Wall Street Journal: Trump’s pledge to end double taxation for Americans Overseas – political stunt or real change?

Daan Durlacher

3 min
Published on: 11-10-2024 Last modified on: 11-10-2024

Summary

Trump's promise to end “double taxation” for Americans abroad sounds appealing, but the details remain uncertain. If by this he means that a small portion (about 4%) will actually pay less or no double taxation, it will be of little value to the remaining 96%. Indeed, this group pays no double tax, but must file an expensive and complex U.S. tax return each year.

Donald Trump has promised that, if re-elected, he will end double taxation for Americans abroad. This means they will no longer be double taxed by both the U.S. and their country of residence.

“I support the END of double taxation of Americans abroad!” declared Trump, according to The Wall Street Journal. However, this promise seems to be nothing more than a strategic move to win voters in the final phase of his election campaign.

What Trump means by “double taxation” remains uncertain. If by this he means that an American abroad will pay less or no double taxation at all, this will be good news for only about 4% of Americans abroad. In fact, 96% pay no double taxation in America but must file a costly U.S. tax return every year.

In short, “one of our own sigars” that will not alleviate tax return requirements. His campaign officials offered no additional details on exactly what policy change he would mean.

A strategic political move

Trump’s announcement comes at a strategic moment in his campaign, targeting Americans living abroad who may vote. “Let’s put America first, together,” he said. “Register to vote and vote Republican,” Trump added, in a clear appeal to Americans abroad to support him.

While this certainly generates publicity, it is unclear whether most American voters abroad are registered in the crucial swing states, where their votes could make the most difference.

Does Trump mean abolishing CBT?

While Trump’s promise sounds like a relief to Americans abroad including many accidental Americans, it is highly questionable whether Trump means only abolishing double taxation or also reforming the tax system. The Citizen-Based Taxation (CBT) system is deeply entrenched in U.S. tax policy.

Any change would require significant support in Congress, something that has failed in the past. Both Democrats and Republicans have tried to reform this system, but without success. Trump’s proposal, according to many analysts, is more of a political gesture than a viable policy change.

Risks: tax avoidance and loss of income to the IRS

One of the main reasons there is so much resistance to ending double taxation is the fear of tax avoidance. As The Wall Street Journal noted, “Trump’s plan could allow wealthy Americans to relocate to low-tax countries to avoid U.S. tax obligations.”

This could mean a significant drop in tax revenue for the U.S. government. Public opinion in the U.S. remains cautious: many Americans fear that abolishing CBT would give the wealthy even more opportunities to evade taxes, while the middle and lower-income groups would suffer.

Position of Americans Overseas

As an advocacy organization for people on U.S. tax return duty, Americans Overseas sees the benefits of tax reform for the millions of Americans living abroad. Yet much uncertainty remains about the details of Trump’s proposal.

As Trump puts it, eliminating double taxation is a simple step, but in reality, the U.S. tax system is complex and politically sensitive. Americans Overseas is waiting for more concrete information before cheering on this promise.

Americans Overseas will continue to fight for relief for Americans living abroad in the near future. The organization continues to advocate for changes that are both fair and achievable. In the meantime, it is important for people to comply with the laws and regulations imposed on Americans living abroad, should anything change it will be a condition.

While Trump’s promise to abolish the double tax offers some hope, for those people who actually have to pay taxes at the moment, it is important to pursue realistic reforms that actually ease the tax burden without undesirable consequences for the U.S. economy or tax revenues.

Americans Overseas will continue to lobby for policy changes that improve the lives of Americans abroad, while also working with policymakers to ensure sustainable and equitable solutions.

We advocate for transparency and clear guidelines before any conclusions can be drawn about the true impact of such promises. This remains a long-term effort centered on the interests of American citizens living abroad.

Contact us for more information

 

 

Sources:

 

Written by Daan Durlacher

Co-founder

Daan Durlacher, co-founder of Americans Overseas, belatedly discovered his US Person status and associated tax liability. He founded the company with Michael Littaur in 2012 to inform and assist others with U.S. tax issues.

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