A British American living in the UK struggles with US double taxation and compliance burden

“Ironically, I am effectively prevented from investing in my own country’s markets because of the complex interaction between U.S. tax rules and foreign financial regulations.”

— Vishay Karia, a U.S. citizen living in the UK

Dear Congress,

My name is Vishay Karia and I am an British-American dual citizen born in the San Francisco Bay Area. Although I was born in the United States, my family moved to the United Kingdom when I was just three months old. I have spent the      past 26 years living in the UK while proudly maintaining my American citizenship and voting in California by absentee ballot.

Like millions of Americans living abroad, I have always wanted to remain connected to the United States. Unfortunately, that connection also manifests itself in the form of a tax system that treats Americans overseas worse than virtually      any other country treats its citizens living abroad.

The financial challenges extend far beyond filing an annual tax return. Because of FATCA and the compliance burden it places on foreign financial institutions, I have been denied access to many of the financial products that my British friends and neighbors take for granted. I cannot access competitive savings accounts that keep pace with inflation. The best savings rate available to me is around 2.75%, while UK inflation is approximately 3%, meaning my savings lose purchasing power simply because of my American citizenship.

Retirement savings barriers

Investing for my future is even more difficult. I cannot open investment or retirement accounts in the UK, and I face significant barriers to investing in simple, diversified index funds such as those tracking the S&P 500. Ironically, I am effectively prevented from investing in my own country's markets because of the complex interaction between U.S. tax rules and foreign financial regulations.

The cost of remaining compliant is another heavy burden. Americans abroad are expected to navigate one of the world's most complicated tax reporting systems even when they owe little or no U.S. tax. Many people I have spoken with spend around $4,000 every year on professional tax preparation simply to remain compliant. It is difficult to understand why ordinary Americans living overseas should have to bear such extraordinary costs, while large accounting firms maintain entire cross-border tax divisions dedicated to helping us navigate these complexities.

Meanwhile, my neighbors in the United Kingdom simply pay taxes where they live. They are free to save, invest, and plan for retirement without worrying that another country's tax code will limit their financial opportunities. As an American abroad, I do not enjoy that same certainty.

Policy solution needed

Public policy remains the only way to solve the root cause of these problems for millions of Americans abroad, even if fintech entrepreneurs like myself are looking for ways to ease the pain.  

That is why I strongly support Tax Fairness for Americans Abroad and Representative LaHood's proposal to move the United States toward a residency-based taxation system. Residency-based taxation would bring the United States into alignment with the approach used by virtually every other developed country. More importantly, it would allow Americans living abroad to participate fully in the financial systems of the countries where we live, save for retirement, invest responsibly, and contribute to our local economies without being penalized for maintaining our U.S. citizenship.

I respectfully urge Congress to support the LaHood bill when it is reintroduced. Americans abroad are not asking for special treatment. We are simply asking to be taxed like our neighbors: where we live, where we work, and where we build our lives.

Please help create a fairer system that allows Americans abroad to remain proud

Sincerely,

Vishay Karia

Co-founder & CEO, Eagle

Editor’s Note: Eagle is TFFAA’s newest commercial Partner.
Learn more about it at: www.eagleapp.us