Tax Reform: ACA Submission to Congress (Jan 2011)
End-January 2011 the House Ways and Means Committee announced it would be holding "Hearings on Fundamental Tax Reform". ACA and its OAW partner organizations AARO (Association of Americans Resident Overseas) and FAWCO (Federation of American Women's Clubs Overseas) have filed a meaty joint submission of proposed testimony .
The basic argument is, of course, in favor of residence-based taxation, to put the US in line with taxation policies of the rest of the world. In the alternative, the groups argue, at least remove the cap on foreign earned income exclusion and make some other adjustments favorable to overseas Americans.
The present system, under which Americans abroad are liable for taxation both in their country of residence and in the US, constitutes "a unique competitive disadvantage that the United States has created for itself," the overseas groups posit. "Government and professional studies have systematically concluded that eliminating America's citizenship-based tax burden would increase exports, and furthermore the administrative burden for the taxpayer and the IRS is out of proportion with the tax revenue generated." The paper ends with an appendix listing almost a dozen examples of US tax code discrimination against Americans residing abroad.
ACA hopes that the paper will be accepted as testimony by the Ways and Means Committee. Formal acceptance of the paper would mean that it would be published in the Federal Register, putting it in official government records.