I agree with Mark that it is really frustrating as an expat to be heard on any issue. I agree that Congressman and Senators do not feel that a person living abroad (even though their permanent address IS in their district) has any say in the district. They act as if we do not exist. And when we are not looking, they pass something which affects us greatly - with no hearing about it or anything. I am very, very angry at these actions - esp. the Senators who passed the repeal! They DO NOT care about me at all!
My understanding of the background to this is:
The Bush admin. were coming under intense pressure re: the proposed
cut in tax on divedend payments (a true gift to the rich). They were told that they needed to come up with some alternative income to bridge the gap that this will create in tax income. As mentiond above they decided
to pick on a group who would find it difficult to organise a response. US
citizens living overseas. Hence you are screwed.
An interesting side effect of this policy will be that this will make it more expensive for companies to send US citizens to ex pat assignments +
will reduce the incentive for US teachers etc to work abroad. Just what the US needs, a reduction in the number of its citizens with any global perspective …
I called one of my senator’s office last night, he wasn’t there unfortuantely, but I did get to talk to someone who has some knowledge about the issue.
This bill will effect everyone who is living overseas, the bill proposes to repeal the total amount of $80,000. We would be able to deduct the income we made here, but as said ealier US taxes are much higher.
According to the person I spoke with many of the senators voted not to strike the 911 bill from the main bill because of inconsistencies between international tax laws and domestic tax laws. If someone from say Texas were to be transfered to NYC for over a year then he would have to pay NYC taxes, instead of Texas taxes. However this still makes absolutely no sense to me. Those people are still in the US, using roads, schools and services, they still should have to pay taxes! . We are not even living in the US!!!
In regards to senators caring - I have always provided them with an address in the state of which they represent, and have always recieved a letter back. Although, most of the time I wasn’t happy with the way they voted.
As an aside, I think the example above deals with state income taxes, and not federal income tax.
I completely agree with you on your main point, though. I wouldn’t mind if they lowered the $80,000 to something a little lower, like 40 or $50,000, but to eliminate it entirely would really suck.
Scomargo,
Yes they do deal with state income taxes and that’s the whole point, why are they comparing these two issues in the first place? They are completely unrelated. I hope to hear back from my Congressman directly as the person I spoke with may not have all the correct information.
On a side note also it may be wise for us to contact large companies in the US who have offices worldwide, for example Microsoft. The reason is these companies probably gave money to some of these Congressmen for their election campaigns. I’m thinking WE aren’t going to be able to do much, but the corporations can!
Sorry, I guess I misread your earlier post. I thought the example was yours, and not theirs.
Hope you get a good reply from that Senator. Let us know if you hear anything.
No problem.
Well of course by the time I get a reply or replies it will be next month and all of this may be water under the bridge… but if I do get a reply I’ll post it or them.
I read that this (the exclusion repeal) would probably be scrapped in conference committee, since the house version is different. What is the current status?
One of the reasons the exclusion was instituted was to encourage Americans to work abroad, thus promoting international trade. Repealing it will have the opposite effect. If you can’t earn more money abroad, why go? (I know there are cultural reasons, etc., but executives usually won’t go abroad unless there is an associated increase in income.)
When voter registration is canceled (involuntarily) because a person has moved out of the US, there is no qestion that the person is not represented in congress. Even if you are able to maintain voting credentials, “your” congressman still represents people in a specific geographic area. As a citizen abroad, your interests can be very different from those of people in your home town.
There is something patently unfair (and immoral IMHO) about taxing income earned abroad. The money is earned in another country by a person who lives in that country. It is not part of the US economy. The person earning the income has to live within the legal and economic environment of his adopted country, not the US. The person earning the income does not utilize any of the services provided by the US, except as any other visitor would. The only connection to the US is that the earner happens to have been born (or naturalized) there.
Those of us who have made their homes abroad do NOT have representation in congress. This is the very definition of taxation without representation.
[quote]
I am afraid a majority of Americans would agree that we should be taxed. They probably even see us as unpatriotic, since we don’t even live in 'merica. [/quote]
They would be wrong in both cases. Something that is fundamentally wrong, is still wrong even if the majority supports it. Our constitution is in place to prevent “mob” rule. If left up to the majority, the majority would pay NO taxes and almost all of the government’s income would come from “rich” people. (Wait a minute, that’s just about the way it works now.)
