tavarich
06-16-06, 01:26 PM
Cap for expat taxes is lifted in new plan
By Brian Knowlton - International Herald Tribune
Thursday, June 15, 2006, 02:01
WASHINGTON - A Republican senator has introduced legislation to eliminate the cap on income that Americans working abroad can earn without having to pay both local and U.S. taxes on it, a change meant to make American businesses more competitive and bring the United States in line with nearly every other country.
The tax proposal, by Senator Jim DeMint of South Carolina, comes days before several groups representing Americans overseas - united in outrage over a recent tax-law change that they say will mean crippling tax bills for some, possibly forcing many home - are to meet here to plan strategy and confer with lawmakers.
"This is an American competitiveness issue," DeMint said. "We are the only industrialized country that punishes its workers with a double tax for competing in a global economy. I've had international companies tell me they won't invest in America or Americans because this tax makes it more expensive than hiring someone from Canada or Europe."
Andy Sundberg, a director of American Citizens Abroad, called the DeMint proposal "a great initiative." In a phone interview from Geneva, he said that it would partly offset the recent tax-law change engineered by Senator Charles Grassley, Republican of Iowa, which he described as "this abomination."
Sundberg and others who follow the issue said the DeMint language had good prospects, at least in the medium term, if framed as a way to improve U.S. competitiveness - an issue dear to President George W. Bush. They portrayed the recent vote changing the tax law as a fluke - a last-minute addition to a larger bill to extend capital-gains and dividend-tax reductions - that does not represent congressional feeling. Even DeMint, a former businessman considered a resolute free-trader and determined tax-cutter, voted for the underlying bill.
"I fully expect DeMint will very easily get 30 Republican co-sponsors, which automatically will make this a serious proposal," said Daniel Mitchell, an economist at the Heritage Foundation, a conservative research center in Washington.
Mike Jones, the Washington representative of the American Business Council of the Gulf Countries, said 28 lawmakers had offered their informal support. His organization is one of four regional umbrella groups of American chambers of commerce; the four will hold a rare meeting in Washington this weekend to plan strategy on the tax law.
"We're going to try and combine all our efforts and really go at this thing hard," Jones said. But given Congress's charged schedule in an election year, congressional aides predicted no final action before the end of the current term or the start of the next.
The change that has mobilized expatriates and business groups retroactively increases taxes on Americans living abroad. The new law raises the foreign-earned income protected from U.S. taxation from $80,000 to $82,400. But because it raises taxes on additional compensation and caps housing allowances, it could quadruple the tax burden on some overseas Americans, while leaving others untouched.
The highest impact will be in low-tax countries with high housing costs. "If you work in a low-tax jurisdiction - Switzerland, Hong Kong or the Mideast countries, the oil-producing countries - being an American means you have a 20 to 30 percent competitive disadvantage," Mitchell said. "American expats are completely priced out of the market now."
Sundberg predicted "relatively massive layoffs of Americans working in countries that have particularly high housing costs. It's going to do devastation in Japan."
Jones told of a teacher at an American school in Saudi Arabia who faces "a tremendous tax increase," adding: "It's probably not worth his while to stay." And The New York Times described an Iowa couple in Singapore who expect to owe $20,000 to $25,000 more in U.S. taxes, up from $5,000 last year, while paying $20,000 to Singapore.
Many in Congress have been less than sympathetic to overseas Americans, whom they see as enjoying tax breaks unavailable at home, but past efforts to trim those breaks have been defeated.
The Grassley language, however, was inserted before opponents could mobilize. Now, expatriate groups and businesses organizations, joined by several conservative think tanks in Washington, are seeking to make themselves heard.
DeMint's proposal has been endorsed by Americans for Tax Reform - whose president, Grover Norquist, is influential in conservative circles - the National Taxpayers Union and the Small Business & Entrepreneurship Council. "Congress should immediately repeal any taxation of foreign earned income for U.S. workers," Norquist said.
WASHINGTON A Republican senator has introduced legislation to eliminate the cap on income that Americans working abroad can earn without having to pay both local and U.S. taxes on it, a change meant to make American businesses more competitive and bring the United States in line with nearly every other country.
The tax proposal, by Senator Jim DeMint of South Carolina, comes days before several groups representing Americans overseas - united in outrage over a recent tax-law change that they say will mean crippling tax bills for some, possibly forcing many home - are to meet here to plan strategy and confer with lawmakers.
"This is an American competitiveness issue," DeMint said. "We are the only industrialized country that punishes its workers with a double tax for competing in a global economy. I've had international companies tell me they won't invest in America or Americans because this tax makes it more expensive than hiring someone from Canada or Europe."
Andy Sundberg, a director of American Citizens Abroad, called the DeMint proposal "a great initiative." In a phone interview from Geneva, he said that it would partly offset the recent tax-law change engineered by Senator Charles Grassley, Republican of Iowa, which he described as "this abomination."
