We are in a very exciting and dynamic political cycle for tax reform. The work of the Dems Abroad Taxation Task Force reflects the big opportunity we have to see reform recommendations we have been working on for many years included in legislation going through Congress this year.
2021 Infrastructure Legislation and Budget Reconciliation
Those watching the political landscape know that the Biden Administration is working with Congress to pass an infrastructure bill and a social spending bill this year. It is possible that there will be bi-partisan support for the infrastructure spending; the social spending bill is expected to be passed with little support from Congressional Republicans through the Budget Reconciliation process. The bills are excellent vehicles for the reforms we have been discussing with Congress for many years. (See Reforming the US Tax Code for Americans Abroad below)
Democrats Abroad Tax Advocacy Strategy - 5 components
Our team of volunteers is progressing initiatives that fall into these categories:
- Research - we publish our own research, conducted through the participation of our many thousand of members plus other Americans abroad, and use it to help Congress understand who we are and the help we need.
- Position papers - we publish briefing document, position papers and other thought leadership pieces. They have many audiences and are used to explain our issues and reform recommendations.
- Government Submissions - we submit formal statements to Congressional hearings and government agencies to ensure the interests of Americans abroad are being addressed in the making and implementation of policy and regulations.
- Meetings with Congress - we meet on a weekly basis with members of Congress working on policy that is relevant to our tax, banking, investing, retirement and other issues.
- Grassroots Campaigns - we host campaigns and publish Campaign Participation Guides for grassroots tax activists to use in identifying, calling and writing to their elected representatives about the problems we suffer and the remedies we need.
Connecting Congress and Constituents Abroad
This month we are combining #4 and #5, organizing zoom calls for selected members of Congress, whose support is essential to our advocacy aims, with their constituents living abroad for a discussion about US taxation and tax reform. A few meetings have been set up, with more to come. Thanks in advance to all those planning and participating in this exciting initiative. We need Congress to know who we are and how to help us. The best people to do that are constituents. We think these meetings will really move the dial and we look forward to reporting back about them. More about our Constituents Abroad Zoom Project is here.
Hearings, Hearings, Hearings. Submissions, Submissions, Submissions.
Over the last 6 months Congress has held many, many hearings relevant to the bills they are writing. Democrats Abroad has been monitoring those hearings and using them as a platform to present Statements for the Record about our issues and recommendations. This is some of our recent work:
- Statement for the Record: “International Tax Policy Impact on American Workers, Jobs and Investment,” March, 2021. http://bit.ly/IntlTaxPolicyImpact
- For the Senate Finance Committee: “Overhauling International Taxation framework,” April 20, 2021. http://bit.ly/OverhaulingIntTax
- Statement for the Record: “Creating Opportunity Through a Fairer Tax System,” May 7, 2021. http://bit.ly/CreatingFairerTax
- Statement for the Record: “Closing the Tax Gap: Lost Revenue from Non-Compliance and the Role of Offshore Tax Evasion,” May 19, 2021. http://bit.ly/ClosingTaxGap
- Statement for the Record: “Funding out Nation’s Priorities: Reforming the Tax Code’s Advantageous Treatment of the Wealthy,” May 24, 2021. http://bit.ly/FundingourNation
- Letter to Treasury and the IRS: “Ensuring Equal Access to Child Tax Credits for Americans Abroad,” May 27, 2021. http://bit.ly/CTCsforAmericansAbroad
- Letter to Treasury and the IRS: “Urgent Concerns of Americans Abroad about Expanding FATCA Reporting,” June 2, 2021. http://bit.ly/ConcernsofExpandingFATCA
- Letter to National Taxpayer Advocate: “Issues relevant to Non-Resident Filers for the National Taxpayer Advocate 2022 Purple Book,” July 8, 2021. Download here.
What can you do to help?
Tax reform will happen when Americans abroad reach out to the elected representatives and demand it. Find your member of Congress - via their website or social media - and say something.
Click here for our Guide to reaching out to Congress about tax reform for Americans abroad. It includes advice on finding your member, what to say when you call and what to write when you send a written or electronic message. Call or write to your member today.
While you are reaching out to your Representatives, ask them to join the Americans Abroad Caucus. Here’s how.
In the next month or so we are launching another research project that will result in a report for our advocacy work expanding on our past research such as the research we published in 2019. Please help us by participating in the research and filling in as much of the survey as you can. Thanks in advance for your help. Thanks also to the participants in our 2021 Focus Group research, which feed into the survey for the 2021 research project. We are so grateful for the participants, facilitators and planners for your excellent work.
We have other important advocacy projects going on as well, including work to ensure Americans parents abroad have access to Child Tax Credits; Congressional database updates for our outreach work; research on 3520/3520A systemic assessment notices; and investigation into the impact of GILTI tax on Americans abroad who own small to medium size businesses more than 3 years after implementation. If you have experience with the last of these 2 issues and are interested in feeding it into our investigations, please reach out to [email protected].
DEMOCRATS ABROAD TAXATION TASK FORCE
Reforming the US Tax Code for Americans Abroad
Americans abroad have long sought relief from US taxation through a switch from our current system of Citizenship Based Taxation to Residency Based Taxation (RBT), in which we would continue to report our U.S. income but not the income we make and pay tax on in the places where we live. Our friends at American Citizens Abroad are hard at work refreshing the modelling they sponsored in 2018 that resulted in a proposal to enact RBT. The design elements of the proposal - who is eligible, how they claim non-resident tax status, how they return to residence tax status, and much more - will emerge from their exceedingly in-depth analysis of what impact the reform would have on the federal budget.
This year the government is spending many trillions of dollars to get the economy and the nation back on its feet. It is difficult to know how receptive Congress would be to this major reform. We are therefore also speaking to Congress about other reforms that would provide consequential relief:
1. A filing modification to greatly simplify filing for Americans abroad who owe $0 in tax
2. GILTI Tax exemption for Americans abroad with income under $400,000
3. FBAR updates, especially to eliminate FATCA duplication
4. An Americans abroad FATCA exemption for accounts in the taxpayer’s country of residence (the Overseas Americans Financial Access Act)
5. A Commission on Americans Living Abroad - to review/reform existing, proposed laws
Also needed to level the taxation playing field for Americans abroad:
6. PFIC exemption - so Americans abroad can invest for their future where they live
7. Redefinition of Foreign Earned Income Exclusion - to include foreign government social welfare and retirement income from statutory funds.
8. Improved service from the IRS - more IRS support to EXPAND compliance
9. IRS payments into our international bank accounts - as the Social Sec Administration does