    [Senate Hearing 117-304]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 117-304

                           HOW U.S. INTERNATIONAL TAX
                        POLICY IMPACTS AMERICAN WORKERS,
                              JOBS, AND INVESTMENT

    =======================================================================

                                    HEARING

                                   before the

                              COMMITTEE ON FINANCE
                              UNITED STATES SENATE

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 FIRST SESSION

                                   ----------

                                 MARCH 25, 2021

                                   ----------

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                Printed for the use of the Committee on Finance

     HOW U.S. INTERNATIONAL TAX POLICY IMPACTS AMERICAN WORKERS, JOBS, AND
                                   INVESTMENT

                                                            S. Hrg. 117-304

                           HOW U.S. INTERNATIONAL TAX
                        POLICY IMPACTS AMERICAN WORKERS,
                              JOBS, AND INVESTMENT

    =======================================================================

                                    HEARING

                                   before the

                              COMMITTEE ON FINANCE
                              UNITED STATES SENATE

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 MARCH 25, 2021

                                   __________

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                Printed for the use of the Committee on Finance

                                 ______

                 U.S. GOVERNMENT PUBLISHING OFFICE
    47-971-PDF              WASHINGTON : 2022

                              COMMITTEE ON FINANCE

                          RON WYDEN, Oregon, Chairman

    DEBBIE STABENOW, Michigan            MIKE CRAPO, Idaho
    MARIA CANTWELL, Washington           CHUCK GRASSLEY, Iowa
    ROBERT MENENDEZ, New Jersey          JOHN CORNYN, Texas
    THOMAS R. CARPER, Delaware           JOHN THUNE, South Dakota
    BENJAMIN L. CARDIN, Maryland         RICHARD BURR, North Carolina
    SHERROD BROWN, Ohio                  ROB PORTMAN, Ohio
    MICHAEL F. BENNET, Colorado          PATRICK J. TOOMEY, Pennsylvania
    ROBERT P. CASEY, Jr., Pennsylvania   TIM SCOTT, South Carolina
    MARK R. WARNER, Virginia             BILL CASSIDY, Louisiana
    SHELDON WHITEHOUSE, Rhode Island     JAMES LANKFORD, Oklahoma
    MAGGIE HASSAN, New Hampshire         STEVE DAINES, Montana
    CATHERINE CORTEZ MASTO, Nevada       TODD YOUNG, Indiana
    ELIZABETH WARREN, Massachusetts      BEN SASSE, Nebraska
                                         JOHN BARRASSO, Wyoming

                        Joshua Sheinkman, Staff Director

                    Gregg Richard, Republican Staff Director

                                      (ii)

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page
    Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee
      on Finance.....................................................     1
    Crapo, Hon. Mike, a U.S. Senator from Idaho......................     3

                                   WITNESSES

    Clausing, Kimberly A., Ph.D., Deputy Assistant Secretary, Tax
      Analysis, Department of the Treasury, Washington, DC...........     5
    Olson, Pamela F., former Assistant Secretary for Tax Policy,
      Department of the Treasury, Washington, DC.....................     6
    Huang, Chye-Ching, executive director, Tax Law Center, New York
      University School of Law, New York, NY.........................     8
    Hines, James R., Jr., Ph.D., Richard A. Musgrave collegiate
      professor of economics and L. Hart Wright collegiate professor
      of law, University of Michigan, Ann Arbor, MI..................    10

                   ALPHABETICAL LISTING AND APPENDIX MATERIAL

    Clausing, Kimberly A., Ph.D.:
        Testimony....................................................     5
        Prepared statement...........................................    47
        Responses to questions from committee members................    51
    Crapo, Hon. Mike:
        Opening statement............................................     3
        Prepared statement...........................................    69
    Hines, James R., Jr., Ph.D.:
        Testimony....................................................    10
        Prepared statement...........................................    70
    Huang, Chye-Ching:
        Testimony....................................................     8
        Prepared statement...........................................    76
        Responses to questions from committee members................    85
    Olson, Pamela F.:
        Testimony....................................................     6
        Prepared statement...........................................    90
        Responses to questions from committee members................   101
    Wyden, Hon. Ron:
        Opening statement............................................     1
        Prepared statement...........................................   111

                                 Communications

    Allara, Neil.....................................................   113
    Alliance for Competitive Taxation................................   113
    Allison, Seth....................................................   123
    American Chemistry Council.......................................   124
    American Citizens Abroad.........................................   125
    Anderson, Garrett................................................   127
    Andrews, Alissa..................................................   128
    Anton, Ray.......................................................   129
    Aries, Ron.......................................................   130
    Artuso, Irene....................................................   132
    Asher, Julian E..................................................   133
    Association of Americans Resident Overseas.......................   134
    Austin, Elizabeth................................................   136
    Baker, V.K.......................................................   137
    Balcerak, Amy....................................................   138
    Barbellion, Wendy O..............................................   139
    Barkley, William Michael.........................................   140
    Barnett, Shon M..................................................   142
    Baron, Daniel....................................................   143
    Beauregard, Claude...............................................   144
    Beberman, Alice..................................................   145
    Beck, Nathan E...................................................   146
    Benedict, Michael................................................   147
    Benny, Diane.....................................................   147
    Berwick, Charlotte...............................................   149
    Beyers, A. Julie.................................................   150
    Bickerstaff, Lena................................................   151
    Blackwell, Nina..................................................   152
    Blore, Joan......................................................   153
    Blouin, Jennifer and Leslie Robinson.............................   155
    Bratlie, Dr. Rachel..............................................   162
    Breiter, Mark....................................................   163
    Brenan, Julia....................................................   168
    Brown, Charlene..................................................   168
    Buckley, Charles.................................................   170
    Bulthuis, Winnie.................................................   171
    Business Roundtable..............................................   172
    Buzatu, Anne-Marie Yarbrough.....................................   176
    Byrne, Austin M..................................................   180
    Campeau, Carolyn Dara............................................   181
    Catt, Amy........................................................   181
    Ceja, Ulises.....................................................   183
    Center for Fiscal Equity.........................................   184
    Chidiac, John....................................................   190
    Chidiac, Peter, Ph.D.............................................   191
    Chotem, Marilyn..................................................   193
    Clark, Susan E...................................................   194
    Clayburn, Jennifer...............................................   195
    Coalition for American Innovation................................   196
    Coalition for a Prosperous America...............................   197
    Coates, James Webster............................................   200
    Coblence, Jane Colandrea.........................................   203
    Connor, Geoffrey W...............................................   204
    Cook, Samantha...................................................   204
    Cook, Sherry.....................................................   206
    Coumeri, Louna...................................................   207
    Cross, Melvin L..................................................   207
    Curtis, Benjamin, Ph.D...........................................   209
    Dale, Paul.......................................................   210
    Dalton, Derek Sean...............................................   211
    Daniels, Nicholas Ryan...........................................   212
    D'Arcy, Andrew...................................................   214
    Debeljak, Maja...................................................   214
    DeGraff, Anthony James...........................................   215
    Democrats Abroad.................................................   216
    Dennis, Robert...................................................   220
    De Paul, Susan...................................................   221
    Depman, David....................................................   222
    De Witte, Susan..................................................   223
    Dias, Cristiana..................................................   228
    Diffloth, Natalie................................................   229
    Dooley, Claire Marie.............................................   230
    Downing, Karen J.................................................   231
    Dymkowski, Christine.............................................   232
    Ekstein, Abraham.................................................   234
    Ellis, Ashley Lynn...............................................   235
    Ellis, Conchita..................................................   237
    Emmons, J........................................................   238
    Engel-Gautier, Carolyn...........................................   239
    Erdman-den Hond, Renee...........................................   240
    Esfahani, Mahan..................................................   241
    Evans, Gail P....................................................   242
    Ferris, Michael..................................................   244
    Filiotis, Spyros.................................................   245
    Financial Accountability and Corporate Transparency Coalition....   247
    Flores, Stephanie................................................   250
    Foroglou, Christopher A..........................................   251
    Fortune, Benjamin................................................   253
    Fountandez, Michael Patrick......................................   254
    Frick, Jason Michael.............................................   255
    Friedman, Dr. Kayla..............................................   256
    Gaertner, Fabio B. and Jeffrey L. Hoopes.........................   258
    Gallagher, Margaret Ellen........................................   261
    Garcia, Domingo..................................................   262
    Garjarian, Sarkis................................................   263
    Garrison, Laurie.................................................   263
    Garry, Benedict..................................................   265
    Geaghan, Matthew.................................................   265
    Gelb, Lindsay....................................................   267
    Geppelt, Michael.................................................   269
    Ghantous, Malek..................................................   270
    Gillie, Darcey...................................................   271
    Gillies, Betsy...................................................   275
    Gillis, Gary.....................................................   276
    Gilotti, Leslie..................................................   277
    Glennie, Christina M.............................................   279
    Goldberg, Melvyn and Judith......................................   280
    Goldfarb, David..................................................   281
    Gordon, Leland...................................................   282
    Gottesman, David M...............................................   283
    Graham, James Richard............................................   284
    Guay, Bradford P.................................................   286
    Gunsch, Jeffrey..................................................   287
    Gutman, Aaron....................................................   289
    Haggard, Kevin Robert............................................   289
    Hale, Thomas.....................................................   291
    Hamernick, Steven................................................   292
    Hanlon, Michelle.................................................   293
    Harris, Ian K....................................................   298
    Hasek, Francis...................................................   299
    Healy, Jim.......................................................   300
    Heine, Eleanor...................................................   300
    Helms, Stephen...................................................   301
    Henderson, Martha................................................   302
    Herman, Suzanne..................................................   302
    Herrera-Lee, Jozette.............................................   304
    Howard, M.E......................................................   305
    Icke, Louisa.....................................................   306
    Jain, Anchal.....................................................   307
    Jefferson, Craig.................................................   308
    Jenke, Esther....................................................   309
    Johnson, Kenneth Glen............................................   310
    Johnson, Scott...................................................   312
    Johnstone, David.................................................   313
    Johnstone, Jill..................................................   316
    Jones, Dominic...................................................   318
    Kane, Marian.....................................................   319
    Karadimas, George C..............................................   320
    Kent, Jill.......................................................   321
    Kiendl, Theodore.................................................   323
    Kitchen, Angela..................................................   323
    Klein, Robert Douglas............................................   324
    Kling, Brian.....................................................   325
    Koo, Caroline....................................................   328
    Koopman, Nancy...................................................   329
    Kraver, Cynthia A................................................   330
    Kraybill, Robert Alexander.......................................   331
    Krim, Asher......................................................   333
    Krim, Shalom.....................................................   334
    Kuettel, Daniel..................................................   335
    Kutnicki, Daniel.................................................   336
    Lange, Alexander.................................................   337
    Lao, Michael Banares.............................................   337
    Lau, Winnie......................................................   338
    Lebelle, Ellen...................................................   339
    Lee, Nicholas Matthew............................................   340
    Lefebvre, Alyssa Marie...........................................   343
    Lennox-Hill, April Michelle......................................   345
    Lewis, Cameron...................................................   346
    Lewis, Laura Ashley..............................................   347
    Lieb, Rebecca....................................................   347
    Lisefski, Alek...................................................   348
    Locke, Elliott...................................................   349
    Loftus, Gerald...................................................   351
    Lowery, Craig....................................................   351
    Luis, Maria Fatima...............................................   352
    Magee, Marian and David Castillo.................................   354
    Maier-Lenz, Kristen..............................................   355
    Manners, Dwight Jeffrey..........................................   356
    Manners, Tanja...................................................   357
    Marino, Michael..................................................   357
    Mark, Justine....................................................   358
    Martin-Burgos, Mario J...........................................   359
    Matthew, Stephen.................................................   360
    Mattson, Marie...................................................   361
    Mattson, Mark William............................................   362
    McGloin, Martha..................................................   364
    McKean, Rachel...................................................   365
    Meacham, Victoria................................................   366
    Melhorn, William.................................................   367
    Michael, Philip..................................................   368
    Michael, Robert..................................................   369
    Miller, Lauren...................................................   371
    Miller, Pamela...................................................   372
    Morrison, Margaret Lynn..........................................   373
    Moskowitz, David.................................................   374
    Muise, Owen......................................................   375
    Nawab, Christina.................................................   376
    Newson, Robert...................................................   377
    Nissan, Tracy....................................................   378
    Nitz, Brian......................................................   379
    Norton, Sylvia...................................................   380
    Norville, Ian....................................................   381
    Oxfam America....................................................   382
    Palomo, Robert P., Jr............................................   386
    Payne, Jodi......................................................   387
    Peacock, Vanessa.................................................   388
    Pedersen, Thomas C...............................................   389
    Perretti, Emily..................................................   390
    Pinkham, George..................................................   392
    Piontkowski, Brad................................................   394
    Pointon, Chris...................................................   396
    Prina, Scott.....................................................   397
    Promote America's Competitive Economy (PACE) Coalition...........   398
    Pruskin, Jacqueline S............................................   403
    Public Citizen...................................................   404
    Quinton, Barbara.................................................   406
    Ramm, Eileen.....................................................   407
    Rasmussen, Jared.................................................   407
    Razgulin, Andrew.................................................   408
    Read, Brendan....................................................   408
    Reed, Carole.....................................................   409
    Reinisch, Mary Ann...............................................   410
    Rempen, Michael..................................................   411
    Riedel, Matthew..................................................   413
    Roberts, Christine B.............................................   414
    Rockwell, Rachel.................................................   415
    Rosalia, David...................................................   416
    Rowe, Joshua.....................................................   417
    Rueckert, Laura..................................................   419
    Runge, Dieter....................................................   419
    Russo, Matthew...................................................   420
    Sackett, Beau Jon................................................   420
    Salari, Reza.....................................................   422
    Schroeder, Greg..................................................   423
    Scurr, Linda.....................................................   424
    Senior, Lisa.....................................................   425
    Shah, Hussnain Qamar.............................................   426
    Shearn, Donna....................................................   427
    Sikora, Maciej...................................................   428
    Silverstein, Sophia..............................................   429
    Singer, Gregg....................................................   430
    Sit, Jesse.......................................................   431
    Snow, Eric.......................................................   432
    Sproul, Jennifer.................................................   433
    St. Pierre, Justin...............................................   434
    Stark, Lauren....................................................   435
    Stautmeister, Bouqui.............................................   436
    Stemm, Rick......................................................   437
    Stocker, Shawn D.................................................   438
    Stop Extraterritorial American Taxation (SEAT)...................   439
    Swanson, Greg....................................................   444
    Sylvester, Nicholas S............................................   446
    Tallen, Amanda...................................................   447
    Taylor, Brendan..................................................   448
    Temperante, Tony.................................................   449
    Terry, Albert....................................................   450
    Todd, Travis J...................................................   451
    Torpie, Kathleen.................................................   452
    Toussaint, Kathleen..............................................   454
    Trog, Thomas Louis, II...........................................   455
    Truong, Dan......................................................   456
    Turner, Mark.....................................................   458
    Tustin-Gore, Melissa.............................................   459
    Tuten, Dr. Bryan.................................................   460
    United States Chamber of Commerce................................   461
    van der Ploeg, Philip............................................   468
    van Haaren, Thomas...............................................   469
    Van Opdenbosch, Dominik..........................................   470
    Veenstra, Janyce.................................................   471
    Wagstaff, Dr. James..............................................   472
    Wallek, Megan....................................................   473
    Wallen, Lars.....................................................   474
    Walther, Ronald..................................................   476
    Welsh, Denise Mary...............................................   477
    Wicki, Claudia...................................................   479
    Williams, Susan Pierce...........................................   480
    Willner, Lisa....................................................   481
    Windsor, Genelle.................................................   482
    Winiski, Anthony.................................................   484
    Workman, Tia.....................................................   485
    Wulfers, Tracy...................................................   486
    Wundheiler, Edward F.............................................   487
    Zitzow, Elizabeth................................................   489

                       HOW U.S. INTERNATIONAL TAX POLICY

                           IMPACTS AMERICAN WORKERS,

                              JOBS, AND INVESTMENT

                                  ----------

                            THURSDAY, MARCH 25, 2021

                                           U.S. Senate,
                                          Committee on Finance,
                                                        Washington, DC.
        The hearing was convened, pursuant to notice, at 9:33 a.m.,
    via Webex, in the Dirksen Senate Office Building, Hon. Ron
    Wyden (chairman of the committee) presiding.
        Present: Senators Cantwell, Menendez, Carper, Cardin,
    Brown, Whitehouse, Cortez Masto, Warren, Crapo, Grassley,
    Portman, Toomey, Cassidy, Lankford, Daines, Young, Sasse, and
    Barrasso.
        Also present: Democratic staff: Jonathan Goldman, Senior
    Tax Counsel, International; and Joshua Sheinkman, Staff
    Director. Republican staff: Courtney Connell, Senior Tax
    Counsel; and Gregg Richard, Staff Director.

       OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR FROM
                 OREGON, CHAIRMAN, COMMITTEE ON FINANCE

        The Chairman. The Finance Committee meets today to discuss
    international corporate taxes, and the 2017 Trump tax law will
    be a significant part of this discussion.
        The lesson of the Trump tax law is that somehow you can
    spend hundreds of billions of dollars on multinational
    corporate tax handouts and not produce any lasting boost in
    jobs and investments.
        Today's hearing comes days after the release of a jaw-
    dropping report from the Joint Committee on Taxation. That
    report found that the Trump tax law slashed the average U.S.
    tax rate paid by the Nation's biggest mega-corporations by more
    than half. Add to that data from the Congressional Budget
    Office, and you will see that corporate tax revenues have
    fallen through the floor. From 2016 to 2019, they dropped by a
    third. The fact is, before 2017 the United States collected
    relatively little tax from corporations compared to other major
    economies.
        Despite this, Donald Trump and Republicans still sent the
    United States diving headlong into a global race to the bottom
    on corporate taxes. After all, that race to the bottom is based
    on the old trickle-down philosophy that has been misleading the
    American people, blowing budgets, and driving inequality for 50
    years. The worst part is, it was done in a way that makes
    America less competitive in tough global markets.
        Under the Trump tax law, multinational corporations have
    special new breaks for shipping jobs and profits overseas.
    There is a specific new tax break for investing in factories
    outside our country. There are even new barriers to bringing
    back good-paying jobs in research and development, or investing
    in key areas like clean energy.
        So, it is no surprise that the investment boom Republicans
    talked about turned out to be more of an investment whisper.
    Manufacturing even went into recession in 2019, months before
    the pandemic hit.
        Now, hearing this has got to be a punch in the gut for
    Americans who live in communities where hulking shuttered
    factories sit there as reminders of what prosperity used to
    look like. Americans have recognized this kind of basic
    unfairness and imbalance in the Trump approach from the get-
    go--colossal benefits for colossal multinationals, with
    promises to workers always coming up empty.
        So here is the bottom line, from where I sit. As the
    committee begins today, I reject the proposition that the
    United States has to participate in a worldwide race to rock
    bottom on corporate taxes just to compete or to create good-
    paying jobs. Our country does not have to behave like some kind
    of minor island off the coast of nowhere, selling zero-tax P.O.
    boxes to corporate headquarters to crank up a quick buck.
        Whether it was the result of shoddy legislating or
    misleading double-speak, the Trump incentives for shipping jobs
    overseas are a disaster for working people in Oregon and across
    the land.
        It is time the Congress took a fresh approach. In the
    coming days, joined by Senator Brown of Ohio and Senator Warner
    of Virginia, I will be releasing a new framework for
    international tax that reverses the Trump era handout for
    multinationals.
        Our new framework is based on just a couple of simple
    propositions. First, multinationals will pay a fair share just
    like Americans who work for a living. There were too many
    corporate loopholes and opportunities for gaming the system
    before the Trump tax law, and the Trump law just made things
    worse. The rates are too low, and it is too easy for
    corporations to skip out on paying their fair share simply by
    shifting profits and gaming the system.
        Second, the tax code needs to reward companies that invest
    and create good-paying jobs in the United States, and stop
    rewarding companies that ship jobs and factories overseas.
    Inequality is getting worse, and millions of Americans are
    hurting and out of a job. Provisions of the Trump tax law that
    shortchange American workers and make us less competitive have
    got to go.
        As I mentioned, we have members already hard at work on
    these issues. I know others have big ideas to bring to this
    debate.
        I want to thank our witnesses. This issue represents a big,
    difficult challenge, but I think the cross-section of people we
    have today gives us a chance to start this debate. And let's
    get at it.
        My friend and colleague, Senator Crapo, is here, the
    ranking minority member, and we will recognize him at this
    time.
        [The prepared statement of Chairman Wyden appears in the
    appendix.]

                 OPENING STATEMENT OF HON. MIKE CRAPO,
                       A U.S. SENATOR FROM IDAHO

        Senator Crapo. Thank you, Mr. Chairman, for holding this
    hearing today. And thank you to our panelists for joining us
    today.
        Before the Tax Cuts and Jobs Act, or the TCJA, we shared a
    common concern for the many threats to the U.S. corporate tax
    base and the collateral threats to U.S.-centered economic
    activity, including investment, growth, and jobs.
        Corporate inversions were on the rise as a defensive
    strategy adopted by U.S. businesses to ward off foreign
    takeovers. The combination of one of the world's highest
    corporate tax rates of 35 percent, and the disadvantages of the
    U.S. worldwide deferral system, made it a losing proposition to
    be a U.S.-based company when competing in overseas markets.
        That environment led this committee's bipartisan working
    group, chaired by Senators Portman and Schumer, to conclude
    that our international tax system was clearly broken. I
    challenge anyone to reasonably argue that we should return to
    the pre-TCJA international tax landscape.
        Our shared view was not limited to the state of our flawed
    system. There was also bipartisan agreement on the optimal path
    forward. President Obama, then-Senate Finance Committee
    chairman Max Baucus, and then-House Ways and Means Committee
    chairman Camp, all proposed lower tax rates with minimum taxes
    on foreign earnings.
        There is nothing controversial about the problems that
    plagued our international tax system, or our collective
    acknowledgment of the fundamental changes that needed to be
    made. Consistent with these bipartisan objectives, the TCJA
    reduced the corporate tax rate, ended the deferral system, and
    introduced a new minimum tax on foreign earnings of U.S.
    companies, as well as other anti-abuse rules to prevent base
    erosion.
        While the reduced corporate rate moved the United States
    more in line with the rest of the world, the anti-base erosion
    measures that were enacted into law are the most robust in the
    world. Indeed, they are prompting other countries, through the
    OECD, to consider similar measures.
        The goal of our new system was to both ensure that the
    United States and U.S. companies are competitive in global
    marketplaces, and to protect the U.S. tax base.
        TCJA is a vast improvement over the prior system. And since
    the TCJA, the flood of inversions has ceased entirely. And U.S.
    companies are no longer easy targets for takeovers. Prior to
    the pandemic, U.S. companies were sharing their business
    stories of increased investment, wages paid to workers, and
    jobs in the United States--outcomes I expect to resume once our
    economy can reopen completely, provided adverse changes are not
    made to our tax laws.
        It is of course healthy to deliberate and to consider
    refinements to allow U.S. companies to further invest and
    expand in the United States without harming their ability to
    compete, especially considering the precarious environment that
    many businesses find themselves in as they recover from the
    pandemic.
        Markets abroad are vast, and we want U.S. companies to be
    competitive in their ability to serve those markets and not be
    hamstrung by uncompetitive taxation. What we should not do is
    hastily change the system purely for purposes of raising
    revenue, bringing inversions and foreign takeovers of U.S.
    companies right back to the forefront.
        Unfortunately, that may be the misguided direction in which
    the administration wishes to proceed. Let us not forget, those
    inversions and foreign takeovers were real and not just
    academic estimates from certain questionable studies we have
    seen in the area of international effects of taxation.
        Some of those studies dealing with so-called stateless
    income, profit shifting, and base erosion play very fast and
    loose with the data and the methods. Sometimes in those
    analyses, politics and advocacy for political position overcome
    rigor--and it shows.
        Under President Biden's proposed corporate rate increase,
    which would result in a combined U.S. rate of nearly 33
    percent, we again would have one of the highest combined
    statutory rates among developed countries.
        Worse, the President's proposed 100-percent increase in the
    GILTI rate--one current provision of the international part of
    the tax code--would put the United States at an even greater
    disadvantage, as no other country taxes foreign earnings at
    even close to that rate.
        America's future jobs, income growth, and prosperity will
    depend on how well U.S. businesses compete in this country and
    in foreign markets. American headquarters, research, and other
    domestic jobs depend on U.S. firms' viability here and abroad.
        Strong U.S. companies mean financial security for millions
    of Americans who need look no further than their 401(k)
    accounts and IRAs, which hold the largest plurality of publicly
    traded stock.
        As the Schumer-Portman working group said, when U.S.
    businesses can compete and win in this growing global market,
    the real winners are U.S. workers--and I might add, those
    millions of Americans who own stock in their 401(k) accounts
    and IRAs.
        As we examine proposals that would dramatically alter the
    TCJA's international provisions, we should test the potential
    outcomes against our shared policy objectives voiced before and
    since the TCJA. Will the U.S. tax base be strengthened? Will
    the U.S. growth rise? Will U.S. workers have better job
    opportunities and wages? Will U.S. workers and retirees see
    their retirement account balances rise?
        Mr. Chairman, I look forward to hearing from today's
    witnesses.
        [The prepared statement of Senator Crapo appears in the
    appendix.]
        The Chairman. Thank you, Senator Crapo.
        Here is how we are going to proceed. And I was just advised
    that we may have a number of votes, starting before too long. I
    want to tell our guests we very much appreciate them, and we
    are just going to do our best to keep this going, with members
    asking their questions.
        Our first witness is Dr. Clausing, Deputy Assistant
    Secretary for Tax Analysis at the Treasury Department. We are
    particularly pleased that she is on leave from Reed College,
    which is right around the corner from my home, and Oregonians
    are very proud of her, and we appreciate her testifying.
        Our next witness will be Ms. Olson, formerly the Assistant
    Secretary for Tax Policy at the Treasury Department, now with
    PWC.
        Our third witness will be Ms. Huang, who is executive
    director of the Tax Law Center at NYU. And there she is.
        And our final witness will be Dr. Jim Hines, Richard
    Musgrave collegiate professor of economics and the L. Hart
    Wright collegiate professor of law at the University of
    Michigan
        Let us proceed, Dr. Clausing.

