Hear this: Double taxation hurts American workers and businesses. Duh!

Dear Congress,

Double taxation harms American workers and entrepreneurs who live and work abroad. That sounds like a no-brainer because it is. That’s the gist of the letter below, which we recently sent Chairman Smith and Chairman Kelly of the House Committee on Ways and Means Subcommittee on Tax, respectively.

The letter was a written submission for the record in the context of the Tax Subcommittee Hearing on Promoting Global Competitiveness for American Workers and Businesses.

Promoting Global Competitiveness for American Workers and Businesses

Dear Chairman Smith and Chairman Kelly,

On behalf of Tax Fairness for Americans Abroad (TFFAA), representing millions of U.S. citizens living outside the United States, we appreciate the Tax Subcommittee’s focus on promoting global competitiveness for American workers and businesses. The subcommittee’s recent hearing underscores a critical truth: U.S. tax policy must enable Americans to compete and succeed globally.

Unfortunately, the current citizenship-based taxation system does the opposite. It imposes lifelong tax filing obligations, high compliance costs, and, in many cases, double taxation on Americans living and working abroad. These burdens make U.S. citizens less competitive in the global workforce, discourage entrepreneurship, and create barriers for U.S. companies seeking to hire Americans overseas. No other major economy imposes such extraterritorial taxation, and this policy undermines the very competitiveness the committee and the Trump administration seek to advance.

Desperately seeking residence-based taxation

We urge the committee to address this issue in any forthcoming tax legislation by transitioning the U.S. tax code to a residence-based taxation system that taxes individuals who want that based on their place of residence and U.S.-source income, not merely their citizenship. This approach would:

·       Eliminate double taxation and reduce compliance costs for millions of Americans abroad.

·       Strengthen U.S. businesses by removing hiring barriers and improving global mobility.

·       Align U.S. policy with that of our largest trading partners, enhancing our economic competitiveness.

Last Congress, Rep. Darin LaHood introduced the Residence-Based Taxation for Americans Abroad Act (H.R. 10468), which provides a sensible, bipartisan solution with appropriate safeguards. We strongly recommend including this measure in any bipartisan tax package the Committee may consider. Doing so would honor longstanding commitments to end double taxation and advance the competitiveness goals highlighted by this hearing.

Chairman Smith and Chairman Kelly, TFFAA stands ready to assist you and your staff in crafting a fair and practical solution. Together, we can ensure that Americans abroad are empowered and not penalized for contributing to U.S. economic leadership worldwide.

Sincerely,

Brandon Mitchener

Executive Director

Tax Fairness for Americans Abroad