April 20, 2021

Democrats Abroad Response to Senate Finance Committee proposal to overhaul international taxation

Democrats Abroad has published a submission to the Senate Finance Committee in response to its proposal "Overhauling International Taxation".  In our submission we make the case for reforming the way the Repatriation Tax and GILTI Tax impact Americans abroad.  Click here to download our submission.


The GOP tax reforms enacted in 2017 included 2 new taxes - Repatriation Tax and GILTI Tax - that provided enormous tax relief to U.S. multinationals with overseas subsidiaries, but have devastated the small to medium sized businesses owned by Americans living abroad.*  

As part of the American Jobs Plan Congress is working through reforms to increase the GILTI Tax on the profits of the foreign subsidiaries of U.S companies like Google and Apple that are not currently paying their fair share. 

Democrats Abroad and the other organizations representing Americans abroad fear the small to medium sized businesses that Americans living abroad rely upon to provide for themselves and their families will be swept up in this tax increase as well.  Democrats Abroad is seizing upon this proposed legislation to ensure they do not - and also to address the problems the taxes are causing currently. 

The reform recommendation in our submission comprises an exemption from the taxes on the profits of the foreign-registered companies of Americans living abroad who have income under $400,000.  Our reform:

  • aligns with the Biden pledge not to increase taxes on Americans making less than $400,000 per year
  • corrects the flaw in the GOP Tax Cuts and Jobs Act which imposed these taxes on the profits of small to medium sized companies instead of just the profits of overseas subsidiaries of U.S. multinationals
  • ends the double taxation of the profits of the foreign-registered companies of Americans living abroad
  • eliminates the need for the flawed GILTI Tax relief provisions implemented by Treasury last year which are too complex and therefore too costly for many to access
  • fulfils the ambition of Democrats to create tax policy that places the greatest tax burden on those with the greatest ability to pay.

We are distributing our recommendation to a range of Congressional leaders (not just those on the cc) and are following up with discussions about it in the weeks to come.

The Overhauling International Taxation document indicates that submissions in response to the proposal are welcome up to Friday April 23.  We encourage those impacted by the transition taxes in the GOP 2017 tax law to submit their own response to the proposal published by Senate Finance Committee Democrats. 

The American Families Plan provides us with further opportunities to progress tax and financial account reporting reforms for Americans abroad.  Please watch this space.

Democrats Abroad Taxation Task Force


*Democrats Abroad published this research on the "transition taxes" in the Trump Tax Cuts and Jobs Act in May 2018 which profiles the impact on Americans abroad with small to medium sized businesses.