The US was never meant to be financed by an income tax. The income tax that finally was approved was never meant to grow into the beast it has become. I would like to see congress look at scrapping the current system in favor of something simpler and fairer.
I think our best bet as ex-pats is to support the Fairtax program described at www.fairtax.org. Any money we earn abroad would be taxed only when it enters the US economy, as it should be. congress could spend time on more important things than bickering over how to shift taxes in a way to generate more votes on election day. I am asking the congressmen I know to support this legislation and asking friends in the US to do the same. It is the best thing for the country, not just ex-pats.
If I remember correctly, if you claim the foreign earned income exclusion and then do not claim it for the next year, you are not eligible to claim it again for THREE years. So, even income under $80,000 is not always excluded even under the current system.
The US Congress does not help people, they help rich people and corporations. I think AIT is an excellent example of how little the US government will do for it’s citizens.
Their is nothing we can do to stop this from passing. It is a trade off for the tax breaks the current administration is giving wealthy Americans. Basically, Jr. is trying to buy the next election.
I don’t think a couple of dollars saved in taxes will make up for 9/11 or the ongoing American conflict in the middle east, not for me anyway. For some it will be more than a few dollars.
What we can do is make a legal challenge before the courts. Congress and the president can pass any law they like, it can still be struck down by the judicial system and I think we have a pretty good case. Anybody know a good lawyer?
It’s an absolutely outrageous situation, however one looks at it. Even Tigerman will be hard put to defend his beloved Republican Party on this one!
I’m truly sorry for all of you guys – and gladder than ever that I was born on the other side of the pond. Thank God we Brits don’t have to put up with any of this kind of nonsense – and don’t even need to file tax returns while we’re living abroad. If I were an American, I’d be up in arms and screaming blue murder over this one. Indeed, I’d probably be inclined to renounce my U.S. citizenship. Perhaps a few more of you might be wanting to follow Poagao’s example and swap your U.S. passport for an R.O.C. one.
Out of curiosity, what is the current UK income tax and VAT rate? I’m asking because when the Minister of Trade and Industry was in the US meeting with Brit expats (trying to persuade them to return) they laughed him out of the hall. The tax rate was cited as the main reason.
Out of curiosity, what is the current UK income tax and VAT rate? I’m asking because when the Minister of Trade and Industry was in the US meeting with Brit expats (trying to persuade them to return) they laughed him out of the hall. The tax rate was cited as the main reason.[/quote]
I don’t really know, to be honest, as I’ve been away for far too long and haven’t needed to pay attention to such things. I’m sure it’s already a lot lower than when I was still a tax-payer there, as they’ve been clipping away at the basic rate over the years. I believe income tax starts at little more than 20 pence in the pound these days, though you’ll quickly move up to higher brackets if you have a decent income, and VAT is on the high side. But the situation is still incomparably better than it was under the old Labour governments 30 years ago – my poor dad had to pay over 80% on much of his hard-earned income. In those days, high-earning Brits were leaving the U.K. in droves to become tax exiles around the world (a brain drain that did enormous damage to the country).
…
Several years ago there was a story in the International Herald Tribune about an American expat organization based in paris that was trying to set up a movement to push for a representative in Congress specifically for US expats. There’s one hell of alot more to complain about than just taxes. My pet peeve (among others) is the high cost of notary services at American diplomatic offices. :x It’s highway robbery, flat and simple.
It’s no real surprise. Expats seldom vote and even when they do absentee ballots are rarely counted except in close races (like the last presidential race). Business has the best representation because they donate the most, elderly vote more than anyone else. That’s what I get for being lazy.
GOPBill
Although the idea in general of setting up a representative in Congress specifically for US expats is good in theory, who will pay for this? In the end expats will end up paying for it in one way or another, and if their is only one represenative, then the situation ends up being the same, he or she voices their opinion and all other congressmen do whatever the $!&# they want anyway.
Hope that Forumosa members who are affected by this disastrous
addition to the Senate Tax bill, do not give up so easily. Keep writing
your Senators and Congressmen by email, fax, etc. Show that there
are expats out here who DO GIVE A DAMN about what is happening.
As it stands now, as far as I can find out, the Senate has passed their
version of the tax bill and so has the House. But the House bill DOES
NOT contain the provision which would eliminate the Foreign Earned
Tax Exclusion Clause from the Internal Revenue Tax Code 911.
