Rep. LaHood sees potential for “long overdue” bipartisan elective RBT bill later this year

A bipartisan bill to end the double taxation of Americans abroad could come by the end of the year, Rep. Darin LaHood, author of the Residence-Based Taxation for Americans Abroad Act, said Monday.

In comments to hundreds of Americans overseas in a webinar organized by Tax Fairness for Americans Abroad, Mr. LaHood emphasized that ending U.S. double taxation :

• enjoys bipartisan support,

• is supported by both the White House and the Treasury,

• is “long overdue”, and

• could find a legislative vehicle in Congress before the end of the year

He said his RBT bill:

• has been sidelined by the reconciliation bill currently making its way through Congress but

• is being “scored” by the Joint Committee on Taxation,

• is being refined and will be reintroduced soon,

• will need “as many co-sponsors in Congress as possible”, and

• will require a broad educational effort by Americans abroad and their families to educate Members of Congress who are still unaware of the realities of life under double taxation, FATCA and FBAR filing obligations.

“We are continuing to build support and momentum to ensure we fix this injustice as quickly as possible,” Mr. LaHood said, responding to questions sent in by Americans overseas.

Bipartisan tax bills queued up

Mr. LaHood said that the reconciliation bill currently making its way through Congress has been the highest priority for many Members as well as for the JCT, which needs to produce revenue estimates for bills with a potential revenue effect. If that bill passes in July, that would pave the way for other bipartisan tax legislation—including his RBT bill—to be debated later in the year, he said. Otherwise it could see further delays.

“There are a number of other bills related to tax extenders and other bipartisan bills related to retirement and other things that we hope will create an opportunity at the end of this year to have a number of bipartisan tax bills to be considered. That's what I've talked to our Ways and Means Committee members, our staff and our chairman about trying to get done.”

Mr. LaHood said many Members of Congress are still unaware of the pain that double taxation, FATCA and FBAR filing obligations inflict on Americans abroad. Winning their support for a bipartisan RBT bill will take education, advocacy and patient explaining, he said. But he also said that Members with whom he and his team have spoken are very receptive to arguments that the U.S. system of taxing its citizens on their worldwide income, regardless of whether they live in the United States, is an aberration.

“It’s just us and Eritrea”

Mr. LaHood mentioned Eritrea no less than three times in his 30-minute remarks. He said highlighting the fact that the United States and Eritrea—an African dictatorship—are the only two countries in the world that still impose income taxes on their citizens abroad exposes the “craziness” and “silliness” of the situation and should be a “wake-up call” to Members of Congress.

Recent media coverage of the fact that Pope Leo XIV, who hails from Mr. LaHood’s state, Illinois, could also face tax scrutiny from the Internal Revenue Service further highlighted the absurdity of taxing Americans on their worldwide income and requiring them to declare all bank and financial accounts in their name even if they live abroad, he said. As the head of the Vatican State, the pope is indirectly responsible for all of its bank accounts.

Mr. LaHood also repeatedly emphasized the need for Americans abroad to engage directly with their Members of Congress via phone calls, letters and above all, personal stories and testimonials about the discriminatory impact of U.S. tax and related financial reporting laws on Americans abroad.

“All politics is local. It's individual stories. It's individual constituents. It's individual families that are detrimentally affected by [CBT].”

Tax Fairness for Americans Abroad invites all Americans living abroad to share their stories via its Help Us page. We publish these testimonials on our blog and share them directly with Members of Congress through our monthly newsletter.

The following are some of the highlights of Mr. LaHood’s remarks:  

• Reform and change are “long overdue.”

• “It's just us and Eritrea that still have citizenship-based taxation. The US and Eritrea are the only two countries that do this. That kind of the silliness is a wake-up call to many Members of Congress.”

• “The system creates huge financial strain and bureaucratic headaches for more than 5 million US citizens currently living abroad.”

  “We are in the process of making tweaks to the legislation now and a few improvements to the bill before we reintroduce it. In the meantime, we are continuing to build support and momentum to ensure we fix this injustice as quickly as possible.”

• “I look forward to working in a bipartisan way to get this across the finish line.”

• “We are waiting on the score from the Joint Committee on Taxation. We hope to have that here fairly soon, and we’re working with them to get the lowest score possible.”

• [JCT] “are working on it, but it has not been prioritized, and nor do I expect it to be prioritized until the reconciliation bill gets done now.”

• “If -- best case scenario--the One Big, Beautiful Bill passes sometime in July, that paves the way for more bipartisan legislation within the Ways and Means Committee by the end of the year.”

• “We’re looking for a legislative vehicle to get it across the finish line.”

• “There are a number of pieces of legislation that enjoy bipartisan support. I would include our bill on double taxation as an important one of those.”

• “There are a number of other bills related to tax extenders and other bipartisan bills related to retirement and other things that we hope will create an opportunity at the end of this year to have a number of bipartisan tax bills to be considered. That's what I've talked to our Ways and Means Committee members, our staff and our chairman about trying to get done.”

• “Our goal should be to get as many co-sponsors as possible.”

• “The Treasury Secretary is going to play important role on this. We've had conversations with his staff on it, and they've been supportive.”

• “All politics is local… It takes education, it takes advocacy, it takes explaining. It's individual stories. It's individual constituents. It's individual families that are detrimentally affected by [CBT].”

• “The time is right now to get this done, but it's going to take a team effort. It's not just going to happen because the president tweeted one thing or said something on the campaign. It's going to take a real effort getting people engaged at every level.”