American citizens abroad are victims of a lot more than double taxation

By Karl Steinke

We live in exciting times.  For the first time in years, the mainstream media are discussing the issue of the U.S. system of citizenship-based taxation and its impact on Americans abroad.

On October 2, 2024, Republicans Overseas issued a press release stating that “President Trump supports ending the double taxation of overseas Americans. A few days later, the former president and candidate for re-election on Oct. 5 published a video statement saying, “I will end double taxation.”  

Tax Fairness For Americans Abroad is a single-issue, non-partisan, non-profit organization fighting for an end to citizenship-based taxation and its replacement with rules that follow the global standard of residence-based taxation. In this context we welcome the fact that our goal has been elevated to the level of presidential politics. We hope that the Harris-Walz camp as well as current and future members of Congress will follow suit.

With the increased media attention, some have taken the position that “double-taxation” is not really a problem for Americans abroad.  Due to international tax treaties as well as credits and deductions such as the Foreign Earned Tax Credit and Foreign Tax Credit, normal hard-working people are not harmed, their argument goes. 

Being subject to two different sets of tax laws never ends well

This is simply not true. As long as Americans overseas are subject to two sets of often contradictory tax laws, the lives of American citizens abroad are harmed in myriad and significant ways.

Individuals earning an average wage in a high-tax European nation and allocating their entire income to expenditures are likely to encounter minimal tax complications beyond basic paperwork and potential consultation with a U.S. tax professional. However, complexities arise with financial activities such as retirement investments, real estate acquisitions, marriage to a non-U.S. citizen, or entrepreneurial endeavors. In these scenarios, navigating the intricacies of two distinct and often conflicting tax and reporting regimes presents a significant challenge.

The discrimination that citizenship-based taxation causes is also a moral issue. The United States should not have the right to tax income from outside of the United States earned by people who do not live in the United States. The income is already subject to taxation in the country of residence. Only one other country in the world does this—Eritrea—and the United Nations has condemned it for enforcing that policy.

In the testimonials on this blog you can find many examples of the problems faced by overseas Americans due to the United States’ unique extraterritorial taxation and reporting requirements. Please help us spread the word that citizenship-based taxation hurts American citizens abroad even if they do not actually owe taxes in the United States.