Americans Overseas Urge Immediate Tax Reform to End Chronic Trade Imbalance

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Non-partisan organization calls on Congress to revise tax legislation on hard-working Americans overseas and eliminate key barriers to higher exports

American Citizens Abroad (ACA), a non-profit organization of United States citizens living all over the world, has alerted 85 U.S. Senators and Congressional Representatives to elements of U.S. tax legislation that create major roadblocks to increasing U.S. exports and advocates for immediate reform.

The first major roadblock to increased American exports is double taxation of U.S. citizens living abroad. The United States is the only country in the world which taxes its citizens no matter where they live. As a result, U.S. and foreign companies overseas have replaced U.S. citizens with employees from Europe, Asia, and elsewhere, who do not have to pay taxes twice. With fewer Americans working overseas to sell U.S. products and services, it is difficult for companies to increase exports, and nearly impossible for small and medium-sized U.S. businesses to set up operations overseas.

The U.S. government itself, in GAO studies, has concluded that Americans abroad play a crucial role in developing exports and that U.S. tax legislation on Americans overseas has a discouraging effect on companies hiring U.S. citizens overseas.

The second major roadblock ACA reported to Congress is U.S. fiscal requirements on foreign subsidiaries. Each foreign subsidiary must file a complex form to the U.S., in addition to the tax forms it files to its country of residence. The IRS itself estimates that completing the necessary form requires 80 hours of work. This is a huge burden for small and medium-sized businesses in particular, who don't have the time or resources necessary for such onerous reporting.

The third major roadblock is the new Foreign Account Tax Compliance Act (FATCA) passed in March 2010. Extremely complex reporting requirements and harsh legal penalties are causing foreign banks to refuse banking services to U.S. citizens abroad. It is extremely difficult to conduct business in any country in the world without access to basic banking services.

To remedy these barriers to Americans working overseas, ACA calls on Members of Congress to enact the following legislative measures:

1) Eliminate citizenship-based taxation of individuals to ensure that more companies hire U.S. citizens overseas;

2) Introduce residency-based taxation for U.S. corporations, to allow more small and medium-sized companies to set up sales offices overseas;

3) Eliminate the FATCA legislation so overseas banks will continue to serve American citizens and companies.

These recommendations were communicated to Congress in a letter ACA addressed to members of the Senate Banking, Commerce and Finance Committees, and members of the House Commerce, Financial Services and Small Business Committees. For the full text of the letter, or to speak with one of the Directors of ACA, please CONTACT: MaryLouise Serrato at (4122) 340 0233 or e-mail info.aca(at)gmail(dot)com, or Marc Destito at (4178) 881 03 22 or email: Destito(at)genevagate(dot)ch

American Citizens Abroad, the voice of Americans overseas, is a non-profit, non-partisan, volunteer organization based in Geneva, Switzerland. ACA represents the interests of Americans living and working outside of the United States, and works to ensure that Americans overseas are treated with equality and fairness by all branches of the United States Government. More information on this issue and other subjects of concern to Americans living overseas can be found at ACA's web site at

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MaryLouise Serrato
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