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.
We undertake research-based advocacy to describe the problems U.S. taxation causes Americans abroad and support our reform recommendations. Our latest research on the tax filing and financial account reporting experience of Americans abroad was published in March 2019. Click here to download the report.
Democrats Abroad has published a "laundry list" of tax code provisions that discriminate against Americans abroad - with accompanying reform recommendations on how to fix them. The list is here.
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
Get involved with our campaign for Residency Based Taxation today - join in today!
The US is the only developed nation that taxes its citizens on overseas income earned while they live abroad. This system is complicated, inefficient, and causes uncertainty for ordinary Americans living outside the US. Democrats Abroad favors Residency Based Taxation because it is a simpler, fairer, and more efficient system.Read more
It has been a very busy first few months for the Taxation Task Force (TTF).
- April Congressional action on FATCA was detailed in messages to Leadership. See the first endnote[i] below for a quick summary.
- At the May 2017 Global Meeting it was announced that the FBAR/FATCA Task Force would be re-structured to take on a broader tax advocacy brief and re-named the Democrats Abroad Taxation Task Force (TTF). We are operating under the terms of a Draft Terms of Reference (TOR) that is awaiting DA Executive Committee approval. I urge those interested in the tax advocacy work of Democrats Abroad to review the document. Comments are welcome.
- Further, we encourage those interested in better understanding DA’s tax policy positions generally, and the work of the TTF in particular, to examine these slides on Tax and the American Abroad. They were originally published to help Country Committees prepare for gatherings about tax, but have since become an overarching guide to the tax matters that impact Americans living outside the US and the reform recommendations Democrats Abroad has made and continues to make.
- On May 23rd the TTF launched the DA grassroots campaign in support of Residency Based Taxation, distributed the Residency Based Taxation (or RBT) Campaign in a Box and, in the weeks that followed, reached out to each of your country committee chairs for support in promoting the June 15 RBT Congressional Call Storm. We believe the launch produced thousands of calls, letters, postcards and emails to Congress asking for their support.
- Since the launch our campaign has drawn scores of comments from members throughout the world, which enabled us to quickly expand the Residency Based Taxation Frequently Asked Questions document initially distributed with the RBT Campaign in a Box. The RBT FAQs are under continuous review and expansion, as it is our key resource for educating our members about RBT, explaining our campaign and addressing concerns about a change from Citizenship-Based Taxation to Residency Based Taxation.
- We have also produced an RBT pamphlet, suitable for printing on your home printer in either Word or PDF format that we hope you will place on your tables at July 4th functions and celebrations. You may also like to print a“Support Residency Based Taxation for U.S. Citizens” banner. Two banner files are attached to this message. I’m having difficulty posting them, but I hope to get them on to the DA wiki soon. Many thanks to Peter Fischbach of DA Thailand for developing this terrific campaign resource!!
- Taxation would have to be foremost among the matters considered by the commission that would be established, under the bill re-introduced by Rep. Carolyn Maloney on May 25th, to study how Federal laws and policies affect United States citizens living in foreign countries. Voting from abroad, the Social Security Windfall Eliminations Provision, Medicare Portability and Citizenship Transmission[ii] might also be among the matters the commission would examine. This is Rep. Maloney’s speech introducing the bill. Democrats Abroad continues to support H.R.2137, the Commission on Americans Abroad Act.
As Resistance Summer moves on we will be very carefully following the work of Congressional Republicans on tax reform and will reach out to leadership with important developments and opportunities for tax activism. Furthermore, we look forward to your support for a new research project that we hope will help demonstrate the grave difficulties US taxation causes for Americans abroad.
We have already identified for Congress the areas of the Internal Revenue Code that discriminate against Americans abroad. We have described the enormous complexity of reporting overseas income, the high cost of filing with support from a tax advisor, and the stress of (and out-of-proportion penalties for) making a filing error. We believe it would be helpful to bring these matters alive by creating a report with Americans abroad tax filing case studies. It would include the stories of non-resident citizens whose situations profile the range of problems we have been discussing.
Please look out for more information about this research study, which we hope to publish by the end of September.
Best wishes for a safe, fun and resistance-filled summer,
DEMOCRATS ABROAD TAXATION TASK FORCE
Julia Bryan - ex officio (Czech Republic)
DeeDee Gierow (Sweden)
Carmelan Polce - Chair (Singapore)
Michael Ramos (Australia)
Joe Smallhoover (France)
Orlando Vidal (UAE)
[i] April brought us long-awaited Congressional attention on the unintended adverse impacts of FATCA:
· On April 24 Americans Abroad Caucus Chair Rep Carolyn Maloney (D-NY) introduced H.R. 2136, the Overseas Americans Financial Access Act (OAFAA) in the House of Representatives. The bill embodies our FATCA reform recommendation, the Same Country Safe Harbor Exemption from FATCA reporting for Americans abroad.
