Petition predicts that territorial taxation would lead to an increase in American exports
A petition calling for “territorial taxation for individuals” (TTI) for US citizens to be included in the Tax Reform Package currently under review by the American Senate and Congress is to be delivered to US President Donald Trump on Monday.
The petition – being circulated by Republicans Overseas – calls for an end to citizen based taxation (CBT), which mandates that American citizens living abroad pay taxes both to their country of residency and to the US government.
According to the document, territorial taxation would be “tax-revenue positive” for individuals, as it “eliminates current loopholes that allow wealthy foreigners not resident in the United States to generate substantial income…without paying their fair share of tax.”
Additionally, the petition predicts that territorial taxation would lead to an increase in American exports.
“Due to CBT, Americans overseas are at least 35 percent more expensive to hire than their foreign counterparts,” the petition reads. “Territorial taxation would make employing Americans overseas more affordable, and more Americans overseas will lead to more exports of American goods and services.”
Other benefits of territorial taxation cited by the petition include attracting skilled immigration by individuals who would avoid tax implications caused by foreign businesses and income, and an end to the “discriminatory costs of tax compliance” on overseas Americans.
In the UAE, Americans from both sides of the political spectrum have voiced their support for territorial taxation.
“The general concept of citizen based taxation is wrong,” Dr. Steven Anderson, the Chairman of Republicans Overseas – UAE said. “We want territorial taxation, or, in other words, taxation at where you are a resident.”
“With FATCA (Foreign Account Tax Compliance Act) the United States government coerced foreign banks to implement measures and comply with their request that all American-owned bank accounts over a low threshold need to have their account balance forwarded to the Internal Revenue Service,” he added. “And this is monthly.”
Dr. Anderson added that, in his opinion, FATCA’s “arrogance” forces international financial institutions to “break their own country’s laws, involving the most basic of citizen’s rights.”
Despite the fact that Democrats Abroad supports residence-based taxation (RBT) rather than TTI, Democrats Abroad UAE Spokesman Tony Graham said he was supporting the effort to include TTI in the Tax Reform Package.
“Both RBT and TTI would solve the problem,” he told Arabia Business. “The principle (of both models) is that those of us living overseas don’t benefit from US government services, so why should we have to pay tax?”
“I’m taking the pragmatic view that the Republicans are in charge now, and TTI addresses the issues faced by American expats,” he added.