The Residence-Based Taxation for Americans Abroad Act is progressing slowly but surely

Dear supporters,  

We have been receiving more and more questions about the status of the LaHood bill. We understand and share everyone's frustration that the process is taking so long. This note is a short attempt to describe what has been happening behind the scenes and underscore the commitment we continue to hear from Rep. LaHood and Sen. Young to see this through.

First, while it may appear that little has happened since the bill was first introduced by Mr. LaHood in the House and our two champions began discussions with the Joint Committee on Taxation in earnest last summer, countless meetings have resulted in substantial improvements in the bill. To cite just one simple metric, we understand that the bill has doubled in length from the original 18 pages to now 37 pages—and counting...  The changes focus on providing more clarity on how a residence-based tax system would operate while also closing potential loopholes that could jeopardize the economics of the proposed bill.  In short, if the bill results in a huge loss of revenue for the U.S. Treasury, it will not garner bipartisan support for introduction, let alone the votes to pass and become law, no matter how much Americans abroad suffer or how just residence-based taxation is in principle. 

We remain in close touch with the offices of Rep. LaHood and Sen. Young and understand they continue to engage with JCT to look for ways to reduce the revenue impact of the bill and explore ways of raising revenue to offset some of the predictable costs. We continue to see our congressional champions as being fully committed to advancing this legislation to bringing tax relief to Americans abroad as soon as possible.  As Tax Fairness for Americans Abroad, we are pushing hard for this bill to be introduced before the summer so that we can engage Members of Congress and seek their commitment to support the bill before this November’s elections, in which overseas voters could determine winners and losers in close races. 

Finally, we understand that for many people, especially wealthy Americans abroad and accidental Americans, their patience is reaching a turning point. Although this is too little appreciated in Congress, many thousands of Americans abroad are only deferring the renunciation of their U.S. citizenship in the hope that residence-based taxation will soon provide them a better option. And that’s on top of the thousands for whom RBT will arrive too late: In 2024, more than 4,820 Americans abroad renounced their U.S. citizenship, up 48% from the year before, and more than 21,027 have renounced over the past five years. Some experts estimate the State Department already has a backlog of 30,000 cases it’s working through. The longer it takes to get an RBT option on the table, the more Americans will exit the U.S. tax system forever — a loss to the country and a revenue impact that Washington does not seem to fully appreciate.  

Our objective was and remains to offer Americans abroad a better option, and we remain committed to that objective. We owe it to all the people who have already donated to our campaign for change. We humbly ask that you to continue to support us in this historic campaign to end double taxation and related FATCA and FBAR filing obligations for Americans abroad forever.   

If you haven’t already shared your personal testimonial or donated, please do. Each story helps build the case that this needs to change, and each dollar donated helps bring us one step closer to financial freedom.

Sincerely,

Brandon Mitchener

Executive Director

Tax Fairness for Americans Abroad