US expats given hope of lower tax bills
Republicans edge towards eliminating need to pay levies overseas and at home
published in the Financial Times
by Demetri Sevastopulo and Barney Jopson in Washington
You can read the article by answering a simple question that appears when the page loads. I cannot post the entire article due to copyright restrictions.
Here are some excerpts:
Millions of US citizens working overseas could see their tax bills lowered by an overhaul of the tax system as Republicans edge towards eliminating a requirement for American expatriates to pay taxes both overseas and in the US.
Kevin Brady, the Republican head of the House ways and means committee, which is drafting a tax reform bill, said lawmakers were considering the measure, which has been the focus of lobbying by Republicans Overseas, a group of party donors around the world.
“It is under consideration. They have made the case,” Mr Brady said in response to a question from the Financial Times at a Christian Science Monitor breakfast. “Lawmakers representing that area of the tax code have made that case.”
The US Chamber of Commerce, a business lobby group, has urged policymakers to consider US-only taxation for individuals, too, arguing that taxing foreign income hurts American managers at the overseas affiliates of US exporters.
Mark Mazur, who was the top tax official in Barack Obama’s Treasury department, said he supported the change, arguing that it was necessary to address the “inequity” of an expat paying tax on the same income to both the US and a foreign government.
“If you take two people, one works in London, one in New York, working for the exact same US multinational — if they make the exact same amount of money you might think they should be taxed exactly the same,” said Mr Mazur, who heads the Tax Policy Center.
Solomon Yue and Michael DeSombre are also mentioned in the article.
There are quite a few comments with JC doing Yeoman’s Duty.
It’s just not that simple.
Citizens are always US-resident (dwelling in Neverland, D.C.). This is the fiction that allows US citizens living outside the US to vote, make use of US tax breaks, etc. For some, those things are highly valued and any attempt to take them away would be challenged.
Changing what income gets taxed would be easier but would do nothing to save expats from FBARs and FATCA.
Nevertheless, it’s great to see the FT article. Let’s hope Brady mentions the subject again.
Pet lover – because ESTA is automated and may kick former citizens out to manual processing, for ridiculous reasons such as traffic offences. This can cause a delay which disrupts travel plans.
Getting a visa is more trouble but surer.
Picked up by finews:
https://www.finews.com/news/english-news/29353-americans-switzerland-swiss-banks-tax-break-donald-trump
Plaxy,
As a former citizen, I had no problem with ESTA. The cost is US$14, compared to US$160 for a tourist visa (plus a trip to the nearest consulate, which, for me means a plane flight). The tourist visa application is more intrusive as well. If you can answer no to all the ESTA eligibility questions (read them here: https://www.official-esta.com/esta-resources/what-are-the-esta-questions/) then you should get through. For former citizens, you need to enter in the data from your last US passport (number, expiration date).
The ESTA application should be approved in a matter of days, and it lasts for 2 years. I got mine a year ago and have been in the US twice on it. My daughter had no problem either.
Karen – that’s good to hear. I don’t mean to cause unnecessary concern.
“By 2pm on Thursday, the FT article quoting Brady had received 142 comments, many from Americans expressing their exasperation, and in some cases fury, with the current system.
The FT article was also immediately flagged up by the IsaacBrockSociety.ca blog, a Canada-based online forum of expatriate Americans keen to see changes in the way American expats are treated by the US.”
http://www.internationalinvestment.net/products/tax/cautious-optimism-among-us-expat-reps-washington-possible-tax-law-changes/
@UScitizenAbroad,
You would be surprised at how these condors are organized and suppprtive of each other as I know some of them from living overseas. They are the eyes and ears of our govt reporting about us and involved in law making etc. Who do you think got together to make this FATCA and all these compliance nightmares so for each repeated information forms they make more money per form stating that it takes 35-40 man hours to do each form. It does not even for millionaires!.with plenty of offshore accounts. It takes only an hour or less to do one form or maybe even less. Most of the condors have shifted their operations overseas to get help from overseas foreign workers such as Greenback with their HQ in Hong Kong. There are firms in India too that are filling out those forms and the CPA would overcharge you for simple forms that he had it done overseas with a final check off from him.
I hope all of them are out of work and shift back to homeland. No more compliances but I doubt they will let us all go free that easy. I hope it does not fail like Obamacare repeal.
https://www.ft.com/content/db6912fc-b931-11e7-9bfb-4a9c83ffa852.
Republican camp buckling already ?
@Harrison
Would you mind copying here? My access is paywalled.
Thanks in advance for sharing, but please copy only excerpts due to copyright restrictions.
Sorry I can’t access the site too due to no subscription but there is a storm brewing among Republicans already about this law from an earlier browsing that caught my attention and then my Firefox crashed and when I tried to access it again the website retained my IP or device information and did not let me look at the information again or I would have simply cut and pasted that info. Maybe its per IP address in one day or per device per day limitation as some days I am able to look at FT info and some days I can’t without a subscription.
I expect it’s about Corker, Flake, McConnell etc vs Bannon. And the difficulty of getting any kind of tax reform through a Congress that is so bitterly divided.
The budget has passed, allowing for the possibility of getting a tax bill through without needing the Democrats – if all the Republicans could agree. But that may be a tall order.
