The Democratic Party (Abroad) would like your opinion

TL;DR version:

DA (Democrats Abroad) have issued a Non-Resident US Taxpayer Research Project (a survey). It is on Google, can be as short or as in depth as you would like, and is anonymous (no Email address required). If you are happy with current US reporting requirements for nonresidents and feel they should be left as is, that can be noted also.

THE SURVEY:
https://docs.google.com/forms/d/e/1FAIpQLSfS5B5EYxLADL8JTD_5u-xPBjxP_Y48cNeC7GkHwhv0M_GQpA/viewform

"We invite Americans living outside the US to submit their experiences of being a US taxpayer filing from abroad.  Democrats Abroad has invested a great deal of time making Congress aware of the issues we as non-resident taxpayers face filing from abroad - the complexity of the forms; the cost of preparing reports and filings (even when no taxes are owed); the stress of preparing accurate filings to declare overseas income and accounts given the penalties for filing errors; the tax code provisions that result in the double or punitive taxation of foreign source income; etc.

We will use the submissions to this survey to provide further data and testimony of our experiences to help us advocate for important reforms to the US tax code."

The long version (too long, but read it anyway).

THE BACKGROUND:
DA has issued its strongest position to date on RBT (Residence Based Taxation).

"Democrats Abroad joins the rest of the Americans abroad community in our strong support for:
•Residency Based Taxation,
•Relief from foreign financial account reporting,
•Reforms to a litany of tax code provisions that inadvertently discriminate against Americans living abroad,
•Simplified and improved tax filing for Americans abroad."

http://www.democratsabroad.org/democrats_abroad_submits_recommendations_to_the_senate_finance_committee_on_tax_reform

WHAT IS BEING PROPOSED, BY WHO, AND WHAT ARE THE DIFFERENCES:

THE TAXATION SYSTEMS:
CBT (Citizenship Based Taxation). It is currently the system used by the United States, and the United States alone. (Eritrea has capped CBT.) It is used in conjunction with RBT, but the U.S. also tax their nonresident citizens on worldwide income.

RBT (Residence Based Taxation). Residents of the country are taxed on their worldwide (local and foreign) income, while nonresidents are taxed only on their local income.

TBT (Territorial Based Taxation). Only local income – income from a source inside the country – is taxed.

For a comparison of the three systems as used by all tax jurisdictions throughout world (scroll down to chart):

https://en.wikipedia.org/wiki/International_taxation 

THE PLAYERS:

TERRITORIAL TAXATION:
This is being proposed by the Republican Party (supposedly(?) with some cross party support), and its affiliate abroad, Republicans Overseas. The tax reform being discussed (as if Congress will ever get around to it!) is for TBT for both entities and individuals.

https://republicansoverseas.com/rnc-approves-resolution-supporting-territorial-taxation-individuals/

RESIDENCE BASED TAXATION:
This is being proposed by ACA (Americans Citizens Abroad) and DA (Democrats Abroad). There is a detailed explanation of ACAs proposal. There is less of an explanation of DAs proposal, but it seems to mirror, somewhat, the ACA proposal. The important element of both is the ability of the USC resident abroad to maintain filing US tax returns, IF this wish to do so (important, for example, for a USC applying for a US residence visa for a UKC spouse).
 
https://www.americansabroad.org/media/files/files/b92e933b/Residency-Based_Taxation_Baseline_Approach_Feb._7_2017.pdf

https://d3n8a8pro7vhmx.cloudfront.net/democratsabroad/pages/11745/attachments/original/1500526198/Tax_Reform_recommendations_from_Democrats_Abroad_.pdf?1500526198

THE BOTTOM LINE!
Don't get your hopes up folks, this is far, far from happening. BUT, this is probably the best (and possibly the last) chance to have the circumstances of USC resident abroad taxation to have a hearing. Don't miss the opportunity.


 

Thanks for this, I completed the survey.

Thanks, I will!

Done, that was really straight forward. I hope it helps!!!

Yes, it is.

Currently, the Democrats Abroad organisation are suggesting they have at least 4000 responses already. I would think anyone resident abroad who supports the Democrats or their candidates would want to be sure to voice an opinion. As for others, since the US is primarily a two party country, it's important to give support on this topic to either party who, for once, are both dealing with the same issue directly related to Americans resident abroad. Party affiliation (Dem., Rep., or Ind.) isn't really important on this (unless you feel strongly about TTFI [TBT] vs. RBT - see first post above). It's the message they send to the Congressional committees. The overseas branches of both parties are, for once, basically singing off the same hymn sheet.

The Republicans Overseas currently have a letter writing campaign on the issue which the Democrats Abroad organisation supports.

https://republicansoverseas.com/territorial-taxation-individuals/#sample-letters

EDIT: Scroll upwards on the above page to see a basic example, or click on (1) on the link above for a sample letter (WORD document)

Democrats Abroad have released the preliminary results of their Non-Resident US Taxpayer Research Project.

