August 10, 2012 · 0 Comments
Source: Over Seas American Academy
By Andy Sundberg:
Great article today in the IHT, but I hope you will go the next step and also address the folly of citizenship-based taxation too.
Studies by the GAO, the President’s Export Council and others have strongly argued that this effective double taxation of U.S. citizens who live abroad, who have to pay U.S. income tax on their overseas income in addition to the foreign tax they pay to the governments of the countries where they are living, has had some very debilitating effects on U.S. trade performance.
Data provided periodically by the IRS suggests that those working abroad pay almost as much tax to the U.S. Government on their foreign source income, as they have already done to their countries of residence, essentially real double taxation.
And data from the Commerce Department used to show how small and ever more declining were the numbers of U.S. citizens on the payrolls of major U.S. corporations for their overseas entities. Even when some were sent overseas, they usually are sent back home after only a year or two because the cost of reimbursing them for the double tax burden (so that they can have the same take-home pay on the same income as colleagues of other nationalities) grows quickly every year because U.S. taxes have to then also be paid on the reimbursed tax, which makes their total U.S. taxable income start to explode.
Most interestingly, when I asked the Commerce Department recently for their latest data on numbers of U.S. citizens working abroad on the payrolls of U.S. corporations they told me that they had stopped gathering this data. Small wonder because it had become increasingly embarrassing and they didn’t want to get caught trying to explain why this was happening.
You’d be doing the couple of million of us living overseas a very big favor if you would address the simple question of whether a cost-benefit analysis of citizenship-based taxation would really come out positive. We strongly feel this is highly self-destructive for the U.S. economy and especially for our trade.
Many thanks in advance for what you might be tempted to write on this. It has been overlooked for far too long and desperately needs someone clever, creative and erudite like you to pick up the intellectual cudgels and have at it.
All the very best,
Fellow and Secretary of the Overseas AmericanAcademy, Geneva, Switzerland,
Founder of American Citizens Abroad, and former worldwide chairman of Democrats Abroad.