Sundberg and others who follow the issue said the DeMint language had good prospects, at least in the medium term, if framed as a way to improve U.S. competitiveness - an issue dear to President George W. Bush. They portrayed the recent vote changing the tax law as a fluke - a last-minute addition to a larger bill to extend capital-gains and dividend-tax reductions - that does not represent congressional feeling. Even DeMint, a former businessman considered a resolute free-trader and determined tax-cutter, voted for the underlying bill.
"I fully expect DeMint will very easily get 30 Republican co-sponsors, which automatically will make this a serious proposal," said Daniel Mitchell, an economist at the Heritage Foundation, a conservative research center in Washington.
Mike Jones, the Washington representative of the American Business Council of the Gulf Countries, said 28 lawmakers had offered their informal support. His organization is one of four regional umbrella groups of American chambers of commerce; the four will hold a rare meeting in Washington this weekend to plan strategy on the tax law.
"We're going to try and combine all our efforts and really go at this thing hard," Jones said. But given Congress's charged schedule in an election year, congressional aides predicted no final action before the end of the current term or the start of the next.
The change that has mobilized expatriates and business groups retroactively increases taxes on Americans living abroad. The new law raises the foreign-earned income protected from U.S. taxation from $80,000 to $82,400. But because it raises taxes on additional compensation and caps housing allowances, it could quadruple the tax burden on some overseas Americans, while leaving others untouched.
The highest impact will be in low-tax countries with high housing costs. "If you work in a low-tax jurisdiction - Switzerland, Hong Kong or the Mideast countries, the oil-producing countries - being an American means you have a 20 to 30 percent competitive disadvantage," Mitchell said. "American expats are completely priced out of the market now."
Sundberg predicted "relatively massive layoffs of Americans working in countries that have particularly high housing costs. It's going to do devastation in Japan."Many in Congress have been less than sympathetic to overseas Americans, whom they see as enjoying tax breaks unavailable at home, but past efforts to trim those breaks have been defeated.
The Grassley language, however, was inserted before opponents could mobilize. Now, expatriate groups and businesses organizations, joined by several conservative think tanks in Washington, are seeking to make themselves heard.
DeMint's proposal has been endorsed by Americans for Tax Reform - whose president, Grover Norquist, is influential in conservative circles - the National Taxpayers Union and the Small Business & Entrepreneurship Council. "Congress should immediately repeal any taxation of foreign earned income for U.S. workers," Norquist said.
By Brian Knowlton - International Herald Tribune
Thursday, June 15, 2006, 02:01
WASHINGTON - A Republican senator has introduced legislation to eliminate the cap on income that Americans working abroad can earn without having to pay both local and U.S. taxes on it, a change meant to make American businesses more competitive and bring the United States in line with nearly every other country.
The tax proposal, by Senator Jim DeMint of South Carolina, comes days before several groups representing Americans overseas - united in outrage over a recent tax-law change that they say will mean crippling tax bills for some, possibly forcing many home - are to meet here to plan strategy and confer with lawmakers.
"This is an American competitiveness issue," DeMint said. "We are the only industrialized country that punishes its workers with a double tax for competing in a global economy. I've had international companies tell me they won't invest in America or Americans because this tax makes it more expensive than hiring someone from Canada or Europe."
Andy Sundberg, a director of American Citizens Abroad, called the DeMint proposal "a great initiative." In a phone interview from Geneva, he said that it would partly offset the recent tax-law change engineered by Senator Charles Grassley, Republican of Iowa, which he described as "this abomination."
Sundberg and others who follow the issue said the DeMint language had good prospects, at least in the medium term, if framed as a way to improve U.S. competitiveness - an issue dear to President George W. Bush. They portrayed the recent vote changing the tax law as a fluke - a last-minute addition to a larger bill to extend capital-gains and dividend-tax reductions - that does not represent congressional feeling. Even DeMint, a former businessman considered a resolute free-trader and determined tax-cutter, voted for the underlying bill.
"I fully expect DeMint will very easily get 30 Republican co-sponsors, which automatically will make this a serious proposal," said Daniel Mitchell, an economist at the Heritage Foundation, a conservative research center in Washington.
Mike Jones, the Washington representative of the American Business Council of the Gulf Countries, said 28 lawmakers had offered their informal support. His organization is one of four regional umbrella groups of American chambers of commerce; the four will hold a rare meeting in Washington this weekend to plan strategy on the tax law.
"We're going to try and combine all our efforts and really go at this thing hard," Jones said. But given Congress's charged schedule in an election year, congressional aides predicted no final action before the end of the current term or the start of the next.
The change that has mobilized expatriates and business groups retroactively increases taxes on Americans living abroad. The new law raises the foreign-earned income protected from U.S. taxation from $80,000 to $82,400. But because it raises taxes on additional compensation and caps housing allowances, it could quadruple the tax burden on some overseas Americans, while leaving others untouched.