      STATEMENT OF KIMBERLY A. CLAUSING, Ph.D., DEPUTY ASSISTANT
         SECRETARY, TAX ANALYSIS, DEPARTMENT OF THE TREASURY,
                             WASHINGTON, DC

        Dr. Clausing. Thank you so much, Chairman Wyden, Ranking
    Member Crapo, members of the committee. Thank you so much for
    inviting me to share these views on the international aspects
    of business tax reform.
        In my testimony today, I will discuss several crucial
    issues related to international tax reform. First, we need to
    better protect the U.S. tax base from the shifting of corporate
    profits to offshore havens. Second, international tax reform is
    an essential ingredient to a fair tax system. And third, it is
    important to modernize our tax system to better suit a globally
    integrated world economy, reducing the tax preference in favor
    of foreign operations and enabling U.S. workers to compete.
        First, consider the important problem of profit shifting,
    which erodes our corporate tax base, reducing tax revenues.
    Compared to our trading partners, the U.S. Government raises
    very little corporate tax revenue as a share of GDP. The United
    States raised only 1 percent of GDP from the corporate tax in
    recent years; whereas, other nations consistently raised 3
    percent of GDP from the corporate tax.
        Our corporate revenues are low despite the fact that U.S.
    companies produce very high corporate profits, both in historic
    and comparative terms. Indeed, the U.S. corporate sector is the
    most successful in the world. The United States hosts 37
    percent of the world's top company profits, despite the fact
    that the United States only comprises 24 percent of world GDP
    and less than 5 percent of the world's population.
        Yet, despite the enormous success of our corporate sector,
    U.S. companies continue to shift corporate profits offshore,
    reducing the U.S. corporate tax base. This costs the U.S.
    Government enormous amounts of foregone revenue. Further, the
    Tax Cuts and Jobs Act has not changed the magnitude of profits
    shifted abroad. The role of foreign tax havens in the years
    2018 and 2019 is quite similar to what it was in the years
    before the 2017 law.
        While the 2017 law contained two modest measures that were
    supposed to stem profit shifting, those two measures had
    harmful unintended consequences. Also, the 2017 law directly
    encouraged profit shifting in other ways by exempting from U.S.
    tax the first 10 percent return on assets, and by taxing
    foreign profits at half the rate of U.S. profits. Both of these
    provisions tilt the playing field in favor of offshore
    activities and earnings relative to domestic activities and
    earnings.
        Second, consider fairness. Improving international taxation
    will improve the progressivity of our tax system, ensuring that
    large corporations and those that own them pay their fair
    share. The corporate tax is one of our most progressive taxes,
    far more progressive than the individual income tax or the
    payroll tax. All respectable economic models agree on this
    point: the corporate tax burdens the owners of capital, and
    those with excess profits.
        Recent decades have witnessed a worrisome increase in
    income inequality, combined with the falling labor share of
    income. This makes it especially important to modernize the tax
    system so that we can tax internationally mobile capital. If
    companies move their profits to avoid tax, we miss our only
    chance to tax most capital income, since about 70 percent of
    U.S. equity income goes entirely untaxed by the U.S. Government
    at the individual level.
        In addition to enhancing the progressivity of the U.S. tax
    system, the corporate tax is also efficient, since taxing
    excess profits can generate revenue without undue distortion.
    And evidence indicates that a rising share of the corporate tax
    base, now likely well over three-quarters, is comprised of
    excess returns.
        Finally, we need to counter the offshoring incentives that
    are baked into current law. At present, U.S. domestic
    corporations pay income tax at 21 percent, a lower marginal tax
    rate than that faced by many schoolteachers or firefighters.
    Yet, multinational companies operating offshore receive even
    more favorable tax treatment. Under the GILTI minimum tax, the
    first 10 percent return on tangible assets is completely free
    of U.S. tax. And subsequent income is taxed with a 50-percent
    deduction, facing tax at approximately half the full U.S. rate.
        Our tax system would benefit from a much stronger minimum
    tax. We are not alone in pursuing these types of solutions.
    There is presently an international effort to move to a global
    agreement on a country-by-country minimum tax. Working with our
    allies and friends in this area can help nations rebuild the
    cooperative spirit that is needed to tackle other important
    problems such as climate change and global public health
    issues.
        Finally, it is important to have a competitive tax system.
    And competitiveness is really about ensuring that our tax code
    does not incentivize foreign operations at the expense of those
    at home.
        Competitiveness is also about nurturing the many
    fundamental strengths that make the U.S. such a great place to
    do business. Investing in our institutions, in the abilities
    and education of American workers, in the quality of our
    infrastructure, and in cutting-edge research, is all-important.
        Thank you.
        [The prepared statement of Dr. Clausing appears in the
    appendix.]
        The Chairman. Okay; our next witness is Ms. Olson. Welcome.

     STATEMENT OF PAMELA F. OLSON, FORMER ASSISTANT SECRETARY FOR
         TAX POLICY, DEPARTMENT OF THE TREASURY, WASHINGTON, DC

        Ms. Olson. Chairman Wyden, Ranking Member Crapo, and
    distinguished members of the committee, thank you for the
    invitation to participate this morning as the committee
    considers the impact of U.S. international tax policy.
        I am appearing on my own behalf, not on behalf of PWC or
    any client, and the views I express are my own.
        The written statements submitted for the record today, and
    what we have already heard, demonstrate widely differing views
    on the efficacy of our current international tax rules, but
    agreement on how policy should be judged: whether it delivers
    what all Americans want--jobs and investment that lead to
    rising wages, economic security for American workers and their
    families, and more broadly shared prosperity.
        I hope my testimony, which draws on my experience as a
    policymaker and as a practitioner observing how the rules work
    in real life, will help the committee chart a path.
        U.S. international tax policy prior to the TCJA was
    dysfunctional. It allowed U.S. companies to compete in foreign
    markets, but put a tax wedge between reinvesting foreign
    profits abroad and in the U.S., a wedge that grew in size as
    the differential between U.S. and foreign corporate tax rates
    increased, disincentivizing the reinvestment of foreign profits
    in the U.S. The U.S. financial statement treatment of
    unrepatriated profits differed from the reporting of companies
    headquartered in territorial systems, making U.S. companies a
    target for foreign governments in search of revenue. The high
    U.S. corporate tax rate and worldwide system placed a discount
    on the value of business assets in the hands of American-owned
    companies, leading to the loss of corporate headquarters, with
    broad consequences for both the local communities and the
    governments where the headquarters were located.
        Besides being dysfunctional, U.S. tax policy was out of
    sync with the rest of the world, which had reduced corporate
    rates, adopted territorial systems, enacted laws to safeguard
    their domestic tax bases, and turned increasingly to
    consumption taxes like a VAT to meet revenue needs.
        There was broad bipartisan recognition--which has already
    been acknowledged this morning--that U.S. international tax
    policy before 2017 was unsustainable.
        Chairman Wyden, you have led in this area with your 2010
    bipartisan comprehensive tax reform bill, lowering the
    corporate rate to 24 percent and significantly broadening the
    base. Democrats and Republicans alike--President Obama, Ways
    and Means chairman Camp, Chairman Baucus, Senator Portman, and
    Majority Leader Schumer, who co-chaired this committee's
    working group on international tax reform--put forward
    proposals to lower the corporate rate, broaden the corporate
    base, and transition to an international system that ended the
    disincentive to repatriate foreign earnings. In 2014, Senator
    Cardin introduced legislation that coupled a 10-percent VAT
    with a reduction in the corporate tax rate to 17 percent.
        To be sure, there were differences among the many proposals
    put forward, but the differences were of degree, not direction.
    As an observer of the legislative process, the TCJA reflected a
    remarkable triumph of bipartisan policy development, despite
    the ultimate vote--lowering the rate of taxing offshore
    earnings, ending the disincentive to reinvest in the U.S., and
    adopting strict anti-base erosion provisions. Though early,
    initial BEA data on the activities of U.S. multinational
    companies since TCJA indicate its success.
        What has mattered most? Reducing the corporate rate from
    number one among OECD countries to the middle of the pack, was
    key to addressing base erosion and increasing U.S. investment
    and job creation. The base broadening in TCJA meant that
    corporate receipts as a share of corporate income have stayed
    relatively unchanged, despite the rate reduction. Mandatory
    deemed repatriation of foreign profits wiped the slate clean,
    subjecting earnings to tax and allowing companies to reinvest
    them in the U.S.
        Two minimum taxes--GILTI and BEAT--guard against base
    erosion and profit shifting. Neither is a perfectly designed
    provision, but the flaws are not in details like QBAI. I am
    unaware of any taxpayer enticed to move operations out of the
    U.S. to be taxed under GILTI. Indeed, taxpayers may go the
    other direction to avoid it, becoming subject to full current
    tax under subpart F. Others have repatriated IP to avoid GILTI
    and take advantage of FDII, which was designed to create a
    level playing field for U.S. income derived in foreign markets.
        Looking ahead, the OECD's project on taxation of the
    digitalizing economy--not on the list of topics for today--is
    the elephant in the room. The U.S.'s jurisdiction to tax is on
    the menu. Congressional guidance to Treasury is lacking, even
    though the proposals may require conforming legislation and
    amendments to treaties requiring Senate ratification. Waiting
    for the OECD agreement is too late to begin consideration of
    what the Senate would like to see in it.
        Whatever the outcome of the OECD negotiations, other
    governments are going to act, and they will act in a manner
    that they believe will foster the interest of workers, jobs,
    and investments in their countries, not in the United States.
    It is up to you to look out for the best interests of America.
        Thank you again for this opportunity.
        [The prepared statement of Ms. Olson appears in the
    appendix.]
        The Chairman. Thank you very much, Ms. Olson.
        Ms. Huang, welcome.

      STATEMENT OF CHYE-CHING HUANG, EXECUTIVE DIRECTOR, TAX LAW
        CENTER, NEW YORK UNIVERSITY SCHOOL OF LAW, NEW YORK, NY

        Ms. Huang. Chairman Wyden, Ranking Member Crapo, and
    members of the committee, thank you for the opportunity to
    testify today. My name is Chye-Ching Huang, and I am executive
    director of the Tax Law Center at NYU Law. It is a new public
    interest initiative to strengthen the tax system by weighing in
    on technical but consequential tax law issues.
        Decades of productivity gains, followed by large tax cuts
    on corporate profits, have not benefited hard-working families
    enough. They have faced near-stagnant wages and have been hit
    hardest by the COVID recession.
        A recovery package may soon invest in priorities, including
    infrastructure, education, and making historic reductions in
    child poverty permanent, as well as ensuring low-wage workers
    are not taxed into poverty. That would permit shared prosperity
    for workers, visitors, and children from all backgrounds who
    could be in the next generation of innovators and
    entrepreneurs.
        If lawmakers decide to offset some of the cost,
    international tax reform can ensure that multinationals
    contribute to the infrastructure and workforce that benefits
    them. And aside from the revenues, it can reduce tax incentives
    for companies to locate profits and investments offshore, or to
    invert.
        My testimony makes three points. First, the current system
    has incentives for multinationals to locate both paper profits
    and real investments offshore. Second, elements of it can be
    salvaged and strengthened to build a coherent, workable system
    that is less tilted. And third, doing so now would not only
    help workers in an economy in need of strengthening, it could
    also help to secure a once-in-a-century chance to build a
    modern, global international tax system.
        So first, the law's incentive to shift profits and
    investment offshore. The 2017 law has a very lopsided basic
    structure that cut the corporate rate to 21 percent but set a
    rate on multinational's foreign profits as low to zero. And
    that is a large incentive to locate profits and investment
    offshore.
        Now the law did create GILTI, BEAT, and FDII to try to
    limit that damage, but their design is flawed. The GILTI and
    minimum tax on multinationals' foreign profits is not very
    robust. It applies only to profits that exceed 10 percent of a
    multinational's investment and tangible assets, like factories
    in foreign countries.
        So that is a U.S. tax rate of zero on large swaths of
    foreign profits, and it is also an incentive for companies to
    have factories and other assets offshore so that they can get
    that zero rate on more foreign income.
        Now GILTI is calculated on a global basis instead of for
    each country separately. So multinationals can take income and
    taxes from countries where they pay little or no tax and
    combine them with income and taxes from countries where they
    pay significant tax. And that average rate lets multinationals
    face less GILTI on their overall foreign profits. And from a
    tax perspective, it can make the U.S. the least attractive
    place for a multinational to invest or put profits. At about
    half the U.S. rate, the GILTI rate is far too low.
        Now BEAT, the base erosion tax, aims at multinationals
    shifting profits out of the U.S. and into low-tax countries by
    making big payments to foreign affiliates. But it catches
    payments that are not a big base erosion risk, while ignoring
    others that are.
        FDII's purpose is unclear and its design muddled. And it
    looks a lot like an export subsidy, which could be a fatal WTO
    problem.
        My second point is that parts of the law can be salvaged
    and strengthened. A reformed GILTI can apply to a broader set
    of foreign profits, can be calculated on a country-by-country
    basis, and the rate should be at least 75 percent of the U.S.
    rate. A strong GILTI and a retooled BEAT could be the basis of
    a coherent tax structure that reduces the tilt toward offshore
    profits and investment.
        And third, these reforms would not only directly benefit
    U.S. workers, families, and the economy, they could also help
    the U.S. to take a leadership role in the current multilateral
    effort to build a modern, cooperative international tax system
    that could have further profound benefits for the U.S. workers
    and families.
        It is an honor to be here today, and I welcome the chance
    to answer your questions.
        [The prepared statement of Ms. Huang appears in the
    appendix.]
        The Chairman. Thank you very much, Ms. Huang.
        Dr. Hines?

     STATEMENT OF JAMES R. HINES, Jr., Ph.D., RICHARD A. MUSGRAVE
    COLLEGIATE PROFESSOR OF ECONOMICS AND L. HART WRIGHT COLLEGIATE
        PROFESSOR OF LAW, UNIVERSITY OF MICHIGAN, ANN ARBOR, MI

