Tracking Foreign Tax legislation in Congress

Renounce tweeted this evening about Congressman Tierney’s proposal to do away with the Foreign Income Exclusion.  That caught my eye, and so I inquired of Andy Sundberg and ACA.   If you wonder why the Tax Code is over 72,000 pages, after you read this information he sent me, you will wonder no more..

Andy writes:

As you are probably aware, there are also five other Democrats in the Congress who have now signed on to support Congressman Tierney’s legislation to get rid of the foreign earned income exclusion.
.

Steve Cohen [D-TN9]

Keith Ellison [D-MN5]

Raul Grijalva [D-AZ7]

Jesse Jackson [D-IL2]

Betty McCollum [D-MN4]

But the problem is vastly bigger.  

You should also be aware of the fact that lots of other legislation has been introduced during the current 112th Congress that addresses one or another variation on the theme of the taxation of foreign income. Forty seven of these are listed below.

This comes from a very fertile website named govtrack.us

You can sign up for free and follow the progress of all kinds of legislation here either by individual bill, or be generic subject category.

This is the link. 

http://www.govtrack.us/congress/subjects.xpd?type=crs&term=Taxation+of+foreign+income 

This is from their website on bills addressing foreign income:

Taxation of foreign income bills

Below are the 47 bills that are related to the “Taxation of foreign income” subject term. Click the Add Tracker button to the right to subscribe to this subject term.

The following is a list of current pending legislation in Congress. These bills and resolutions have been proposed by Members of Congress but may not have had any action taken on them on their path to becoming law. In fact, the vast majority of proposed legislation never becomes law.

 

Bill

Status

S. 1549: American Jobs Act of 2011

Reported by Committee

Sep 14, 2011

S. 940: Close Big Oil Tax Loopholes Act

Reported by Committee

May 11, 2011

S. 2091: United States Job Creation and International Tax Reform Act of 2012

Introduced

Feb 9, 2012

S. 2075: CUT Loopholes Act

Introduced

Feb 7, 2012

H.R. 3638: Act for the 99%

Introduced

Dec 13, 2011

S. 1960: Jobs Creation Act

Introduced

Dec 7, 2011

H.R. 3460: American Jobs First Act of 2011

Introduced

Nov 17, 2011

H.R. 3400: Jobs Through Growth Act

Introduced

Nov 10, 2011

S. 1837: Rebuilding America Act

Introduced

Nov 9, 2011

H.R. 3338: Stop Outsourcing and Create American Jobs Act of 2011

Introduced

Nov 3, 2011

S. 1671: Foreign Earnings Reinvestment Act

Introduced

Oct 6, 2011

S. 1616: Real Estate Investment and Jobs Act of 2011

Introduced

Sep 22, 2011

H.R. 3020: Puerto Rico Investment Promotion Act of 2011

Introduced

Sep 22, 2011

H.R. 2989: Real Estate Jobs and Investment Act of 2011

Introduced

Sep 21, 2011

H.R. 12: American Jobs Act of 2011

Introduced

Sep 21, 2011

H.R. 2862: Putting America Back to Work Act of 2011

Introduced

Sep 7, 2011

H.R. 2735: To amend the Internal Revenue Code of 1986 to make permanent the look-through treatment of payments between related controlled foreign corporations.

Introduced

Aug 1, 2011

H.R. 2669: Stop Tax Haven Abuse Act

Introduced

Jul 27, 2011

H.R. 2632: Life Sciences Jobs and Investment Act of 2011

Introduced

Jul 25, 2011

S. 1410: Life Sciences Jobs and Investment Act of 2011

Introduced

Jul 25, 2011

S. 1373: International Tax Competitiveness Act of 2011

Introduced

Jul 14, 2011

S. 1346: Stop Tax Haven Abuse Act

Introduced

Jul 12, 2011

H.R. 2495: Tax Equity and Middle Class Fairness Act of 2011

Introduced

Jul 11, 2011

H.R. 2280: Offshoring Prevention Act

Introduced

Jun 22, 2011

H.R. 2230: Internet Gambling Regulation and Tax Enforcement Act of 2011

Introduced

Jun 16, 2011

H.R. 1887: Free Trade With Cuba Act

Introduced

May 12, 2011

H.R. 1889: Gas Tax Holiday Act

Introduced

May 12, 2011

H.R. 1834: Freedom to Invest Act of 2011

Introduced

May 11, 2011

H.R. 1813: Gas Price Relief Act of 2011

Introduced

May 10, 2011

S. 727: Bipartisan Tax Fairness and Simplification Act of 2011

Introduced

Apr 5, 2011

H.R. 1163: Patriot Corporations of America Act of 2011

Introduced

Mar 17, 2011

S. 626: American Shipping Reinvestment Act of 2011

Introduced

Mar 17, 2011

H.R. 1036: Job Creation and Innovation Investment Act of 2011

Introduced

Mar 11, 2011

H.R. 1031: American Shipping Reinvestment Act of 2011

Introduced

Mar 11, 2011

H.R. 937: Rising Tides Act of 2011

Introduced

Mar 4, 2011

H.R. 936: Stop Taxing American Assistance to Afghanistan Act

Introduced

Mar 3, 2011

H.R. 749: To amend the Internal Revenue Code of 1986 to permanently extend the subpart F exemption for active financing income.

