An American Abroad - Expatriate Taxes May 2003

Anxiety Swells For Americans Abroad As They Wait For Congress To Decide Their Fate

by Brian Wall, editor of AnAmericanAbroad.com (May 2003)

Life is not easy these days being an American residing abroad.

First, you have to get over culture shock if you have been out of the USA for over a month or longer. Second, you had Sept 11th which changed the way Americans and Americans abroad viewed the world. In other words, the terrorists came to us. Third, the US Government decided to take it back to the terrorists abroad as well as get rid of the regime in Iraq with the hunch for weapons of mass destruction. So now as Americans abroad we have to be the ambassador for America as we get questioned daily about why America does the things they do. And now fourth, Congress proclaims a Tax Cut for America while they tell us through the media and other leaks that Americans Abroad will be the ones paying for the Tax Cut.

Well in reality Americans abroad are not being so subtle. We are screaming for answers. There has been a real lack of information about what will happen to us in regards to paying more taxes.
Here are some views from American readers of AnAmericanAbroad.com:

"What are you going to do about this criminal law? We pay high taxes here, and with 3 children in Paris and a very high rent, we have just enough money to live, we can't even save any money. We won't pay. Is he going to lose his passport?"
- Wife of an American Abroad in France

"Most countries have double-taxation treaties that mean they do not tax ANY income of their citizens living abroad if these people are also paying taxes to the countries in which they reside. The US is already different in double-taxing all income over $80,000.

I live in the Czech Republic, a high-tax country, and make more like $18,000 (maybe $20 now that the dollar has dropped). If I had to pay another 35% over my current 26% + health insurance + Czech social security whose benefits I cannot claim, I would be impoverished. Yeah, I’ll sign any damn petition you want."
- Jeff in Czech Republic

"Thank you for the information regarding the proposed repeal of the expat tax deduction. I will gladly sign a petition against this or follow any other course you may suggest. "
- Melanie, living abroad

"Thanks for the information. Unfortunately, the final vote for this may happen in the Senate today [last week] or tomorrow [last week] so there is little to be done. I contacted my Senators by phone and email when I first heard about it. I will fax them tonight. I've also contacted local organizations here and had them contact their members. Let me know if anything gets organized."
- Debra, living abroad

"What amazes me is the wording...we "enjoy" a tax break???? We PAY our taxes in the countries that we live in. I would be more than happy to sign a petition on this matter...I have been living in the Netherlands for the last 3 1/2 years - my husband works in the U.S. What I am not sure of...does this mean I would pay Dutch taxes AND U.S. taxes? How are foreign governments going to react? They need the foreign worker's expertise in many cases?
- Chana in The Netherlands

"Please add my name to the petition against the proposed tax plan."
- Melissa in The Netherlands

"I also read (and sent to all my friends) several recent articles about the possible elimination of the $80,000 exclusion. What can we do about this? YES - a petition for sure - what else? thanks for helping."
- Ann, living abroad

"What can I sign to let my voice be heard about tax increases for Americans working abroad?"
- Jon, living abroad

"Assuming that I earn $80,000/year and already pay taxes to the German government (I only see 53% of my gross pay when all is said and done), do I understand this proposal correctly, that I will now be taxed another 20 something percent by the IRS on top of that? I mean, if this is true, why should I then bother to go to work? I would be very interested in hearing if my assumption is correct. Petion - YES, I'm interested."
- Christina in Germany

"I would like to sign any petition, you may come up with in protesting the proposed abolishion of tax breaks for ex-pats."
- Prasad, living abroad

"My husband and I live and teach in Japan. We would love to participate in any action that you organize to fight this tax increase. We have already contacted our senators and representative. I am planning to contact all senators today by fax. This tax increase is going to make it impossible for us to continue to live and work abroad. So I am very eager to help. Please let me know if there is any way I can help."
&nbs&nbs&nbs&nbs&nbs&nbs&nbs&nbs&nbs - Debra & Mark in Japan

"I read it and am fine with supporting the petition of course"
- Jessica in France

"I would like to add my name to a petition against taxing expat Americans. I don't receive any benefits from the U.S. and I pay taxes in France; I don't see why I should be double-taxed and still receive nothing.
- Kristie in France

"Of course I will sign any petition you draw up on this issue. I'd be KOed with double taxation."
- Mark in France

"I would like to sign the petition and will happily pass it along to other expat friends. This is absurd – I already pay 48% taxes to the Australian government so why should I have to pay the US as well?"
- Julia in Australia

"I have been living abroad for my entire adult life (27 years!). I work for the city of Munich and for the Austrian Government. I pay taxes in both countries. I would seriously consider changing my citizenship before having to pay taxes in 3 countries. I would gladly sign the petition and I will see to whom I can forward the message."
- Lawrence in Germany, Austria

"My husband and I will be willing to sign a petition against the expatriot tax cut. Just send it to this address. Thanks for giving us a way to let the representatives know."
- Helga, living abroad

"Of course I'll sign!" [Against US Tax Increase on Expatriates]
- Nancy in Germany

RESOLUTION ON THREAT TO FOREIGN EARNED INCOME EXCLUSION
(adopted by the DPCA Executive Committee on Monday May 19, 2003)
WHEREAS seven million citizens of the United States live and work abroad,
WHEREAS the United States is the only major democracy in the world to tax its overseas citizens on their foreign earned
income,
WHEREAS international tax treaties and the foreign tax credit provisions of the Internal Revenue Code do not adequately protect overseas working families from the unfair burden of double taxation by their countries of residence and the United States,
WHEREAS repealing Section 911 of the Internal Revenue Code will unduly burden the many millions of American families living abroad,
WHEREAS repealing Section 911 is a disguised tax increase on working families abroad,
WHEREAS in the past the Internal Revenue Service has itself concluded that the cost of collecting taxes on the foreign earned income of Americans abroad would exceed the amounts actually collected,
WHEREAS while increasing tax on working families abroad the tax bill adopted by the Republican controlled Senate with the tie-breaking vote of VP Dick Cheney provides a massive tax decrease for the wealthiest Americans,
WHEREAS Democrats Abroad has continually supported the extension of Section 911 rather than its repeal,NOW THEREFORE BE IT RESOLVED,
THAT Democrats Abroad deplores the position on Section 911 adopted by the Senate championed by Senator Grassley and pushed through by the Senate Republican leadership, THAT Democrats Abroad calls on the House and the Senate to maintain Section 911 of the Internal Revenue Code as currently in effect, THAT Democrats Abroad calls on all Americans living overseas to contact their Representatives and Senators and the President and Vice President to express the in support for Section 911.
                                                                                                                      - Democrats Abroad
                                                                                                                        International Vice Chair
                                                                                                                        John McCreery

"I would sign petition and whatever else it takes to keep this from happening."
- Gwen in Czech Republic

"There is nothing like personal investment that motivate people to become involved. As one of the people who would be affected if this endeavor is ever actualized, I can say I would be willing to lend my name and support to any reasonable action to fight it and prevent it from ever becoming reality."
- O'von in The Netherlands

The US is already the only country in the world, I believe, the makes its non-resident citizens pay taxes at all!
Yes, I'd sign a petition.
- Laura in France

(Note: So as you can tell, there is confusement, shock, anger, anxiety, frustration, and big signs of protest against this measure. We ask Congress and those in the know to help clarify these issues, return emails & phone calls, and give a statement on what is heresay, what is true, what is not, before the bill becomes law and give us reasonable time to respond.)

For further information, please email the editor