The US Administration has axed plans for a sweeping review of tax breaks for American residents abroad, Treasury Secretary Robert Rubin confirmed yesterday. The proposals called for the repeal of the foreign earned income exclusions that gives American residents abroad US$70,000 of tax free income each year. In addition, there are concessions for housing costs. There was widespread concern that President Clinton's seven-year balanced budget plan would have had a serious impact on the territory's economy. Following vigorous lobbying from both Congress and American business organisations around the world, the measures have been withdrawn. Mr Rubin said: 'We have changed our minds.' Without the exclusion, expatriates would have only had double-tax relief to offset their tax burden. The tax proposals would have been particularly hard-hitting in Hong Kong because of the high cost of accommodation. In January, when the measures were first announced, it was claimed they could have caused an exodus of Americans from Hong Kong.