Expats in Europe have banded together to tell Congress that the United States needs a residence-based tax system instead of a citizenship-based method.
The group, called the Americans in Switzerland Town Hall Meeting Working group, also wants more say in issues involving overseas Americans. The group suggests that some form of ombudsman be created and empowered to review and respond to challenges facings Americans overseas.
The Sept. 3 letter from the group in Switzerland is signed by business leaders and heads of both Democrats Abroad and Republicans Abroad.
The primary concern is the effect that the Foreign Account Tax Compliance Act is having on overseas Americans as well as the impact of the Report of Foreign Bank and Financial Accounts. These are called FATCA and FBAR.
“Recent measure aimed at finding holders of undeclared foreign bank accounts, the vast majority of whom are not residents abroad but living in the U.S., have been applied in such a manner that has made ordinary life very difficult for average, law-abiding American citizens who live and work overseas,” said the letter to members of Congress.
The letter also said that bi-national marriages are coming under increased stress because of the reluctance of the non-American partner to share joint account information with the Internal Revenue Service. The letter also said that some U.S. citizens are concluding that their best option is to surrender U.S. nationality.
“A disproportionate number of those who are renouncing their U.S. citizenship are currently living here in Switzerland,” the letter said.
The letter says the heart of the problem is the unique policy of the United States to base its taxation on citizenship. This denies overseas Americans any chance of attaining competitive equality in world markets, and also has very adverse effects on U.S. exports and the entire U.S. economy,” the letter said.
The group said that the problems are not confined to U.S. citizens in Switzerland but are general among U.S. expats all over the world.
The group also suggests representation in Congress for overseas Americans.
The report that accompanied the letter contains an expat wish list. In addition to the repeal of FATCA, the report expresses concern about proposals in Washington to repeal the foreign earned income exclusion that lets U.S. citizens earn about $93,000 each year overseas without paying U.S. taxes.
The report also rejects a proposal to deny passports to U.S. citizens who owe taxes.
The report also was critical of U.S. policies of using informants to denounce fellow citizens who are suspected of U.S. tax non-compliance. “. . . how such an ignoble practice could be deemed compatible with our long cherished fundamental American values of solidarity, friendship and mutual trust,” the report asked. The report is HERE!