Cautious optimism among US expat reps over possible tax law changes

By: Helen Burggraf | 26 Oct 2017

Representatives for American expatriates in Washington have been expressing cautious optimism about the chances that the way such expats are taxed may be about to change, after weeks of lobbying that culminated this week in meetings with lawmakers.

Among them is Republican National Committee member Solomon Yue, who is also chairman of the Republicans Overseas, one of a number of organisations that have been actively urging Congress to use the opportunity of a tax reform bill to move the US to a “territorial taxation for individuals” regime, or TTFI – replacing the current system of taxing individuals on the basis of their citizenship.

Read the full article here.

RO and TTFI on the front page of the Financial Times

US expats given hope of lower tax bills

Republicans edge towards eliminating need to pay levies overseas and at home

Millions of US citizens working overseas could see their tax bills lowered by an overhaul of the tax system as Republicans edge towards eliminating a requirement for American expatriates to pay taxes both overseas and in the US.

Kevin Brady, the Republican head of the House ways and means committee, which is drafting a tax reform bill, said lawmakers were considering the measure, which has been the focus of lobbying by Republicans Overseas, a group of party donors around the world.

“It is under consideration. They have made the case,” Mr Brady said in response to a question from the Financial Times at a Christian Science Monitor breakfast. “Lawmakers representing that area of the tax code have made that case.”

Some 8.7m Americans live outside the US, excluding military personnel, according to the Association of Americans Resident Overseas.

For those expatriates, the first portion of their foreign earnings — about $100,000 in 2016 — is already shielded from US tax liabilities, but they have to pay tax on any income above that level to both the host authority and the US. The mooted change would therefore benefit those on six-figure salaries.

Republicans are striving to pass the first major overhaul of the US tax code since Ronald Reagan in 1986. They are looking at measures that would simplify the code, lower the corporate tax rate, make it less attractive for US companies to keep cash overseas, and changes that they say will help the middle class.

Mr Brady later told the FT that lawmakers were taking “seriously” the call for a shift from a citizen-based income tax system to a residence-based system that would only tax people on the income they earn in the US.

Republicans have already decided they want to make an equivalent change for business, switching to a “territorial” regime where most of US companies’ foreign earnings are beyond the reach of American tax collectors.

The US Chamber of Commerce, a business lobby group, has urged policymakers to consider US-only taxation for individuals, too, arguing that taxing foreign income hurts American managers at the overseas affiliates of US exporters.

In a recent interview with the FT, Mick Mulvaney, the White House budget office director, said he supported the shift to residence-based taxation. “It is something that I have advocated for as a member of Congress,” Mr Mulvaney said. “It is good for American businesses to encourage Americans to work overseas.”

Solomon Yue, vice-chairman of Republicans Overseas, this week submitted a petition with 3,027 signatures calling for the change to Shahira Knight, the White House official in charge of tax policy, and also to Mr Brady’s staff on the House ways and means committee. “We made inroads with his [Brady’s] chief of staff yesterday when we presented the signatures,” Mr Solomon said.

Michael DeSombre, an American partner at the law firm of Sullivan & Cromwell in Hong Kong who chairs Republicans Overseas, said the White House was also supportive. “The White House and the Republican National Committee support the proposal but are not going to push for it actively.”

James Brandell, a lobbyist helping the Republicans make their case, said Ms Knight said the White House “sees no policy problem” with the proposal, but urged them to focus on the House ways and means committee and the Senate finance committee which are writing the tax bill.

The White House acknowledged that Ms Knight had met with the Republicans Overseas team, but Raj Shah, deputy press secretary, said their account of the meeting was “not accurate”.

Caroline Harris, a US Chamber tax official, told Congress in a letter in July that taxing individuals’ foreign income “significantly undermines the global competitiveness of US exporters. No other country taxes its citizens working abroad, and any transition to a territorial tax system should take this into consideration and end this damaging practice.”

Mark Mazur, who was the top tax official in Barack Obama’s Treasury department, said he supported the change, arguing that it was necessary to address the “inequity” of an expat paying tax on the same income to both the US and a foreign government.

“If you take two people, one works in London, one in New York, working for the exact same US multinational — if they make the exact same amount of money you might think they should be taxed exactly the same,” said Mr Mazur, who heads the Tax Policy Center.

