An Open Letter to Secretary of the Treasury Yellen, on behalf of the International Chair of Democrats Abroad and the Chair of the Democrats Abroad Taxation Task Force
Dear Madam Secretary,
On behalf of the millions of U.S. Citizens living overseas, Democrats Abroad wants to welcome you on your first trip abroad as Secretary of the Treasury. After four years of being frequently embarrassed by the actions of our own government, we are overjoyed to again feel a sense of pride when a brilliant, competent American official visits one of the foreign capitals in which many of us reside. Democrats Abroad was honored to play an integral part in electing the Biden-Harris administration, and we look forward to continuing our work to support your policy agenda. We are especially excited by your plans to encourage fellow G7 ministers to institute a global minimum corporate tax rate to stop the harmful race to the bottom between leading global economies.
Moments like your visit to the G7 are, however, sometimes bittersweet for U.S. citizens abroad. While they foster a sense of pride to be American, they also remind us, as Americans overseas, of the ways in which our constituency is often misunderstood as a group, as well as overlooked when certain policies are designed and implemented.
U.S. citizens overseas seem to be frequently thought of as high-net-worth individuals living a life of luxury in low or no-tax countries, caricatured as fat cats stashing money in the Caymans or in unoccupied West London real estate. In truth, the vast majority of us are middle-class Americans who are studying, working, raising families, and retiring in countries with a higher overall tax burden than the United States. According to research published in 2019, 61 percent of U.S. citizens abroad have a household income of less than $100,000 per year. This misunderstanding of who Americans overseas are has had severe consequences for us.
As Democrats, we strongly believe in the importance of preventing tax evasion and financial crime. However, the policies put in place to achieve these laudable goals have often been designed in a way that causes serious harm to ordinary U.S. citizens living abroad. As a direct result of policies like the Foreign Account Tax Compliance Act (FATCA), we are often denied ordinary banking services in the places we live. We are frequently removed from joint accounts we share, putting our financial security in serious jeopardy, and denied employment, promotions, and business partnerships when roles involve signature authority over business accounts in foreign financial institutions.
Given the often prejudicial impact of the tax system on Americans abroad, we hope that the Department of Treasury under your new leadership will keep ordinary Americans living overseas in mind. We know you have the best interests of all Americans at heart, and we look forward to the chance to share some recommendations for ways to help the IRS refashion tax enforcement measures to better catch bad actors while simplifying compliance and providing the intended relief for working class Americans living abroad. We are excited to see what the new era your leadership, as the first female Secretary of the Treasury, will bring to the department, and we wish you every success in your work representing the United States in London.
Taxation Task Force Chair