The highest impact will be in low-tax countries with high housing costs. "If you work in a low-tax jurisdiction - Switzerland, Hong Kong or the Mideast countries, the oil-producing countries - being an American means you have a 20 to 30 percent competitive disadvantage," Mitchell said. "American expats are completely priced out of the market now."
Sundberg predicted "relatively massive layoffs of Americans working in countries that have particularly high housing costs. It's going to do devastation in Japan."
Jones told of a teacher at an American school in Saudi Arabia who faces "a tremendous tax increase," adding: "It's probably not worth his while to stay." And The New York Times described an Iowa couple in Singapore who expect to owe $20,000 to $25,000 more in U.S. taxes, up from $5,000 last year, while paying $20,000 to Singapore.
Many in Congress have been less than sympathetic to overseas Americans, whom they see as enjoying tax breaks unavailable at home, but past efforts to trim those breaks have been defeated.
The Grassley language, however, was inserted before opponents could mobilize. Now, expatriate groups and businesses organizations, joined by several conservative think tanks in Washington, are seeking to make themselves heard.
DeMint's proposal has been endorsed by Americans for Tax Reform - whose president, Grover Norquist, is influential in conservative circles - the National Taxpayers Union and the Small Business & Entrepreneurship Council. "Congress should immediately repeal any taxation of foreign earned income for U.S. workers," Norquist said.
WASHINGTON A Republican senator has introduced legislation to eliminate the cap on income that Americans working abroad can earn without having to pay both local and U.S. taxes on it, a change meant to make American businesses more competitive and bring the United States in line with nearly every other country.
The tax proposal, by Senator Jim DeMint of South Carolina, comes days before several groups representing Americans overseas - united in outrage over a recent tax-law change that they say will mean crippling tax bills for some, possibly forcing many home - are to meet here to plan strategy and confer with lawmakers.
"This is an American competitiveness issue," DeMint said. "We are the only industrialized country that punishes its workers with a double tax for competing in a global economy. I've had international companies tell me they won't invest in America or Americans because this tax makes it more expensive than hiring someone from Canada or Europe."
Andy Sundberg, a director of American Citizens Abroad, called the DeMint proposal "a great initiative." In a phone interview from Geneva, he said that it would partly offset the recent tax-law change engineered by Senator Charles Grassley, Republican of Iowa, which he described as "this abomination."
Sundberg and others who follow the issue said the DeMint language had good prospects, at least in the medium term, if framed as a way to improve U.S. competitiveness - an issue dear to President George W. Bush. They portrayed the recent vote changing the tax law as a fluke - a last-minute addition to a larger bill to extend capital-gains and dividend-tax reductions - that does not represent congressional feeling. Even DeMint, a former businessman considered a resolute free-trader and determined tax-cutter, voted for the underlying bill.
"I fully expect DeMint will very easily get 30 Republican co-sponsors, which automatically will make this a serious proposal," said Daniel Mitchell, an economist at the Heritage Foundation, a conservative research center in Washington.
Mike Jones, the Washington representative of the American Business Council of the Gulf Countries, said 28 lawmakers had offered their informal support. His organization is one of four regional umbrella groups of American chambers of commerce; the four will hold a rare meeting in Washington this weekend to plan strategy on the tax law.
"We're going to try and combine all our efforts and really go at this thing hard," Jones said. But given Congress's charged schedule in an election year, congressional aides predicted no final action before the end of the current term or the start of the next.
The change that has mobilized expatriates and business groups retroactively increases taxes on Americans living abroad. The new law raises the foreign-earned income protected from U.S. taxation from $80,000 to $82,400. But because it raises taxes on additional compensation and caps housing allowances, it could quadruple the tax burden on some overseas Americans, while leaving others untouched.
The highest impact will be in low-tax countries with high housing costs. "If you work in a low-tax jurisdiction - Switzerland, Hong Kong or the Mideast countries, the oil-producing countries - being an American means you have a 20 to 30 percent competitive disadvantage," Mitchell said. "American expats are completely priced out of the market now."
Sundberg predicted "relatively massive layoffs of Americans working in countries that have particularly high housing costs. It's going to do devastation in Japan."Many in Congress have been less than sympathetic to overseas Americans, whom they see as enjoying tax breaks unavailable at home, but past efforts to trim those breaks have been defeated.
The Grassley language, however, was inserted before opponents could mobilize. Now, expatriate groups and businesses organizations, joined by several conservative think tanks in Washington, are seeking to make themselves heard.
DeMint's proposal has been endorsed by Americans for Tax Reform - whose president, Grover Norquist, is influential in conservative circles - the National Taxpayers Union and the Small Business & Entrepreneurship Council. "Congress should immediately repeal any taxation of foreign earned income for U.S. workers," Norquist said.