LIFESTYLE - MONEY

US expats: tax reduction rumours



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US high earning expatriates currently face double taxation, both in their host country and in the US; however, talks are underway to reform the tax system.Pictured: The Senate and House of RepresentativesPicture credit: Ron Cogswell 

The Financial Times has reported that lawmakers were considering changing the law which asks American high earning expatriates to pay taxes both overseas and in the USA.

This current rule only applies to high earners (those earning over $100,000 in 2016), who have to pay tax on anything over that amount to both the host country and the US.

Republicans Overseas, a group of party donors, has been lobbying congress for years, and submitted a letter to the House’s committee. The US chamber of commerce has also lobbied congress to introduce US-only taxation for individuals, because it disadvantages American managers at overseas branches of US exporters.

The FT reported on Wednesday 25 October that Kevin Brady, the Republican head of the House ways and means committee, said that they were considering the measure as part of a tax reform bill.

The House of Representatives ways and means committee and the Senate finance committee are responsible for the drafting of the tax bill.

Brady told the FT that congress was taking “seriously” the call from a citizen-based income tax system to a residence-based system. The White House budget office director, Mick Mulvaney also told the FT that he would support the change.