The US has tax treaties with more than 60 countries that to varying degrees reduce, but do not usually eliminate, the US tax burden on American expatriates.

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https://www.ft.com/content/4909d804-b9a1-11e7-8c12-5661783e5589

6,400 expat American signatures sought on petition to end citizenship-based tax

By: Helen Burggraf | 16 Oct 2017

As US lawmakers consider the relative merits of a package of proposed changes to the American tax code, a global network of expat Americans is calling on their fellow countrymen in Expatland to urgently sign a petition calling for the US to end its citizenship-based taxation regime. 

The petition calls for “territorial taxation for individuals”, or TTFI, to replace the current American system of taxing Americans for their entire lives, unless they renounce their citizenship, on the basis of their being American citizens.

Read the full article here.

Solomon Yue and Michael DeSombre deliver TTFI letters and petitions to the White House

Michael DeSombre (Left), Republicans Overseas Worldwide President, and Solomon Yue, Republicans Overseas Vice Chairman and CEO, met with Samantha Zager (Right), White House Associate Political Director on October 2, 2017.

On behalf of the White House, Ms. Zager accepted 1,744 letters/petitions to President Trump in support of including Territorial Taxation for Individuals in the Tax Reform Package being debated in the House and Senate. Ms. Zager was very impressed with our efforts, and we discussed the strategy for getting TTFI included in the tax reform package.

The next step is to petition Congress for the inclusion of  TTFI in the Tax Reform Package. Republicans Overseas will deliver your  TTFI petitions to the House Ways and Means committee and to the Senate Finance Committee in late October. Ms. Zager will facilitate RO meeting requests with the leadership and tax writers of the committees. Thank you for your participation!

Comparison of RBT, TTFI and CBT

Republicans Overseas has compiled a comparison of the world’s two major income tax methods: residence based taxation and territorial taxation. We’ve added the United States’ citizenship based taxation to demonstrate that overseas Americans would be better off with TTFI.

You can access a PDF copy here:   RBT vs TTFI postcard

“How to Stop Foreign Billionaires from Gaming the US Tax Code”

 – The Washington Times – Thursday, September 21, 2017

ANALYSIS/OPINION:

How do Republicans win in 2018, let alone in 2020, when their president’s approval rating is lower than Hillary Clinton’s self-esteem?

Easy: 5.7 million Americans who live and work abroad are registered and qualified to vote by absentee ballot.

Why’s that a big deal when we already have 194 million registered voters inside our borders, 135 million of whom voted last Nov. 7?

Remember absentee ballots in one state, Florida, won George W. Bush the presidency in 2000.

Read the full article at the Washington Times.

 

 

Non-Americans Enjoy Preferential Tax Rates on US Investments Over US Citizens

Currently non-Americans have very preferential (0-10%) tax rates on dividends, interest and capital gains earned in America while Americans are hounded by the IRS around the world at 38% tax rates on every penny earned outside of America.

Here are the tax rates enjoyed by non-Americans on American investments:

  • Dividends 5-15%
  • Interest 0%
  • Gains 0%

If we believe America First means US citizens first, then non-Americans should pay the same dividends, interest, and capital gains taxes as 322 million stateside and 9 million overseas Americans.

We will bring this issue to the White House on October 2, 2017.

Write a letter to President Trump to support putting US citizens first!

Sign the petition!

Would you like to see the language granting these tax rates to non-Americans? Then please read the US Model for tax treaties.

Help RO get out the word about the TTFI Letter Writing Campaign!

Please help us to spread the word about our Letter Writing Campaign and Petition!

You can forward our TTFI Airmail Postcards:

You can click to tweet:

Tell the White House and Congress to put Territorial Taxation for Individuals into the Tax Reform Package! http://bit.ly/2x1enud

Let’s end double taxation once and for all!

RNC approves resolution supporting Territorial Taxation for Individuals

During their summer meeting, the RNC approved a resolution supporting the transition from Citizen Based Taxation to Territorial Taxation for Individuals.

Read more

Interview with Grover Norquist on Tax Reform

Watch Stuart Varney’s informative interview with Grover Norquist on tax reform.