        Dr. Hines. Chairman Wyden, Ranking Member Crapo, and
    committee members, thank you for the opportunity to participate
    in these hearings.
        International taxation involves multinational firms which
    are important parts of our economy. Twenty percent of the
    private-sector U.S. workforce is employed by U.S.-based
    multinational firms, and another 6 percent work for foreign-
    based multinational firms. These are good jobs that pay well
    above the country's average compensation.
        Multinational firms are responsible for 73 percent of the
    country's manufacturing employment, 53 percent of total plant
    and equipment investment, and 84 percent of industrial R&D.
    Multinational firms constitute a big portion of the U.S.
    economy, and in particular the advanced part of the economy
    that is the engine of growth and provides the best jobs.
        Multinational firms compete in global markets, but one of
    the understandable concerns that people have about
    multinational companies is that they might shift production out
    of the United States to lower-cost foreign alternatives, and
    thereby reduce U.S. investment and employment. These types of
    substitutions definitely occur. But it is important to note
    that something else that happens is that foreign operations
    make multinational firms more productive, and this productivity
    effect enhances U.S. output and employment.
        All of the available evidence indicates that, for the
    economy as a whole, this productivity effect is much larger
    than the substitution effect. As a result, 10-percent greater
    foreign investment by U.S. multinational companies is
    associated with 2.6-percent greater U.S. investment by the same
    firms, and 10-percent greater foreign employee compensation is
    associated with 3.7-percent greater U.S. employee compensation.
        Foreign expansion makes companies more profitable. And when
    they are more profitable, they do more business, both in the
    United States and abroad. What would happen if we were to adopt
    tax rules that make it more costly for U.S. companies to do
    business abroad?
        To some degree there would be less substitution, which
    would save some U.S. jobs. But at the same time, the reduction
    in U.S. business productivity would lose the United States far
    more jobs. Of course, any business tax increase has the effect
    of reducing business activities, so it is natural to wonder
    whether it makes more sense to direct any new business taxes to
    the foreign operations of U.S. firms rather than their U.S.
    operations.
        The problem with this logic is that international business
    operations face much greater competition from foreign firms,
    and as a result, studies consistently show that they are much
    more affected by taxation than are domestic operations. It does
    not make sense to try to impose heavy taxes on economic
    activities that will thereby be greatly diminished.
        U.S. firms are often subject to lower tax rates in foreign
    countries than they are in the United States. As I note in my
    written remarks, statistics on the extent to which the foreign
    operations of U.S. firms are lightly taxed are commonly
    misinterpreted in a way that greatly overstates their
    importance and leads to exaggerated estimates of tax avoidance
    by U.S. companies. But it is true foreign tax rates are often
    low.
        If the U.S. operations of a company are taxed at 21
    percent, is any failure to tax the foreign operations also at
    21 percent somehow an implicit subsidy? The answer is ``no.''
    And the reason why is that the foreign operations of U.S.
    companies compete with foreign companies that are not subject
    to U.S. taxes.
        Creating a level playing field requires not that taxes on
    U.S. and foreign operations be equal, but instead that the
    foreign operations of U.S. firms not be subject to a tax regime
    that disadvantages them relative to their true competitors,
    which are foreign companies.
        Heavier taxation of international business operations
    leaves the United States a less attractive home for
    multinational firms. In the past, this has been responsible for
    corporate inversions, which are visible instances in which
    previously U.S. companies become
    foreign-headquartered for tax purposes. But more importantly,
    and particularly in the pre-2018 era, there were many cases
    every day when U.S. firms lost out on foreign business
    opportunities because they could not compete on an equal basis
    with companies from Great Britain, Canada, Germany, and other
    places whose home countries did not subject them to the same
    taxes.
        These lost opportunities have the same economic and tax
    consequences as classic inversions, but they are less visible
    because newspapers do not describe business transactions that
    never took place. Furthermore, these lost business
    opportunities for U.S. companies cannot be prevented by anti-
    inversion legislation. What prevents them is sound, competitive
    tax policy.
        [The prepared statement of Dr. Hines appears in the
    appendix.]
        The Chairman. Thank you very much, Dr. Hines.
        I will go to you, Dr. Clausing, first. The committee had a
    terrific hearing last week on promoting manufacturing in
    America--a great turnout from both Democrats and Republicans--
    and what was front and center was the need to make sure the
    best research and manufacturing is done in America.
        Yet, the international system the Republicans created in
    2017 says just the opposite. If you look, for example, at
    research and development: don't do it here, build everything
    overseas.
        My question is, aren't we undercutting all the time and
    money spent trying to get research and development and
    manufacturing in the United States by having this backward
    system in place, where you have all these incentives to ship
    the jobs overseas, and ship our factories outside our country?
        Dr. Clausing. Thank you for that question. The Biden
    administration most definitely shares your goal of ensuring
    that research and development and manufacturing prosper in the
    United States. And it most certainly works against those goals
    to have a tax system that directly rewards offshoring.
        Consider two provisions of the 2017 law. First, the GILTI
    gives you a larger tax exemption the more tangible assets you
    have offshore. Second, the FDII gives you a less-generous
    deduction the more U.S. assets you have, all things equal.
    Together, these two provisions mean that if a company moves
    plant and equipment from Indiana to India, it both increases
    its ability to earn tax-free income offshore, and it also
    increases its FDII deduction.
        These are two powerful incentives that directly encourage
    offshoring. There have also been studies that have documented
    these sorts of effects and found that U.S. companies with the
    largest GILTI benefits are those that are doing the most
    foreign investment, with no noticeable effect on domestic
    investment.
        The Chairman. Thank you, Dr. Clausing.
        Ms. Huang, your talking and your scholarship is all about
    how corporate revenues are falling through the floor since the
    2017 tax law. I had the Joint Committee on Taxation pull some
    data for the hearing that shows for some big companies, the
    biggest, rates were cut more than in a half. My question to you
    is--I believe you think these trends are going to continue,
    absent reform. How would the country meet the challenge for
    priorities that are inherently governmental, like
    infrastructure, if we continue to see these revenues fall this
    way?
        Ms. Huang. Yes. Thank you, Mr. Chairman. There is really no
    getting around that the law was a really big corporate tax cut.
    You can see that on the JCT estimates by companies, but also
    revenues as a share of GDP, all but cut in half. And
    investments, some things like infrastructure, skilled
    workforce, future innovators, they are all things that
    multinationals benefit from too.
        If one is looking to offset some of that cost of making
    those overdue investments, reducing the tax subsidy for foreign
    profits--which is something that the Joint Committee treats as
    a subsidy--is one of a number of really sound revenue sources
    that you could look to to do that.
        The Chairman. Thank you.
        One more question for you, Dr. Clausing. And it goes back--
    I think the point was made by Ms. Olson. I do believe we ought
    to try to find a way in the tax system to be bipartisan. My
    bipartisan proposals were tied to American investment. That is
    what Democrats asked for in 2017. We were denied the
    opportunity. So I want to ask a question about this Republican
    claim, because they are always saying this is about
    competitiveness.
        I bet you we will hear that 25 times in the course of the
    morning. It seems to me what their definition of
    ``competitiveness'' is is that these big megacorporations do
    not have to pay real taxes. I think that is their definition of
    the concept of competitiveness. And if you are wondering if
    that is what they mean, look at what they did in 2017. They cut
    taxes for those megacorporations, and they did well, and our
    country did not do well.
        Tell us, in my remaining time, what kinds of policies, in
    your view, would really address what we need to do to be more
    competitive?
        Dr. Clausing. Yes. So there are two really important ideas
    here. One is the competitiveness of the U.S. location as a
    place to do business relative to opportunities offshore. And we
    can do a lot better there.
        But another really important aspect of competitiveness is
    our larger business climate. And that means things like making
    investments in infrastructure, investing in people, addressing
    urgent social needs such as responding effectively to crises.
    Both of these types of competitiveness are too often
    overlooked.
        The Chairman. Thank you.
        Senator Crapo?
        Senator Crapo. Thank you, Mr. Chairman.
        Ms. Olson, I will go to you first. First, thank you again
    for appearing here today, and for your discussion of how the
    TCJA actually has worked since it was adopted.
        The current U.S. combined statutory rate of 25.8 percent
    brings our system more in line with the rest of the world, but
    the rate is by no means low. It is still two points higher than
    the OECD average.
        We were also the first country to enact a global minimum
    tax, and we were very deliberate about the burden imposed on
    U.S. companies' global activities. While we wanted to protect
    the U.S. tax base and prevent tax base erosion, we did not want
    to accomplish those goals at the expense of our companies'
    ability to compete and to continue to invest in the United
    States and increase U.S. jobs.
        What is your view of President Biden's proposal to increase
    the combined statutory rate to nearly 33 percent and to double
    the GILTI rate?
        Ms. Olson. Well, the increase to 33 percent would put us
    number one again in OECD rankings, and that is a place that I
    do not think we want to occupy. We would like to be first in a
    lot of things, but that is not one of them. So you know, other
    countries--there has been a lot of talk about a race to the
    bottom. I do not think there has actually been a race to the
    bottom. There has been a race to the middle, and that race to
    the middle continues.
        So we have a couple of countries that are lowering their
    rates, one country that is increasing its rates. They are all
    going to about the same place. Those rates still tend to be
    lower than ours. We are, I think, number 12 on the OECD list.
    But if we were to add in a significant increase, we would be
    back at the top of the list. And I do not think that would be
    advantageous for U.S. investment and jobs, and I also think it
    would increase the incentives to erode the base. So I think
    that would be a mistake.
        GILTI, I think, allows American companies to compete. And
    as Professor Hines's testimony indicates, it is important that
    the U.S. be able to compete, because that adds jobs in the
    United States.
        Senator Crapo. Well, thank you very much.
        And, Dr. Hines, we just heard from Dr. Clausing that she
    believes profit shifting is resulting in significant U.S.
    revenue loss. Her estimates are that profit shifting by U.S.
    multinational companies results in a 35- to 40-percent loss of
    U.S. corporate tax revenues. That is a critical factor.
    However, there are other studies--in fact, one I am looking at
    by Jennifer Blouin and Leslie Robinson--that suggest that those
    estimates are overstated, and their study estimates that profit
    shifting results in only 4 to 8 percent of U.S. tax revenues
    being lost.
        Dr. Hines, do you believe profit shifting is occurring
    anywhere near the levels suggested by some of the testimony
    today? And given the research that I just referenced and
    others, do you believe there is a commonly held view by
    economists of the data and methodology used to reach that
    conclusion?
        Dr. Hines. There is profit shifting, but its magnitude has
    been greatly exaggerated. And I think part of the reason is
    that the statistics are commonly misinterpreted. The terrific
    work by Drs. Blouin and Robinson pointed out a common
    misinterpretation of the available data. And I think everyone
    agrees that this is a very important critique.
        Senator Crapo. Well, thank you very much. And my last
    question, Dr. Clausing, is for you. I have said directly to
    Secretary Yellen, both publicly and privately, that I
    appreciate how the Treasury Department and bipartisan tax
    leaders in Congress have consistently spoken with one voice
    when it comes to pursuing an agreement at the OECD that is fair
    to the United States. I think that is a critical negotiation
    that we are engaged in.
        And in our opposition--both with regard to our business
    community and in our opposition to unilateral efforts to single
    out the U.S. businesses for unfair taxation--that kind of unity
    is essential. And it will require continued coordination and
    transparency between the administration and the bipartisan tax
    leaders on the Hill.
        I just wanted to follow up with you on a commitment that
    Secretary Yellen has already made to keep the Finance Committee
    appropriately updated on the OECD negotiations. Nothing has
    changed at the administration, has it, about being willing to
    coordinate with us on a bipartisan basis regarding those
    negotiations?
        Dr. Clausing. No. We are delighted to continue to
    coordinate with leadership in both parties, and with the tax
    staff on your committee, as well as the House Ways and Means
    Committee. We have already held a bipartisan, bicameral
    briefing on the OECD negotiations, and our intention is to do
    those on a regular basis, both to share with you our thinking,
    but also, more importantly, to hear your thoughts about the
    direction that you would like the negotiations to go. So we are
    committed to that.
        Senator Crapo. Well, thank you very much. I think those
    negotiations are a very critical aspect of what is happening
    with regard to, not only the U.S., but global tax policies, and
    I appreciate that commitment on your part. Thank you.
        The Chairman. Thank you, Senator Crapo.
        Next will be Senator Cantwell, and then, following Senator
    Cantwell will be Senator Thune.
        Senator Cantwell?
        Senator Cantwell. Thank you, Mr. Chairman, and thank you,
    Ranking Member. I appreciate the hearing this morning, but if I
    could be local yet global, I want to bring up an issue that I
    have been hearing about in my State, and that is the issue of
    tax policy and the movement of our tax date to May 15th.
        We still, though, have the requirement that people have to
    pay their first quarterly taxes before that. I think this is
    something that is causing a great deal of consternation at
    home, particularly as it relates to other provisions in the
    CARES Act that we passed. So I hope we can look at legislation
    that would actually move that requirement to coincide with the
    May 15th date.
        I do not know if anyone on the panel wants to say anything
    about that? Anybody want to get local?
        Dr. Clausing. I know that the Treasury is committed to
    working to make sure that the tax deadlines are suited to the
    needs of the American people. And the extension of the original
    tax deadline was meant to help taxpayers have more time in this
    difficult time to file their taxes. And we are continuing to
    focus on implementation issues.
        Senator Cantwell. Thank you for that. I think the issue is
    that we actually, legislatively, have to pass that date. So we
    should get on it, Mr. Chairman, Ranking Member, and actually
    figure out how to do that sometime in the next--you know, when
    we return at the beginning of April, we should just do that.
    And that is my--anyway, we will continue that drum beat.
        But if I could turn to international tax policy issues, the
    Northwest is a very big export economy, and we want to continue
    to see--with so much growth happening outside of the United
    States, we feel that the opportunities of a growing middle
    class reaching past a 50-percent threshold of the population in
    general provide a new world middle-class market to sell to.
        So what should we be looking at as tax policy that would
    help us encourage more exports from the United States? What
    kind of tax policies? And, Dr. Clausing, if you want to try
    that--not to put you in the hot seat twice, but----
        Dr. Clausing. Sure; no problem. So I think the important
    thing with our tax code is to avoid unnecessary distortions to
    the location of our economic activity. And one of the problems
    with the tax code as we have it right now is that it
    incentivizes operations offshore relative to those in the
    United States.
        So we would much rather have a more even treatment of the
    profits earned from activities here in the United States as
    those earned from activities abroad, so that we can produce
    products right here in the Pacific Northwest and export them
    throughout the world.
        And I think that the kind of reforms that we are discussing
    today would be a helpful move in that direction.
        Senator Cantwell. Well, thank you. Yes, I think that--I
    mean all of these things go hand in hand, and obviously we need
    to lead in a skilled workforce, we need to lead in R&D, we need
    to have more open trade policies that get our products in the
    door, in my opinion. But there is just a lot more here to do.
    But I do think getting this equation right--and the Obama
    administration had a goal of increasing exports by 50 percent
    over a 5-year window. I think they got like 70 percent there,
    or something. And to me that is the heralding of more economic
    opportunity for the United States. So I hope we will look at
    these policies.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Cantwell.
        Senator Thune?
        Senator Thune. Well, thank you, Mr. Chairman. And I want to
    thank all our witnesses for being here.
        Let me just start by saying that our colleagues on the
    other side of the aisle like to describe the Tax Cuts and Jobs
    Act as nothing but a tax cut for corporations, but the truth is
    that tax bills went down for most families across this
    country--and businesses. The law cut taxes for households,
    increased tax credits for families with children, narrowed the
    AMT, and expanded the standard deduction.
        As for the lowered corporate rate, it was part of an effort
    to give companies an incentive to invest in the United States
    rather than overseas. The corporate rate cut was fully offset
    by base broadeners, and the closure of corporate international
    loopholes, which enabled those provisions to be permanent under
    reconciliation.
        It is also important to point out that even with the
    current 21-percent Federal rate, the U.S. combined statutory
    rate is 25.77 percent when taking into account State taxes.
    Based on OECD data, the average combined rate among OECD
    countries is 23.27 percent. So our rate is not that low. It is
    actually higher, as has already been pointed out, than the OECD
    average.
        We heard last week from the CEO of the National Association
    of Manufacturers, and several companies, about how important it
    is to keep the corporate rate at the current level in order to
    ensure that U.S. companies can compete with their foreign
    competitors.
        Ms. Olson, this week, as we are talking about profit
    shifting and our current international system, how does the
    U.S. rate play into that equation? And isn't keeping the U.S.
    rate competitive with the rest of the world an important anti-
    base-erosion metric?
        Ms. Olson. Yes, Senator, it is critically important that
    the United States keep its rate low, and I do think that is the
    most important thing that was done in the Tax Cuts and Jobs Act
    to encourage investment in the U.S., as well as to reduce base
    erosion. So I think that is a really critical thing.
        We need to keep our rates in the ball park of where other
    governments are. Right now we are at the high end of the pack.
    That is okay, but going back to being number one in the pack
    would not be good.
        Senator Thune. As I reviewed the testimony of this very
    qualified panel of witnesses, there were a couple of things
    that stood out to me.
        On the one hand, Dr. Clausing's testimony relies on the
    conclusion that corporate tax revenues are too low. And her
    testimony focuses on the relative drop in U.S. corporate
    revenues as a percentage of GDP compared to the OECD average of
    corporate revenues to GDP.
        On the other hand, Ms. Olson's testimony notes that
    American pass-throughs account for a significant share of
    business income. This share of business income has only
    increased over time. For instance, the most recent IRS data
    shows that pass-throughs accounted for more than half of
    business income from 1998 to 2015, with the exception of one
    year. Pass-throughs are much smaller players among the other
    OECD countries. Whereas pass-throughs account for only 25
    percent of business income in OECD countries, they account for
    50 percent of U.S. business income, and that number continues
    to grow.
        Ms. Olson, isn't comparing the OECD average and the U.S.
    average a bit of an apples and oranges exercise? And don't we
    need to consider the context of the relative importance of
    pass-through entities as a business form in the United States?
        Ms. Olson. Yes, Senator, I think that is right. It is
    interesting. I think that the statistics I was looking at show,
    relative to the OECD, that countries are actually moving in
    opposite directions. So as the U.S. pass-through sector has
    grown, the pass-through sector in other countries has shrunk.
    So we are moving in different directions, and we have to take
    that into account when you look at what we're collecting in
    corporate receipts.
        Another mistake that is often made in looking at the data
    is that they look at income that includes, for example, the
    income of S corporations, which is taxed on pass-through basis.
    So there is a lot of apples and oranges kind of comparisons
    that go on as we look at the data regarding corporate tax
    receipts.
        Senator Thune. As a candidate, President Biden proposed an
    additional 10-percent offshoring penalty surtax when U.S.
    companies buy from an affiliate outside the United States,
    effectively what would be a broad tariff. And the Biden
    proposal ignores the reality of global supply chains. There are
    certain products and components that simply cannot be
    manufactured or created here in the United States, especially
    when they are to be sold abroad.
        I understand the purpose of such a provision would be to
    discourage offshoring. But as it has been described, it would
    have a far more expansive and severe effect. As a specific, a
    very timely example, I have heard from the U.S. company Johnson
    & Johnson that manufactures a COVID vaccine that said that
    taxing the import ingredient of the vaccine would result in a
    higher cost, and consequently either lead to higher prices or
    serve as a disincentive to U.S. companies bringing products
    invented overseas to the U.S., which is contrary to what
    everyone wants.
        Dr. Hines, if foreign companies are not subject to a
    similar tax in their country of jurisdiction, doesn't this
    surtax penalize companies for being headquartered in the United
    States?
        Dr. Hines. Yes. Yes, it does.
        Senator Thune. Very good. Thank you, Mr. Chairman.
        The Chairman. Thank you. I thank all my colleagues for
    their brevity.
        Senator Menendez is next.
        [Pause.]
        The Chairman. Are you out there in cyberspace?
        [No response.]
        The Chairman. Senator Portman?
        [No response.]
        The Chairman. Senator Carper?
        [No response.]
        The Chairman. Senator Toomey?
        [No response.]
        The Chairman. Senator Cardin?
        [No response.]
        The Chairman. Senator Cassidy?
        [No response.]
        The Chairman. Senator Brown?
        [No response.]
        The Chairman. Senator Lankford?
        [No response.]
        The Chairman. Senator Bennet?
        [No response.]
        The Chairman. Senator Daines?
        [No response.]
        The Chairman. Senator Casey?
        [No response.]
        The Chairman. Senator Barrasso?
        [No response.]
        The Chairman. Senator Whitehouse?
        [No response.]
        The Chairman. Senator Cortez Masto?
        [No response.]
        The Chairman. Senator Warren?
        [No response.]
        The Chairman. Senator Sasse?
        [No response.]
        The Chairman. Senator Young?
        [No response.]
        The Chairman. Senator Grassley?
        [No response.]
        The Chairman. There is Senator Toomey. Senator, you are up,
    and please proceed.
        Senator Toomey. Thank you very much, Mr. Chairman. I cannot
    help but reflect on the big picture about this tax reform from
    2017 that some of my Democratic colleagues seem not terribly
    fond of. It is amazing to me, when we think about where our
    economy was immediately prior to the pandemic strike, but it is
    not a mystery, right?
        The economy had accelerated. Growth was very strong and
    robust. Unemployment was crashing down and reaching lows that
    many economists did not think were even possible. We hit all-
    time record lows for African American unemployment, Hispanic
    unemployment, women's unemployment.
        We had record job gains. We had more job openings than
    there were people looking for work, and wages were going up.
    The increase in wages was accelerating, and the wage gap, the
    income gap between high-paid workers and low-paid workers, that
    was narrowing. And the narrowing was accelerating.
        So I wish my Democratic colleagues would tell me what is
    wrong with that picture? Why did they object to record-low
    unemployment? Why did they object to accelerating wage gains,
    especially for low-income workers? And do we really think that
    it is all just a big coincidence that we had passed major
    structural tax reform 2 years earlier, and these benefits
    started to occur?
        With respect to the international side, my friend, Chairman
    Wyden, had long been an advocate for doing something about the
    inversions that we were plagued with. And in 2014, the chairman
    likened inversions to a virus outbreak, and talked about how
    bad this problem was, how long it had persisted, how Congress
    had not fixed this problem. And Chairman Wyden was 100-percent
    correct.
        Then we fixed it. And the changes we made to our global
    system of taxing American multinationals brought a complete
    halt to inversions. Let me be clear. It did not slow them down.
    As best I can determine, we ended them. There have been no
    inversions since, because we diminished the incentive to be a
    foreign-based multinational instead of being an American-based
    multinational.
        So let me go to Ms. Olson and ask, based on your experience
    both in Treasury and in the private sector before and after
    TCJA, do you think it is just a coincidence that inversions
    stopped pretty much immediately after the enactment of the
    TCJA?
        Ms. Olson. No; I think the two are definitely related. The
    21-percent rate made the United States a much more attractive
    place to be located. The anti-base-erosion rules were--they are
    actually, in the view of the corporate world, quite onerous,
    rather than generous, as has been suggested. And so that went a
    long way.
        And then of course there is the tightener on 163(j), which
    was what had driven a lot of the corporate inversion
    transactions. So all those things coming together make the U.S.
    a much better place to invest, and have eliminated, I think,
    the movement of corporate headquarters offshore via inversions.
        Senator Toomey. Now is it fair to think of the GILTI tax
    as, in a way, similar to a global minimum tax?
        Ms. Olson. If that is to me, yes, I would say that it is.
        Senator Toomey. I think that is the case also. And isn't it
    true that many OECD countries do not have a global minimum tax
    at all? We do. Ours is effectively 12\1/2\ percent. Actually,
    the GILTI tax rate is effectively 13\1/8\ percent when you take
    into account the foreign credits, as I understand it. And is
    that not actually more onerous than many of our OECD
    competitors?
        Ms. Olson. Yes, again the--we are the only country that has
    a minimum tax. Other countries generally have territorial
    taxes.
        Senator Toomey. So the way I think about this--and tell me
    if you disagree--we do actually put our multinationals based in
    the U.S. at a competitive disadvantage with respect to the tax
    code, with respect to other countries, but it is not so onerous
    that we drive everybody out of the country. Is that a fair way
    to think about it?
        Ms. Olson. I think it is.
        Senator Toomey. But is there a point at which, if you
    decided to just keep raising this minimum tax, that the cost
    would be so high that the rational decision for a multinational
    would be to locate somewhere other than the United States
    because the cost is just too much?
        Ms. Olson. Well, what the high tax rate does is, it puts a
    discount on the value of assets in the hands of a U.S. company,
    and over time they tend to migrate in other ways, whether it is
    through acquisition or sale of parts of a business, but they
    migrate.
        Senator Toomey. Right. So I would just--let me just point
    out that we have made tremendous, tremendous progress. I think
    our challenge now, the way we ought to be thinking about the
    economy, is how do we get back to the best economy of my
    lifetime, the best economy for low-income workers of my
    lifetime, the best economy for creating opportunity of my
    lifetime? That is what the goal should be, and we are not going
    to get there by unwinding the progress we made in the TCJA.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Toomey.
        Senator Menendez?
        Senator Menendez. Thank you, Mr. Chairman. You know, I have
    listened with interest to our Republican colleagues claim that
    dropping the corporate rate down far below the OECD average is
    the holy grail of U.S. competitiveness; that somehow American
    businesses and the U.S. entrepreneurial ecosystem are unable to
    compete with foreign counterparts without a significant tax
    advantage. But I believe that in order for the U.S. to out-
    compete our competitors, we need to out-innovate them.
        But unfortunately, the U.S. now ranks in the bottom half of
    the OECD when it comes to investment in research and
    development. And rather than enhance incentives for R&D, the
    Republican corporate tax bill actually went in the opposite
    direction, and it gutted critical tax incentives like the R&D
    tax credit.
        In addition, the poorly constructed BEAT is penalizing many
    businesses that are playing by the rules, creating jobs in the
    United States, while turning a blind eye to some of the worst
    base eroders.
        So, Secretary Clausing, what is more beneficial to the
    American economy and U.S. workers, a lower corporate rate or
    targeted tax incentives to increase research and development
    investments?
        Dr. Clausing. I needed to unmute. Thank you for that
    question. I absolutely think it is more important to focus on
    investing in both infrastructure and research and development,
    rather than worrying about further reducing corporate taxes,
    which as of now, as we have noted, we pay the lowest corporate
    taxes as a share of GDP of any OECD country, or right near the
    bottom. And that is despite the fact that our corporate profits
    are very high.
        So just looking at corporate profits as a share of GDP,
    they are much higher now than they were in decades past.
        Senator Menendez. And I would assume research and
    development creates jobs here at home, and the high-paying jobs
    and the continuing effort to help us innovate and be
    competitive, for example with China?
        Dr. Clausing. Yes. Research and development is essential to
    our future, as well as investing in education and having an
    economy that is open to the talents of the world, foreign
    students and immigration being another important source of
    comparative advantage for the United States.
        Senator Menendez. Now the 2017 Republican corporate tax
    bill was the largest corporate tax giveaway in our Nation's
    history, period, from my view. According to the Joint Committee
    on Taxation, Congress's nonpartisan scorekeeper, cutting the
    corporate rate from 35 to 21 percent cost a whopping $1.5
    trillion alone--nearly the entire price of the entire package.
        As a result, in 2018 the average tax rate paid by U.S.
    corporations dropped by more than half to only 7.8 percent. Now
    I know most families in New Jersey would love such a sweetheart
    deal to pay a Federal tax rate of less than 8 percent. But
    because working families are not politically connected and do
    not make big campaign contributions, they get stuck paying the
    bill, as millions now face double taxation due to the new cap
    Republicans put on the State and local tax deduction.
        So again, Secretary Clausing, in your opening statement you
    noted that the U.S. only collects about 1 percent of its GDP
    worth of corporate tax, which is half the level we collected
    prior to the GOP corporate tax bill, and one-third of the OECD
    average.
        So how did the 2017 GOP corporate tax bill shift the tax
    burden between corporations and individuals? And can you
    explain the tangible impact this large cut in corporate taxes
    has on middle-class families in New Jersey and, for that
    matter, across the Nation?
        Dr. Clausing. Yes. So when we cut corporate taxes so
    dramatically, one of two things has to happen. Either we are
    increasing the relative burden on others in the economy--and
    that is definitely true: the relative amount of taxes paid by
    households and small businesses is higher relative to that paid
    by corporations. But we also put a lot of budget pressure on
    the government. We raise only about 16 percent of GDP in
    Federal revenue right now. The last time we balanced the
    budget, it was 20 percent of GDP. And so, when you look at
    those consequences, they are pretty important for middle-class
    families. And when you look at that 2017 law, the provisions
    that were permanent were those that cut corporate taxes;
    whereas, the provisions that are permanent on the individual
    side are those that make health insurance more expensive for
    the most vulnerable among us, and those that change the
    inflation indexing of the tax code in a way that is a stealth
    tax increase on the middle class.
        So those permanent provisions show a real shifting of the
    burden, again away from corporations and to middle-class
    Americans.
        Senator Menendez. So corporations got a permanent cut, and
    average citizens in short order will then find themselves again
    with a whack. Thank you very much.
        The Chairman. Thank you very much, Senator Menendez.
        Next will be Senator Carper, who is with us.
        Senator Carper?
        [No response.]
        The Chairman. Senator Carper, you might be on mute.
        [No response.]
        The Chairman. Senator Carper?
        [Pause.]
        The Chairman. Senator Carper? Senator Carper?
        [No response.]
        The Chairman. Okay, let's go to Senator Cassidy while we
    wait for Senator Carper.
        Senator Cassidy?
        Senator Cassidy. Thank you for having me.
        Let me just kind of echo a little bit of what Senator
    Toomey said. I was on Fox News Sunday a few weeks ago when
    Jared Bernstein, who is part of the President's Council of
    Economic Advisors, said--before he caught himself--we need to
    go back to the economy we had before COVID hit.
        It was like, ``Oh, wait, I cannot say that because that
    would acknowledge that the economic policies of the previous
    administration had given us an economy which was admirable, and
    even aspirational.''
        I think it is also important to notice the words the
    witnesses are using. Dr. Huang said something along the lines
    of, those who are lower-income are not doing as well as they
    should. Well, as it turns out, under the previous
    administration, as Senator Toomey pointed out, there was
    relative wage growth that was higher in the lower quintile of
    Americans, and indeed they were the ones that, relatively
    speaking, benefited more than those of the upper income.
        You may not like the fact that I use ``relative,'' but Dr.
