USA Residence-Based Tax Reform
My friends and family ask me all the time about life in Switzerland and living abroad. I tell them about the wonderful hiking and nature, about the amazingly on-time public transit system, and the new experiences that I have almost everyday. Then they ask about how the income tax thing works. Do I get double-taxed?
I find that when I actually lived in the US I didn't think about how the government affected my life. I voted in Presidential elections and followed current events but I always felt that I needed more time to truly understand all the issues and candidates before I could 'complain' about anything with concerning the government.
Now as an American expatriate (expat) I 'feel' the US government more than ever. I file my taxes and so far I haven't owed the US government anything since moving to Switzerland. They fortunately built in enough deductions plus the tax I pay to Switzerland that I come out on the good side. Filing taxes really is only the tip of the problem.
The larger problem lies in the pressure and requirements the US government places on all financial institutions over-seas. It's because of this, and the ensuing litigation, that persons with a US tax obligation (read: citizens, green card holders, etc.) are often quickly escorted out of the building with they mention the letters "USA".
You see, filing taxes is really the easiest part, although it can be quite expensive just to hire someone to prepare your tax statements. The most frustrating part is those people who can't have a joint bank account with their European spouse, who can't use the financial institutions investment services and who struggle just because they are a US citizen.
How can WE fix the problem? By using our voice. We (expats) have advocates in Washington D.C. but we need to put power behind those advocates. We need to be blogging, vlogging, writing, talking and most importantly sending those thoughts and experiences to the US government agencies responsible for tax reform.
I do not claim to have read all the tax documents but to me it makes simple sense. If the US government switches to a Resident Based Taxation scheme then US citizens living abroad would no longer be required to file and the financial institutions would no longer be required to provide the US with their clients information. What about all those multi-million/billionaires that hide their money offshore?
There are additional provisions like, Same Country Exemption, as the ACA describes "giving “safe harbor” to Americans legitimately living and working overseas, characterizing accounts owned by Americans resident abroad with a bank or other foreign financial institution located in their country of residence as local and not offshore. This would take these accounts out of the due diligence and the reporting requirements of FATCA for both the individual and the foreign financial institution." Then the US could still 'go after' those persons dodging taxes vs. those of us just making a normal living abroad.
Follow this link and make your voice heard before April 15, 2015. And do yourself a favour and start educating yourself about the issue, educate others especially our friends and family still living in the states. Don't take my word, find out for yourself what you can do to help yourself.