Introduced

Feb 16, 2011

H.R. 601: End Big Oil Tax Subsidies Act of 2011

Introduced

Feb 10, 2011

S. 258: Close Big Oil Tax Loopholes Act

Introduced

Feb 2, 2011

S. 45: Offshoring Prevention Act

Introduced

Jan 25, 2011

S.Res. 25: A resolution expressing the sense of the Senate that comprehensive tax reform legislation should include incentives for companies to repatriate foreign earnings for the purpose of creating new jobs.

Introduced

Jan 25, 2011

S. 13: Fair Tax Act of 2011

Introduced

Jan 25, 2011

H.R. 255: Cuba Reconciliation Act

Introduced

Jan 7, 2011

H.R. 25: Fair Tax Act of 2011

Introduced

Jan 5, 2011

H.R. 64: To amend the Internal Revenue Code of 1986 to prevent corporations from exploiting tax treaties to evade taxation of United States income.

Introduced

Jan 5, 2011

H.R. 99: Fair and Simple Tax Act of 2011

Introduced

Jan 5, 2011

H.R. 62: International Tax Competitiveness Act of 2011

Introduced

Jan 5, 2011

 

 

 

27 thoughts on “Tracking Foreign Tax legislation in Congress

  1. This seems all too futile.
    For me personally, the solution is:
    1. Value my Canadian Passport
    2. Move funds to Credit Union.
    3. Avoid the USA.
    4. Continue following the story but from a detached, “isn’t this sad” perspective.

  2. If this law does pass, expect Canada’s Finance Minister Jim Flaherty to throw a knock out punch! He won’t rest till they’re bruised and bloody.

  3. The US government reminds me of an uncle I had (now deceased) who had a terrible drug habit since the age of 12. He borrowed money from each and every relative and friend, of course never paying anyone back. He would try to use guilt to get you to give to him. This is America.

  4. “Removal of the foreign earned income exclusion which allows U.S. citizens living overseas to avoid paying taxes ($5.4 billion in 1st year)”

    Where do these figures come from? Is there some explaination about how they are arrived at, or does someone just pick a big number out of thin air to make it sound good.
    They don’t even know how many US citizens live overseas and where, so how can they know this?

    If there are 5 million US citizen’s abroad, (a guess I have heard quoted somewhere) that is $1000 each every year. I don’t think there are too many US citizen’s in Canada who would owe that much, even if the Foreign income exclusion was removed.

    The people who would really be hurt by the loss of the FEIE are the people with low paying jobs and no investment income (like my children). I doubt it would make them pay more, but the paperwork would expand. People with high paying jobs and investment income (like me) are already using the Foreign tax credit to cancel out the tax. The end result is the same but the paperwork is way more complicated.

  5. I am going to put up a post later today on how there is a Canadian Parlimentary delegation headed to Washington this coming week and supposedly will bring up the tax issues. I think the challenge is get people like Tierney to show up for it.

  6. Typical politico logic: we’ll have even more tax compliance if we get rid of the Foreign Income Exclusion. I, for one, will make sure to file knowing I will be subject to double taxation without representation!

  7. I wonder if President Obama shook his fist in the face of the next Chinese Prime Minister this past week to tell him that if China does not enact legislaton obligating US banks to report full details on all of the bank accounts of US banks with the 2.16 million Chinese citizens who are legal residents of the US to China’s tax authorites, and require them to pay taxes to China on their US-source income. If he didn’t he should have done so.

    What is sauce for the goose should be sauce for the gander, we all know. That kind of legislation would solve the US trade deficit problem with China since Chinese citizens in the US, like US citizens in China, could no longer survive having to pay taxes to two countries on their world-wide income, and would therefore be forced quit selling Chinese exports in the US and go back home “where they belong.” That should bring US-China trade into equilibrium very quickly.

    Perhaps the US should also denounce its own commitment to the UN Declaration of Human Rights which guarantees that every person has the right to leave his own country to live and work elsewhere in the world, since the US quite obviously no longer supports this “right” for its own citizens.