DA Taxation Survey findings

RESPONSES
• 4,500 submissions from voters living in 94 different countries, voting in every state plus 1 from Guam

CHALLENGES TO MAINTAINING TAX COMPLIANCE
• 80% of respondents - complexity of filing
• 66%(sic) - stress of filing
• 63% - cost of filing
• 59% pay a tax return preparer/adviser
• 57% of them paid $500 or more for tax services
• Nearly 33%(sic) – IRS support is inaccessible and/or unhelpful
• 3% had no complaints

PARTICIPANTS – ordinary, middle class Americans
• 63% - married
• 59% - income of $20,000-$99,000
• 61% - live in a home they own or are buying
• 70% - employed or self-employed, full time or part time

NON-RESIDENT STATUS
• 69% - have lived outside the US for 10 or more years
• 66% - have no plans to return to the US to live

TAX ISSUES OF NOTE
• 48% - taxation of long-term savings and retirement plans
• 45% - reduced access to financial produces and services
• 26% - Capital Gains Tax treatment of non-US property sales
• 23% - PFIC rules on non-US investment funds

OTHER
• 25% - over age 65 (largest Age group)
• 59% - female
• 37% - Mandatory financial account repor3ng on the online FBAR

CBT v RBT
• 84% in favor of switching from CBT to RBT
• 7% - no view/Don’t know

https://d3n8a8pro7vhmx.cloudfront.net/democratsabroad/pages/13438/attachments/original/1506694428/Tax_Advocacy_Webinar_29092017_v8.pdf?1506694428

As broad and non-specific as the survey was, it still leaves the occasional result which could make for some interesting discussions. Some results seem to echo the typical US taxpaying population; for example, how different would some of these results be from the results of a similar survey of US actual resident taxpayers (married, income, employment)? On the other hand, some results seem highly untypical of US actual resident taxpayers; for example 57% paid $500 or more for tax services (what's the cost of TurboTax)?

Will the data ever be used further?

Thanks for the summary, excellent feedback.

Unfortunately I doubt it will have any effect on policy.

Done, thank you!

Terrific, thanks OAP. Have they put this on their website yet? I couldn't find it.

Very interesting numbers. It is noteworthy that the vast majority have lived outside the US for over a decade and have no intention of returning. This begs the question of why ACA, DA and others focus on short-term expats. They need to concentrate on relief for those of us whose lives are being most adversely affected, e.g. accidentals and duals permanently outside the US. At present, our only recourse is (extortionate) renunciation.

Have they put this on their website yet? I couldn't find it.

The data was from a presentation (linked above) which was part of a DA webinar on 28 Sept.


Republicans Abroad will be taking the results of their letter writing and petition campaign to the White House, tomorrow, Oct. 2.

Terrific, thanks OAP. These are great efforts. I really hope the shift to residence based taxation happens soon.

I missed the initial post because I was in the US and had no internet access for 2 weeks - otherwise, I definitely would have responded.

Thanks for posting the results. Just wish I could have been part of the survey group.

Just wish I could have been part of the survey group.

Don't despair, the survey is still available for completion on the link above. The Republicans Overseas are also still requesting petition signers and letters.

There will be numerous congressional meetings on the issue of tax reform in the future and all input is still valuable.

On 3 Oct., there will be a Senate Finance Committee session on "International Tax Reform".

https://www.jct.gov/publications.html?func=startdown&id=5025

The 72 page policy document deals with the international corporate situation and contains nothing concerning individuals (although PFICs and subpart F are discussed). But, if anything were to favour the discussion for international individual taxation, it will likely come associated with this initiative.

It's understandable, at this time, that expat concerns are not high (or even visible). There's too much proposed change for the actual resident American in these tax proposals to deal with. Although it may seem discouraging, change for the taxation of expats cannot happen unless those expats start voicing their concerns. Squeaky wheel, and all that!

That's not to say the issues proposed (with very little detail) won't be of interest to all US expats:
Doubling of the Standard Deduction, but elimination of the Personal Exemption (but Child Tax Credits remain, and may be boosted).
Repeal of the Estate Tax (married to an NRA?).
Repeal of AMT.

Many times in the past we've experienced changes to the tax code which has the typical actual resident American in mind, resulting in dire consequences for the expat. FATCA is a prime example.

   

Suffer the first 40 seconds of this clip to watch how a discussion of international corporate issues morph into a discussion of the taxation of individual US citizens:

Thanks for the video clip OAP, very interesting. Good to see how companies are pitching their call for residence based taxation, it being very difficult to place American citizens in jobs in their American operations overseas because of how much extra it costs the company to handle the complex personal tax issues of those employees.