    Clausing just used the word relative. Yes, if you cut corporate
    tax rates and their profits go up, they will pay more taxes.
    But, relatively speaking, the family would pay more, but it is
    relative. We are playing word games here.
        I would rather go back to what Mr. Bernstein said on Fox
    News Sunday. If we can get back to that economy that we had
    prior to COVID, wouldn't we all be happy? Wouldn't the Biden
    administration be doing victory laps?
        One thing to point out: we had a hearing yesterday in the
    Homeland Security Committee on how do we reshore important
    industries for domestic production of PPE, for example of
    antibiotics and other things that have migrated overseas.
        One of the witnesses--nonpartisan--said that if we raised
    corporate rates, it would be a disincentive for companies to
    reshore. This kind of makes sense. If it costs more to do
    business here, you are less likely to do business here. And it
    is so kind of 101 in terms of why a company would locate
    someplace. I am just kind of amazed that we are having a debate
    over this, but clearly not everybody in this hearing is
    nonpartisan, unlike the person yesterday.
        Let me mention something. Ms. Olson, I am concerned about
    antibiotic production. Right now, our so-called beta-lactam
    drugs, which are penicillin, cephalosporins, are made entirely
    in China. And their shelf life is not great.
        So, if you want to store the active pharmaceutical
    ingredient, you have less ability to store it long-term. But if
    there would ever become a reason why China would wish those
    drugs not to be sent to us, then obviously we would be worse
    off.
        So the question is, how do you incentivize companies to
    restart manufacturing here in the United States of a medication
    such as this? So tell me--we have fewer pharmaceutical
    companies based here because of our tax code, I am told, but
    what do you think about raising relative tax rates in the
    United States versus tax rates overseas as regards the
    incentive for someone to begin to set up a whole new
    manufacturing apparatus to create antibiotics here in the
    United States versus say, for example, China?
        Ms. Olson. Well, the corporate tax rate is clearly very
    important in company decisions about where to locate their
    activities. And so keeping it low is a good thing. Attending to
    R&D, and encouraging that that be done in this country is also
    important.
        When you add in our State and local rate to our corporate
    rate, we are not below the OECD average. We are above it by a
    couple of points. And so if we increased it further, we would
    very quickly go back to the head of the pack there.
        On the R&D side, as has been said, we are on the low side.
    So we need to fix some of those things in order to incentivize
    more of that to be done here in the United States.
        Senator Cassidy. So tell me this. If what the other side is
    alleging, that our rates of corporate tax are important, but
    they are also alleging that our rates are much lower than they
    should be relative to our competitors, has there been a massive
    movement of companies moving from those other countries into
    the United States?
        I mean, from what you just said, if our rates are so much
    lower relatively speaking, and we have all the advantages of
    being in the United States, it seems as if companies would move
    from other countries to the United States to take advantage of
    our relatively low tax rates.
        Has that mass migration occurred?
        Ms. Olson. Not that I've seen.
        Senator Cassidy. Not that I have seen, either. I yield
    back, but just point out that some of this just defies common
    sense, and it is word games in order to advance an agenda. With
    that, I yield the floor. Thank you, Mr. Chairman.
        The Chairman. I thank my colleague.
        Senator Carper is next.
        Senator Carper. Thank you, Mr. Chairman and Ranking Member.
    I want to address my one question to the reformed Base Erosion
    and Anti-abuse Tax, also known as BEAT. I want to thank our
    witnesses for joining us today.
        There has been a fair amount of discussion this morning
    about areas where we disagree, for example, with respect to the
    corporate tax rate and Global Intangible Low-Taxed Income, also
    known as GILTI.
        But I think there might be some consensus in another area
    among Democrats and among Republicans, and industry, that
    another international tax provision in the 2017 tax law--the
    Base Erosion and Anti-abuse Tax, also known as BEAT--needs some
    reforms.
        For example, Congress created tax credits to encourage
    private investment in clean energy projects. I strongly
    supported these credits which helped lead to the creation of
    good-paying jobs, much more reliable power, and cleaner air.
    However, the basic design of the BEAT disincentivizes the use
    of these tax credits, especially after 2025 when the credits
    can no longer be factored into the BEAT calculation.
        These concerns will be partially addressed by a bill that
    I've introduced today, and it is called the Save America's
    Clean Energy Jobs Act, which would help get projects that are
    stalled by the pandemic off the ground by providing temporary
    refundability for clean energy tax credits.
        In addition, the recent report from the Joint Committee on
    Taxation showed that in 2018, large multinationals paid a
    fraction in BEAT taxes compared to what the BEAT was projected
    to raise.
        And to each of our witnesses today, let me just ask this.
    Why does this enormous gap exist between projected and
    collected BEAT revenue? And where might there be consensus on
    reforming the BEAT so that it achieves its goal of preventing
    profit shifting by avoiding unintended consequences?
        And to that end, does the BEAT just need some tweaks, or
    should it be repealed and rewritten from scratch? In other
    words, the question before us--with apologies to the late
    Congressman Sonny Bono of California--is, should the BEAT go
    on?
        Dr. Clausing. Thanks. I am happy to start with that. The
    BEAT was intended to target in part the profit shifting and
    income stripping that was happening from foreign multinational
    companies that are investing in the United States. And if you
    look at the UN reports on inward foreign investment, the United
    States actually was sort of the top destination for foreign
    direct investment from other countries for many years. We are a
    really good place for foreign companies to invest. But it is
    important that when they are investing and doing things in the
    United States, that they are also paying the tax and not moving
    the income offshore.
        So the BEAT was designed to address that problem. But there
    were many problems with both the final legislation and also
    with implementing regulations that made it such that the BEAT's
    revenues have been very disappointing. So it has not really
    stemmed the income stripping of foreign companies offshore as
    much as was intended.
        In addition, as you point out, it has mistakenly hit a lot
    of U.S. companies that benefit from tax credits that encourage
    things like clean energy, which is a very important shared goal
    of yourself and the Biden administration. But we do not want to
    be mistakenly harming companies that are investing in clean
    energy, rather than targeting this foreign profit shifting.
        So some of those companies have done very little profit
    shifting themselves, but are nonetheless being hit by the BEAT.
    So I think there is ample room to improve on the BEAT. The
    Biden administration has not yet taken a position on reforms,
    but we are actively studying that problem, and we are aware of
    all of these issues.
        Senator Carper. All right; let me ask the same question, if
    I could, to our other witnesses. Pam Olson, please?
        Ms. Olson. Yes, I think there is definitely room to improve
    the BEAT. One of the things that it does is to target on a
    gross basis, without looking at whether or not income that is
    paid out of the United States is subject to tax somewhere else.
    So it does have some very odd effects.
        The credit that you are focusing on is also one of the odd
    effects. I would say that the Joint Committee on Taxation, at
    the time that they were estimating revenues from the BEAT, said
    that it was the hardest provision that they had to estimate in
    the TCJA because it was a completely novel provision and they
    did not have good data from which to draw in order to make the
    revenue estimate.
        So in some sense, it is not surprising. I do think it will
    ramp up in future years, which will exacerbate some of the
    effects that you do not like, such as when it goes from 5
    percent to 10 percent.
        Senator Carper. All right; thank you.
        Ms. Huang, same question. Does the BEAT just need some
    tweaks, or should it be repealed and rewritten from scratch, or
    in other words, should the BEAT go on?
        Ms. Huang. Senator, I think it is very muddled. A polite
    word would be ``curious,'' but a less polite word is
    ``bizarre.'' It really does have some quite strange features.
    And in terms of the revenue piece that you were talking about,
    one reason is that it was written to have a lot of holes in it.
    I am looking at a tax advisory firm that has a report that says
    taxpayers may be able to reduce BEAT liability by increasing
    cost of goods sold. And there are lots of big holes like that
    in the BEAT that allow for reduction in the liability.
        There are also the regulations which--by one report, just
    one regulation exempting foreign banks will cost about $50
    billion over 10 years.
        The Chairman. We are going to have to move on, Senator
    Carper.
        Senator Carper. Could I get a ``yes'' or ``no,'' Mr.
    Chairman, from our last witness, Dr. Hines? Should the BEAT go
    on?
        Dr. Hines. No.
        Senator Carper. Thank you so much.
        The Chairman. Thank you.
        Senator Warren?
        Senator Warren. Thank you, Mr. Chairman.
        So we have a lot of work to do to fix the international tax
    system, and I am looking forward to working with my colleagues
    here to do that. A good place to start is to be clear about the
    extent to which giant corporations are already manipulating the
    tax code to avoid paying their fair share.
        Dr. Clausing, between 2018 and 2020, what was the corporate
    income tax rate?
        Dr. Clausing. The corporate tax rate was 21 percent.
        Senator Warren. Okay; 21 percent. So, Dr. Clausing, how
    much profit did Amazon make? And what tax rate did Amazon pay
    during that same 3-year period?
        Dr. Clausing. So there was a recent ITEP study that looked
    at this, and Amazon earned over $40 billion over that 3-year
    period and paid about a 4\1/2\-percent tax rate.
        Senator Warren. Okay; so how is it possible that Amazon was
    able to rake in profits like that and pay only a four--I think
    it is about a 4.3-percent tax rate, when the corporate income
    tax rate was 21 percent?
        Dr. Clausing. Yes; so there are lots of reasons that we
    have discussed in this hearing today about why U.S. companies
    end up with very low tax burdens. And I think that the one that
    we are focused on here the most is the international profit
    shifting problem. And Amazon, as well as many other companies,
    has benefited from the favorable treatment that our tax code
    provides for international profit shifting.
        There are also other reasons why companies pay less in tax.
    Those might include receiving large R&D credits, or having
    losses in past years that might reduce their tax liability, or
    they are paying a lot of stock compensation, which is favorably
    treated in tax laws as well.
        Senator Warren. Okay; so you have given us the technical
    names. I think the rest of us would call them loopholes and tax
    shelters that they have used to drive down their liability.
        But let me ask, is this kind of manipulation that Amazon
    used unusual?
        Dr. Clausing. I would say there's a wide recognition that
    the kinds of loopholes that we have been talking about today
    are very common. And there is a lot of agreement on this. So
    some of our witnesses have focused on disagreement, but I would
    point out that the American Enterprise Institute, the Tax
    Policy Center, economists at OTA, at the Treasury, and
    economists at the JCT, they all agree that profit shifting is a
    very large problem, and they have put out revenue estimates
    that suggest very similar magnitudes across all those different
    organizations.
        So this is a very common, and a very large problem. And I
    think that is why it is so important to have this hearing
    today, to be able to address this rampant avoidance of tax.
        Senator Warren. So let me ask, then, Ms. Huang: if we
    applied just a flat 7-percent tax on the more than $20 billion
    in profits that Amazon reported to investors in 2020, Amazon
    would have paid nearly $1\1/2\ billion more in taxes.
        If we applied a 7-percent flat tax to the more than 1,000
    corporations that reported more than $100 million in profits,
    would that help ensure that big companies paid their fair
    share, regardless of loopholes and other tax avoidance schemes?
        Ms. Huang. Well, Senator, that is an idea that just makes
    so clear how easy it is for companies to control what they
    report on paper, whether it is for tax purposes or whether it
    is for financial reporting purposes, and as you are pointing
    out, sometimes neither of those pieces of paper can reflect
    what is going on in the real world.
        And as Dr. Clausing said, you can try to get at that by
    making them both look more like the real world or, as in your
    proposal, you can target the gap between them, which also could
    be thought of as a backstop on the first approach. So I think
    that makes crystal clear what the problem is.
        Senator Warren. Yes. Well, something has to change. And I
    am all for raising the corporate tax rate. I am also for
    closing loopholes. I am all for shutting down tax havens. But
    we also need to recognize that corporations will never stop
    trying to bend the rules. You know, when you plug one loophole,
    they are going to bring in armies of lawyers and lobbyists and
    accountants to try to find another one.
        A small tax on profits, like the number that CEOs like to
    brag about, their book profits, would ensure that even the
    companies that are most skilled at gaming the tax code would
    have to contribute a fair share.
        President Biden agrees, and he has proposed a similar tax
    on book profits. And in the coming weeks, I am going to be
    introducing legislation to make a tax on book profits for the
    largest, most profitable companies in America a reality.
        I think it is time for this. Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Warren. Senator Brown is
    here. Senator Cortez Masto is here. Senator Warner is here. We
    are going to do our best to just keep this all moving.
        Senator Brown?
        Senator Brown. Thank you, Senator Wyden, for this really
    important hearing.
        For decades we have had a corporate business model where
    companies shut down production in Toledo, or Dayton, or
    Youngstown. They would collect the tax break, move jobs to
    Mexico or China where they could exploit workers, only to sell
    their products back in the United States.
        And, Mr. Chairman, you know the 2017 tax bill only made it
    worse. I am working with Senator Mark Warner from Virginia on
    this committee on a framework that will get rid of incentives
    in the tax code to shift jobs and factories abroad, reward
    investing in American jobs, and make multinational corporations
    pay their fair share. We have been working together on this for
    years. I am proud to be partnering with him and with Chairman
    Wyden. So I would thank Chairman Wyden for this work to take
    the renegotiation of NAFTA, another corporate trade agreement,
    and go to work with making changes to make NAFTA into USMCA,
    which actually looks out for workers.
        So my question, Dr. Clausing and Ms. Huang--imagine for a
    moment a CEO deciding whether to retrofit an empty factory in
    Ohio, or whether to build a brand-new factory in Mexico. He is
    asking his chief tax counsel which option would get the company
    more favorable tax treatment. What would the CEO's tax expert
    say? Which would they say gives the company a bigger tax break,
    keeping it in Ohio or going to Mexico? Dr. Clausing and Ms.
    Huang, if you would both answer.
        Dr. Clausing. Thank you for that thoughtful question. So,
    one of the problems with our tax code now is it does not just
    incentivize operations in low-tax countries and havens--which
    is something we have been talking about so far today--but it
    also incentivizes operations in high-tax countries because you
    get to blend the income in the high-tax country with the low-
    tax country, and together you get to half the U.S. rate.
        So, take Mexico, which was your example. They have a
    corporate tax rate of 30 percent. But if you have some income
    in Mexico and some income in an offshore haven, you can blend
    those streams of income and together get that 50-percent
    deduction relative to doing business in Ohio. And so that is a
    large tilt in the playing field in favor of any foreign
    operation relative to U.S. operations. I sometimes refer to
    this as an ``America last'' tax bill.
        Senator Brown. Ms. Huang, your comments?
        Ms. Huang. I absolutely concur. You have incentives within
    GILTI where having those tangible assets in Mexico allows you
    to exempt profits from both Mexico and potentially from
    Bermuda, if you have managed to shift some profits to Bermuda.
    You get to shield both of those from the GILTI tax.
        And then, as Dr. Clausing mentioned, because of the
    averaging feature, there is an incentive that makes America
    potentially the least attractive place to put that physical
    asset from a tax perspective.
        Senator Brown. So the 2017 tax law which Senator Wyden and
    I and others on this committee, the Democratic side, opposed
    for many reasons, was a giveaway to the wealthiest people in
    the country, some of what Senator Warren has talked about. And
    also, the GILTI provision gave 50 percent off taxes if they
    move overseas.
        So, Dr. Clausing, in the last minute, or even less, talk a
    little bit about what incentive this creates.
        Dr. Clausing. Yes. So those two together--the powerful
    incentive of having the first 10 percent of your assets be
    completely tax-free offshore, means that if you take some
    equipment from the United States and move it abroad, you
    qualify for even more tax-free treatment abroad.
        There is also another provision in the current tax law--the
    FDII--which turbo-charges that because, if you reduce your
    investments in the United States, you get even larger FDII
    deductions. So with both hands, you are encouraging movement
    offshore in plant and equipment through that tangible asset
    exclusion.
        In addition, there is the blending issue that we mentioned
    before, which means that in all of the foreign operations, like
    a master distillery, you can combine the high-tax and low-tax
    income and get to this outcome. It's really much better than
    what you would get operating in the United States.
        And you know, I think that if we are focused on
    competitiveness for the United States, we need to think about
    ways to make this a productive location to do business. And
    that includes fixing all of these tax things, but it also
    includes making key investments in things like infrastructure,
    education, our institutions, and our response to crises. And if
    we combine those two things together, then nothing can stop us,
    and the United States, I think, will be an excellent place to
    do business.
        Senator Brown. Thank you, Ms. Clausing. I just came off of
    our tenth year of our presentation with manufacturers, doing
    6th, 7th, 8th graders' manufacturing camps in Ohio. We have
    done about 100 of them to encourage young people to go into
    manufacturing. We need a government that is going to support
    their futures, and these tax changes that Chairman Wyden is
    fighting for are so important.
        Thank you very much, Mr. Chairman.
        The Chairman. Thank you very much, Senator Brown.
        We are going to try to get both Senator Cortez Masto and
    Senator Warner in before we will have to take a little break,
    and hopefully we can keep it moving.
        Senator Cortez Masto?
        Senator Cortez Masto. Thank you. This is a great
    conversation. I have had to pop off to Energy and Natural
    Resources, so I am going to follow up on some of the testimony
    I'm sure was covered, but thank you so much.
        Let me start with Ms. Huang. I have to thank you for
    highlighting the need to prioritize our workers and families,
    particularly in the wake of COVID-19 and its impact on low-wage
    workers and workers of color. And in the State Nevada, our
    hospitality workers have been so affected.
        What is the best way that we can ensure that we have good-
    paying, stable American jobs, particularly in the hospitality
    industry that just requires a lot of input around the low wage?
    What should we be doing with the tax code, or anything?
        Ms. Huang. Absolutely. Thank you very much, Senator, for
    that question. And I think investments that directly focus on
    supporting workers and businesses, tourism and hospitality and
    other hard-hit sectors, would be far better than the poor
    economic return that we are getting from tax-subsidizing
    multinationals to shift profits and investments offshore.
        For example, your leadership on securing a boost in the
    Earned Income Tax Credit in the American Rescue Plan heavily
    benefits workers in tourism and hospitality. It directly
    benefits about a third of all cooks, for example. And making
    that provision permanent, with other needed investments, would
    be far better for delivering shared prosperity to the economy
    overall than continuing these deeply discounted tax rates for
    foreign profits.
        Senator Cortez Masto. Thank you. And because we know, when
    particularly workers in hospitality and leisure do well, the
    American public does well, right? I mean, when there is
    opportunity, that lifts up that income that is so necessary for
    our struggling families.
        So let me jump to Ms. Olson. In your testimony, you
    mentioned a lack of congressional guidance in relation to the
    digitalization project, among other related measures. Can you
    talk a little bit more about that and how you feel Congress can
    take a greater initiative in international tax policy?
        Ms. Olson. Certainly. Thank you for that question. In the
    trade area, there is something called Trade Promotion
    Authority, which you are probably familiar with, where the
    Congress gives instructions to the negotiators when they go off
    to negotiate trade deals. I think something like that is
    something that would work really well in this case, where what
    we are talking about is the United States' jurisdiction to tax.
    It is something that, if an agreement is reached at the OECD--
    and I do hope agreement is reached at the OECD--is going to
    come back and land in this committee, and in the Senate Foreign
    Relations Committee, to write legislation and to ratify
    treaties that might have to be changed as a consequence.
        So it is really important that you get engaged in that
    process, and something formal along the lines of the Trade
    Promotion Authority process would be a good thing to think
    about.
        Senator Cortez Masto. Thank you very much. Thank you again
    for the conversation.
        The Chairman. Thank you very much, Senator Cortez Masto.
        Senator Warner?
        Senator Warner. Thank you, Mr. Chairman. Let me echo what
    Senator Brown said. I look forward to working with you and
    Senator Brown as we try to get this international corporate
    structure right. The 2017 bill did not get it right. I think
    that some of our friends thought with the GILTI system and FDII
    that they would balance it right. In actuality, by doing some
    of these blending rates that Ms. Huang and Dr. Clausing have
    talked about, they actually got it flat wrong and incented,
    particularly R&D and intangible assets, to go offshore.
        Dr. Clausing, I want to raise a quick point with you. When
    you look at our corporate revenue levels, 1.1 percent of GDP in
    2019, we are bottom of the barrel of the G7. You look at our
    overall revenue levels in terms of the OECD, we are 33rd or
    34th.
        If we are going to stay competitive with China, for
    example, which is making record investments in next-generation
    technology, how are we going to be able do that in any kind of
    fair way with these kind of revenue levels?
        Dr. Clausing. One important feature of having a competitive
    economy is having adequate funds to make the public investments
    in things like infrastructure, research and development, our
    education system, our highways. You know, all of those are
    really important parts for making a strong business climate.
        As you point out, we have very low Federal revenues. We
    only raise about 16 percent of GDP in Federal tax revenue. That
    is much, much below any peer nation, and it is well below the
    20 percent that we raised when we last balanced the budget at
    the turn of the century.
        So I think that there is room for a lot more tax revenue.
    Now, when you look at where to raise the revenue, one thing
    that is quite clear is that our corporate revenues are
    particularly low. They are one-third that of other nations in
    the OECD. And that is despite the fact that our corporate
    profits are really high, both in historic terms as a share of
    GDP, but also relative to those in other countries.
        So I think there is room to collect more in this area
    without creating undue concerns about the competitiveness of
    our companies. The important thing is the competitiveness of
    our location as a place to do things, and that requires an
    adequate funding of the state.
        Senator Warner. And I agree, and that also requires an
    incentive system. As Senator Brown pointed out in his
    questions, we are encouraging, maybe not intentionally but
    indirectly, placing your best assets, your R&D assets,
    oftentimes offshore.
        Ms. Huang, one of the things that you raised is the
    importance of investment in human capital. I am going to throw
    out something I have raised with this committee a number of
    times. It seems to me we have people who say they want to
    invest in human capital, but we have nothing in our tax
    accounting or reporting system that incents a company to do
    that.
        As a matter of fact, I always like to point out, if a
    company goes out and buys a robot for $5,000, oftentimes the
    company will get an R&D tax credit for that robot. The robot is
    viewed as an asset, and that asset can be reported, if you are
    a public company, in a public way.
        If the same company spends $5,000 training two human beings
    to be more efficient than the robot, yes, you get to deduct
    those costs, but you do not get an R&D tax credit. It is viewed
    as an expense. And until recently the SEC did not even have any
    public reporting components for companies that invest in human
    capital.
        Can you talk about, on a broad basis, the idea of whether
    we create an R&D tax dredit for human capital investment, or
    other ways that we can put real muscle behind this notion that
    we ought to incent companies to invest in their most valuable
    asset, human capital?
        Ms. Huang. Well, I can tell you a few things that we should
    not do, Senator, and I think that will point to some of those
    structures that are in the 2017 tax law that actually create
    incentives to move capital and investment offshore, and
    therefore potentially jobs and wages, and also the potential to
    do that investment in U.S. workers and infrastructure.
        So, as you were mentioning, we were talking with Senator
    Brown about some of these perverse incentives. The FDII tax
    break is one example that is supposed to help create incentives
    for manufacturing and creating jobs in the U.S., but the fewer
    tangible assets that a company has in the U.S., all else equal,
    the larger the tax break. So that is an incentive to move
    assets offshore, which in some cases would be helpful to
    producing wages and benefits for workers.
        And the other problem with that is that it is also a tax
    break on both old and new assets, and a lot of that is a
    wasteful giveaway. So if one were to think about how you invest
    in workers, you would want to make sure that the benefits are
    very direct; that there isn't an ability to have windfall gains
    going to corporations for things that they were doing anyway,
    and really target it to all the types of investments that would
    help create shared prosperity.
        Senator Warner. Thank you, Mr. Chairman.
        The Chairman. Now Senator Portman was here----
        Yes, Senator Portman?
        Senator Portman. Thank you, Mr. Chairman. Thank you for
    working with us on other committee hearings.
        Ranking Member Crapo started off this morning talking about
    the fact that I co-led a task force back in 2015 with Senator
    Schumer on international tax, and we had a lot of consensus. We
    agreed that the high corporate rate, highest in the OECD, and
    the worldwide system, was simply unsustainable. And you
    remember what it was leading to. We had companies that were
    literally inverting, you know, moving from the United States
    overseas.
        In fact, we had a number of inversions in Ohio. We were
    losing jobs, loving investment. The system was causing a lock-
    out effect. That was the reality. And we recognized the need to
    transition to a better system.
        In that report--I just looked at it--we said, and I quote,
    ``When U.S. businesses can't compete and win in the global
    market, the real losers when they can't compete are U.S.
    workers. The real winners are U.S. workers when we can
    compete.'' And the TCJA reflected that consensus.
        So there were lots of parts of that bill that were
    relatively controversial, but the international part actually
    reflected that consensus: lower the rate, territorial system,
    and making our companies more productive and more competitive.
    And that is exactly what has happened.
        So there is a lot of investment that has occurred, coming
    back into this country. I look at the IP side that was just
    talked about. New IP is largely now being done in America.
    Companies like Google brought their IP back, as did others. So
    that is the reality.
        And, Ms. Olson, we have heard from Democrats and several
    panelists today that TCJA incentivizes offshoring.
    Specifically, they are pointing to the Global Intangible Low-
    Tax Income, the GILTI minimum tax and its allowances for
    Qualified Business Asset Investment, to reduce the level of
    taxes paid.
        However, the QBAI is not a loophole. It is a recognition
    that earnings attributable to tangible property are not
    susceptible to profit shifting. In order for U.S. companies and
    businesses and workers to compete in foreign markets, they need
    to be where the customers are. Think of General Electric, as an
    example. The engine plant is in Ohio. They sell a lot of
    engines overseas. That is good. We like that. It creates jobs
    here. But the servicing of those engines has to be done in
    those foreign countries. They cannot bring the engines back for
    service.
        We have Owens Corning in Ohio. They cannot be competitive
    trying to ship glass halfway across the world, but we are glad
    they are an American company and that they are able to have
    foreign markets. Procter and Gamble in my hometown of
    Cincinnati, they cannot ship diapers from Ohio overseas
    profitably. It just cannot be done.
        So the vast majority of foreign operations of U.S.
    companies serve foreign markets. In fact, approximately 90
    percent of all sales of those foreign operations are to foreign
    customers and not an offshoring of operations to serve U.S.
    markets.
        That is data that is real. That is what is happening. So,
    Ms. Olson, do you believe GILTI's treatment of tangible assets
    is appropriate? And in your experience, does this actually
    incentivize U.S. companies to move U.S. assets or jobs
    overseas?
        Ms. Olson. Thank you, Senator Portman. Yes, I do not think
    that the GILTI provisions have done anything to incentivize the
    movement of operations outside the U.S. What QBAI does is to
    measure a return on tangible assets. When those tangible assets
    are in another country, they have primary jurisdiction to tax
    the income from it. That is all it does--it recognizes that.
        There has been a long recognition that what is mobile is
    intangible income. And what intangible income is measured by in
    GILTI is a return on tangible assets in excess of 10 percent.
    So I think it exactly targets what it should target. I do not
    believe that it provides any kind of incentive. I am unaware of
    any company that has moved operations to take advantage of
    GILTI. Quite to the contrary, they try to escape it. And some
    of that escape is even subjecting themselves to subpart F or
    bringing the assets, as you mentioned, back to the United
    States to take advantage of the U.S. rate and FDII.
        Senator Portman. Last week we heard testimony in the
    committee on tax incentives for encouraging investment in the
    United States, something we should all want.
        Professor Hanlon, from MIT, testified that in terms of a
    company's next marginal decision, the lower corporate rate and
    the FDII are more likely to lead to decisions to retain IP in
    the U.S., and also to manufacture in the U.S., all else
    constant.
        So FDII works in tandem with GILTI and provides the
    deduction on the GILTI tax for U.S. IP used abroad. A
    competitive effective rate is needed to prevent the GILTI
    provision from harming the competitiveness of U.S. companies
    relative to their foreign competitors.
        FDII is just as important to provide a disincentive against
    moving intangible property offshore. As shown by the
    legislative history of FDII that we just did in 2017, one of
    the committee's goals was to remove the tax incentive to locate
    intangible property abroad and encourage U.S. taxpayers to
    locate intangible income, and potentially valuable economic
    activity, in the U.S.
        Professor Hines, some academics have called for repealing
    FDII. Don't you think doing so would risk undermining the
    attractiveness of the U.S., not only as a place for locating
    intangible property, but also as a place for high-paying jobs
    in research and manufacturing?
        Dr. Hines. Oh, yes, I completely agree. It would be a big
    mistake to repeal FDII for two reasons. One, because it
    encourages companies to locate their intellectual property and
    other high-tech stuff in the United States; and second, because
    it offers a more competitive tax rate on higher-tech companies
    that are more internationally mobile. And those are the
    companies we want to make sure stay in the United States.
        Senator Portman. Thank you very much. And thank you, Mr.
    Chairman, for allowing me to ask questions today.
        Senator Crapo [presiding]. Thank you. Senator Wyden has
    gone over to vote. I do not know if he explained this to
    everybody, but we have a series of four votes going on right
    now on the PPP program. And we are going to be kind of
    switching out with each other while those votes go on.
        And we also have three hearings for many members of this
    committee that are going on at the same time. So that is why we
    have a little bit of difficulty getting coordination of our
    attendance here.
        As a result of that, I do not see anyone else here at this
    moment who is in line. Senator Portman, if you had any other
    questions, you are certainly welcome to keep going.
        Did you have any other questions, Senator Portman?
        Senator Portman. I certainly do. And if you do not mind,
    Ms. Olson, I would love your views on FDII, and in particular,
    does it not make sense, as we are talking about reform, to be
    sure, when we are looking at tax incentives to invest in
    America, that we start with retaining FDII?
        Ms. Olson. Yes, I think FDII is an important provision. And
    I do think that we should retain it. I also think you need to
    take a look at R&D--which as you know switches from expensing
    to capitalization and amortization next year--as another thing
    that affects where R&D gets done. And I think it would behoove
    the committee to consider changing that provision so that we do
    not start driving R&D other places.
        R&D is so important in terms of the jobs it creates here in
    the United States, as well as the knock-on effects. And that is
    why other countries put so much effort into trying to attract
    that kind of investment. We are number 27 out of the 36 or
    whatever OECD countries when it comes to R&D incentives. We
    will get worse once we switch from expensing to capitalization
    and amortization. And if we were to get rid of FDII, we would
    probably fall to dead last.
        Senator Portman. Well, that is a great point. And we do
    hear quite a bit about the R&D issue, and the fact that, during
    the 2017 bill, it was really used as a pay-for, not because of
    good policy reasons, and hopefully there is a bipartisan
    consensus that going to amortization does not make sense to
    encourage exactly what we all should want, which is more R&D to
    be done here in the United States.
        So my hope is, that will be part of whatever package people
    are talking about putting through. My concern is that, based on
