A plan to boost taxes on US citizens living abroad while slashing other taxes is drawing an angry response from businesses as well as organizations representing US expatriates.
The bill drafted by the Senate Finance Committee, which seeks to cut some US$350 billion overall over a 10-year period, would recoup some of that by eliminating a longstanding tax exemption for Americans living overseas.
The Senate bill still must be reconciled with legislation passed by the House of Representatives.
To offset some of the tax cuts, the Senate plan includes proposals to raise revenues by eliminating tax breaks to some US firms that move offshore, and -- in a more controversial move -- ending the US$80,000 annual income exclusion for US citizens abroad, known as the Section 911 exclusion.
Without that exclusion, most Americans abroad would be taxed twice, because the US, unlike most other countries, taxes its citizens living anywhere in the world.
David Hamod, a Washington consultant and executive director of the Section 911 Coalition, which represents US firms, chambers of commerce and schools operating overseas, said the Senate panel made a huge mistake.
"The committee was looking for a quick fix, but I don't think they fully understood the magnitude of what they were doing," Hamod said, arguing that the exemption for US workers abroad got muddled in with the question of offshore tax shelters.
"There was some confusion about offshore companies and overseas Americans, but the two are almost diametrically opposed. ... Sending Americans abroad creates jobs and promotes American exports."
But Senator Charles Grassley, who crafted the bill, said it was no mistake.
"Part of tax relief is tax fairness," he said. "I have to ask whether it's fair for taxpayers to underwrite the cost of sending employees overseas ... an American soldier who spends a year in Kabul has to pay his full US tax obligation, but an American working for a private company in Bermuda pays no taxes."
Opponents contend that companies and employees would face double taxation under the proposal.
"The tax exclusion for overseas income should be expanded, not scrapped," said Thomas Donohue, president of the US Chamber of Commerce.
"These workers play a vital role in promoting our national interests, and their presence helps support US exports and creates US-based jobs."
Official estimates put the number of US private citizens abroad at around four million, but Hamod said the figure is closer to 10 million, because the official number includes only those who have registered with US embassies.
Congressional experts say that ending the tax exclusion would bring in some US$35 billion over 10 years.
US business groups with overseas links and others have started an intense lobbying campaign to maintain the exclusion, arguing that the Senate bill would make it much harder and more costly to send Americans to overseas posts.
"The United States is one of the few nations to tax its citizens when they live and work in other nations -- the misguided practice of `worldwide' taxation," said Daniel Mitchell, a researcher at the conservative Heritage Foundation.
Eliminating the exclusion, said Mitchell, "hurts US companies trying to compete in global markets and reduces American exports. It also is a form of double taxation, since US citizens employed in other nations are subject to all applicable taxes in those nations."
Senate Democratic leader Tom Daschle said his party would fight to strip out that provision in the bill.
"There are tens of thousands of people who work abroad and work with an understanding that they're helping America's economy because of our globalized economic interdependence," he said.
"We need people abroad to take those jobs, to continue to grow this economy as much as we can ... This is a huge tax increase on working families all over the world at the very time when we need them, perhaps, even more than ever."
INSURRECTION: The NSB said it found evidence the CCP was seeking snipers in Taiwan to target members of the military and foreign organizations in the event of an invasion The number of Chinese spies prosecuted in Taiwan has grown threefold over a four-year period, the National Security Bureau (NSB) said in a report released yesterday. In 2021 and 2022, 16 and 10 spies were prosecuted respectively, but that number grew to 64 last year, it said, adding that the Chinese Communist Party (CCP) was working with gangs in Taiwan to develop a network of armed spies. Spies in Taiwan have on behalf of the CCP used a variety of channels and methods to infiltrate all sectors of the country, and recruited Taiwanese to cooperate in developing organizations and obtaining sensitive information
BREAKTHROUGH: The US is making chips on par in yield and quality with Taiwan, despite people saying that it could not happen, the official said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has begun producing advanced 4-nanometer (nm) chips for US customers in Arizona, US Secretary of Commerce Gina Raimondo said, a milestone in the semiconductor efforts of the administration of US President Joe Biden. In November last year, the commerce department finalized a US$6.6 billion grant to TSMC’s US unit for semiconductor production in Phoenix, Arizona. “For the first time ever in our country’s history, we are making leading edge 4-nanometer chips on American soil, American workers — on par in yield and quality with Taiwan,” Raimondo said, adding that production had begun in recent
Seven hundred and sixty-four foreigners were arrested last year for acting as money mules for criminals, with many entering Taiwan on a tourist visa for all-expenses-paid trips, the Criminal Investigation Bureau (CIB) said on Saturday. Although from Jan. 1 to Dec. 26 last year, 26,478 people were arrested for working as money mules, the bureau said it was particularly concerned about those entering the country as tourists or migrant workers who help criminals and scammers pick up or transfer illegally obtained money. In a report, officials divided the money mules into two groups, the first of which are foreigners, mainly from Malaysia
SILICON VALLEY HUB: The office would showcase Taiwan’s strengths in semiconductors and artificial intelligence, and help Taiwanese start-ups connect with global opportunities Taiwan has established an office in Palo Alto, one of the principal cities of Silicon Valley in California, aimed at helping Taiwanese technology start-ups gain global visibility, the National Development Council said yesterday. The “Startup Island Taiwan Silicon Valley hub” at No. 299 California Avenue is focused on “supporting start-ups and innovators by providing professional consulting, co-working spaces, and community platforms,” the council said in a post on its Web site. The office is the second overseas start-up hub established by the council, after a similar site was set up in Tokyo in September last year. Representatives from Taiwanese start-ups, local businesses and
RSS