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Grassroots Corner 4/12/19

THE FORGOTTEN PEOPLE

No, this piece is not about Americans Trump claimed, in his campaign, were forgotten. There is still a class of Americans who are being ignored by our politicians. Who are they? Here’s a hint. I was e-mailing people who had been FAIRtax activists in states that are not yet chapters. One response came back from a former Kentucky-ian who is now living in Asia, has been since 2013, and will be there for the foreseeable future. This man did not think he could help with the FAIRtax. More on that later.

 
Our Kentucky friend is part of a forgotten people - Americans who live abroad and maintain no residence in the United States. There is no exact figure on how many Americans live abroad outside the military, but the figure could be as high as nine-million.
 
Here is why these people are forgotten. A recent article in an English-Language paper published in Berlin, The German Times,  highlighted yet a new way in which American Expats are unfairly treated by our tax code. Here is the article: http://www.german-times.com/many-americans-abroad-face-an-increased-tax-burden-as-a-result-of-president-trumps-tax-reform-dual-citizens-are-renouncing-their-us-nationality-at-record-rates/.  
 
The German Times article is about a repatriation levy on American Expat business owners of as much as 17.5 percent on old foreign profits, and an annual levy called “GILTI” (global intangible low-tax income) on new foreign profits. See also Accounting Today, July 31, 2018 “US expats face hammering from new tax rules.” The repatriation tax and GILTI were aimed at mega-corporations like Microsoft to keep them from hiding trillions of profits abroad. But like many pieces of legislation, Congress forgot to put a floor on the amount. So many US-expat small business owners are being made uncompetitive.
 
Unfairness, however, predates GILTI. That is so because the United States and Eritrea are unique in the world in taxing the incomes of their expats who maintain no domestic residences. The result of this oddity is that Americans living abroad get the worst of both tax worlds.  If Americans in Germany buy “tax-free” municipal bonds, the so-called “tax-free” bonds are taxable by Germany. If these Americans win 1 million Euros in the South German Lottery, the winnings are tax-free in Germany but taxable by the United States.
 
As if having the worst of both tax worlds isn’t bad enough, American Expats have trouble opening bank accounts where they live because of another US tax law called “FATCA” (Foreign Account Tax Compliance Act).  Most foreign banks don’t want to report to and comply with the laws of the United States. And why should they? As a result, many foreign banks refuse to open accounts for Americans.
 
Because of this unfairness, more Americans are renouncing their citizenship than ever before. And more permanent US residents than ever are turning in their “green cards” once they go back.
 
With the FAIRtax, this nonsense would stop. The FAIRtax repeals the Internal Revenue Code and taxes only retail sales of services and new tangible goods that take place in the United States. American Expats would pay tax only when they come for a visit.
 
Going back to our Kentucky friend, what can he do? There is an organization called American Citizens Abroad (“ACA”), www.americansabroad.org, that advocates for these people whom politicians have forgotten.  Annual membership costs only $70 - $55 for seniors. Getting into ACA could give our Kentucky friend access to a mother-lode of unhappy folks who should love the FAIRtax – and can act on it.
 
How can these people act? Fortunately, Americans abroad now have the voting rights. (As have expats of other countries for years. This capability is recent; I could not vote when I was an American Expat living in Germany in the 1970’s.) American Expats can vote for federal Senators, Congress Members and for the President. Generally, American Expats vote in the Congressional District where they last lived before leaving the US for their foreign destinations.  With a little pressure on ACA (which I joined), these people can be organized, and their Congress Members won’t know what hit them.
 
We have FAIRtax-ers in France and Japan with whom we communicate. Do you know any Americans who live outside the country? If so, reach out to them.
 

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