  8. Thank you for this most excellent find. This only proves further two points that I have been developing.

    1) The US Congress is a reflection of the US as a whole: Its members seem to have no idea how living overseas actually works as a US citizen OR they intentionally are doing this just to screw over people who can’t complain and to whom they don’t have to answer to come election time. I imagine that it is a mix of the really dangerous group blindly leading the ignorant majority..

    2) I don’t have the time to read the fine print of all those bills, but anyone else notice almost the exact same thing appear 3-4 times (as in Stop Tax Haven Abuse Act or Oil such and such)? This just shows that the US political system is becoming more and more bloated and inefficient I always thought that the Presidential system was odd when I lived in the US, and my belief in the parliamentary system of government is only strengthened yearly when I read nonsense like this. Which other country’s senate or parliament has 3-4 bills floating around with the same material in them?

    Has the US system always been like this? Could governments actually govern, say, 50 years ago? I’m not sure which is worse: a bloated, “can’t do or change anything toxic political climate” in the US or the endless bickering and increased infighting of 27 EU member states. Makes me really envious of countries like Switzerland and Canada 😦

  9. @DonPomodoro: You ask the question if the US has always been like this. The answer is no.

    When I accepted a job offer and moved with my wife and 4 small children to Peru in 1966, one of my earliest observations was how there was abundance of corruption in the freely-elected government there. I was employed by the telephone company which at time was a subsidiary of the US company, ITT – International Telephone and Telegraph Corporation. We were constantily being solicted for funds to resolve our “difficulties” with the government regulators.My boss once commented that there were more people who said they could “solve” or probems than there were extras in the filming of Ben Hur. At that time I marveled how well the US democratic system in the US functioned as compared to how poorly it seemed to function in Peru.

    But that is no longer the situation in the US. It brings back memories of the worst I saw in Peru. There were good honest people in Government there, but they were few and far between.

  10. What exactly would happen if they did away with the FEIE?

    Would we pay more tax? or would it make the 1040 longer to fill out??

  11. @Mach7

    Depends on where you are located. See this for example:

    http://en.wikipedia.org/wiki/File:Income_Taxes_By_Country.svg

    If you’re in Korea, New Zealand, Iceland or so on then you would actually be paying the difference in your taxes to the US. For example, say you are based in Russia with a tax rate of 13% on an income of about 40,000 dollars. Without the FEIE you would pay the other 20% or whatever the difference would have been had you been based in the US. If you live somewhere like Canada or most EU countries you would already be paying more than in the US so losing the FEIE wouldn’t be a huge loss. Removing it would punish not only those living in “tax havens”, but also those working in most third world or developing countries.

    I have to agree with some previous comments – I think that the FEIE provides a bit of a blinding “safety net” that “US persons” overseas can’t see through. Pull back the veil and then the reality of unfairness in the US the tax situation should become immediately apparent, maybe even to “homeland” Americans. I won’t hold my breath though!

  12. @don

    I think the FEIE is worth more than we think! I live in Switzerland and I just finished my Swiss tax forms for 2011 last night. I have a taxable income of 71’800 CHF which gives me a tax bill (local, Kanton and fire) of about 6’600 CHF and 185 CHF Swiss federal tax for a grand total of 6’785 CHF for a family of 4.
    If I look at the tax table from the IRS instruction book for 2011 and use an exchange rate of 1:1 a taxable income of 71’800 would cost me 10’206 USD. The only thing is 10’206 is for filing jointly, my wife is Swiss and probably would divorce me if I asked her to get an ITN 😉 and I’m not sure that I can file as head of household or if I have to bite the bullet and go for single :-0 Filing single totals up to 14’081 USD. Thefore without EFIE and filing as a single I would owe the IRS:
    14’081-6’785 = 7’296 USD.
    THAT IS MORE THAN I ALREADY PAY IN SWITZERLAND!!!!!!! And this is if I’m able to deduct 100% of my Swiss taxes, which I doubt that I can. So this means that I would pay double in taxes as compared to my next-door neighbor who is Italian, earns just about the same as I do, and also has a family of 4 to look after.
    The worst part of all is that my taxable income, according to the IRS is more like 120’000 because I have to include as income my Swiss social security contributions, my pension contributions, the pension contributions that my employer pays in and the contribution I make to my Swiss IRA, oh and don’t forget the interest my Swiss IRA is earning that is also income!

    Is this FAIR TAXATION????

  13. @John, There is absolutely nothing that is “fair” about the US policy of citizenship based taxation. It is a sin tax, pure and simple. Its real purpose is punishment of the US citizen who has the audacity to actually live and work in a country whose tax sytem is different from that of the US; especially if its income tax rates are not higher than those in the US so you will have paid enough in foreign taxes to offset with foreign tax credits the additional tax you owe the IRS on foreign incime that is taxed by the US but tax free in the country where you life – like the items you have cited.

