American citizens abroad oppose a package by the Bush government requiring them to pay taxes on all their income
The American Chamber of Commerce is urging US citizens and companies to strongly oppose a plan requiring Americans working abroad to pay taxes on all of their income.
There have been howls of outrage among multinationals and the local American community over the proposal to cut the longstanding exemption for expatriate workers, which would potentially bring the government US$32 billion over the next 10 years.
At present, US citizens do not pay tax on the first US$80,000 they earn a year or on housing expenses.
The package, approved by the US Senate Finance Committee last week, also calls for prohibiting American companies from avoiding US taxes by incorporating in offshore tax havens such as Bermuda. The move would help to fund the Senate's plan for US$350 billion in tax cuts, which include reducing a levy on stock dividends. The House of Representatives is proposing US$550 billion in tax cuts, less than the US$726 billion President George W. Bush is seeking.
Lobbyists opposed to the Senate version said it would mean fewer employment opportunities for US nationals, while US companies would be compelled to hire foreign employees to avoid spiralling costs. A smaller overseas US population would ultimately drive down demand for US goods and services, prompting a drop in exports.