2018 Quadrennial Homeland Security Review

A simple way to make the US safer

What is the problem: Americans need to file and pay taxes to the US even if they live abroad. In essence Americans abroad need to file and pay taxes twice. The US (together with Eritrea), is the only country that enforces this practice. Together with additional regulation due to FACTA this creates an extreme high administrative burden and double taxation (regardless of treaties between the US and other countries). As a result, Americans can not open bank accounts in the country they live, can not get mortgages and can not save for their pensions without being taxed for it.

 

Why does this matter for the DHS: Americans abroad are the first line of defense for any country. This policy undermines American soft power. More and more Americans abroad renounce their citizenship. This year approximately 5000 with a 25% YoY increase. With this rate there will be hardly any Americans living abroad in 20-25 years. Companies (including American ones) outside the US stop hiring Americans due to this policy. Countries including Russia and China are taking note and are building out their influence in international hubs like London, Hong Kong, Frankfurt, Geneva, Toronto and beyond.

 

What should the DHS do: Engage with politicians to make them aware of the gravity of this problem and steer them to: 1) a system of residence based taxation 2) exceptions in FACTA to avoid targeting hard working Americans that happen to live outside the US.

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Idea No. 248