GILTI until proven innocent: Taxed on money I never received

“My U.S. passport, the thing I was always told is the greatest asset in the world, has become the biggest liability in my life.“

— John, U.S. citizen in the U.A.E.

Dear Congress,

I am a born and raised New Yorker, and I take genuine pride in where I am from. I love cheering for the Yankees and the Knicks, and most importantly, I am proud to be an American. But living abroad as a U.S. citizen has turned my life into a never-ending compliance nightmare with massive bureaucracy that chips away every day at that very pride.

Family and friends back home tell me to just hire someone to work out what I owe and pay it, as if I had not already hired an expensive accountant. They do not see the phantom income tax, CFC rules, GILTI, PFIC and cross-border tax traps that I have to constantly keep in mind. I carry a racing mind through the day, terrified of making a catastrophic error in how I structure my finances. I have burned tens of thousands of dollars to stay compliant even when my tax bill is zero.

Phantom income, real anxiety

Americans at home cannot get their heads around phantom income tax until I explain it in detail. They cannot believe that a country that claims to embrace capitalism, equal opportunity, life, liberty and the pursuit of happiness imposes measures like taxing unearned income or unrealized capital gains on its citizens just because we live and our business is domiciled abroad.

Taxing someone on income they never receive? Shutting people out of the global financial system? This is a nation founded on the principle that taxation without representation is unjust. Yet Americans overseas face double taxation risks, invasive financial oversight and massive compliance burdens.

This is not just an administrative hassle. It penalizes real enterprise. I have been shut out of business opportunities and turned down by prospective foreign partners who refuse to work with Americans because our tax rules make us a liability.

My passport became the liability

When I tried to open a brokerage account abroad, I was denied. The list of countries they would not work with included Iran, Russia, North Korea and the United States. That was the list. My U.S. passport, the thing I was always told is the greatest asset in the world, has become the biggest liability in my life.

It is an exhausting paradox to be fiercely proud of where you come from while feeling targeted by your own government, to the point where I would be better off renouncing my citizenship and my entire identity.

With all my friends and family still in the United States, I am forced into an unfair choice. I should not have to sacrifice my heritage, identity and ability to freely visit my loved ones just to secure basic global financial access.

Please pass the LaHood Residence-Based Taxation for Americans Abroad Act. Moving to residence-based taxation is not just a political debate or a question of saving money. It is about restoring fundamental fairness, constitutional principles and peace of mind to millions of law-abiding Americans overseas.

Sincerely,
John in the United Arab Emirates