There is supposed to be a meeting sometime soon, still cannot find out
when but am trying, to hash out a compromise version between the
two houses. If I get this info, I will pass it along.
The senators feel that if this repeal fo the Foreign Earned Tax Exclusion
Clause is passed, the US government stands to reap an additional
US$32 billion. However, as others have stated, they are extremely
short-sighted about the consequences. And everything about the
present administration seems very short-sighted: doing something now
without regard for the consequences which follow. I sometimes feel
like the country is being run by a two-year-old or something.
Anyway, please keep sending those faxes and emails to the short-sighted
people in Washington. And check out the websites of www.house.gov
or www.senate.com to find out how various people in your state or
district voted. Send letters to people in the Senate who voted against
this hideous measure to thank them for their understanding and support.
And letters to the others who voted for it to tell them why they should
change their vote.
I am trying to contact every person I know who is presently working
overseas or has in the past to try to get their support in this measure.
I hope others are doing the same. I have not been this LIVID in a long
time!
I’ve already ripped into my 2 Senators and 4 of the Represenatives from my commonwealth, and I’ve written to President Bush and to some other congressmen not from my commonwealth expressing my displeasure.
I’ve always believed that much as educating foreign students at American universities helps the US and US foreign policy aims (or should at least in theory) when these folks return to government positions in their home nations. Likewise, IMO, we expats also help to inform foreign nationals when we live outside of the US regarding US policy and our ways of life. I’ve always been a proponent of exchange programs, as I sincerely believe that they facilitate the bringing together of the people of the world closer, if not geographically, than at least in terms of mutual understanding.
As I advised several congressmen, I have foregone a larger income in the States to work here in Taiwan. I could return to the States and find employment that will be more financially rewarding for me… but I think that I do provide value to American firms that I counsel in Taiwan, and in terms of the grass-roots diplomacy that goes on between my co-workers and myself, and anyone else whom I come into contact. Forgive me if I sound arrogant, but I believe that I am much more valuable to the US while here abroad than I could ever possibly be back home.
Then again, I could be making more enemies than friends… if this forum is indicative of my diplomatic performance 
That’s the way to do it, Tigerman!!!
Do the Republicans control both Houses now? If so, we are in big
trouble.
From what I can track down so far, the Senate Bill is probably S1054
and it is Section 350 of the bill regarding Sec. 911 of the IRC (Internal
Revenue Code) that we disagree with.
It looks like the House passed their budget bill on May 9 WITHOUT
a Foreign Earned Income Exlusion repeal, but the Senate passed theirs
on May 15th WITH a Foreign Earned Income Exclusion repeal.
Chuck Grossley, from Oklahoma , Chairman of the Senate Finance Committee, had alot to do with getting this repeal into the bill. In his
committee, his idea won by a 12-9 margin before going to the Senate
floor.
Senator John Breave (D-Louisiana) was one person who tried to stop
the repeal by offering an amendment. Unfortunately, his amendment
was defeated. He objected to this section of the bill as it would hurt
his constituents who work overseas AND THERE WAS NO HEARING
held about it. Another senator, Senator Max Bauous (D-MT) said that
he did not believe there was enough political support for the provision.
They were the main people who spoke up AGAINST the Senate
attaching the repeal provision. However, the Senate version was
passed by a 51-49 margin.
Also, the Senate expects to make US$35 billion by this provision,
the repeal of the US$$80,000 exclusion.
The only info I can really find about this issue are at the following sites
found by going to Yahoo, and typing Foreign Earned Tax Exclusion
Repeal in the Yahoo Search Engine.
Here are the websites you might look at there: (May 20th positions)
Nbr. 1 TaxAnalysts: Taxwire: Senate Keeps Foreign Earned Income…
Also look at GOP Leaders Reach Compromise On Tax Cut
(can get to it at the bottom of the article)
Nbr.3 IAS Global Watch foe 05/09/2003
Gives info about the Senate version of the tax bill with the repeal
of Sec 911 of the Internal Revenue Code discussed.
Nbr 5 (?) ExpatExchange.com
He talks about Sec. 350 of the bill changing Sec. 911 of IRC
If I find anything more, I will let people know. Hope all of you out there
are still busy writing emails and faxes!