Death by taxation narrowly averted…for now
The International Herald Tribune - Expatriates weather threat to tax exclusion:
Americans working abroad breathed a collective sigh of relief last week as Congress jettisoned an item in the tax reduction bill that would have repealed the $80,000 expatriate earned-income exclusion. The provision, section 911 of the Internal Revenue Service code, allows U.S. taxpayers who are foreign residents to exclude up to $80,000 of money earned from services performed abroad from their gross income, and calculate their U.S. taxes only on the rest.
That’s great news for us Yankee-gaijin, but it seems we’re not safe yet…
Although the proposal died in committee, some observers believe it will eventually be enacted. “It is clear the Bush administration has targeted this provision,” said Samuel Okoshken, an attorney in Paris who specializes in taxation. “They don’t see it as a tax increase for expats, but the closing of a loophole,” he said.
Any way you slice it, the Bush administration’s tax-cut fixation is economic voodoo. How in the world can you expect to sell a tax cut to people that will actually increase the amount they will have to pay in taxes?
Oh, but this is not a tax increase, you say? This is simply about closing an unfair loophole that allows Americans abroad to avoid paying their fair share? Um, no, not really. One might just as easily say that it’s unfair of the United States to tax expatriates in the first place. No other nation does. Also, how is it that “double-taxation” (a phony excuse for a tax cut if there ever was one) is unfair when it applies to dividends, but perfectly legitimate when it applies to the incomes of Americans living abroad?