    what I have heard today from some of my colleagues and some of
    the witnesses, we could be shooting ourselves in the foot by
    doing away with FDII or otherwise making it more difficult for
    U.S. companies to invest here.
        And again, a lot of companies that are American companies
    are global companies. That is good. We want them to have
    markets overseas. It is not a bad thing that they are servicing
    GE aircraft engines overseas. Otherwise, GE would not have the
    market in the first place. And so we have to be, I guess,
    cognizant of the fact that there are going to be some foreign
    operations to serve foreign markets. And our tax code ought to
    encourage that.
        Do you agree with that, Ms. Olson?
        Ms. Olson. Yes; wholeheartedly.
        Senator Portman. Well, Mr. Chairman, thanks very much for
    allowing me to continue. I appreciate your fitting us all in
    between our hearings and the votes and so on.
        Senator Crapo. Thank you, Senator Portman. And while we are
    waiting, let me just ask, is there any other Senator who I do
    not see here? If you are here, click on and let us see you show
    up on the screen. If not, I have a couple of questions.
        I know that when Senator Wyden gets back, he has at least
    one more question. And then we will see if other Senators are
    able to make it back to the hearing.
        My next question is for you, Dr. Hines. Most economists,
    from Jason Furman on the Democrat side to Doug Holtz-Eakin on
    the Republican side, agree that cost recovery for investments
    in business assets, especially plant and equipment, provide a
    significant tax incentive for that investment.
        Indeed, the Joint Committee on Taxation's macroeconomic
    analysis specifically states that. That is the reason I have
    introduced legislation to make bonus depreciation provisions of
    the TCJA permanent. The report on this policy choice, after
    enactment of the TCJA and before the pandemic, bears it out.
        But today, many of my colleagues on the other side have
    focused on JCT's snapshot of an average tax rate of 7.8 percent
    for certain companies in 2018. What they are not acknowledging
    is the fact that U.S. companies can reduce their taxes paid by
    increasing investment in capital assets like plant and
    equipment in the United States. And that is exactly what we
    hoped U.S. businesses would do when we provided bonus
    depreciation in the TCJA.
        I believe most of us on this committee would agree that it
    is a good policy, as greater investment leads to greater
    productivity, which leads to more jobs and higher wages for
    workers.
        Dr. Hines, could you just tell me if you agree? And comment
    on this issue, if you would.
        Dr. Hines. I do agree. And both economic theory and the
    available evidence indicate that bonus depreciation encourages
    greater investment, exactly as you would expect. And the
    economy benefits from that.
        So it is true, when you introduce bonus depreciation in the
    first year or two, you are going to have diminished corporate
    tax revenues because you are front-loading the deduction, and
    that is what TCJA did. But that does not mean it is not a good
    policy. It makes some sense if you want a country with lots of
    investment and lots of business activity.
        Senator Crapo. Well, thank you very much. I appreciate
    that. It is just that we are hearing a lot of statistics thrown
    around today on both sides, and a lot of comparisons relative
    to that, and both sides are using relative analysis as well.
        So I just kind of wanted to get some clarity on the fact
    that we have to be very careful when we look at snapshot
    statistics or comparative analysis of ratios of tax burden and
    so forth. They are all relevant, and it is appropriate for both
    sides to talk about them. But we need to be sure we understand
    exactly what these statistics are showing. So I appreciate
    that.
        Ms. Olson, I also had another question I would like to ask
    you. This relates to sort of what I was just talking about.
    Senator Warren just stated that companies with lower U.S. tax
    rates are achieving those rates through loopholes and tax
    havens. But she is looking at financial statements as she
    reaches these conclusions, I believe.
        What is the problem with looking to a financial statement
    to try to understand how much tax a company paid? And to give a
    little more clarity to this question, we have heard a lot about
    providing manufacturing incentives like R&D tax credits, but
    don't those tax credits reduce a company's tax paid? And would
    that be legitimately described as a tax loophole?
        Ms. Olson. Thank you for that question, Senator Crapo. Yes,
    those are all things that reduce corporate tax receipts. So we
    tend to, one, like the effect of the tax benefits--we had this
    same conversation with Senator Carper when he was talking about
    BEAT. We like those provisions. At the same time, we do not
    like what they do for corporate tax receipts.
        And so, when we look at a tax return and when we look at
    financial statements, they are prepared for different purposes.
    A financial statement is intended to give a picture to
    investors of the health of the company. The tax return is
    prepared in compliance with what the Internal Revenue Code
    says, which is of course written by Congress, and there are all
    sorts of incentives that are built into the tax code, like
    bonus depreciation, like R&D tax credits, like green energy
    credits, that all affect the tax liability that is ultimately
    paid. Those are not reflected on the financial statements,
    except as a reduction of tax liability, because they do not
    affect what the company shows as its income.
        Senator Crapo. Well, thank you. I think it is important to
    understand that distinction. You know, we have an ongoing
    debate here in Congress over our tax extenders, as we have come
    to call them. We have all kinds of tax credits and other pieces
    of our tax code that have to be extended, often on an annual
    basis. And we go through this lurch and stop, and lurch and
    stop with tax policy in the United States as we kind of battle
    over the extension of, or modification of these tax extenders.
        And I suppose that that is one area where some of us would
    call some of those bad tax policy and would like to terminate
    them, and some of us would call some of those very good tax
    policy, like the R&D tax credit or the bonus provisions that I
    talked about a moment ago, which we would call good tax
    policies.
        But it seems to me we should conduct the debate in the
    context of exactly what it is in the tax code that is causing
    whatever appears on a financial statement or on a tax return
    and look at the bottom line as to whether we are having the
    kind of impact on our economy that we want in terms of making
    the economy strong.
        Let me--hold on. I am going to have to ask my staff to do
    something for me really quickly here. I will be right back.
        [Pause.]
        Senator Crapo. Okay, I apologize. I am back. We are
    checking on how the votes are going. I expect Senator Wyden to
    be back any moment, but until he returns, perhaps I could just
    ask another general question. And the question basically is,
    you know we have had a lot of talk here about what the
    corporate rate is, what it should be, how it works, and so
    forth.
        I have a question about who pays the burden of the
    corporate tax. Where does the burden of the corporate tax fall?
    My understanding from the Portman-Schumer report was that it
    was estimated that a reduction of the corporate tax would
    significantly benefit workers by allowing greater numbers of
    jobs, and greater wage and benefit increases. So there is one
    group that I think perhaps sees an impact on them from the
    corporate tax.
        We have heard a lot of talk about the fact that the actual
    owners of the corporation are the ultimate ones who may be
    considered to have the burden of the tax fall on them, and who
    would that be? You know, I understand a significant part of
    that would be retirees, or people building their own retirement
    packages through their IRAs, 401(k)s, or pension funds. And I
    know that the argument goes back and forth on that.
        I would just love to toss this out to anyone of you who
    would like to speak about it. Where does the payment--who bears
    the burden of the corporate tax in the United States?
        Dr. Hines. You know, the awful truth is that there is a lot
    of controversy about this. And we do not actually know. But
    what theory says is that in a globalized economy, fixed factors
    in the United States--which are land and labor--should bear
    most of the burden of a business tax. So that would argue from
    a theory standpoint in favor of workers.
        But the evidence is mixed. And I think there are a lot of
    reasons to think that workers bear a lot of the burden of the
    corporate tax, you know, half or more. There are estimates that
    are lower, that are close to 25 percent of the tax burden, but
    it does seem a little too low, actually.
        Dr. Clausing. Let me add that there is a lot of consensus
    actually on this point. If you look at the American Enterprise
    Institute model, the Tax Policy Center model, the Joint
    Committee on Taxation model, the Treasury model, and the
    Congressional Budget Office model, they all agree that the
    corporate tax burden, the lion's share of it is falling on
    either capital or excess profits.
        And if you look at the evidence for countries that have
    lowered their corporate tax, including big ones like us, but
    also Japan, Germany, Italy, and the UK, you do not see evidence
    of those corporate tax reductions showing up in higher wages
    for workers.
        And I think the reason is that a lot of the corporate tax
    base is not taxing the normal return to capital, which would
    create the theoretical mechanisms that Dr. Hines mentioned, but
    it is falling on the excess return to capital. And taxing the
    excess return to capital is efficient, right? And there are a
    lot of changes in our economy that have increased the market
    power of companies. And there are changes in our law that have
    increased expensing. And those two changes together mean that
    more and more of the corporate tax is really falling on these
    extra returns, which is, I think, why we cannot see any
    beneficial effect on wages in all of these large countries that
    have run this experiment.
        And there is a lot of consensus in the models.
        Ms. Huang. Senator, may I just add in response to what I
    think is a really core question that sits behind a lot of the
    to and fro we have been having so far, that in addition to the
    points that Dr. Clausing made, even in those models that say
    that some share of the corporate tax flows through to workers,
    that share is highly skewed towards high-wage workers--so
    executives, CEOs, people at the top end of the wage
    distribution.
        And in addition, the assumption underlying those models is
    that ultimately any cut in the corporate tax is paid for. So
    one of the questions ultimately in terms of who benefits or not
    from a cut in the corporate tax rate is who ends up paying.
        Dr. Clausing pointed out earlier that in the 2017 tax law,
    for the permanent corporate tax cut, it was offset by increases
    on lower- and moderate-income individuals, plus high-income
    individuals through that chained CPI piece.
        Your point about IRAs and 401(k)s and other ways in which
    lower- and moderate-income people might ultimately own stock
    is, I think, a really good question. But if you look again at
    the distribution of who does have savings in those stocks, it
    is not low- and moderate-income workers that are the lion's
    share. And to the extent that they do, a lot of that is held in
    tax-preferred accounts that do not face any tax whatsoever.
        Senator Crapo. Okay, anyone else? Ms. Olson, did you want
    to get in on this one? You do not have to if you do not want
    to.
        Ms. Olson. I think I am the lone non-economist on the
    panel, so perhaps I shouldn't venture in. I have consumed a lot
    of economic analysis over the years, and I would say, based on
    the economic analysis that I have consumed, I fall more into
    Professor Hines's camp, that the information does not appear at
    all settled.
        Dr. Clausing referred to the models. The models use a
    number that is based on a lot of analysis that economists have
    done, but I do not think that that represents a final
    conclusion.
        The other thing--and this may be more correlation than
    causation--but over the course of the last few years, prior to
    COVID, we did see the wages of low- and moderate-income
    individuals start to edge up for the first time in a long time.
    So again, maybe it is correlation not causation, but that did
    occur.
        Senator Crapo. Yes, I was going to actually raise that
    question. But I see Senator Wyden is back, so, Mr. Chairman, I
    am not aware that there are any other Senators available, and I
    have asked another question or so. I understand you probably
    have some more, but the gavel is in your hands.
        The Chairman. Thank you, Senator Crapo.
        Dr. Clausing, I think we are getting close to wrapping this
    up. As you know, tax law does not really resemble English; you
    know, this kind of arcane set of concepts, and we are blending
    things, and we are throwing stuff around, section this and
    that.
        But I am increasingly troubled about the fact that in the
    United States, tax havens are driving too much of the world's
    largest economy. And I would like, maybe apropos of this debate
    about a handful of sentences in English, for you to kind of
    walk people through it.
        Because to me, the way these debates get played out is,
    well, there is all this competition between the big guys. And
    then we have debates about somebody has this rate and somebody
    has that rate. But that is not a growing concern of mine
    because, when you read Joint Tax, they said it sure looks like
    the tax havens are getting more of the action.
        So my take on this is that it seems increasingly--despite
    all the rhetoric about going after tax havens--there is a lot
    of competition between the United States and tax havens. And
    that can really hurt the cause of creating more high-skill,
    high-wage jobs.
        So why don't you unpack that, and particularly get into the
    question of to what extent is the problem between the United
    States and tax havens? And what is to be done about it?
        Dr. Clausing. Yes. That is an excellent question. Thank you
    for asking me that.
        If you look at that JCT report that just came out, there
    are some very interesting tables in the back. And one of the
    things that you will see is the place where U.S.
    multinationals, and in fact other multinationals, invest and
    put jobs. Those are often high-tax countries with strong
    institutions and strong labor forces. But the places where they
    put their profits, on the other hand, are often tiny havens
    with rock-bottom tax rates.
        So if you look at the data in the back of that report, you
    will see that in 2017, havens accounted for 10 of the top
    profit countries, and 47 percent of all after-tax profits were
    in just 7 of those havens. In 2018, after the tax law, havens
    accounted for 8 of the top 10 profit countries and 51 percent
    of the profits. So it is clear that havens are really big in
    this space.
        Another thing that that points out is, there is a shared
    interest among non-haven countries in tackling this problem.
    And as Secretary Yellen has said, we are quite interested in
    working with other countries to lessen the pressures of tax
    competition. Measures we need to protect our corporate tax base
    can help other countries, and measures that other countries
    take to protect their corporate tax base can help our country.
        So there is a mutual, shared interested here in addressing
    this problem that havens have been creating for all the non-
    haven countries of the world. So I think it is an essential
    priority in working with other countries on this.
        The Chairman. Thank you, Dr. Clausing. And we are going to
    follow up with you on that. And as you know, Senator Brown and
    Senator Warner and I are getting ready to lay out a framework
    for dealing with some of these challenges and loopholes. And I
    just think, when you look at that JCT report, I was struck by
    the fact--and they are a pretty cautious group; they do things
    by the book--they made it very clear that the tax havens are
    continuing to drain some of the crucial ability we have to have
    to create more high-skill, high-wage jobs here.
        So I thank you. We will note for the record Ms. Huang also
    nodded affirmatively.
        Okay, Senator Daines, you are on.
        Senator Daines. Thanks, Mr. Chairman.
        Well, this hearing is examining a really important topic,
    and that is how our international tax policy affects workers,
    jobs, and investment. Following the enactment of what we did
    back in 2017 with the tax cuts, we improved our competitiveness
    in a very big way, lowering corporate tax rates from where we
    had the highest combined rate in the developed world, to where
    we are at today, about the OECD average, and we are seeing the
    results of this working in our economy, particularly in the job
    market.
        Inversions stopped. Corporate investment in the U.S.
    increased. And the unemployment rate in February 2020, just
    before the pandemic hit, was at a 50-year low at 3\1/2\
    percent. And best of all, workers were thriving. We were seeing
    median household income increasing by 6.8 percent in fact,
    between 2018 and 2019. And given this positive data across the
    board, and the fact we are finally seeing robust wage gains at
    the lower end of the income spectrum, I am scratching my head,
    truly, as to why we are hearing from my colleagues that they
    want to roll back the Tax Cuts and Jobs Act.
        However, I am excited to examine this topic here today. I
    would like to start by talking about something I have heard
    Secretary Yellen say a few times now. During her appearance
    before the Banking Committee yesterday in the Senate, Secretary
    Yellen acknowledged that it is necessary for U.S. firms to be
    competitive.
        As somebody who spent 28 years in the private sector
    competing against companies outside the United States, this is
    about U.S. global competitiveness. In response to a question of
    whether an increase in the corporate tax hike would have hurt
    U.S. competitiveness, Secretary Yellen stated, and I quote,
    ``It would be important to make sure the corporate tax increase
    is done in the context of a global agreement.''
        I think increasing the GILTI rate can also be put into that
    same bucket. Increasing it unilaterally without corresponding
    moves by other countries would be disastrous. And do not take
    my word for it. The left-leaning Tax Policy Center wrote last
    week that increasing GILTI without any corresponding moves by
    other countries will, and I quote, ``put U.S. firms at a
    disadvantage and reignite inversions.''
        Remember, we wanted to stop the inversions when we passed
    the tax cuts. Guess what? Inversions stopped.
        To be clear, I do not personally think we should increase
    the corporate tax rate, GILTI, or for that matter, any other
    taxes. However, I have a question for you, Dr. Clausing. Do you
    agree with Secretary Yellen, your boss, that U.S. rates should
    not be increased until a global agreement with our competitors
    is reached and implemented?
        Dr. Clausing. Thank you so much for that question.
        I agree with Secretary Yellen on many things, and I believe
    what she said in her testimony was that she has committed to
    working with other countries on addressing this problem.
        If you look at the last couple of decades, you will see
    that countries throughout the OECD have dramatically cut their
    corporate tax rates, together by over 20 percentage points. And
    this tax competition environment is not good for us, and it is
    not good for those other foreign countries. As I mentioned in
    my last response to Chairman Wyden, we have a joint interest in
    addressing these problems.
        That said, it is important to remember that the United
    States also has a lot of advantages, right? We have excellent
    infrastructure. We have excellent workers. We have strong
    institutions. And we are committed to building on those
    advantages. And building on those advantages means that we do
    not always have to match exactly what every other country is
    doing.
        So I think that there is room for really constructive
    engagement with other countries on tackling this problem.
        Senator Daines. Well, to be clear, Dr. Clausing, this is
    about competition. The reason other countries are lowering
    their rates is this competition. Inversions were a really big
    problem for us, and we cut taxes, and guess what? Inversions
    virtually stopped.
        And so I just--I am very concerned that if we unilaterally
    go forward here, it puts U.S. businesses at a disadvantage, and
    it starts having an unintended consequence, which is moving
    businesses back offshore, which would be a huge mistake.
        Your written testimony and opening statement highlight your
    conclusions on the magnitude of profit shifting by U.S.
    companies both before and after enactment of TCJA. However, Dr.
    Hines shared that 2017 was the last year for which high-quality
    data was currently available.
        So in other words, we are looking at data, frankly, before
    TCJA became effective. We are not looking at relevant data in
    terms of cause and effect. Even in your paper, titled ``Profit
    Shifting Before and After the Tax Cuts and Jobs Act,'' you
    state that ``studies of the TCJA are relatively speculative at
    this point, and to my knowledge there is not yet substantial
    work estimating how the legislation will affect profit
    shifting.''
        Nevertheless, in today's testimony you once again point to
    data that is as of 2017, which is before we enacted the tax
    policy. So my question is, how do you reconcile the fact that
    both you and Dr. Hines acknowledged in your written testimony
    the 2017 data is the only comprehensive data available, to your
    conclusion that profit shifting cost the government an
    estimated $100 billion in 2018 and 2019, particularly given
    Professor Hines's current-level estimate of profit shifting as,
    at best, modest?
        Dr. Clausing. Just briefly, I will say that there is 2018
    and 2019 data from the Bureau of Economic Analysis in the
    testimony, and there is also 2018 data that have been analyzed
    by the Joint Committee on Taxation that we have been talking
    about today. And both of those show absolutely no diminution in
    the use of tax havens after the law relative to before the law.
    So we do have some substantial data sources.
        The Chairman. Senator Daines, we have to go to your
    colleague, Senator Sasse.
        Senator Daines. Okay. Thank you.
        The Chairman. Thank you. Senator Sasse?
        Senator Sasse. Thank you, Mr. Chairman. And thank you,
    Steve, for teeing up the same issues that I wanted to pursue as
    well. So I want to thank all four witnesses for being here.
        And, Dr. Clausing, I'm not trying to keep you on the hot
    seat, but Senator Daines grabbed a bunch of the topics I wanted
    to pursue as well, before we run back to this next vote.
        So can you just back up and help me understand what your
    view is on what Steve Daines just said about inversions pre-
    and post- 2017? Do you agree that they stopped? Because I think
    they have stopped, but it is not clear to me whether or not you
    agree with that.
        Dr. Clausing. I think there is a lot of evidence that the
    late Obama-era regulations stopped all of the very important,
    sizeable inversions. And I also think that there are many tools
    at our disposal to address issues of inversions, including both
    unilateral measures, but also working with other countries to
    lessen these pressures of tax competition.
        As Secretary Yellen points out, we do not want to engage in
    a race to the bottom in this area. It is not a fair tax system
    to let capital completely escape tax but to apply much higher
    rates on the labor and income of school teachers and
    firefighters.
        So working with our partners abroad, we should be able to
    tackle some of these tax competition pressures, while making
    sure that we are also able to make the investments at home for
    fundamental economic success.
        Senator Sasse. Okay, so at a theoretical level I hear what
    you are saying, and I think a lot of it is defensible. But at a
    practical level, do you really believe that if you look at all
    the countries into which inversions were going, whatever the
    right preposition should be if not ``into,'' but where the
    inversion decided to then incorporate and locate, do you really
    believe we are going to have some sort of treaty with all those
    countries?
        So I mean, you are not really going to stop it by that
    theoretical point, are you? You are just going to push the
    beach ball under the pool in one direction instead of another.
    But if the inversions are happening, they are going to go to
    one of the countries that does not participate in your
    idealized international treaty, aren't they?
        Dr. Clausing. There are lots of strong tools that the
    countries like the United States, Germany, and Japan, have at
    our disposal to tackle not just our own tax laws, but to also
    encourage other countries to cooperate in this mechanism.
        And we are committed to using all the tools at our disposal
    not just to make the U.S. a competitive place to invest, but
    also to lessen the pressures that are put on all countries' tax
    systems by low tax rate havens. And there is a lot of work to
    be done here, and we are working in every possible way to
    counter those pressures. And I am hopeful that we will succeed,
    because it is a very important opportunity, and a very
    important time to build a fairer and a more efficient tax
    system.
        Senator Sasse. So I mean, I think what I hear you saying is
    that you do not think U.S. companies were disadvantaged in the
    run-up to 2017. Does that mean that you would be comfortable
    going back to a pre-2017 international tax structure right now
    and you do not think that would disadvantage U.S. companies?
        Dr. Clausing. I think if you look at the data, U.S.
    companies were quite successful both before and after the
    recent tax laws. But no one is suggesting simply going back to
    a prior era. Both the Biden proposals and the kinds of
    proposals favored by many of the Senators on this committee
    suggest building on our current laws to make a stronger system
    that is more suited to the challenges of the global economy,
    that does not encourage offshoring, that does not allow rampant
    profit shifting, that puts a fair burden on both labor and
    capital. And so these are all objectives that I think we can
    work on together to reach in our building on current law.
        Senator Sasse. Dr. Hines, could I toss the same question at
    you? Can you tell me how you see the effects of the tax changes
    of 2017 on inversions, and what would you think would happen to
    U.S. competitiveness if we returned to a pre-2017 international
    tax system?
        Dr. Hines. Look, I agree with Dr. Clausing that nobody
    wants us to return to the pre-2017 international tax system. We
    were clearly out of whack with the rest of the world, and I
    think there was bipartisan agreement on that.
        When it comes to inversions, yes, clearly the 2017 bill put
    the end to inversions by making the U.S. a less-disadvantaged
    place to do business.
        But we also need to keep in mind these kind of invisible
    inversions that take place around the world all the time, where
    American companies are not competitive with their foreign
    competitors--with companies from Canada and Germany and
    Britain--then they lose out on foreign business activity. Those
    are a lot like having inversions, except that we do not see
    them; it is just that they take place anyway.
        Senator Sasse. Thank you. The chairman is flashing his red
    light on my screen, and I do not want to get a foul.
        The Chairman. I thank my colleague. And unless members come
    back who have not gotten a first round, I think we are going to
    wrap up. And I am just going to be really brief on this.
        I do want to come back to the----
        Senator Young. Mr. Chairman?
        The Chairman. Yes? Well, here we have a Senator who did not
    get his first round. Senator Young?
        Senator Young. I thank you for recognizing me, Mr.
    Chairman. I am grateful for you holding this hearing.
        Dr. Hines, I want to revisit an issue that I understand was
    just raised by the ranking member. According to the nonpartisan
    Congressional Budget Office and the Joint Committee on
    Taxation, 25 percent of the corporate tax is borne by American
    workers in the form of fewer jobs and reduced wages.
        Now President Biden has proposed raising the Federal
    corporate rate to 28 percent, which means a combined statutory
    rate of 33 percent, taking into account State taxes, plus
    doubling the tax on companies' foreign earnings.
        So I also understand the President has pledged not to raise
    taxes on households earning less than $400,000 per year. Dr.
    Hines, in any case, won't these dramatic tax increases in
    significant part be borne by American workers and families who
    are making far less, far less than $400,000?
        Dr. Hines. Yes. Look, the higher taxes reduce business
    activity, and that reduces demand for American labor, which
    reduces employment and wages. And we can quibble about exactly
    how much of the burden is borne by workers, but it is clearly
    large.
        I think it is greater than 25 percent, but other people
    think it is 25 percent, and I should add that it is not just
    high-paid workers. The theory says the opposite, that it is all
    workers who are employed by these companies. Because what
    happens is, when you raise the business tax rate, companies do
    less investment. They do less of everything. And that reduces
    their labor demand across the board.
        So yes, like it or no, we live in a capitalist system. And
    if you live in a capitalist system, workers' demand is
    determined by their productivity. And their productivity is how
    productive they are in the businesses. So higher tax rates
    reduce business activity, reduce worker productivity, and
    therefore reduce employment and compensation.
        Senator Young. Thanks so much, Doctor. You know, I read a
    recent article by Alex Hendrie in The Washington Times, and it
    is an incredibly accessible piece. I commend it to anyone who
    might be watching or listening to these proceedings. And I just
    want to quote a little snippet from it. It is entitled ``Joe
    Biden Breaks His Tax Pledge.''
        And discussing the worker impact of the proposed taxes, he
    cites a 2017 study by Stephen Entin of the Tax Foundation
    indicating that labor, or workers, bear around 70 percent of
    the burden of corporate taxes. And Mr. Entin says that
    ``economic studies over the last few decades have found that
    labor bears between 50 percent and 100 percent of the burden''
    of the corporate tax rate.
        Even the Congressional Budget Office--this nonpartisan
    entity that both parties must listen to that referees our
    public policy decisions--in 2006 published a study indicating
    that 74 percent of the corporate tax is borne by workers--by
    workers.
        So that lends further support to your perspective, Doctor.
        I would like to move on to global competitiveness as it
    relates to the corporate tax rate. Ms. Olson, before the Tax
    Cuts and Jobs Act, the U.S. headline rate was 35 percent, the
    highest corporate tax rate among industrialized countries. So
    we had all kinds of headquarters that were so-called inverting,
    moving overseas and to Canada.
        While U.S. companies' foreign earnings were subject to that
    35-percent tax rate, that tax could be deferred, in many cases
    indefinitely. Now President Biden has proposed increasing the
    statutory tax rate to 28 percent, but with State taxes, the
    rate would be nearly 33 percent on corporations.
        He has also proposed increasing the tax on foreign earnings
    to 21 percent, but that rate would be closer to 26 percent when
    you take into account the effect of foreign tax credits.
        So, Ms. Olson, again I am asking out of concern for the
    welfare of America's workers and retirees, doesn't the
    Democrats' proposed system start to look an awful lot like a
    worldwide tax system with higher rates applicable to U.S. and
    foreign earnings than other countries impose? And what would
    this mean for American businesses and, in turn, most
    importantly, their workers?
        Ms. Olson. So it would vault us back to number one in the
    world with respect to the tax on domestic income. And that, I
    think, would be disadvantageous to investment in the United
    States, and job creation in the United States.
        On the international side, there is not much doubt in my
    mind that it would make us less competitive. One of the things
    that has been raised by Dr. Clausing is the fact that the U.S.
    is working at the OECD to try to get to consensus on setting
    some minimum taxes to put a floor on tax competition.
        I think the tax competition actually ended a while ago.
    Ninety percent of the rate reduction that has occurred was over
    by 2007. We just have not seen that since then.
        We also have not seen any indication that other countries
    are willing to engage in setting a minimum tax that is anywhere
    near even--it is certainly not near 21 percent. They actually
    seem to be talking about a rate that is below our current GILTI
    rate.
        So moving high above that would certainly have a
    disadvantageous effect on American companies, and therefore on
    American workers.
        Senator Young. Thank you, Mr. Chairman.
        The Chairman. I thank my colleague. I think we are getting
    ready to wrap up. I am just going to make a couple of quick
    comments. For all the colleagues who are also following it, we
    need questions for the record within a week from today.
        I do want to come back to the notion of competitiveness. I
    really get the sense that a number of Republicans see that as
    code for big corporations, megacorporations paying little or no
    taxes. And mention was made, I think perhaps by Ms. Olson, that
    I wrote two bipartisan tax reform bills, with the Republican
    chair of the Budget Committee, Judd Gregg, then with Dan Coats,
    in fact, Senator Young's colleague from Indiana. Neither of
    those two bipartisan bills had a big carve-out for foreign
    income. That was the difference. That is what the debate was. I
    think Ms. Olson probably remembers it. That was what the debate
    was that went on month after month after month. It was critical
    to tilt the playing field to create as many good-paying
    American jobs and keep investments here.
        And neither of those two bipartisan bills gave
    megacorporations a special break for doing business overseas.
    That is what the difference is all about.
        Now I am just going to make a quick couple of comments, and
    then we will close. I think that there is a lot of clarity
    today on some of these areas where the Trump law sold out the
    workers and in fact made us less competitive in the world. The
    research and development provision, for example, on this 2017
    law could not have been clearer. It was a disincentive, and the
    basic proposition of creating incentives for research and
    development and manufacturing overseas--when folks in Oregon
    and around the country are watching our manufacturing sector
    and innovation-oriented companies looking for opportunities,
    those kind of destructive policies disincenting research and
    development, making it more attractive to do business overseas,
    are losers.
        So this is an area that needs change in the tax code. And
    there is a broad range of members whom you heard from today who
    have a variety of ideas. And we are going to look at them. And
    very shortly Senator Brown and Senator Warner and I are going
    to put out our framework, and I think there will be ideas from
    other members.
        The bottom line is, we are the largest and most innovative
    economy in the world. And we can let other countries fool
    around with hand-outs and gimmicks and the like. We are going
    to focus on policies that actually make us more competitive,
    attract U.S. investments, high-skill, high-wage jobs, and do it
    in a way without blowing up the budget.
        This is the kind of hearing that generates the ideas and
    thoughts for making that possible. Thank you to all our
    witnesses, and this has been an excellent hearing. And I think
    it is a great compliment to your expertise in the field that
    you have so many Democrats and Republicans--the fact that this
    hearing, this domestic manufacturing hearing, had so many
    members in attendance is reflective of the need for reform.
        So with that, I think we will call it a wrap. I do see my
    friend, Senator Crapo, here. Is there anything you wanted to
    add, or can we wrap?
        Senator Crapo. Well, I could respond to your comments, Mr.
    Chairman, but I will do it at another time.
        The Chairman. You and I will continue the conversation
    during the next vote.
        Senator Crapo. All right.
        The Chairman. I thank my colleague for his courtesy. With
    that, the committee is adjourned.
        [Whereupon, at 12 noon, the hearing was concluded.]

