Democrats Abroad is pleased to make public the data obtained in our 2019 research into the experience of Americans abroad complying with U.S. tax filing and financial account reporting requirements.
We hope this information will be useful to the many organisations and individuals working hard to persuade Congress to make urgently needed reforms to the way the U.S. tax code impacts Americans living outside the U.S.
Democrats Abroad supports:
- A switch from the current U.S. system of citizenship based taxation to a system of residency based taxation, in which Americans living abroad would continue to report their U.S.-sourced income but would no longer be required to report income they generate and pay tax on in their country of residence.
- Urgent relief from the “transition taxes” in the 2017 Tax Cuts and Jobs Act which threaten the viability of many thousands of companies owned by Americans living abroad.
- The elimination of the foreign financial accounts of Americans living abroad from all reporting under the Foreign Account Tax Compliance Act or FATCA.
- The repeal of the Windfall Elimination Provision which prevents Americans abroad with pensions in their countries of residence from claiming the full amount of Social Security payments owed to them.
- Reforms to the Foreign Bank and Financial Accounts Report (FBAR) reporting requirement for US Citizens in their bona fide country of residence, especially to redress the enormous and out-of-proportion penalties for non-wilful non-compliance and the biases in mandatory electronic filing.
- An urgent remedy for “Accidental Americans” who want only to shed unwanted U.S. citizenship without lengthy procedures and undue penalties.
We urge Congress to:
- Hold hearings to investigate the myriad ways the U.S. tax code discriminates against Americans abroad; and
- Establish a commission to study the impact of federal laws and regulations on Americans living abroad and to avoid passing laws that unintentionally harm Americans abroad in the future.
Democrats Abroad's Taxation Task Force continues to meet regularly with members of Congress, primarily (but not exclusively) those on the important tax writing committees. We continue to practice research-based advocacy to make the case for urgently needed tax reform for Americans abroad and to build support for residency based taxation legislation that ensures access to the reform for ordinary Americans abroad and protects the law from abuse by those who would use offshore residency to avoid paying tax.
Democrats Abroad reaffirms its commitment to tax policy that –
- helps reduce inequality and boost opportunity,
- makes the tax code fairer for all Americans,
- protects programs essential to national, community or individual well-being, and
- raises revenue from those with the greatest ability to pay.
Democrats Abroad supports tax reforms that -
- clarify and simplify filing,
- do not add significantly to the federal debt, and
- do not create loopholes to be exploited for tax avoidance.
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Democrats Abroad Taxation Task Force