Taxation

The Democrats Abroad Taxation Task Force (TTF) was formed to 1) research U.S. tax policy as it affects Americans living outside the U.S. and 2) consider, develop and execute initiatives aimed at enacting reforms that resolve adverse impacts.

Democrats Abroad has published a "laundry list" of tax code provisions that discriminate against Americans abroad.  The list is here:  smarturl.it/HowToFix23

We fear Congress is too divided to find remedies for each of the many and myriad tax problems we have identified.  But we are determined to demand it of them.

We are committed to Residency Based Taxation as a remedy, requiring little effort by Congress, that addresses the vast majority of the tax problems faced by Americans abroad.

Further, we will continue to promote:

  • the elimination of FATCA reporting for the accounts of Americans abroad,
  • the repeal of the Windfall Elimination Provision,
  • an exemption for American business owners abroad from the transition taxes in the 2017 Tax Cuts and Jobs Act, and
  • a citizenship remedy for "accidental Americans".

We support tax reforms that help reduce inequality, boost opportunity for all Americans and raise enough revenue, predominantly from those with the greatest ability to pay, to meet public needs.

Democrats Abroad Taxation Task Force

TaxationTF@democratsabroad.org

DA Taxation Leadership:

Carmelan Polce
| Taxation Task Force Chair
See all Leaders


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    News

    March 2019 meetings with Congress about expat tax reform

    The DemsAbroad Taxation Task Force is pleased to report back about our expat tax reform meetings last week (the week commencing 4 March 2019) on Capitol Hill.  Thanks to Carol Moore of DAUK for joining us for the meetings.

    Work continues on a bill implementing a switch to Residency Based Taxation

    As followers of this issue know, the residency-based taxation (RBT) bill introduced by Rep George Holding on the last sitting day of Congress in 2018 was lacking in the detail needed to generate the support it needs to be enacted.  However it was a great milestone for RBT activists and an important signal to us all that a powerful member of Congress is committed to an expat tax reform that would provide genuine relief to ordinary Americans living and working abroad.

    We understand from Holding’s team that they are back at work with the Ways and Means Committee lawyers drafting the bill, and with the analysts on the Joint Committee on Taxation who are scoring the proposal (to establish the impact on the federal budget).  Holding's team expects to introduce another version of the Tax Fairness for Americans Abroad Act in the 116th Congress in the coming months and we support their work to see more of the detail we spent so much time developing through 2018 in the next version of the bill.

    But you don’t have to take our word for it.  Rep Holding’s tax counsel, Matt Stross, will feature in a Webcast about the Tax Fairness for Americans Abroad Act hosted by our colleagues at American Citizens Abroad taking place on Wed 13 March and Thurs 14 March.  Click here for information and to register to attend.  Bring your questions and don’t forget to thank Matt.  He has worked very hard on this proposal and deserves our gratitude for his endeavors and his commitment to getting it done!

    Building support for RBT across the House

    We also met with the other members of the House who we know are our allies in expat tax reform:  Rep Carolyn Maloney (Americans Abroad Caucus co-chair); Rep Jamie Raskin (former member of DA France); Rep Dina Titus (former American abroad, very good friend to Democrats Abroad and featured speaker at our 2016 Global meeting in Berlin); and Rep Don Beyer (former U.S. Ambassador to Switzerland).  They are fully across work on the bill and, now that Democrats have control of the House, we expect them to become more hands-on with it.

    Meetings with other members of the tax writing subcommittee of the House Ways and Means Committee suggests our band of mission-critical allies is about to grow.  We will give those members some time to develop an understanding of the reform and will be happy to share their names in due course.

    What else

    We understand that Rep Carolyn Maloney will be reintroducing the Overseas Americans Financial Access Act which would exempt from FATCA reporting all accounts of Americans abroad in their countries of residence and also reintroducing her bill proposing the establishment of an Americans Abroad Commission to examine the range of U.S. laws and regulations that have an unfair, adverse impact on Americans abroad.   If such a commission were in place then Congress might avoid inadvertently enacting laws that harm Americans who live outside the U.S., such as the Tax Cuts and Jobs Act (TCJA) which gave rise to the Transition Taxes which are seriously hurting Americans who own foreign registered companies.[i] 

    The TCJA introduces two Transition Taxes: the Repatriation Tax and Global Intangible Low Tax Income (GILTI) tax.  Despite a year of activism, we are still waiting for some Repatriation Tax relief, other than the one-year deferral to start making payment.  The GILTI Tax, however, was the subject of new Treasury regulations introduced when we were on the Hill last week.   The rules change gives individual owners of foreign registered companies access to the same offsets and discounts afforded to US-based corporate owners of foreign registered companies.  Electing to be taxed as a corporation, however, could for some result in greater levels of taxation in the long run.  American owners of foreign-registered companies should consult their tax professional.