                                A P P E N D I X

                  Additional Material Submitted for the Record

                                  ----------

      Prepared Statement of Kimberly A. Clausing, Ph.D., Deputy Assistant
              Secretary, Tax Analysis, Department of the Treasury
        Chairman Wyden, Ranking Member Crapo, members of the committee,
    thank you for inviting me to share these views on the international
    aspects of business tax reform. International tax reform feeds into our
    most important tax policy goals: building a tax system that is fit for
    purpose, fair, and focused on the needs of all Americans.

        In my testimony today, I will discuss several crucial issues
    related to international tax reform. First, we need better protections
    to defend the U.S. corporate tax base from the tax-motivated shifting
    of corporate profits to offshore havens. Second, international tax
    reform is an essential ingredient in building a fairer tax system.
    Third, it is important to modernize our tax system to better suit a
    globally integrated economy, reducing the tax preference in favor of
    foreign operations, and enabling U.S. workers to compete on a level
    playing field. Most important, all our tax system choices must serve
    the interests of all Americans.

        Fortunately, there are relatively straightforward changes that we
    can make, that will vastly improve our international tax regime. These
    include a stronger, more robust minimum tax and steadfast work with our
    partners and allies abroad in order to counter the pressures of
    international tax competition.

     Building a Tax System That Is Fit for Purpose

        International tax reform is essential to our most important tax
    policy goals. After the tax cuts of prior years, we now raise only
    about 16 percent of GDP in Federal tax revenue. (To put this into
    perspective, the last time the U.S. balanced the Federal budget,
    receipts were about 20 percent of GDP.) And, while the pandemic
    necessitated a large and robust fiscal response in the near term, it
    will be important to build a tax system that can contribute to our many
    important fiscal priorities, including lasting investments in
    infrastructure, research, and clean energy. At the same time, it is
    essential not to raise taxes on typical workers, who have often not
    felt the beneficial effects of our strong economic growth.

        Compared to our trading partners, the U.S. government raises very
    little corporate tax revenue. For many years, the typical OECD
    (Organization for Economic Cooperation and Development) country has
    raised about 3 percent of GDP from corporate taxation, whereas in 2018
    and 2019 (before the pandemic occurred), the United States raised only
    1 percent of GDP from the corporate tax. Even before the 2017 Tax Cuts
    and Jobs Act, the United States was below peer nations, collecting only
    2 percent of GDP. Indeed, corporate taxes as a percentage of GDP have
    been trending downwards in the United States since the 1950s.\1\
    ---------------------------------------------------------------------------
        \1\ Data from Tax Policy Center. ``Corporate Income Tax as a Share
    of GDP, 1956-2018.'' https://www.taxpolicycenter.org/statistics/
    corporate-income-tax-share-gdp-1946-2018.

                     Corporate Tax Revenues Relative to GDP
    ------------------------------------------------------------------------
                                                              OECD  Average
                                             United States         \2\
    ------------------------------------------------------------------------
    Post-TCJA: 2018/2019                               1.0              3.1
    ------------------------------------------------------------------------
    \2\ The average for G7 countries is
     very similar.
    5 Years pre-TCJA: 2013-2017                        2.0              2.9
    ------------------------------------------------------------------------
    Years Prior: 2000-2012                             2.0              3.0
    ------------------------------------------------------------------------
    Data Source: OECD Revenue Statistics

        Corporate tax revenues are low despite the fact that U.S. companies
    produce very high corporate profits, both in historic and comparative
    terms. For example, in recent years, corporate profits (after-tax) as a
    share of GDP averaged 9.7 percent (2005-2019), whereas in the period
    1980-2000, corporate profits averaged only 5.4 percent of GDP.\3\
    ---------------------------------------------------------------------------
        \3\ Data are from the Federal Reserve Economics Statistics
    database.

        Indeed, the U.S. corporate sector is the most successful in the
    world; the United States hosts 37 percent of the Forbes Global 2000 top
    companies' profits, despite the fact that the United States only
    comprises 24 percent of world GDP and less than 5 percent of the
    world's population.\4\
    ---------------------------------------------------------------------------
        \4\ Data are from 2020 Forbes Global 2000 list.

        Yet, despite the enormous success of the corporate sector, U.S.
    companies continue to shift corporate profits offshore, reducing the
    U.S. corporate tax base and U.S. tax revenues. As of 2017, corporate
    profit shifting by both U.S. and foreign multinational companies cost
    the U.S. government approximately $100 billion per year at prior tax
    rates.\5\ Although revenue loss is mechanically lower at today's lower
    corporate income tax rates, recent data indicate that the role of
    foreign tax havens was quite similar in 2018 and 2019 as it was in the
    years before the 2017 law.
    ---------------------------------------------------------------------------
        \5\ See Clausing, Kimberly. ``Profit Shifting Before and After the
    Tax Cuts and Jobs Act.'' 2020. National Tax Journal. 73(4). 1233-1266.
    My preferred estimate is over $100 billion, but a thorough analysis
    that employs four data sources and three methods finds a wide range of
    revenue costs; across all methods, the revenue cost averages about $90
    billion per year. Similar revenue losses are found in Clausing,
    Kimberly. ``Five Lessons on Profit Shifting from the U.S. Country by
    Country Data.'' 2020. Tax Notes Federal. 169(6). November. 925-940.
    Many other researchers have drawn attention to the large scale of the
    profit shifting problem. Studies are too numerous to fully recount here
    but include Guvenen, Fatih, Raymond J. Mataloni, Dylan Rassier, and Kim
    J. Ruhl. 2018. ``Offshore Profit Shifting and Domestic Productivity
    Measurement.'' NBER Working Paper No. 23324; Crivelli, Ernesto, Michael
    Keen, and Ruud A. de Mooij. 2016. ``Base Erosion, Profit-Shifting, and
    Developing Countries.'' Finanz--Archiv 72 (3): 268-301; and Bilicka,
    Katarzyna. 2019. ``Multinationals' Profit Response to Tax
    Differentials: Effect Size and Shifting Channels.'' American Economic
    Review 109 (8): 2921-2953.

        Although the 2017 law contained two modest measures that were
    supposed to reduce profit shifting (the GILTI minimum tax, for global
    intangible low-tax income, and the BEAT, for base-erosion anti-abuse
    tax), the 2017 law also encouraged profit shifting in other ways, by
    exempting from U.S. taxation the first 10 percent return on foreign
    ---------------------------------------------------------------------------
    assets, and by taxing foreign profits at half the rate of U.S. profits.

        Based on the early evidence in the 2 years after the law, the use
    of tax havens to avoid tax continues unabated. As the figure above
    illustrates, the share of total foreign income in seven prominent tax
    havens is nearly identical in the 2 years after the law (2018 and 2019)
    as it was in the 5 year prior to the law, at 61 percent of after-tax
    income, or 1.5 percent of GDP.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Building a Fairer Tax System

        Improving international taxation will do more than raise much-
    needed revenue. It will also improve the progressivity of our tax
    system, ensuring that large corporations--and those that own them--pay
    their fair share.

        The corporate tax is one of the most progressive taxes in our tax
    system, far more progressive than the individual income tax or the
    payroll tax. Economic models from organizations as varied as the U.S.
    Treasury, the Joint Committee on Taxation, the Congressional Budget
    Office, the Tax Policy Center, and the American Enterprise Institute
    all agree that the vast majority of the corporate tax burden falls on
    the owners of capital and those with excess profits.

        Recent decades have witnessed a worrisome increase in economic
    inequality, combined with a falling labor share of income. At the same
    time, governments throughout the world have too often responded by
    shifting relative burdens away from capital, reducing tax rates on
    capital gains, dividends, and corporate income, while increasing
    relative tax burdens on other income. Instead of dampening economic
    inequality, the tax system has too often exacerbated it. In part, these
    policy changes may have been a response to the fact that capital is
    more mobile than labor, as it is easier to offshore a factory (and even
    easier to offshore paper profits) than it is to move a person (or their
    labor income).

        Yet policy-makers have not sufficiently modernized the tax system
    to make it more suited to these global forces. The changes outlined
    below will go much further toward that end. It is also essential to
    remember that shifting the capital tax burden to individuals, rather
    than businesses, will still leave much capital income untaxed, unless
    long held tax preferences are completely rethought. At present, about
    70 percent of U.S. equity income goes untaxed by the U.S. government at
    the individual level.\6\ (Indeed, some U.S. equities are also held by
    foreigners, whose residence countries may or may not tax that income at
    home. When corporate rates are cut, large benefits accrue to foreign
    investors.)
    ---------------------------------------------------------------------------
        \6\ See Burman, Leonard E., Kimberly A. Clausing, and Lydia Austin.
    2017. ``Is U.S. Corporate Income Double-Taxed?'' National Tax Journal
    70 (3): 675-706.

        In addition to enhancing the progressivity of the U.S. tax system,
    the corporate tax is also efficient, since taxing excess profits can
    generate revenue without undue distortion, and evidence indicates that
    a rising share of the tax base, now likely over three quarters, is
    comprised of excess returns.\7\ Finally, a majority of voters in both
    parties favor higher taxes on corporations.\8\
    ---------------------------------------------------------------------------
        \7\ See Laura Power and Austin Frerick. 2016. ``Have Excess Returns
    to Corporations Been Increasing Over Time?'' National Tax Journal. 69
    (4): 831-46.
        \8\ See data from the Financial Times-Peterson Foundation U.S.
    Economic monitor, summarized at https://www.pgpf.org/infographic/
    majority-of-voters-support-higher-taxes-for-wealthy-and-corporations-
    and-want- next-president-to-pay-for-his-priorities.
    ---------------------------------------------------------------------------

     Building an Economy That Meets the Needs of All Americans

        Our modern global economy generates enormous churn. Forces such as
    transformative technological change, rising market power, import
    competition, declining unionization, and changing social norms have
    left many workers with economic outcomes that fall short of long-held
    expectations. Nearly 90 percent of children born in the 1940s out-
    earned their parents, but that share has fallen steadily. For children
    born in 1970, only 60 percent out-earn their parents; for those born in
    the 1980s, only half do.\9\
    ---------------------------------------------------------------------------
        \9\ See Raj Chetty et al. ``The Fading American Dream: Trends in
    Absolute Income Mobility Since 1940.'' Science. 28 April 2017. 398-406.

        Those left behind by economic disruption are looking for answers.
    Some policy solutions, such as reinvigorating labor law to give workers
    greater economic power and investing in infrastructure and community
    colleges in left-behind regions, can be quite helpful. Others, such as
    erecting immigration barriers, risk adding insult to injury.
    Immigration is a vital source of job creation and innovation in the
    U.S. economy; turning our back on immigrants and foreign students
    weakens one of our most essential advantages.\10\
    ---------------------------------------------------------------------------
        \10\ For a book-length treatment of these themes, see Clausing,
    Kimberly. Open: The Progressive Case for Free Trade, Immigration, and
    Global Capital. Cambridge: Harvard University Press, 2019.

        Yet we can do a lot more to ensure our tax system works for
    American workers. Expanding the Earned Income Tax Credit rewards work
    for those that are struggling, and expanding the Child Tax Credit is an
    enormous anti-poverty tool. Both of these were enacted as part of the
    American Rescue Plan. In corporate tax, it is important to reduce the
    large tilt in the playing field that favors foreign income and to work
    with partner countries to lessen the pressures of tax competition. A
    stronger minimum tax, stronger measures to tackle the profit shifting
    of foreign multinational companies, and close cooperation with our
    allies all have an important role to play.

