canada as well). I asked “where/when is the panic party ?” — I trust the auto spelling so much, I just hit send —
Then my boss respond “what are you panic for ?”
Later,. my friend told me “good you did not put panty party”
Take care, my dear friend, and it is always happy to see you..
Happy to see both of you here, as US immigrants need a place to vent and commiserate too, and if it is on a post that I do, I can be the spell checker!! 🙂
@annon123. I left you a note over at Jack’s this morning.
@markpinetree…
I usually don’t pitch for contributions here, but I too contribute to ACA lobbying efforts. I view them as my non partisan NPR like source for Expat tax news, and so they need my support.
Accounting Today just ran a story on this release…
http://www.accountingtoday.com/news/Expatriates-Press-Capitol-Hill-Tax-Reforms-61786-1.html#read
BTW, Michael Cohen has been very good about reporting on our issues, so you might give him some support by clicking on his stories and making favorable comments. Just a suggestion.. 🙂 Oh… a hint. Their web comments does not accept hyperlinks, and it doesn’t tell you the problem. Also think comments are limited to 4000 characters.
I added this comment.
Michael
Balanced, and thanks for drawing this to the attention to a wider audience.
There is a reason that all States in America practice a territorial taxation system, and that 192 countries around the world do to. It works. When you think about it, the basis for a Citizenship Taxation model, unique in the world is totally indefensible morally, and contra productive practically speaking. To assert the right to tax a citizen anywhere in the world they live or work, is something I think the American Founders found offensive. When was that? Oh, back in the 1700s.
Regarding FATCA …When Shulman says. “In this case, we tried to maximize offshore tax compliance, while minimizing burden on market participants.”
I wished he would think about trying to minimize the burden on Expats, immigrants new to America, and those that are not the intended targets of the past 3 years crackdown on offshore evasion. FATCA is surely a road to hell paved with one good intention.
I am glad he is listening to the super persons, Corporate Financial institutions, and I can sympathize with their plight. It has to be complex and costly to try to do what FATCA requires. When you think about it, it is a stunning extra-territorial overreach trying to have all Financial Institutions in the world to report to the IRS. That surely will add some element of systemic shock to the financial system, when uncertainty arises about transactions between compliant and non compliant FFIs, which can not be good in this fragile time.
In the meantime he apparently is refusing to consider the plight of normal middle class persons in dealing with the fall out of these misguided programs. We/they are the unintended collateral damage of all of this that have a hard time getting our voices heard due to the scattered nature of the Diaspora and lack of representation.
Further, he is even failing to respond formally to the Tax Advocacy Service Directive (TAD) regarding the misapplication of his Voluntary Disclosure programs with the “Bait and Switch” nature of the rule changes, and the use of maximum penalty threats as the tool of choice to encourage compliance. In this he has turned an entire class of citizens into implied tax cheats without the ability to discern the difference in an easy, fair and administratively simple way. A lot of the recent National Tax Advocate report to Congress dealt with these issues, so maybe he will have to respond there.
Thanks again for your continued reporting on these issues, which frankly do not break onto the radar screen of the MSM. Expats, or immigrants don’t have a voice at the table, except for ACA which does the best they can, but frankly, have been outgunned for years when it comes to getting favorable consideration of the Expat POV. There is a lot of misunderstanding in Congress about who the expats are (not just rich tax cheats) and the value of a large Expat community who acts as an ambassador for the country and creating Export jobs back home. China gets it, Germany gets it, and so does every other country in the world that has an export led economy. Maybe someday, the US will come to it’s senses, you think? Nah, me either, but then hope springs eternal.
Another favorable story highlighting the issues has come out from Robert Wood at Forbes. He consistently writes on these issues and often links to ACA web site as references. This is a good one to pass around..
http://www.forbes.com/sites/robertwood/2012/02/25/expats-lobby-for-tax-on-residence-not-worldwide-income/
https://twitter.com/#!/FBAR_Compliant/status/173494883443671040
upon reminder from @bubblebustin, I have updated this Post to provide link to the actual ACA proposal that is now with members of Congress.
Missed this the first time around!
@bubblebustin
You are not alone. I miss a lot too. 🙂
@from Bubblebustin
US group offers better idea for collecting taxes abroad
“GENEVA, SWITZERLAND – There’s a better way for the IRS, the US tax office, to collect money, a group of US citizens says, noting that it is “alarmed and vexed” at costly and cumbersome Fatca legislation the US is enacting. Its suggestions were unveiled Saturday in London.
The ACA proposal “would replace the current citizenship-based taxation with residence-based taxation, under which American residents overseas would pay taxes on a basis very similar to that applied to non-resident aliens, with US-source income withheld at source. This would align US tax policy with that of virtually every other country on the planet. In addition, ACA calculates that implementing the new proposal would dramatically improve tax receipts to the US Treasury and improve the US export picture”, the group says in a statement issued 8 December.”