· On April 25, the House Subcommittee on Government Operations held a hearing into the unintended impacts of FATCA. Although our requests to provide testimony were denied, we made a written submission to the Subcommittee prior to the hearing and a follow up submission with three modifications for improving FATCA. We will continue to follow FATCA developments closely and strongly support H.R. 2136.
[ii] On 12 June 2017 the Supreme Court issued a new decision on acquired citizenship, striking down, on equal protection grounds, the distinction in INA 309 between the physical presence required for fathers and mothers when the child is born out of wedlock. Previously, if the child was born of an unmarried US mother and non-US father the mother had to demonstrate 1 year of physical presence in the US in order to pass along US citizenship to the child; if the child was born of an unmarried US father and a non-US mother, the father had to demonstrate 10 years of physical presence in the US in order to pass along US citizenship to the child. Following this ruling and until Congress changes the law, the physical presence rule applying for fathers (10 years) will now also apply for mothers. Had the Court instead established the one-year rule for both fathers and mothers there would be greater protection from being born stateless provided to children born abroad with one unmarried US parent.
RESIDENCY BASED TAXATION CAMPAIGN
Democrats Abroad is running a grassroots campaign in support of Residency Based Taxation.
The US is the only developed nation that taxes its citizens on income earned while they live abroad. This system is complicated, inefficient, and causes uncertainty for ordinary Americans living outside the US. Democrats Abroad favors Residency Based Taxation because it is a simpler, fairer, and more efficient system.
Ordinary Americans living outside the US, even those that earn very little income, are burdened not only with increasingly complex and costly forms and filings, we are also obliged to submit reports on our foreign accounts and other financial assets. For this reason, Democrats Abroad has supported Residency Based Taxation since our inception. It has been a high priority in our Platforms and on Capitol Hill during our Congressional Door Knocks.
Now that Congress is planning to introduce a comprehensive tax reform package the time is right for all aggrieved non-resident Americans to raise their voices and be heard on this matter. Democrats Abroad advocates for a system of Residency Based Taxation that introduces fundamental, common-sense reform while protecting American values of fairness and responsibility.
Click here for the Residency Based Taxation Campaign In A Box. It includes:
- Background on Residency Based Taxation
- Links to find elected representatives and their contact details
- Scripts for calls to elected reps
- Language for letters, postcards and emails to elected reps
- The link to our trackable RBT email campaign on the Democracy.io Congressional outreach platform
Contact Carmelan Polce at any time with questions: [email protected]
COMPREHENSIVE TAX REFORM
We are working hard to see Residency Based Taxation included in the package of tax reforms moved by the 115th Congress. However, our support for any package of tax reforms will depend on whether it aligns with our Democratic Party values.
We believe Congress has an opportunity to enact common sense reforms that clarify and simplify filing and make the tax code fairer for all Americans. The advantages of changing to Residency Based Taxation must primarily benefit ordinary Americans living and working overseas, without enabling a few to take advantage of new loopholes.
Democrats Abroad has given careful consideration to the potential impact of a change to Residency Based Taxation. We support efforts being made to structure a Residency Based Taxation proposal (hyperlink to ACA webpage) that results in a policy that is revenue-neutral to the federal government. Because we would not, for example, abide a tax reform plan where school lunches were eliminated so that our taxes become simpler. Common sense tax reforms must not become a quid pro quo in order to starve programs that benefit children, the elderly or otherwise vulnerable Americans.
Democrats Abroad will only support reforms that help reduce inequality, boost opportunity and raise enough revenue to meet public needs, predominantly from those with the greatest ability to pay.
Democrats Abroad supports strong policy that discourages and apprehends tax cheats.
Congress passed FATCA to bring an end to illegal tax avoidance by Americans in the US who use overseas financial accounts to secret untaxed earnings out of the country.
But Congress did not fully anticipate the impact the regulations would have on overseas Americans and we, therefore, are now burdened with a tax reporting obligation that treats us like suspected tax cheats and money launderers.
Fortunately for overseas Americans, we can address the unintended adverse consequences of this important piece of anti-tax evasion legislation by reforming the regulations that implement it.
Democrats Abroad, in collaboration with other organisations of overseas Americans, supports a Safe Harbor for Americans abroad from FATCA reporting, also known as the Same Country Exception, which, when added to the FATCA implementation rules, will preserve the original intent of FATCA to fight illegal tax avoidance by Americans using overseas accounts to hide assessable earnings from the IRS, but will alleviate the useless reporting by overseas-resident citizens and their banks of ordinary accounts used to pay bills and save for the future.