     Building a 21st-Century Tax System

        The American Rescue Plan provided an essential down payment,
    expanding Child Tax Credits and Earned Income Tax Credits, both
    measures that go to the heart of creating inclusive, worker-focused
    prosperity. But we also need to build business tax systems that can
    handle the global mobility of capital.

        Multinational corporations can reasonably be asked to pay their
    fair share. At present, U.S. corporations pay income tax at only a 21-
    percent rate, a lower marginal tax rate than that faced by many
    schoolteachers and firefighters.\11\ Multinational companies operating
    offshore receive even more favorable tax treatment. Under the GILTI
    minimum tax, the first 10 percent return on tangible assets is
    completely free of U.S. tax, and subsequent income is taxed with a 50-
    percent deduction, facing tax at approximately half the full U.S.
    rate.\12\ Our tax system would benefit from a much stronger minimum
    tax.
    ---------------------------------------------------------------------------
        \11\ In 2020, the 22-percent tax bracket began at $40,126 for
    single individuals.
        \12\ The exact rate depends on the circumstance of the company. If
    they are operating only in zero-tax jurisdictions, they pay tax at 10.5
    percent, but the rate can be as high as 13.125 percent if income is
    blended with income from higher-tax countries, since foreign tax rates
    are only 80 percent creditable.
    ---------------------------------------------------------------------------

     Building Multilateral Cooperation in International Tax

        We are not alone in worrying about the profit shifting of
    multinational companies. Since 2013, there has been an ongoing
    international effort at cooperation in this area, led by the OECD and
    G20 countries, referred to as BEPS (for base erosion and profit
    shifting). The first round of negotiations made some modest progress in
    several areas, but ultimately was not transformational, as tax
    avoidance techniques that were shut down sprung back in different
    forms, and multinational company profit shifting continued in a manner
    similar to years prior.

        Presently, a second round of negotiations is centered around
    addressing two problems: rethinking the allocation of taxing rights in
    a modern economy (so-called ``Pillar 1''), and ensuring that all
    companies pay some minimum level of tax (``Pillar 2''). Within these
    efforts, a country-by-country minimum tax is presently being proposed
    internationally.

        In general, there is strong policy interest in solving these vexing
    international tax problems, and countries' efforts can be mutually
    reinforcing. For instance, governments levying minimum taxes generate
    positive fiscal spillovers for each other's tax bases, by substantially
    reducing the incentive of their resident multinational companies to
    shift profits away from all non-haven tax bases toward tax havens.
    Further, U.S. leadership in international tax reform may incentivize
    stronger action abroad.

        Working with our allies and friends in order to build better tax
    laws can help nations cooperate to solve other global collective action
    problems, not just stopping excessive tax competition pressures in
    corporate tax, but also using these vital international collaborations
    to work productively to handle issues like climate change, global
    public health, and other serious threats.

    Building Consensus

        Several hurdles stand in the way of international reforms, but they
    are not insurmountable.

        Concerns about the competitiveness of U.S. multinationals ignore
    the evidence. Both before and after the 2017 Tax Act, U.S.
    multinational companies are the envy of the world, not just for their
    high profits and market capitalization, but also for their tax planning
    acumen. U.S. multinational companies paid similar effective tax rates
    as peers in other countries, even before the 2017 Tax law dramatically
    lowered U.S. corporate tax rates. And, U.S. corporate tax revenues are
    far lower than those in peer countries, as shown in the table above.

        Further, to the extent that foreign countries also adopt strong
    minimum taxes, that will also reduce any competitiveness worries, while
    protecting our tax base from the profit shifting of foreign
    multinational companies. In fact, the present moment is an ideal time
    to reform our international tax rules, since there is a strong
    international consensus around addressing these problems, and our
    action can encourage action abroad.

        Finally, it is important to remember that competitiveness is about
    more than the success of U.S. companies in foreign merger and
    acquisition bids. It is also about ensuring that our tax code doesn't
    incentivize foreign operations at the expense of those at home. And, it
    is about nurturing the many fundamental strengths that make the United
    States a good place to do business. Investing in our institutions, in
    the abilities, education, and economic power of American workers, in
    the quality of our infrastructure, and in cutting-edge research is all
    important. It is also important to work harmoniously with other
    countries in order to ensure a smooth and stable trading system, and in
    order to seriously address common concerns such as climate change and
    public health.

                                     ______

       Questions Submitted for the Record to Kimberly A. Clausing, Ph.D.
                 Questions Submitted by Hon. Michael F. Bennet
                       international tax policy post-tcja
        Question. Corporate tax revenues declined sharply following the
    2017 tax law, which has led to a large gap between U.S. corporate tax
    revenue as a share of our gross domestic product (GDP) and that of most
    of our peer nations. The global minimum tax rate, known as GILTI,
    provides an incentive for corporations to offshore physical assets and
    to prefer foreign income over U.S. income. At the same time, the
    foreign-derived intangible income (FDII) deduction also acts as an
    offshore,
    profit-shifting incentive.

        How have these incentive structures affected the broader U.S.
    economy? Would you recommend a pure return to the pre-2017 tax law
    international tax regime? If not, what are some alternative policy
    options the U.S. should consider that would alter the current
    incentives firms face to shift profits overseas?

        Answer. The pre-2017 tax regime did not include the specific
    offshoring incentives that are part of current law under GILTI and
    FDII,\1\ but the prior regime did have some undesirable features that
    can be improved upon. For example, the statutory rate was high but the
    base was relatively narrow, leading to large gaps between the statutory
    and the effective rate. In addition, there was no corporate income tax
    assessed on foreign income until it was repatriated, which incentivized
    offshore operations and profits, yet simultaneously disappointed
    investors who wanted tax-free access to their offshore cash. (Still,
    effects on U.S. investment and corporate profitability were minor,
    since companies could borrow against offshore profits, and offshore
    profits were often still invested in U.S. markets.)
    ---------------------------------------------------------------------------
        \1\ GILTI exempts the first 10 percent return on foreign assets;
    all else equal, FDII deductions are less generous as domestic assets
    increase. Early literature has shown that companies have responded to
    these perverse incentives. For example, Beyer et al. (see https://
    papers.ssrn.com/sol3/papers.cfm?abstract_id=3818149) find that for U.S.
    multinational corporations, higher levels of pre-TCJA foreign cash are
    associated with increased post-TCJA foreign property, plant, and
    equipment investments. They do not find a similar increase in domestic
    property, plant, and equipment. Atwood et al. (see https://
    papers.ssrn.com/sol3/papers.cfm?abstract_id=3600978) find the GILTI
    provisions introduced new incentives for U.S. multinational
    corporations to invest in foreign target firms with lower returns on
    tangible property so that they might shield income generated in havens
    from U.S. tax liability under the GILTI minimum tax.

        Ideally, corporate tax reform would fix the problems of both prior
    law and current law. The American Jobs Plan proposal does just that. By
    eliminating the (QBAI) exemption for the first 10 percent return on
    offshore tangible assets, and by repealing FDII, offshoring incentives
    are eliminated. A much stronger minimum tax (with country-by-country
    administration and a higher rate) will put an end to the profit-
    shifting incentives that were present in current and prior law.
    Accompanying this change, we recommend reforms to the BEAT (as
    described in our SHIELD proposal) that will curtail foreign
    ---------------------------------------------------------------------------
    multinational company profit shifting.

        Question. What has been the overall effect of the 2017 tax law's
    shift from a ``worldwide'' tax system toward a ``territorial'' tax
    system?

        Answer. Exempting foreign profits from taxation encourages both
    operations in low-tax jurisdictions and the shifting of corporate
    profits toward low-tax jurisdictions. While the 2017 tax law included a
    modest minimum tax, the net effect of the international provisions of
    the 2017 law was to leave the profit-shifting problem fully intact,
    while also increasing incentives to offshore assets (see footnote 1
    above). The share of U.S. multinational company profits in low-tax
    jurisdictions was nearly identical in the years after the law (2018-
    2020) as it was in the years prior to the law (2013-2017).

        Question. I am interested in your perspective on the best practices
    for economic recovery and regaining the historic pre-pandemic levels of
    economic growth and low unemployment, particularly for minority
    communities that were hit the hardest by the pandemic and continue to
    lag in their recovery.

        Do you believe there is a danger of a slowed recovery if the U.S.
    corporate tax rate is once again set at the highest rate among OECD
    member countries, thus disadvantaging U.S. firms?

        Answer. A strong economic recovery is indeed important. Still,
    raising corporate income taxes will not hamper our recovery. First,
    over 10 years, the Biden proposals increase corporate income taxes
    modestly, to about 1.7 percent of GDP. In years prior to the 2017 law,
    U.S. corporate tax revenues averaged about 2 percent of GDP, and in the
    years since the 2017 law, U.S. corporate tax revenues averaged about 1
    percent of GDP. In contrast, our trading partners raise about 3 percent
    of GDP in corporate income taxes.

        Second, the corporate income tax is a profits tax, and as such, it
    is strongly countercyclical. Companies only pay corporate tax when they
    are profitable, and companies earning losses (or carrying them forward
    from prior years) pay no corporate tax. In contrast, other sources of
    tax revenue fall more heavily on typical American workers and families,
    regardless of economic conditions.

                                     ______

                Question Submitted by Hon. Robert P. Casey, Jr.
        Question. The 2017 tax bill eliminated the deduction for
    unreimbursed expenses workers incur as part of their job--this means
    that police and firefighters were no longer able to deduct unreimbursed
    cost of their uniforms or equipment. Truck drivers could no longer
    deduct travel expenses and workers in unions could no longer deduct the
    cost of their dues.

        I have a bill, the Tax Fairness for Workers Act, to reinstate these
    deductions and make the deduction for union dues above the line. It is
    a measure I hope will be included in the President's budget.

        Will you commit to working with my office on this proposal which
    supports workers and union jobs?

        Answer. We are interested in working with your office on this
    effort and on a wide array of policies that support strong union jobs
    in the United States. The goal of fostering high- quality U.S. jobs is
    at the heart of the American Jobs Plan, which invests in U.S.
    infrastructure, R&D, manufacturing, and clean energy. Our international
    tax plan also encourages U.S. job growth by addressing provisions in
    the current tax code that favor offshore profits and production.

                                     ______

                  Questions Submitted by Hon. Robert Menendez
                   the base erosion and anti-abuse tax (beat)
        Question. The 2017 GOP corporate tax law was poorly conceived and
    drafted, which has resulted in many unintended consequences. One flawed
    provision is the Base Erosion and Anti-abuse Tax or BEAT. While there's
    no doubt that we need to prevent multinational corporations from
    artificially shifting their income outside of the U.S., the BEAT was
    written in a way that often punishes the good actors--those that pay
    what they owe to the U.S.--while letting the true base eroders get
    away.

        Do you agree that the BEAT is ineffective and in serious need of
    reform?

        Answer. The administration has determined that the BEAT is beyond
    repair. It has been largely ineffective at curtailing profit shifting
    by multinational corporations, and BEAT revenues have been below
    forecasts. Although the BEAT could be strengthened, it is both under-
    and over-inclusive in its scope due to its structure. For example, the
    BEAT penalizes firms with lower margins over firms with higher margins,
    and it does not distinguish between payments subject to a low effective
    tax rate and those subject to a high effective tax rate. More
    fundamentally, the BEAT does nothing to stop the race to the bottom on
    corporate income tax rates. To address harmful tax competition, the
    Americans Jobs Plan would repeal the BEAT and replace it with the
    Stopping Harmful Inversions and Ending Low-Tax Developments (SHIELD)
    rule. Because the SHIELD denies deductions by reference to payments to
    related foreign parties in low-taxed jurisdictions, it incentivizes
    those jurisdictions to reverse the race to the bottom by adopting
    minimum tax regimes.

        Question. Should our tax code provide special consideration and
    relief from the BEAT or any future alternative, for a company that
    already has an Issue Resolution Agreement under the IRS's Compliance
    Assurance Process and abides by a bilateral advanced pricing mutual
    agreement between the IRS and a foreign National Tax Agency to ensure
    the company is paying its fair share of U.S. taxes?

        Answer. The BEAT is deeply flawed, both as legislated and as
    implemented by the Trump administration in regulations. This includes
    its potential for over-
    inclusiveness in some circumstances that you cite. As drafted, the BEAT
    applies to payments to countries that have tax rates higher than our
    proposed GILTI rate of 21 percent, and to transactions that may be been
    subject to an advance pricing agreement with the IRS. The proposal in
    the American Jobs Plan would replace the BEAT with a more targeted
    provision that addresses comprehensively low-taxed income to prevent a
    race to the bottom. We look forward to working with the committee on
    these reforms.

                 Questions Submitted by Hon. Sheldon Whitehouse
        Question. Trump promised his tax law would put America first and
    bring jobs and investment back home. Instead, he created a special
    half-off rate for the profits multinational corporations earn abroad,
    and on top of that, a ``get out of taxes free card'' for companies that
    build factories overseas.

        You have called these provisions an ``America-last'' tax policy,
    explaining they create incentives to shift profits to tax havens and
    invest in physical production in higher-tax countries--often our
    economic competitors--instead of investing here in America. My No Tax
    Breaks for Outsourcing Act would apply GILTI on a country-by-country
    basis, which President Biden has proposed in his Made in America Tax
    Plan.

        Why is it so important to apply GILTI on a country-by-country
    basis? Is this feasible from a compliance and enforcement standpoint?

        Answer. It is ideal to apply GILTI on a country-by-country basis,
    since the global averaging feature of the GILTI minimum tax creates a
    perverse ``America last'' tax policy. Specifically, under current law,
    income earned in a low-tax country gets taxed at approximately half the
    U.S. rate, incentivizing earnings in low-tax countries. But,
    importantly, high-tax foreign income is also incentivized relative to
    U.S. income, since it generates foreign tax credits that can offset tax
    due on haven income. This system makes it easy for multinational tax
    planners to blend income from high-tax and low-tax locations abroad,
    paying a rate much lower than the U.S. rate.

        In contrast, a country-by-country administration of the law acts as
    an immediate deterrent on profit shifting. Every dollar earned in a
    haven generates immediate U.S. tax, with no sheltering possible from
    foreign tax credits. And, there is no longer any tax preference for
    earning income in a high-tax country, rather than the United States.

        It is true that current international tax law is very complex. Yet,
    many companies are already doing country-by-country calculations under
    present law. Much of the complexity is the current system is due to new
    technical problems introduced under the 2017 Tax Act. International tax
    reform can be accompanied by coordinated regulatory changes that
    simplify tax administration.

        Further, a strong minimum tax will dramatically curtail the
    incentives to shift profit offshore, substantially reducing the waste
    of resources that are devoted to tax planning, and also lowering the
    degree of difficulty that the IRS faces when it attempts to enforce our
    international tax rules.

        Question. My No Tax Breaks for Outsourcing would require
    multinationals to pay the same rate on profits earned abroad as smaller
    domestic companies pay to eliminate the incentive to shift profits to
    tax havens.

        How might this reform benefit the competitiveness of domestic
    businesses? How would it impact profit shifting?

        Answer. It is important to close the offshoring and profit shifting
    loopholes built into the 2017 tax bill, and both your reform and the
    President's approach do just that. The President has proposed
    increasing both the international and domestic rates and narrowing the
    difference between the rates. Of course, it is difficult to balance two
    worthy goals: fair taxation that levels the playing field for domestic
    and multinational companies and addressing the competitiveness of
    American companies as they operate around the world.

        Question. The 2017 tax law created a tax break for so-called
    Foreign-Derived Intangible Income (FDII), promoted as an incentive to
    locate intellectual property in the U.S. But a company that locates
    fewer tangible assets--like plant and equipment--in the U.S. often can
    get a larger tax break. President Biden has proposed to eliminate it in
    his Made in America Tax Plan.

        Why is the tax incentive for FDII so ineffective?

        Answer. There are multiple problems with FDII. First, the FDII is
    not an effective way to encourage R&D in the United States, since it
    provides larger tax breaks to companies with excess profits (those
    already reaping the rewards of prior innovation) and only targets those
    with high export sales (omitting those companies with domestic sales).
    Second, like the GILTI, the FDII encourages offshoring, since the
    export subsidy becomes less generous (all else equal) as companies have
    higher U.S. tangible assets. (Whereas the GILTI rewards companies for
    offshore assets by allowing a larger tax-free return on those assets.)
    Repealing FDII would generate a large amount of revenue that could be
    used to encourage research and development much more directly. As one
    example, reversing the research amortization provision in the 2017 Tax
    Act (and returning to expensing) would cost a similar amount of revenue
    as FDII repeal would raise. Also, many of the same companies receive
    benefits from each provision. The vast majority of all FDII deductions
    are claimed by corporations that also have large qualified research
    expenses.

        Question. When it came to negotiating global tax rules at the OECD,
    the Trump administration focused on shielding large corporations from
    tax rather than addressing the global scourge of tax avoidance. I am
    pleased that Secretary Yellen dropped the Trump Treasury demand that
    the new regime be optional for companies and that President Biden has
    called to end the race to the bottom on corporate tax rates.

        How does the Treasury Department plan to lead our global partners
    towards strong international rules to put an end to offshore tax
    dodging? How can leading by example by enacting strong domestic
    legislation spur similar reforms abroad?

        Answer. Through bilateral and multilateral engagement, Treasury has
    already begun to lead our global partners toward adoption of a robust,
    globally agreed upon minimum tax under Pillar 2 of the OECD/G20
    negotiations, and enactment of domestic international tax reform will
    bolster Treasury's efforts in this regard. For instance, changing GILTI
    to a per-country system would strengthen the minimum tax by reducing
    the ability to blend high- and low-tax profits to escape minimum tax
    liability altogether. This not only substantially reduces incentives to
    shift profits but has the additional benefit of addressing concerns
    that our negotiating partners have regarding the weakness of the
    current regime. The Made in America Tax Plan's SHIELD proposal also
    functions as a heavy incentive to get partners on board with a robust
    Pillar 2 because it denies U.S. tax deductions on payments made to
    related entities in low-tax jurisdictions.

        Question. Public country-by-country reporting of key financial
    information--such as taxes paid, revenue, profits, number of employees,
    and tangible assets--would help deter multinational corporate tax
    avoidance and provide investors with financially material insight into
    aggressive tax strategies and related risks to their investments.
    Investment firms with over $100 trillion in cumulative assets under
    management support such tax transparency. This data would also inform
    policy makers as Congress considers reforms to the taxation of
    multinational corporations.

        Do you support requiring corporations to publicly report key
    financial information, such as taxes paid, revenue, profits, tangible
    assets, and the number of employees, on a country-by-country basis?

        Answer. Tax transparency is an important goal, and companies should
    have a responsibility to their shareholders, their customers, their
    workers, and the public to be open and transparent. Taxpayer privacy is
    also an essential tenet of U.S. law, and under current law, country by
    country information should be shared among tax authorities, but not
    released to the public. We are studying possible reforms that would
    foster greater tax transparency, while balancing the needs of taxpayers
    for privacy.

                                     ______

                     Questions Submitted by Hon. Mike Crapo
        Question. The nonpartisan Joint Committee on Taxation (JCT) has
    estimated that 25 percent of the corporate income tax is borne by
    workers.\2\ More recent estimates have concluded that the amount of the
    corporate income tax borne by workers is closer to 50 percent.\3\ Do
    you agree that the percentage of the corporate tax borne by workers is
    at least 25 percent? If not, why do you believe the JCT analysis is
    incorrect?
    ---------------------------------------------------------------------------
        \2\ https://www.jct.gov/publications/2013/jcx-14-13/.
        \3\ https://www.aeaweb.org/articles?id=10.1257/aer.20130570.

        Answer. Economic models from organizations as varied as the U.S.
    Treasury, the Joint Committee on Taxation, the Congressional Budget
    Office, the Tax Policy Center, and the American Enterprise Institute
    all assign the vast majority of the corporate income tax burden to some
    combination of capital and excess profits. These models also assume
    that the deficits created by corporate tax cuts will be offset sometime
    in the future--yet do not account for the potential costs of those
    offsets for typical workers. It is important to remember that other tax
    options (such as labor income taxes, payroll taxes, and sales taxes)
    ---------------------------------------------------------------------------
    fall almost entirely on labor.

        Furthermore, since these models were developed, two factors have
    likely lessened the long-run burden of the corporate income tax on
    labor. First, since current law exempts the normal return to capital
    for much investment, in theory the corporate tax should fall even less
    on labor than it did in years past. The mechanism by which corporate
    taxes burden labor requires a reduction in investment to reduce worker
    productivity, lowering wages. Second, the role of market power in the
    U.S. economy has continued to increase, making more and more of the
    corporate tax base excess profits rather than the normal return to
    capital. See Phillipon, Thomas, The Great Reversal: How America Gave up
    on Free Markets, Cambridge: Harvard University Press, 2019.

        Finally, the article you cite uses German evidence, and Germany has
    very different norms about wage setting and labor involvement in
    corporate decision-
    making.

        Question. The Global Intangible Low-Taxed Income (GILTI) minimum
    tax provides an exclusion for a return on tangible assets (Qualified
    Business Asset Investment or QBAI). The provision has been criticized
    by Dr. Clausing and Ms. Huang for encouraging offshoring. However, the
    Organisation for Economic Co-operation and Development (OECD) Pillar 2
    minimum tax being considered provides an exclusion similar to QBAI,
    although the proposed Pillar 2 exclusion would exempt a return
    attributable to both tangible assets and payroll. Even President
    Obama's proposals for a minimum tax provided an exclusion for a return
    on active assets ``to exempt from the minimum tax a return on the
    actual activities undertaken in a foreign country.''\4\
    ---------------------------------------------------------------------------
        \4\ https://home.treasury.gov/system/files/131/General-
    Explanations-FY2017.pdf.

        Isn't this type of exclusion a normal feature of a global minimum
    tax because there is a recognition that profits attributable to hard
    assets are less susceptible to profit shifting, and returns on hard
    assets are normally taxed by the local jurisdiction? Do you believe the
    OECD Pillar 2 proposal would encourage domestic companies to invest in
    ---------------------------------------------------------------------------
    foreign jurisdictions?

        Answer. GILTI exempts the first 10 percent return on foreign
    assets; all else equal, FDII deductions are less generous as domestic
    assets increase. Early literature has shown that companies have
    responded to these perverse incentives. For example, Beyer et al. (see
    https://papers.ssrn.com/sol3/papers.cfm?abstract_id=
    3818149) find that for U.S. multinational corporations, higher levels
    of pre-TCJA foreign cash are associated with increased post-TCJA
    foreign property, plant, and equipment investments. They do not find a
    similar increase in domestic property, plant, and equipment. Atwood et
    al. (see https://papers.ssrn.com/sol3/papers.cfm?
    abstract_id=3600978) find the GILTI provisions introduced new
    incentives for U.S. multinational corporations to invest in foreign
    target firms with lower returns on tangible property so that they might
    shield income generated in havens from U.S. tax liability under the
    GILTI minimum tax.

        OECD negotiations are ongoing and the question of excluding a
    normal return on assets or employment is presently unsettled.

        Question. Dr. Clausing says in her testimony that the corporate tax
    is an efficient tax. However, many economists, including those at the
    OECD, find that the corporate income tax--out of all the different
    types of taxes countries impose--is the most harmful to economic
    growth. In their report--``Tax and Economic Growth,'' the OECD
    economists say ``lowering statutory corporate tax rates can lead to
    particularly large productivity gains in firms that are dynamic and
    profitable, i.e., those that can make the largest contribution to GDP
    growth.''

        Do you agree or disagree with the OECD economists on this point?
    Couldn't raising the corporate tax rate have the opposite effect and
    cause a drag on economic growth?

        Answer. It is possible that the OECD economists were relying on
    older models of the corporate tax, as early theoretical models in
    economics showed that capital taxes could be quite distortionary.
    However, modern models including more realistic assumptions indicate
    that the optimal capital tax rate could be at least as high as the
    optimal labor tax rate.

