Issues

Now celebrating over 35 years of service to Americans residing abroad, ACA has held unwavering positions on several issues directly affecting citizens residing abroad: Children's citizenship, Medicare, Social Security, Taxation, Voting, and Congressional representation. 

Taxation

ACA proposes two complementary changes to US tax laws as they apply to overseas residents:

1. Eliminate citizenship-based taxation and replace it with residence-based taxation: RBT Proposal.

2. Collect withholding taxes on all US source passive income (including dividends, interest, royalties, pensions, etc.) of overseas Americans on the same basis as the US currently collects withholding taxes from non-resident foreigners on US source income.

Executive summary:
US citizens working overseas are subject to a tax liability in their country of residence AND in the US, putting American citizens and businesses overseas at a competitive disadvantage. This tax burden discourages American companies from employing Americans overseas. Changing from Citizenship-based taxation to residence-based taxation is revenue neutral and brings major economic advantages to the United States.


The ACA proposal would:

• produce tax revenues for the United States comparable to, and possibly even greater than, the current system of citizenship-based taxation;
• align US tax policy on individuals to that of the rest of the world;
• align US tax policy on individuals to numerous proposals to tax US corporations on a territorial 
basis;
• increase the competitiveness of the United States and its citizens in world markets;
• stimulate job creation for Americans at home and abroad;
• simplify the US tax code and taxation of Americans living and working abroad;
• rationalize and reduce the administrative burden of the IRS in a cost-effective way;
• improve the relationship and develop positive synergies between Americans abroad and their 
home country which they dearly love.

An explanation of this RBT proposal was submitted in July 2013 to the Joint Senate Finance and House Ways and Means website (taxreform.gov).

Banking Access

ACA opposes legislation such as the Foreign Account Tax Compliance Act (FATCA) and the Foreign Bank Account Report (FBAR) which is leading foreign banks and financial institutions to deny Americans overseas the necessary banking tools to live and work as well as, opposes elements of the Patriot Act which is causing Americans overseas to lose their state-side banking services. ACA advocates for excluding bona-fide residents living and working overseas from filing foreign bank account reports such as Form 8938 and TD F90-22.1 and easing Patriot Act guidance to facilitate state-side banking access for Americans overseas.

Executive summary:
Patriot Act legislation currently contains guidance that is forcing US banks to close state-side services for Americans who no longer can provide a US mailing address. At the same time, FATCA and FBAR legislation, which require reporting of Americans clients by Foreign banks to the IRS and necessitates additional filing requirements through the TD F90-22.1FBAR form and Form 8938 (FATCA), are shutting Americans overseas out of foreign financial tools such as mortgages, bank accounts, insurance policies policies, pension funds, essential financial tools for their survival overseas.

 

Voting

ACA favors the unhindered exercise of voting rights for eligible overseas Americans, whether military or civilian.

Executive summary
ACA has consistently supported defensive legislation and litigants engaged in the business of assuring that this fundamental right be available without excessive bureaucracy. We favor the use of clear, simple and straightforward voting and ballot request documentation, and rigorous procedures enabling confirmation that all ballots voted were properly tabulated.

 

Citizenship

All Americans should enjoy the same right to transmit US citizenship to all of their children at birth, including all children born to or adopted by a US citizen abroad.

Executive summary
Every year about 40,000 children are born overseas to a US citizen parent. Of these, 90% acquire US citizenship at birth while 10% do not. The right to a nationality at birth is one of the most fundamental of human rights, as it opens the door to membership in our society and all other related rights. It is obvious that 4,000 children each year deserve better treatment. ACA is continuing its support of revised legislation to make it easier to transmit US citizenship to children born or adopted abroad.

 

Social Security

Americans abroad should not be penalized simply because they spent part of their careers abroad, or because they retire abroad and/or have a foreign spouse or adopted children. ACA supports the Social Security Fairness Act, which would eliminate the Windfall Elimination Provision (WEP).

Executive summary
The Windfall Elimination Provision (WEP) eliminates up to 50% of US Social Security benefits for individuals receiving foreign pensions. Self-employed Americans living abroad often must pay SECA taxes in addition to the social security taxes they pay in their country of residence.  No voluntary program exists for non-self-employed Americans to contribute to the Social Security system.  Foreign spouses and adopted children of Americans are often denied survivor benefits.
 


Medicare

Americans abroad who are eligible for Medicare benefits in the US should be able to sign up without premium penalties for late enrollment upon return to the US.

Executive summary
Medicare benefits are not available to citizens outside the United States. Premiums are increased for those who sign up later than when first eligible, and some American health insurances require the insured to pay Part B premiums even when living abroad. This encourages citizens to travel back to the US for expensive treatments, which would cost far less in their countries of residence. TheTriCare program available to military personnel overseas has shown the feasibility of extending Medicare coverage abroad. 

 

Representation in Congress

ACA believes that the only effective long-term solution for Americans overseas to have their voice heard is direct representation in Congress through Delegates elected by the overseas community.        

Executive summary
The Americans Abroad Caucus, founded in 2007 in the House of Representatives, is a positive first step for Americans Abroad to have a contact point in Washington.  Nevertheless, as Americans overseas represent a population that would be ranked 25th among the 50 states, this community should have right to its own representation, particularly given the special issues they face, the growing complexities of the global markets and the role that Americans overseas play in the competitiveness of the United States.  ACA is in favor of proposed legislation H.R. 597 that would improve the situation for Americans residing abroad.

(updated July 2013)

Last Updated July 25, 2014