@plaxy ditto. With all the condor industry against it after realizing its impact on them would make it impossible to pass. Did you all see that Greenback is headquartered in HK possibly paying a lower taxation and convoluted structure similar to what I see US tax attorneys setting up these convoluted structures for themselves and their high net worth clients to reduce or avoid their taxation. For example did anyone think of Mr Romney and his Bain capital incorporated in Cayman Island paying less taxes? Meanwhile a lesser earning expat pays his taxes in his country of residence as well as pay a VAT and other high charges in his country of residence and then has to pay high amount to a US CPA just to get under compliance. Meanwhile he has to fight the banks to keep his account opened up or closed down by some banks completely such as in what is happening in Hong Kong now as all banks are off limits to US citizens completely. You can forget about brokerage accounts everywhere as US govt is hitting them hard with a stick and they are very afraid and denying accounts to US citizens based on one nationality alone. It helps if you have a passport from another country but then again you have to file under perjury forms that you are US citizen or green card alien or not even as a second nationality question. This is what I see in all foreign bank forms nowadays. Only one nation is doing that in all bank forms everywhere and that is good ole US.
Harrison – I don’t think the Republican “war” mentioned in the FT headline would be anything to do with CBT.
There are plenty of reports in other papers, not behind a paywall.
https://www.washingtonpost.com/news/powerpost/paloma/daily-202/2017/10/26/daily-202-the-gop-civil-war-is-bigger-than-trump-a-new-study-shows-deep-fissures-on-policy/59f0eb7230fb045cba000a43/
http://www.npr.org/2017/10/25/559963926/steve-bannons-war-against-establishment-republicans
The scariest ones suggest Bannon is getting ready to run for President after Trump.
For those of you who can access FB, Solomon received permission to post the article (via Keith)
You can the entire text
here
Koskinen is OUT and Kautter is IN as the IRS Commissioner (at least temporarily). Does anyone have a sense of whether or not David Kautter will be good, bad or indifferent for the tax reform being sought by expats?
Same day as this:
https://www.upi.com/Top_News/US/2017/10/26/Justice-Department-settles-Tea-Party-IRS-lawsuit/3281509047086/
Clearing the decks for peace to break out between the two main factions of the Republican Party, it looks like.
@ plaxy i meant the same in my statements. The war among the Republican Party itself would slow the bill but I just saw a new headline on FT ” Trump tax reforms clears House votes”. Budget vote means lawmakers can now focus on the details, but deep divisions remain.
The details are hidden for subscribers only.
Hope and pray that House decides to axe this CBT/FBAR and FATCA for good and every brokerage and banks in the world start taking clients from expats. The last time a bank manager in HK told me if there is any IRS request to freeze my funds for any reason they will do it at once and all banks in HK will follow the law. They were pretty scared as we tried to open up accounts and were rejected at showing the blue eagled passport. Show us your other passport and come on board was the statement. Nowadays CRS is taking hit on HK banks and they are not opening up accounts anymore for non resident HK. Businesses like mines who were actually trading in HK and China took a hit due to FATCA abuse as I had to wrap up everything from HK banks.
“There doesn’t seem to be a law to tax expats. There just isn’t a law not to.”
26 USC 1 taxes every individual in the universe. I haven’t checked to see if the individual has to be carbon-based or have 23 pairs of chromosomes, but we do know the individual doesn’t have to speak English and doesn’t have to be within the reaches of Earth’s atmosphere.
However, 26 USC 2(d), Nonresident aliens, says this:
‘In the case of a nonresident alien individual, the taxes imposed by sections 1 and 55 shall apply only as provided by section 871 or 877.’
So it would be easy, technically, to delete the words “aliens” and “alien” from section 2(d).
All non-residents would become subject to Form 1040NR instead of 1040. If the person has no US-sourced income, or if US withholding is enough to pay US tax on the US-sourced income, then the person doesn’t even have to file Form 1040NR.
“Kevin Brady, the Republican head of the House ways and means committee, which is drafting a tax reform bill, said lawmakers were considering the measure, which has been the focus of lobbying by Republicans Overseas, a group of party donors around the world.”
Yes indeed, in a democracy, the ruling party’s primary obligation is to campaign donors. Even though I’m not American, I have to admire lobbyists who got it this far and hope they will succeed.
Please read the 2298 comments on this bill that is still being worked on. We don’t know the specifics yet but big cheers to all those who worked hard for it. Wishing I had not complied with the rules too like some of you. The comments are from hateful homelanders who don’t understand how international taxation affects people overseas.
https://www.washingtonpost.com/powerpost/house-narrowly-passes-budget-paving-way-for-15-trillion-tax-cut/2017/10/26/49867544-ba50-11e7-be94-fabb0f1e9ffb_story.html?hpid=hp_hp-top-table-main_housebudget-1108am%3Ahomepage%2Fstory&utm_term=.898024977162
“The comments are from hateful homelanders who don’t understand how international taxation affects people overseas.”
Hmm. Everyone’s been assuming that ET taxation is punishment for homelanders who moved to Canada during the US’s civil war, but what if it isn’t? What if it’s designed to punish Canada (with collateral damage in other countries) because Canadians burned Washington when the US entered the War of 1812 on the side of Napoleon?
Original article and comments visible here:
https://amp.ft.com/content/4909d804-b9a1-11e7-8c12-5661783e5589
For the record, since none of the newspapers could be bothered to link it, here’s how each chamber voted on the budget resolution:
Senate vote: https://www.govtrack.us/congress/votes/115-2017/s245
House vote: https://www.govtrack.us/congress/votes/115-2017/h589
Nay votes from Republicans: one in the Senate (Rand Paul), 20 in the House (among them three names you may remember from the FATCA hearings back in April: Thomas Massie, Mark Sanford, and John Duncan)