    As a US citizen you can forget ever living and working in a country which primarily raises its tax revenue through other kinds of taxes rather than an income tax. In those countries you have to have income from 3 to 5 times greater than your next door neighbor in order to pay this punishment tax to the IRS and still be able to survive.

    I don’t know where in US law that it is a crime for a US citizen to live outside of the US. In fact the UN Universal Declaration of Human Rights, which the US in theory supports, states that every person has the right to freely leave and return to his own country. But it is US tax laws that punish you severely if you do this. How my own country, the USA, can claim to be the champion of Human Rights around the world yet deprive its own citizens of this right defies explanation.

    Where in US law is it a crime worthy of punishment to live and work in a foreign country? It just is not there.

  14. @Roger

    Very well said. I think that the problem is that US law probably was written by people who have no conception of the fact that many “US persons” do live and work overseas, some for US corporations and others on a longer, more permanent basis. In their eyes the US is a one way street where everyone wants to go to and nobody wants to leave, but this makes absolutely no sense in the modern world where somebody does have to leave, as you have said beforehand, in order to promote US goods and products overseas.

    I know that this is very cynical to say so, but I believe that the US supports the UN Declaration of Human Rights only when it is politically expedient to do so, as in the case of the Eritrean “diaspora tax”.

    @John

    This is exactly what I am talking about, and without the FEIE your tax situation would be even worse. The point I was trying to make is that when we complain about US taxes overseas many US politicians can argue that we “evade tax” through the FEIE. This is a sham though, since the FEIE doesn’t even include areas where we are already double taxed like you mention, such as capital gains. Where I live, in Belgium, we don’t even have a capital gains tax. So if you were to buy a house here and sell it in 10 years at a profit you would be taxed by the US as if it were a house in the US even though it should be tax free here.

    You’re already being pounded by the IRS…What are you going to do in the long term? Do you plan to stay in Switzerland?

  15. @Don
    Well, I’m a SwissAmerican since birth (born in the USA to CH parents) left the US after highschool and have been living in CH for the past 30 years (hey, I’m a 30 year vet too 🙂 ) I actually just started filing 1040’s and FBAR’s last year. One reason why is that I didn’t know I had too and another is that I’m not sure yet what my plans for retirement are. I could see myself at or near the ocean like North Carolina, South Carolina, Oregon or maybe Florida and that’s why a US passport might just be handy as long as I can afford it. If the US dollar keeps on diving, in another 15 to 20 years from now I might be able to buy a pretty nice ocean front home 🙂 But if they do decide to revoke the FEIE then I’ll definately renounce.

  16. Just finished talking with my Accountant regarding the loss of FEIE in Canada.

    I quote:

    Basically, not double taxation, but more tax payable. If the Exemption is eliminated, then only the Foreign Tax Credit would be available and it is not as beneficial as the Exemption. The higher the Canadian income, the more the US tax payable as the US tax rates continue to increase where Canada’s doesn’t.

    So here we go….what is US citizenship really worth??

    Also, does anyone know how long it will take for the FEIE to be eliminated? or is it just talk right now?

  17. Law and regulations that are expected to raise more revenue are enacted faster than you can say Rip Van Winkle. FATCA came to life before we even got to Van 😥

  18. @justme, and others….
    Hale E. Sheppard, who writes very readable (and scholarly articles – including some on FBARs; ex. the history of, and as applied to Canadian RRSP’s) on international (and other tax law issues) has the fulltext of “The Foreign Earned Income Exclusion: U.S. International Tax Policy, Political Reality, and the Need to Understand How the Two Intertwine”, 37(3) Vanderbilt Journal of Transnational Law 727 (2004). of the FEIE on his firm’s website : http://www.chamberlainlaw.com/attorneys-96.html . It is worth a look, since it helps to place the FEIE in a historical and political context….

  19. @Brock the Badger

    I agree with you on Hale Sheppard. I got a lot of my education from him, and have had some good discussions with him. He is bright and articulate. Thanks for the heads up on that article. I will definitely read it. BTW, he is on a board of advisers for ACA, if I recall correctly. (at least he was last year. I will check)

  20. Pingback: Who is a US Citizen? | The Isaac Brock Society

  21. @all…

    BTW, for those looking for the Hale Sheppard’s article on “The Foreign Earned Income Exclusion: U.S. International Tax Policy, Political Reality, and the Need to Understand How the Two Intertwine”

    That is number 37 on his list of 70 publications.

  22. Pingback: Congressional Progressive Caucus “Budget For All” would end Foreign Earned Income Exclusion | The Isaac Brock Society

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