A plan to boost taxes on US citizens living abroad while slashing other taxes is drawing an angry response from businesses as well as organizations representing US expatriates.
The bill drafted by the Senate Finance Committee, which seeks to cut some US$350 billion overall over a 10-year period, would recoup some of that by eliminating a longstanding tax exemption for Americans living overseas.
The Senate bill still must be reconciled with legislation passed by the House of Representatives.
To offset some of the tax cuts, the Senate plan includes proposals to raise revenues by eliminating tax breaks to some US firms that move offshore, and -- in a more controversial move -- ending the US$80,000 annual income exclusion for US citizens abroad, known as the Section 911 exclusion.
Without that exclusion, most Americans abroad would be taxed twice, because the US, unlike most other countries, taxes its citizens living anywhere in the world.
David Hamod, a Washington consultant and executive director of the Section 911 Coalition, which represents US firms, chambers of commerce and schools operating overseas, said the Senate panel made a huge mistake.
"The committee was looking for a quick fix, but I don't think they fully understood the magnitude of what they were doing," Hamod said, arguing that the exemption for US workers abroad got muddled in with the question of offshore tax shelters.
"There was some confusion about offshore companies and overseas Americans, but the two are almost diametrically opposed. ... Sending Americans abroad creates jobs and promotes American exports."
But Senator Charles Grassley, who crafted the bill, said it was no mistake.
"Part of tax relief is tax fairness," he said. "I have to ask whether it's fair for taxpayers to underwrite the cost of sending employees overseas ... an American soldier who spends a year in Kabul has to pay his full US tax obligation, but an American working for a private company in Bermuda pays no taxes."
Opponents contend that companies and employees would face double taxation under the proposal.
"The tax exclusion for overseas income should be expanded, not scrapped," said Thomas Donohue, president of the US Chamber of Commerce.
"These workers play a vital role in promoting our national interests, and their presence helps support US exports and creates US-based jobs."
Official estimates put the number of US private citizens abroad at around four million, but Hamod said the figure is closer to 10 million, because the official number includes only those who have registered with US embassies.
Congressional experts say that ending the tax exclusion would bring in some US$35 billion over 10 years.
US business groups with overseas links and others have started an intense lobbying campaign to maintain the exclusion, arguing that the Senate bill would make it much harder and more costly to send Americans to overseas posts.
"The United States is one of the few nations to tax its citizens when they live and work in other nations -- the misguided practice of `worldwide' taxation," said Daniel Mitchell, a researcher at the conservative Heritage Foundation.
Eliminating the exclusion, said Mitchell, "hurts US companies trying to compete in global markets and reduces American exports. It also is a form of double taxation, since US citizens employed in other nations are subject to all applicable taxes in those nations."
Senate Democratic leader Tom Daschle said his party would fight to strip out that provision in the bill.
"There are tens of thousands of people who work abroad and work with an understanding that they're helping America's economy because of our globalized economic interdependence," he said.
"We need people abroad to take those jobs, to continue to grow this economy as much as we can ... This is a huge tax increase on working families all over the world at the very time when we need them, perhaps, even more than ever."
DEFENDING DEMOCRACY: Taiwan shares the same values as those that fought in WWII, and nations must unite to halt the expansion of a new authoritarian bloc, Lai said The government yesterday held a commemoration ceremony for Victory in Europe (V-E) Day, joining the rest of the world for the first time to mark the anniversary of the end of World War II in Europe. Taiwan honoring V-E Day signifies “our growing connections with the international community,” President William Lai (賴清德) said at a reception in Taipei on the 80th anniversary of V-E Day. One of the major lessons of World War II is that “authoritarianism and aggression lead only to slaughter, tragedy and greater inequality,” Lai said. Even more importantly, the war also taught people that “those who cherish peace cannot
Taiwanese Olympic badminton men’s doubles gold medalist Wang Chi-lin (王齊麟) and his new partner, Chiu Hsiang-chieh (邱相榤), clinched the men’s doubles title at the Yonex Taipei Open yesterday, becoming the second Taiwanese team to win a title in the tournament. Ranked 19th in the world, the Taiwanese duo defeated Kang Min-hyuk and Ki Dong-ju of South Korea 21-18, 21-15 in a pulsating 43-minute final to clinch their first doubles title after teaming up last year. Wang, the men’s doubles gold medalist at the 2020 and 2024 Olympics, partnered with Chiu in August last year after the retirement of his teammate Lee Yang
The Philippines yesterday criticized a “high-risk” maneuver by a Chinese vessel near the disputed Scarborough Shoal (Huangyan Island, 黃岩島) in a rare incident involving warships from the two navies. The Scarborough Shoal — a triangular chain of reefs and rocks in the contested South China Sea — has been a flash point between the countries since China seized it from the Philippines in 2012. Taiwan also claims the shoal. Monday’s encounter took place approximately 11.8 nautical miles (22km) southeast” of the Scarborough Shoal, the Philippine military said, during ongoing US-Philippine military exercises that Beijing has criticized as destabilizing. “The Chinese frigate BN 554 was
The number of births in Taiwan fell to an all-time monthly low last month, while the population declined for the 16th consecutive month, Ministry of the Interior data released on Friday showed. The number of newborns totaled 8,684, which is 704 births fewer than in March and the lowest monthly figure on record, the ministry said. That is equivalent to roughly one baby born every five minutes and an annual crude birthrate of 4.52 per 1,000 people, the ministry added. Meanwhile, 17,205 deaths were recorded, resulting in a natural population decrease of 8,521, the data showed. More people are also leaving Taiwan, with net
RSS