Friday, February 24, 2012
|Another attack on Americans abroad|
Another attack on the Foreign Earned Income Exclusion (FEIE) is on the way in Congress. According to H.R. 2495, the FEIE would be reduced to zero, subjecting all income earned abroad to US tax.
H.R. 2495 ("To amend the Internal Revenue Code of 1986 to eliminate certain tax expenditures") currently in the House Ways and Means Committee contains language (Sec. 402) that would entirely remove the FEIE which allows Americans working abroad to exclude part of their foreign earned income from their US taxable income. Ironically, the bill does not touch the foreign housing exclusion which allows Americans the possibility of excluding some foreign housing expenses from their US taxable income.
Actually, this particular paragraph in H.R.2495 could hardly be expected to increase tax revenue by the promised amount of 5.4 billion dollars as US taxpayers living abroad would start using various tax credits such as foreign taxes paid in an effort to reduce their US tax bill. Filing US tax forms will become even more complicated for Americans abroad and tax revenue will not increase.
If anyone is from Massachusetts, please write to Tierney immediately and tell him this is crazy. His bill would eliminate the Foreign Earned Income Exclusion for Americans living overseas and would not bring in very much extra tax money. We DO pay taxes overseas. And the US is the only country in the world that taxes its citizens even if they live in another country and pay taxes to that country. Please write to Tierney and the bill's cosponsors (Steve Cohen [D-TN9], Keith Ellison [D-MN5], Raul Grijalva [D-AZ7], Jesse Jackson [D-IL2], Betty McCollum [D-MN4]) to tell them to remove this paragraph from the bill.