AMERICANS ABROAD
American Citizens who live outside the United States would seem to be an odd place to troll for grassroots support of the FAIRtax. But that is precisely where we have started to look. The US Income Tax Code treats US expatriates unfairly. US Citizens share the company of only North Korea and Eritrea in having to file a US income tax return, in addition to a return of their host country. This rule applies to expatriates even when they maintain no residence in the US. German citizens, for example, who live outside Germany do not have to tangle with their country’s income tax authorities. Even the Phillippines, who had our income tax code following independence, changed.
With the FAIRtax, for the first time, the territorial and destination concepts, that characterize the tax codes of every other country in the world, are introduced to US taxation. If expatriates do not purchase services or new tangible goods in the United States, The FAIRtax does not apply to them.
The juxtaposition of the US Income Tax Code abroad is unfair to US Citizens abroad for several reasons:
- US expatriates encounter the worst of two tax worlds. Different tax systems promote different – and sometimes inconsistent – national tax policies. For example, winnings in the South German Lottery are tax-free in Germany but taxable to the US to citizen who lives there. Conversely, municipal bonds are tax-free in the US but taxable in Germany to the US citizen who lives there.
- Because of distortions in foreign exchange rates, the progressive nature of our income tax (yes, even after the Tax Cuts and Jobs Act) can impose an unfair burden on expatriates, particularly at times when the dollar is weak.
- The Foreign Account Tax Compliance Act, known commonly as “FATCA,” causes foreign banks to avoid opening an account for US Citizens who live there. Foreign banks prefer not to have to comply with US tax law. Imagine, for comparison, an Iowa branch of a US bank having to comply with the laws of China for opening an account in Iowa for a Chinese citizen!
Until 1986, American Citizens abroad were disenfranchised. But President Reagan, that year, signed the Uniformed and Overseas Citizens Absentee Voting Act into law, and most American Citizens gained the right to vote for candidates for Congress, the Senate, and the Presidency. US Citizens generally vote in the Congressional District where they last lived immediately before leaving the country. Citizens of other countries have always taken this right for granted.
The State Department estimates there could be as many as nine million US expatriates. These citizens are dispersed, but an organization called American Citizens Abroad is helping to give these citizens a voice. We recently met in Washington DC with a representative of American Citizens Abroad and hope to develop a relationship.
CALL FOR PICTURES AND WRITEUPS
We need your pictures and news. If you have anything to share, please send your material to me at jim.bennett@fairtax.org, or text me at (908) 578-4975. When others see your activity, they are inspired, and the process snowballs. When the process snowballs, Congress Members and Senators and, yes, even the President start to listen.
Seated left to right are FAIRtax Grassroots Director, Jim Bennett, Christine Bennett, U.S. Senate Candidate from Massachusetts Allen Waters, Shaun Waters