    What’s next

    Our expat tax advocacy team is back on Capitol Hill the week of Monday 8 April and again the week of Monday 13 May, having more meetings with law makers key to the development of the bill and the development of support for it.  Whilst normally we see members in both houses, the March 2019 meetings focused on the House where the in-the-weeds work on RBT is going on.  Our outreach will accordion out again to include the Senate next month. 

    We can’t underestimate the importance of outreach by Americans abroad to your elected officials about expat tax reform.  If you’re looking for advice on how to contact your member please refer to this Guide.  It gives you everything to know about how to contact your member and what to say/write to them once you do.

    Democrats Abroad Taxation Task Force

    Taxationtf@democratsabroad.org

     

     

     

    [i] The TCJA introduced territorial taxation for corporations giving them a deeply discounted tax rate on the repatriation of unrepatriated of profits.  It also imposed deemed repatriation of profits on Americans abroad who own foreign registered companies, many of whom never intended to repatriate the profits (and who are already paying taxes in the jurisdiction where the company is registered.)   These business owners living and working abroad are having to put their hand on many thousands of dollars to pay the retroactive Repatriation Tax on profits going back to 1986.  Catastrophic for many.

    The TCJA also places a new tax on the future profits of foreign registered companies, with offsets and discounts for US-based corporate owners of foreign registered companies but none for Americans abroad who own foreign registered companies. 

    read more

    Democrats Abroad is back on Capitol Hill to discuss tax reform for Americans abroad this week.

    A delegation of Democrats Abroad is in Washington DC this week meeting with members of Congress to share the results of our 2019 research on Americans abroad facing US taxation and continue discussions about legislation enacting a switch from our current system of citizenship based taxation to residency based taxation.

    In our Leave Behind Pack is a summary of the findings of the research and a document making the case for RBT.  

    Residency Based Taxation activists are asked to reach out this week to their members of Congress in support of expat tax reform.  Please refer to this grassroots campaign guide for reaching out to Congress about expat tax reform, which has scripts for calls and language for writing messages.

    Please send questions and comments to taxationtf@democratsabroad.org.

    read more

    Democrats Abroad supports a remedy for "Accidental Americans"

    Democrats Abroad has written to Congressional leaders in support of a citizenship renunciation mechanism for "Accidental Americans".   Download the letter here.

    Please send questions or comments to taxationtf@democratsabroad.org

    read more

    Tax Filing From Abroad: 2019 Research on Non-Resident Americans and U.S. Taxation

    Democrats Abroad is pleased to present its fourth major research project on the experience of Americans living and working abroad facing the challenges of a range of U.S. tax, financial account reporting, banking, securities and other laws that discriminate against them as non-resident citizens:  Tax Filing From Abroad:  Research on Non-Resident Americans and U.S. Taxation.

    The key findings of the research are summarized below. The report includes not only the survey data but also comments from research participants that expand on the numbers. Download the full report here.

    We will use the findings to profile the Americans abroad community to lawmakers and regulators in discussions aimed at persuading them to enact reforms to laws and regulations that place an unfair and undo burden on Americans abroad.  We hope the data is useful to all those advocating on behalf of the Americans abroad community.  To that end we will be publishing a Datapack of the raw data collected in the survey undertaken in January 2019.

    Please send questions and comments to taxationtf@democratsabroad.org.

     

    Key findings of the Democrats Abroad 2019 research on Non-Resident Americans and U.S. taxation:

     

    55%

     moved outside the U.S. for marriage/a relationship or work/employment

    64% 

    are living abroad indefinitely

    97%

     have serious problems addressing their US tax filing obligations

    55%

     hire tax return professionals to prepare their filings

    61%

     pay more than $500 for tax filing services, 34% pay more than $1,000

     

    One in three incur personal and financial harm by discriminatory tax code treatment

    30%

     receive foreign government social welfare payments, which are fully US taxable even if they are not taxed locally

    31% 

    have been refused foreign financial products

    28% 

    have been denied U.S. investment/brokerage products

    2%

     employed by a company in which they own a majority interest; these are entities are affected by the 2017 Tax Cuts and Jobs Act (TCJA) Repatriation Tax and GILTI tax

    4%

     Indicate they are personally impacted by the TCJA Transition Taxes, suggesting the impact is felt by the spouses/family of the business owners.

    20%

     Receive U.S. social security benefits

    One in six SS beneficiaries have their benefits reduced by the Windfall Elimination Provision

    56%

     Have payments reduced by more than 25%

    57%

     Say WEP reductions make a modest to very big impact on their household budget

    2.5% 

    Identify as Accidental Americans

    50%+

     of them would like to renounce their U.S. citizenship, but most would only do so if they could renounce at a reasonable cost, effort

    read more
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