Below is a copy of the submission the Democrats Abroad Global Taxation Task Force submitted to the House Ways & Means Committee for the hearing on The Need to Make Permanent the Trump Tax Cuts for Working Families held on January 14, 2025.
Click here to download a pdf of DA's submission to the Ways & Means Committee in full.
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Dear Chairman Smith and Ranking Member Neal:
Democrats Abroad is the official arm of the Democratic Party engaging with the millions of Americans living outside the United States. Democrats Abroad has country committees – throughout Europe, the Americas, the Middle East, Africa, and Asia – that keep Americans abroad informed of their rights and help them participate in the U.S. political process.
Estimates of the number of U.S. citizens living abroad – constituents in all congressional districts – range between five and nine million. Americans abroad are not a uniform group, and include both active military and veterans; individuals living abroad for work, school or family reasons; retirees; small business owners; etc. Contrary to what is sometimes assumed, very few of them are high-net-worth individuals: 80% of tax returns coming from overseas in 2021 had an Adjusted Gross Income of $100,000 or less.
An important part of our work as Democrats Abroad is non-partisan advocacy for fair and proportionate application of tax rules applying to Americans living abroad, since these rules apply equally to all Americans abroad.
Regarding the Tax Cuts and Jobs Act 2.0, the two main challenges affecting American taxpayers abroad that we would like to see addressed are residency-based taxation for Americans abroad and eliminating the GILTI tax for American owned small- and medium-size businesses abroad: Regarding residency-based taxation (RBT) for Americans abroad:
The effect of the TCJA’s GILTI tax provisions on American small-business owners abroad also requires urgent attention:
Residency-based taxation and the GILTI tax are two priority areas where we ask you to act to ensure that Americans abroad are treated fairly. In both cases, we urge you to address the far-reaching unintentional negative effects of current U.S. tax legislation for the millions of Americans abroad, and to remember them while drafting the new tax package this year, in order to avoid additional unintended negative consequences.
Sincerely,
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