American Citizens Abroad Calls for Support of New Tax Legislation

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American Citizens Abroad (ACA) calls for strong support of S. 3162 "MADE in the USA Tax Act" and congratulates Senator George Voinovich for his initiative.

American Citizens Abroad (ACA) calls upon all Americans living overseas to write to Congress to show strong support for bill no. S. 3162 «MADE in the USA Tax Act» introduced by Senator George Voinovich (R-OH) in June 2008. ACA is sending out an appeal to the thousands of members, associations, organizations and media contacts on the ACA mailing list to ask that everyone write members of Congress in support of this important legislation. In addition ACA has included this appeal with full details on the bill on the ACA web site (

Section 105 of S. 3162 would reverse measures constituting a dramatic tax hike for overseas Americans that were included in the Tax Increase Prevention and Reconciliation Act (TIPRA 2006). By eliminating the present cap on foreign housing expenses as well as the stacking measure, this act would alleviate the double taxation burden faced by Americans residing overseas and simplify tax legislation.

S. 3162 includes another provision that would affect Americans overseas, prohibiting those who elect to exclude foreign earned income from claiming a refundable child credit, which is a government payment to taxpayers with no tax liability. Due to the foreign earned income exclusion, Americans overseas may have a reduced US tax liability or no US tax liability, but this does not imply that they are low-income individuals. As the refundable child credit is intended to benefit only low-income individuals, ACA views this proposal in S. 3162 as reasonable and acceptable.

Senator Voinovich's bill reflects the growing concern in Congress for fundamental tax reform to allow the nation to be more competitive in global markets. While the main purpose of S.3162 is tax relief to improve the competitiveness of U.S. corporations and small businesses and to eliminate tax incentives for moving jobs and profits overseas, it is significant that Senator Voinovich has recognized the importance in this context of reversing the TIPRA tax hike measures on overseas Americans. Americans working overseas play an important role in promoting American products and corporate competitiveness; they also play a recognized role of goodwill ambassador of the USA to the rest of the world.

S. 3162 would lower the U.S. corporate tax rate from 35% to 28%, increase the domestic activities deduction for small businesses, make permanent the 2003 expansion in small business expensing, simplify the international tax rules and repeal the 3% withholding requirement for contractors. These tax reforms will be paid for by repealing a number of existing tax breaks, detailed in the act, that favor foreign competitors and encourage companies to move jobs and profits overseas.

At the Senate Finance Committee hearing on June 26th 2008 focused on international corporate taxation, Senator Max Baucus (D-MT), chairman of the committee, stated: "It's time to consider whether we need to make minor tune-ups to the rules for taxing foreign income, or start from scratch." He went on to say, "The way we tax foreign income is important to American investments, American jobs and American productivity. In order to enhance American competitiveness, we have to ask to what extent the tax code needs reform."

At the same hearing, Senator Chuck Grassley (R-IA), committee ranking minority member, said international tax reform is "long overdue" and that "our tax policy should enable U.S. companies to operate in the global marketplace without the artificial boundaries set in place by the tax code."

ACA believes that one of the key dangers facing the United States today is the unsustainable level of its trade deficit. American companies and individuals today cannot compete on a level playing field largely because of US tax policies. Without preferring one form of corporate taxation over another, ACA will support any legislation which goes in the direction of improving the competitiveness of American industry, encouraging the growth of domestic jobs and promoting exports from the United States.

Written by Jackie Bugnion, member of the Executive Committee of American Citizens Abroad (ACA). ACA is a global non-profit, non-partisan association based in Geneva, Switzerland and celebrating its 30th anniversary this year. Since its founding in 1978, ACA has represented the interests of American citizens overseas on issues of taxation, citizenship, voting, representation, Social Security and Medicare.


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