Over the years, U.S. legislation has made it increasingly difficult for Americans to live and work overseas. Our organizations urge Congress and the Administration to review and rethink certain policies that restrict the effectiveness of the estimated 8.7 million overseas Americans* who are both ambassadors for American interests abroad and creators of domestic jobs.
In addition to legislation that could deprive overseas Americans of their only valid means of identification and travel documentation abroad, our most important concerns this year are:
TAXATION: We believe that the United States puts itself at a competitive disadvantage by taxing its citizens abroad on the basis of their nationality. The ability to send an employee abroad to manage, direct, instruct or train the employees of a foreign subsidiary is crucial to successful competition in today’s global economy. The U.S. should put U.S. persons on a par with citizens of other countries and adopt Residence-Based Taxation (RBT). The current system of Citizenship-Based Taxation (CBT) imposes the risk of double taxation on people already taxed in the countries where they live and work. In addition, the compliance costs for U.S. persons abroad are as daunting as the enforcement costs for the IRS. We regret the closure of the last IRS offices abroad and strongly support the creation of National Taxpayer Advocate offices around the world.
FATCA: The Foreign Account Tax Compliance Act understandably targets those who evade paying taxes by hiding assets in undisclosed foreign bank accounts but, as an unintended consequence, penalizes American citizens overseas and U.S. economic interests. In the absence of a shift to RBT, we recommend exemption from FATCA reporting requirements for “same country” accounts belonging to bona fide American residents fiscally domiciled abroad, and other measures to redress the damage created by FATCA.
BANKING: Overseas Americans are being denied financial services worldwide. We call for legislation to require U.S. banks to find ways to provide services for U.S. citizens with a foreign address while satisfying their Know Your Customer requirements; to ease the reporting burden on foreign financial institutions so as to allow Americans abroad to maintain bank accounts where they reside; to ensure access to low-cost savings and retirement products worldwide; and to stop U.S. tax discrimination against foreign pension funds.
VOTING: Legislation should be introduced to clarify certain provisions of the Military and Overseas Voter Empowerment (MOVE) Act (especially by creating a “permanent status” option for qualified overseas voters). Funding should be assured for the Election Assistance Commission to allow it to carry out its mission and for continued improvement of election technology. American citizens who do not meet state residency requirements should have the right to vote in federal elections in all states and the District of Columbia at the legal voting residence of their U.S. citizen parent(s) or guardian(s).
CITIZENSHIP: With respect to transmission of US citizenship to children born abroad to an American parent, the same prior residency requirement applicable to a married American parent (5 years total) should be available as an alternative to an unmarried mother if she cannot satisfy the current requirement (1 continuous year).
REPRESENTATION: We look forward to the re-introduction of the Commission on Americans Abroad Act, calling for a Federal Commission to study the impact of government policies upon the millions of Americans residing overseas. Our organizations will pursue our ongoing collaboration with the bipartisan Americans Abroad Caucus.
BUSINESS AND TRADE FACILITATION: We applaud Customs and Border Protection’s (“CBP”) recent decision to extend the validity to five years from three years of ABTCs newly issued to U.S. citizens. As membership in CBP’s Global Entry program is required in order to be eligible for the ABTC and interviews for the Global Entry program are normally conducted only in the United States, it is difficult for Americans who reside overseas to apply for the ABTC. We call on CPB to expand the periodic offering of interviews at consular posts in Asia for U.S. citizens to apply for the Global Entry program so as to facilitate ABTC applications by Americans who reside overseas.
SOCIAL SECURITY: Americans who have worked abroad should be exempted from application of the Windfall Elimination Provision which unfairly reduces Social Security pension benefits. Americans abroad should not be required to contribute to U.S. Social Security and Medicare programs in addition to government pension plans where they reside. This double contribution affects, in particular, self-employed Americans abroad and Americans sent overseas by a U.S. employer to a country which does not have a Totalization agreement with the United States. Access must be facilitated for overseas citizens to “My Social Security Account”, enabling them to manage their accounts from abroad. The thresholds for taxation of old age and disability pensions should be significantly raised and adjusted for inflation.
MEDICARE: Overseas Americans who retire in America should not be financially penalized for the quarters after retirement age that they lived abroad (where they were covered by other systems and ineligible for Medicare and therefore did not contribute to it), but should be allowed to enter the system. American civilians eligible for Medicare who retire abroad must return to America to receive Medicare benefits, where medical costs are much higher. A program for civilians abroad similar to Tricare for Life for military veterans retired abroad could ultimately save money for Medicare.
CONSULAR ACCESS: We support prompt Congressional action to implement judicial remedies in serious cases for foreigners arrested in the U.S. whose rights under the Vienna Convention on Consular Relations have been violated. For U.S. citizens arrested abroad to be assured of consular access under terms of the Convention, enforcement must be reciprocal.
VAWA: Funding must be assured for programs protecting American women subject to domestic abuse abroad. We support continued funding of grants under the Violence Against Women Act.
AARO: Association of Americans Resident Overseas, founded in 1973 and now in 46 countries, is a non-partisan not-for- profit public service organization representing United States citizens living abroad. AARO’s mission is to seek fair and equal treatment from the U.S. government for Americans living and working abroad; to inform AARO members of issues affecting them; and to build awareness in the United States of the role played by Americans overseas. www.aaro.org
FAWCO: Federation of American Women’s Clubs Overseas, a non-partisan not-for-profit network founded in 1931, currently comprises 64 independent volunteer American and international organizations in 34 countries worldwide with a membership of around 12,000. The oldest and largest organization representing private-sector Americans abroad, it is a 501(c)(3) corporation established in the State of New York, and an approved Non-Governmental Organization with special consultative status with the Economic and Social Council of the United Nations. It has been particularly active in the fields of citizenship rights and voting from overseas. www.fawco.org
* The equivalent of the 12th state in terms of population, or the combined populations of Los Angeles, Chicago, Philadelphia and Tucson, according to 2014 U.S. Census statistics.