Wednesday, June 28, 2006
Interesting op-ed in today's Wall Street Journal: Our Taxed Expats, by Newt Gingrich & Ken Kies:
Suppose you are trying to come up with ways to change U.S. tax law to make American business less competitive in the global economy. Your list of ideas would likely include raising the U.S. corporate tax rate even higher than its current 35% rate, already tops in the OECD. You would try to make sure that U.S. companies are subject to higher taxes than foreign-based competitors when they do business abroad. And of course, you would attempt to change our tax system to discourage the hiring of Americans overseas. Americans working overseas might actually help promote the export of U.S. goods and services abroad.
Sadly, Congress has latched on to this last idea as part of the ironically titled "Tax Increase Prevention and Reconciliation Act," signed into law by President Bush on May 17. A provision inserted in the conference agreement dramatically rewrites the rules under section 911 that limit U.S. taxation of American citizens working abroad. Specifically, the proposal would tax U.S. citizens working overseas at higher marginal rates and subject their housing to higher taxes. Adding insult to injury, these changes were drafted to take effect retroactively, back to the beginning of this year.