US Expats Step Up Pressure To Repeal FATCA

Expat Republicans are delivering a petition to President Donald Trump calling for the end of citizen based tax for US nationals.

Campaigners have collected thousands of signatures worldwide urging the government to consider a switch to residence based tax.

Under the current tax system, US citizens have their worldwide income taxed in the US regardless of where they live in the world.

America and the small African nation of Eritrea are the only two countries to impose this type of taxation on citizens.

The rest follow residence based taxation, where income is taxed in the country where someone lives regardless of their place of origin.

Crucial timing

The petition will be served with a detailed report that Republican expats argue shows US exports would increase and wealthy foreigners living in the US generating would pay more tax. At the same time, the tax burden on expats would fall.

“The general concept of citizen based taxation is wrong,” Dr Steven Anderson, who chairs Republicans Overseas in the United Arab Emirates, said. “We want territorial taxation, or, in other words, taxation where you are a resident.”

“With FATCA (Foreign Account Tax Compliance Act) the United States government coerced foreign banks to implement measures and comply with their request that all American-owned bank accounts over a low threshold need to have their account balance forwarded to the Internal Revenue Service. And this is monthly.”

The timing of the petition is crucial. Politicians in Washington will be discussing Trump’s proposed tax reforms this week, and many hope a repeal of FATCA promised in the Republican’s election platform will be part of the debate.

Cross-party support

The pressure on Trump to reform the US tax system is immense from within his own party – and from the Democrat opposition.

Democrat expats also want the president to ditch citizen-based taxes and are supporting the rival campaign.

“We don’t want citizen-based taxes and either residence or territorial taxes would do a better job, as either model will solve the problem,” said a Democrats Abroad spokesman.

FATCA requires foreign financial institutions to report financial data of accounts controlled by US nationals to the Internal Revenue Service each year.

The data is cross-checked against tax filings to make sure overseas earnings are full declared and taxed.

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US Expats Step Up Pressure To Repeal FATCA
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