Survey reveals overwhelming support for Rep. LaHood’s Residence-Based Taxation for Americans Abroad Act
Dear Congress,
Americans abroad overwhelmingly support Rep. Darin LaHood’s Residence-Based Taxation for Americans Abroad Act and would opt for RBT as soon they had the chance.
Those are the headline results of an online survey launched by Tax Fairness for Americans Abroad to gauge support for the LaHood bill among Americans living outside the United States.
Of the 712 people who responded, 98.2% said they favored residence-based taxation (RBT) over the current U.S. system of taxing citizens on the basis of their worldwide income, regardless of where they lived. Moreover, 97.3% said they would instantly choose RBT if Mr. LaHood’s bill made that possible.
The vast majority of respondents described the LaHood bill as a huge step towards true residence-based taxation as practiced by every other free country in the world.
Hungry for tax reform
Both those headline results and the detailed comments submitted suggest that Americans abroad are hungry for a reform of the U.S. tax system that has made it impossible for them to live normal lives and makes them second-class citizens, both compared with Americans living in the United States and with their neighbors in their countries of residence.
Here are a few of of the hundreds of comments that we received. Together, they give a flavor of the extent to which Americans abroad have been silently suffering under the current system:
“I hope this passes so that I can finally save for retirement (since I will no longer have the PFIC issue). I just want to put a small amount of money into an index fund.”
“I hope this will mean my children don’t have to renounce their U.S. citizenship.”
“Choosing to remain an American should not equal choosing to be taxed to death!”
“I was not born in the US and have never lived there. I’m covered by U.S. taxes because one of my parents was born there but left many years before I was born. Double taxation is seriously impacting my ability to manage finances, invest and plan for retirement as having U.S. citizenship negatively impacts all those matters in my home country, placing me at a serious financial disadvantage to my compatriots in my home country. I have been rejected for bank accounts and investment accounts, and have had all accounts at one bank frozen meaning my family could not even buy groceries until I found an alternative. I cannot have or apply for jobs that would require me to have signing ability on bank accounts, impacting potential career progression. As an accidental American this proposed legislation would be life changing. Being an accidental American is a curse.”
“I am an accidental American and do not understand why I am obliged to go through onerous and expensive procedures to file tax returns in America when I have never lived there nor have ever benefitted from any of its tax-funded services or facilities.”
“I just want to tick a box and be free. And I wish that for any other American or ‘accidental’ American in the same situation.”
“It's not a tax break. Americans pay taxes where they live. It's a move to a system operated by the entire rest of the world. The entire citizenship-based taxation system is rotten to the core and needs to end.”
“Each year I file more than 800 pages in U.S. tax forms. I cannot see how this is efficient to be processed for the little or no tax that I end up paying each year.”
“Residence-based taxation needs to happen so that the United States doesn’t continue to lose valuable citizens.”
Constructive criticism
A significant number of respondents felt the LaHood bill should go even further, making moving abroad and residence-based taxation a fundamental right that the U.S. government could not refuse. (This is how other countries handle the question: if you move abroad, you are immediately considered to be a tax resident of the new country, provided that you inform the original country that you are moving. There is no waiting period and no exit tax.) Several people who had renounced their U.S. citizenship because of the unfairness of double taxation and FATCA and FBAR reporting requirements asked if there was a way that they could get their US citizenship back. Some questioned why they should still have to pay taxes on U.S.-sourced income, given that they do not benefit from any U.S. government services.
Many others raised questions about how the bill would impact their individual situations and those of their families. We have consolidated all the questions not already addressed in the bill and shared those with Mr. LaHood’s office.
We look forward to seeing the LaHood bill reintroduced in the new Congress, ideally with bipartisan support.
Sincerely,
Tax Fairness for Americans Abroad