US Lobby Group Reiterates Calls To Axe Worldwide Tax Regime

Tom Burroughes Group Editor January 3, 2018

US Lobby Group Reiterates Calls To Axe Worldwide Tax Regime

Almost alone among major nations, the US operates a worldwide tax system, and the recent legislation cutting rates leaves this system unchanged.

A lobby group for American expats continues to call for change to the US worldwide tax system, angry that reform of the regime was not included in the Tax Cuts and Jobs Act (HR1) legislation signed into law late last year.

While the tax bill, said to slash levies by up to $1.5 trillion over a decade and which cuts corporate taxes and doubles estate tax exemptions, has been billed as radical, the measures don't include an overhaul of how US citizens living abroad are tax. Unlike most nations that adopt a residency-based, territorial tax system, Americans are forced to file US tax returns even if they haven't spent a day of their adult lives in the US.

American Citizens Abroad called on Congress to hold hearings on the topic early this year. It argues that lawmakers in Congress and in the Trump administration have voiced support for reform to the system. For example, Kevin Brady, chairman of the Ways and Means Committee in the House of Representatives, has been quoted as saying that the US worldwide tax system needs to change, ACA said.

"While differing on details, Republicans Overseas, Democrats Abroad, Americans for Tax Reform, the Heritage Foundation, several American Chambers of Commerce overseas, and other business groups, all support the movement towards change," it continued.

“Now is the time to lay on the table every aspect of this subject,” said Marylouise Serrato, ACA executive director, was quoted as saying.  “The background, the workings of existing law, the numbers, the real-life stories, all need to be aired, and now’s the time to do it.Then, based on all the information, everyone can come forward with their detailed proposals.”

US citizens have sometimes struggled to get access to financial services abroad; since the US FATCA legislation chasing after alleged tax evaders abroad was enacted in 2010, expats have faced more hurdles. Some banks, such as HSBC and Deutsche Bank, stopped offering services to expats, although a number of firms have sought to stress their doors remain open. The problem of compliance has gotten so severe that it is said to be a reason why more Americans are renouncing citizenship in recent years.

“The Tax Cuts and Jobs Act brings corporate tax policy into the 21st Century – moving to a territorial tax system like the rest of the industrialized world.  Individuals should not be left tied to an arcane and burdensome tax system based on 19th Century Civil War era tax policy,” Serrato added.


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