        For example, while early work such as Atkinson and Stiglitz (1976)
    suggested a zero tax on capital, later work by both authors concluded
    otherwise, and both took policy positions that were in stark contrast
    to this result.\5\ The more realistic assumptions that create a
    positive role for capital taxation include differences in the ability
    to earn returns on capital, a role for inheritance, imperfect or
    incomplete capital markets, and uninsurable shocks to rates of return.
    There is also a political economy rationale for capital taxation.\6\
    ---------------------------------------------------------------------------
        \5\ See, e.g., Atkinson and Stiglitz (2015), the most recent
    edition of their text Lectures on Public Economics, as well as Stiglitz
    (2012) and Atkinson (2015).
        \6\ For examples of papers with these arguments, see Conesa, Kitao,
    and Drueger (2009), Piketty and Saez (2012, 2013), and Farhi, Sleet,
    and Werning (2012). Recently, Straub and Werning (2019) show that
    optimal capital tax rates are higher than those found in the early
    literature, even when relying on the very same theoretical models.

        Excess returns to capital above the normal market return, resulting
    from market power or rents, also create a powerful rationale for
    capital taxation. Since much of the capital income tax base reflects
    these excess returns, that implies a far higher ideal rate of capital
    taxation. In most models, taxes on excess profits do not diminish the
    incentive to invest, although they may affect risk-taking behavior.
    Evidence from the U.S. corporate tax base indicates that a rising share
    of the tax base, now likely over three quarters, is comprised of excess
    returns.\7\
    ---------------------------------------------------------------------------
        \7\ See Power and Frerick (2016).

        Thus, the tax system should keep a robust role for capital taxation
    for efficiency purposes, bearing in mind that most taxes (aside from
    head taxes and Pigouvian taxes) generate some inefficiencies. To ensure
    adequate capital taxation, the corporate tax is a vital tool, since
    about 70 percent of U.S. equity income goes untaxed by the U.S.
    government at the individual level.\8\
    ---------------------------------------------------------------------------
        \8\ Burman, Clausing, and Austin (2017).

        Question. The administration has proposed significantly raising the
    corporate statutory rate and the GILTI rate. The GILTI minimum tax
    already imposes a higher rate of tax on foreign income of U.S.
    companies than other countries apply to the foreign income of their
    ---------------------------------------------------------------------------
    domestic companies.

        If the OECD fails to reach an agreement or if member states fail to
    adopt the agreement, the effect would be even higher comparative
    effective tax rates on U.S. businesses, potentially a differential of
    an effective minimum tax rate of over 21 percent compared to 0 percent
    imposed by most foreign countries.

        In answering a question on the effects of the TCJA reforms on
    locating or maintaining a U.S.-based business in the United States, Ms.
    Olson said that higher levels of taxation imposed on U.S. companies
    would discount the value of assets in the hands of a U.S. company. Over
    time, the diminution in the value of those assets would make them,
    relatively speaking, more valuable in the hands of foreign-owned
    companies. Doesn't this impact on asset value have to be true? Is there
    any reason to ignore this basic financial reality?

        Answer. Concerns about the competitiveness of U.S. multinationals
    ignore the evidence. Both before and after the 2017 Tax Act, U.S.
    multinational companies are the envy of the world, not just for their
    high profits and market capitalization, but also for their tax planning
    acumen. U.S. multinational companies paid similar effective tax rates
    as peers in other countries, even before the 2017 Tax Act dramatically
    lowered U.S. corporate tax rates.

        And, U.S. corporate tax revenues are far lower than those in peer
    countries. Over 10 years, the American Jobs Plan proposals increase
    corporate taxes modestly, to about 1.7 percent of GDP. In years prior
    to the 2017 law, U.S. corporate tax revenues averaged about 2 percent
    of GDP, and in the years since the 2017 law, U.S. corporate tax
    revenues averaged about 1 percent of GDP. In contrast, our trading
    partners raise about 3 percent of GDP in corporate taxes.

        Further, to the extent that foreign countries also adopt strong
    minimum taxes, that will also reduce any competitiveness worries, while
    protecting our tax base from the profit shifting of foreign
    multinational companies. In fact, the present moment is an ideal time
    to reform our international tax rules, since there is a strong
    international consensus around addressing these problems, and our
    action can encourage action abroad.

        Still, even absent agreement, we are not powerless to address these
    problems. The SHIELD proposal can counter foreign company profit
    shifting. And simple anti-
    inversion measures, or even changes through regulation, can be quite
    effective in stemming the incentive to invert, as shown by the U.S.
    experience after the anti-inversion (and anti-income stripping)
    regulations of the late Obama years.

        Finally, it is important to remember that competitiveness is about
    more than the success of U.S. companies in foreign merger and
    acquisition bids. It is also about ensuring that our tax code doesn't
    incentivize foreign operations at the expense of those at home. And, it
    is about nurturing the many fundamental strengths that make the United
    States a good place to do business. Investing in our institutions, in
    the abilities and education of American workers, in the quality of our
    infrastructure, and in cutting-edge research is all important. It is
    also important to work harmoniously with other countries in order to
    ensure a smooth and stable trading system, and in order to seriously
    address common concerns such as climate change and public health.

        Question. The U.S. Congress cannot write the rules for sovereign
    members of the G7, G20, or the OECD. That is the case even if the OECD
    were to reach an Inclusive Framework agreement. The Peoples Republic of
    China, for instance, America's greatest economic rival, has indicated
    skepticism towards the OECD Inclusive Framework. Without such an
    agreement, wouldn't the United States be unilaterally raising the
    comparative effective tax rates of U.S.-based companies to
    uncompetitive levels? How should Treasury proceed if other countries,
    such as China, are not willing to impose a global minimum tax? The
    United States was already a first mover with GILTI. Why should the
    United States move again before other countries move at all?

        Answer. At the Prime Minister or Finance Minister level, every G7
    country has publicly expressed support for or openness to the global
    minimum tax and a commitment to work constructively towards an OECD
    Inclusive Framework agreement. In the G20 we similarly see support for
    the negotiations from every G20 member country, including China. With
    respect to the Chinese specifically, we are in multilateral discussions
    with China, just as we are in a discussion with the rest of the
    Inclusive Framework members in this negotiation. We have also engaged
    directly with the Chinese on the international tax issues at stake in
    the OECD negotiations. China has consistently engaged constructively.
    Separately, the OECD Secretariat has pointed out that Pillar 2 can go
    forward and be fully effective without every country implementing
    Pillar 2, and indeed that is the point of the so-called undertaxed
    payments rule of Pillar 2. On Pillar 1, as the other major economy with
    very large globally engaged digital firms, China and the United States
    share certain interests.

        Question. Chairman Wyden and Dr. Clausing engaged in a dialogue
    where Chairman Wyden went as far as to question the policy motives of
    those on the Republican side as using competitiveness as simply
    ``code'' for cutting taxes for ``mega-corporations.'' Do you believe
    that tax policies that raise the effective tax rate on the foreign
    operations of U.S. businesses well above that of their foreign
    competitors has no effect on their ability to succeed in foreign
    markets?

        Answer. This question was addressed in my answer above (two prior).

        Question. In testimony before this committee, both Secretary Yellen
    and Deputy Secretary Adeyemo noted the importance of competitiveness in
    reviewing TCJA's policy effectiveness and appropriate revisions to the
    TCJA. Competitiveness was discussed with respect to the Global
    Intangible Low-Taxed Income (``GILTI'') regime and the Treasury
    objectives on Pillars 1 and 2 of the OECD discussions. Yet, in your
    testimony, you said ``Concerns about the competitiveness of U.S.
    multinationals ignore the evidence.'' With respect to the role of
    competitiveness, do you agree with Secretary Yellen and Deputy
    Secretary Adeyemo that it is important to consider the competitiveness
    of U.S. companies when considering international tax policy?

        Answer. This question was addressed in my answer above. (See prior
    question; three prior.)

        Question. During the hearing, several Senate Finance Committee
    members pointed out that corporate inversions ceased after TCJA was
    enacted. You dismissed the effect of TCJA's lower corporate rate, anti-
    base erosion rules on inbound and outbound transactions, significant
    tightening of interest deductibility rules of section 163(j), full
    bonus depreciation and other major policy features of TCJA as not
    having any effect on eliminating corporate inversions, and suggested
    the section 385 regulations were responsible for ending inversions.
    Weren't the proposed and final section 385 regulations focused on
    thinly-capitalized transactions and similar aspects of interest
    deductions and earnings stripping?

        Answer. The section 385 regulations that addressed distributions of
    indebtedness addressed U.S. taxpayers that borrowed from foreign-
    related parties to fund a distribution of cash out of the United States
    (or a similar transaction) to reduce the U.S. tax base, or so-called
    dividend note transactions. Prior to the section 385 regulations, these
    dividend notes transactions frequently occurred immediately after an
    inversion or a non-inversion foreign takeover of a U.S. company because
    foreign owners of U.S. corporations can base erode the United States
    through very low tax jurisdictions. The section 385 regulations
    addressed these transactions. While the 2017 tax legislation did
    include certain additional provisions addressing inversions, as
    currently defined in the code, the only provision in the 2017 tax
    legislation that attempted to comprehensively address base erosion
    after inversions and foreign takeovers was the BEAT. As observed in the
    hearing, the BEAT is poorly designed for its intended purpose of
    protecting the U.S. tax base. The Made in America tax plan proposes to
    both improve the rules preventing inversions and to replace the BEAT
    with a better tailored tool to prevent erosion of the U.S. tax base. We
    look forward to working with the committee on these reforms.

        Question. It was well-documented that inversion transactions were a
    defensive strategy for U.S. businesses to thwart tax-driven takeovers
    by foreign-owned companies attributable to many different features of
    U.S. tax policy before TCJA's enactment, including, for instance, the
    highest corporate rate, and the lock-out effect of deferred earnings.
    Isn't it true the section 385 regulations did not address those
    disadvantageous features because section 385 doesn't provide the
    authority to do so?

        Answer. See response immediately above. The section 385 regulations
    address a specific type of dividend note transaction that often occurs
    immediately after an inversion or a non-inversion foreign takeover.
    This type of dividend note transaction takes advantage of the
    preference in current law for foreign ownership of U.S. corporations
    because the foreign owners can base erode the U.S. operations through
    debt from very low tax jurisdictions in a manner that U.S.-
    headquartered businesses cannot. The BEAT, through its flawed enactment
    and regulations, has failed to adequately address these concerns. The
    administration has proposed legislation addressing these transactions
    more comprehensively, through the SHIELD. We look forward to working
    with the committee on these reforms.

        Question. As a follow-up to the previous two questions, Treasury
    Secretary Lew described the section 385 regulations as inadequate in
    eliminating inversions, when originally released, with this statement:

            Today, we are announcing additional actions to further rein in
            inversions and reduce the ability of companies to avoid taxes
            through earnings stripping. This will have an important effect,
            but we cannot stop these transactions without new legislation.
            I urge Congress to move forward with anti-inversion legislation
            this year. Ultimately, the best way to address inversions is to
            reform our business tax system, which is why Treasury is
            releasing an updated framework on business tax reform,
            outlining the administration's proposals to date as a guide for
            future reform. While that work goes on, Congress should not
            wait to act as inversions continue to erode our tax base.

        Was Secretary Lew's statement incorrect?

        Answer. Secretary Lew was correct. The regulations he addressed
    were important to discouraging inversions, but legislative action was
    needed to completely eliminate this activity. Unfortunately, the 2017
    tax legislation failed to adequately address the environment that gave
    rise to these transactions. The American Jobs Plan and the President's
    other budget proposals will however address these transactions and, if
    enacted in full, could make the section 385 regulations unnecessary. We
    look forward to working with the committee on these reforms.

        Question. The administration's ``American Jobs Plan'' includes a
    proposal to ``make it harder for U.S. corporations to invert.'' Yet, as
    we have seen, there have been no inversions since TCJA was enacted.
    Does the administration, then, acknowledge that its proposals would
    ``reignite'' inversions, as the Tax Policy Center has stated?\9\
    ---------------------------------------------------------------------------
        \9\ https://www.taxpolicycenter.org/taxvox/oecd-pillar-2-provides-
    good-model-biden-us-worldwide-tax.

        Answer. The Biden-Harris administration, like the Obama-Biden
    administration, is concerned about both inversions (as currently
    defined in the code) and non-
    inversion foreign takeovers of U.S. businesses. For this reason, the
    administration is proposing legislation that will eliminate preferences
    that remained in place after the 2017 tax legislation that preference
    foreign ownership of U.S. corporations. This includes tighter rules
    defining a statutory inversion and tighter rules addressing base
    erosion by foreign-parented groups. We look forward to working with the
    ---------------------------------------------------------------------------
    committee on these reforms.

        Question. You advocate for repealing the provision in GILTI that
    provides for an exemption for 10 percent of QBAI. You also advocate for
    doubling the GILTI rate to 21 percent. However, as you know, the
    Organisation for Economic Co-operation and Development (OECD) Pillar 2
    minimum tax being considered provides an exclusion similar to QBAI,
    although the proposed Pillar 2 exclusion would exempt a return
    attributable to both tangible assets and payroll, and the minimum tax
    rate under consideration is 12.5 percent. Is the administration
    similarly advocating at the OECD to remove this exclusion from the
    Pillar 2 minimum tax and raise the minimum rate higher than 12.5
    percent?

        Answer. The administration's negotiating position on Pillar 2 is
    obtaining agreement on a robust minimum tax at the highest rate
    possible. As you note, tax burdens can increase due to either or both
    of a higher tax rate and a broader tax base. In the negotiations, the
    administration is focused on both features of the Pillar 2 minimum tax
    and is actively negotiating on both fronts.

        As for the 12.5 percent rate, this has only been informally
    discussed as a potential benchmark under the prior administration. The
    Finance Ministers of both France and Germany have already indicated
    support for a higher rate, and Treasury is confident that consensus can
    be reached in a manner that would help, rather than hurt, the
    competitiveness of the U.S. tax system. Currently, the gap between the
    domestic minimum tax is 10.5 percent because there is no globally
    agreed upon minimum tax. A deal on Pillar 2 would close that gap.

        The Pillar 2 proposal does include a provision that leaves open the
    possibility of an optional exemption related to tangible assets and
    payroll, with the intent of ensuring that local jurisdictions may
    retain incentives to encourage routine activities in their home
    jurisdiction (as opposed to encouraging that activity to move to
    foreign jurisdictions). This rationale and the consequent path of the
    negotiations is quite distinct from QBAI, which is a feature of U.S.
    law that encourages the offshoring of U.S. jobs. In other words, the
    path forward on the payroll and tangible assets rules in Pillar 2 is
    entirely consistent with the Biden Harris administration rationale for
    repealing the offshoring incentive we have in our own law.

        Question. During the hearing, you engaged in a discussion regarding
    the tax profile of Amazon. Specifically, statements were made that
    Amazon takes advantage of ``loopholes'' and tax shelters to reduce its
    tax liability. You responded that ``there's a wide recognition that the
    kinds of loopholes that we've been talking about today are very
    common.''

        Would you describe bonus depreciation under section 168(k) as a tax
    shelter or loophole? Would you describe the research and development
    credit under section 38 as a tax shelter or loophole?

        Answer. In the hearing, I was focused on the loopholes that we were
    discussing in the hearing, which are primarily international in nature;
    in particular, I was concerned with incentives in current U.S. law that
    encourage profit shifting and offshoring (discussed above). Clearly,
    the tax code is also used to incentivize activities with positive
    effects on the economy (such as research, clean energy, etc.), and that
    practice does not generate troubling ``loopholes'' when credits are
    properly claimed and substantiated.

        Question. What do you believe is the role of the tax code in
    incentivizing domestic manufacturing and research?

        Answer. Research and development, whether in conventional
    businesses, manufacturing, or in cutting edge green energy companies,
    is very useful to economic growth, and economists have long recognized
    that R&D has beneficial spillover effects. Thus, it makes sense to
    encourage R&D through favorable provisions in the tax code, provided
    that the credit is properly claimed and substantiated.

        Question. On page 2 of your written testimony, you provide a
    comparison of corporate tax revenues relative to GDP for years prior to
    TCJA and after. You also compare the U.S. share of tax revenues to GDP
    to the share for OECD countries.

        My understanding is these data ignore tax revenue attributable to
    businesses operating in passthrough form, which are taxed at the
    individual level. How much business tax revenue was attributable to
    passthrough entities in the United States in 2018 and 2019? How much
    business tax revenue was attributable to pass-through entities in OECD
    countries, on average, in 2018 and 2019? Do the OECD data include
    subnational tax revenue? Does your 2018/2019 data for the United States
    include State tax revenue? If the data are unavailable for 2018 and
    2019, please provide a comparison of the business tax revenue for 2017
    of U.S. tax revenue as a share of GDP as compared to other OECD
    countries on average, adjusting for business income and tax revenue
    attributable to passthrough entities, as well as subnational and State
    tax revenues.

        Answer. I used data from the OECD that is available here: https://
    data.oecd.org/tax/tax- on-corporate-profits.htm#indicator-chart. As
    detailed in the description, the data include revenues at all levels of
    government. While it is true that the U.S. has a vibrant and important
    pass-through business sector, we also have a large corporate sector and
    the most successful multinational companies in the world. The OECD data
    examine only corporate profits revenues and do not provide the other
    breakdowns.

        Question. Don't your estimates also exclude the tax revenue from
    the Tax Cuts and Jobs Act section 965 transition tax, which imposed tax
    on pre-enactment foreign earnings? Please adjust your corporate tax
    revenues to include the estimated effect of the Section 965 transition
    tax and provide the corresponding results.

        Answer. The OECD data do not allow this breakdown. But that
    consideration would imply that our corporate revenues are even lower in
    the steady-state.

        Question. On page 2 of your written testimony, you state that
    ``corporate tax revenues are low despite the fact that U.S. companies
    produce very high corporate profits, both in historic and comparative
    terms. For example, in recent years, corporate profits (after-tax) as a
    share of GDP averaged 9.7 percent (2005-2019), whereas in the period
    1980-2000, corporate profits averaged only 5.4 percent of GDP.''
    Footnote 3 provides ``Data are from the Federal Reserve Economics
    Statistics database.''

        The Federal Reserve has numerous databases. Please provide a more
    specific data source, along with the data used to arrive at your
    results.

        Answer. Please see this source: https://fred.stlouisfed.org/graph/
    ?graph_id=
    245129&rn=117.

        Question. My understanding is that the Federal Reserve Economics
    Statistics corporate profits data include income from S corporations,
    which are taxed under the individual income tax. Additionally, they
    include Federal Reserve earnings and income of non-profits.

        Please adjust the corporate profit percentages cited in your
    testimony to exclude S corporations and non-profits as not adjusting
    for them provides an inaccurate reflection of corporate profits to GDP,
    particularly when compared to tax estimates that do not include tax
    revenues of S corporations.

        Answer. These data are not provided in comparable terms on the FRED
    database. But other data sources, such as the Forbes Global 2000 lists
    of multinational companies, indicate that U.S. multinational corporate
    profits are very strong in recent years.

        Question. Why were the periods 2005-2019 and 1980-2000 chosen as
    the timeframes for comparison?

        Answer. If you look at the graph (see two answers prior), you will
    see that the latter period looks relatively stable (aside form great
    recession), as does the former period (aside from cyclical factors).
    The years in between were a period of rapid increases in this series.

        Question. On page 3 of your written testimony, you state that the
    2017 law encouraged profit shifting. Please provide data that support
    this conclusion.

        Answer. There were several causal mechanisms that directly
    encouraged profit shifting; most important was the move toward
    territorial treatment of some income, which removed the possibility of
    U.S. tax upon repatriation. These are discussed in my written testimony
    (and in answers above).

        Question. On page 3 of your written testimony, you state that
    corporate profit shifting costs the U.S. government approximately $100
    billion per year at prior tax rates. You cite your own published work
    for this conclusion. While your testimony states that your preferred
    estimate is $100 billion, your published work provides a range of $61
    billion to $141 billion. Further, Leslie Robinson and Jennifer Blouin's
    research finds that your estimates are severely overstated as a result
    of using data that double count corporate profits, estimating that
    profit shifting results in one-tenth of the corporate tax revenue loss
    that you estimate.\10\ While your written work cites 2017 data, you
    also stated in your testimony that 2018 and 2019 data exist that
    support your conclusions on profit shifting. Please cite the specific
    data that support your conclusion that profit shifting in 2018 and 2019
    results in $100 billion of U.S. corporate tax revenues lost.
    ---------------------------------------------------------------------------
        \10\ https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3491451.

        Answer. The best place to go for a thorough answer to this question
    is a paper that I've written on this topic. The appendix addresses the
    Blouin/Robinson critique in full. The paper is available here: https://
    ntanet.org/NTJ/73/4/ntj-v73n04p1233-1266-Profit-Shifting-before-after-
    TCJA.html. If for some reason that is behind a firewall, you can also
    find it on SSRN here: https://papers.ssrn.com/sol3/papers.cfm
    ?abstract_id=3274827. Within, there is a figure that shows data through
    2019, leading to the conclusion that the size of the profit shifting
    problem is unchanged post TCJA, presumably because there were
    contradictory measures within the law. (Some provisions encouraged
    ---------------------------------------------------------------------------
    profit shifting; others discouraged profit shifting.)

        Please note that this article and its appendix are referenced for
    the following several pages of questions since it addresses those
    subject matters in detail.

        Question. You defend your use of direct investment income to study
    profit shifting, and reject the use of the subtraction method, on the
    basis that the subtraction method misses foreign-to-foreign profit
    shifting. Please provide an example of
    foreign-to-foreign profit shifting that would not be captured by the
    subtraction method using Bureau of Economic Analysis (BEA) data. Please
    explicitly explain how this transaction would not be captured using the
    subtraction method but would be captured in direct investment income.

        Answer. Hybrid dividends are one possible problem. This problem,
    and others, are discussed in the appendix to the above paper.

        Question. In your published work, you state that ``experts at both
    the BEA and the JCT believe that [excluding equity income] will omit
    some types of profit shifting.\11\ Please provide citation or other BEA
    and JCT documentation expressing these official views. In addition,
    please list the types of profit shifting that would be omitted by
    excluding equity income and an estimate of their magnitude.
    ---------------------------------------------------------------------------
        \11\ Clausing, Kimberly A., ``How Big Is Profit Shifting?'' (May
    17, 2020). Available at: https://ssrn.com/abstract=3503091.

        Answer. The experts are Ray Mataloni and Dylan Rassier (BEA) and
    Tim Dowd and Paul Landefeld (JCT). They are all mentioned in the
    ---------------------------------------------------------------------------
    acknowledgements of the aforementioned paper.

        Question. Until 2020, you provided estimates in your research of
    U.S. revenue loss using an income measure from the BEA that you
    understood to double count some foreign income. In your published work,
    you state ``Unfortunately, with existing data, it is not possible to
    account for this double-counting accurately.'' Consider the following
    passage from the BEA:\12\
    ---------------------------------------------------------------------------
        \12\ https://www.bea.gov/help/faq/1402.

            BEA separately shows the value of income from equity
            investments in other foreign affiliates (in this example, $100
            million) as a component of the aggregated income statement
            statistics, allowing data users to exclude this double-counted
            income from in their analysis. Doing so leaves a total of $100
            million of operational net income in Germany and $10 million of
            operational net income in the Netherlands for a total
    ---------------------------------------------------------------------------
            operational net income of $110.

        This sounds like a straightforward correction. Please explain why
    there is a data limitation.

        Answer. That is explained (in full detail) in the appendix of the
    aforementioned paper.

        Question. Related to the previous question, if you can remove the
    double counting in the BEA so easily, why use country-by-country
    reporting data? In the latter data, you do not know how much double
    counting exist, have no means of fixing it, and have no time series. On
    what basis would aggregate country-by-country reporting data be more
    useful for studying profit shifting than aggregate BEA data?

        Answer. No data series is perfect; this is why I use multiple data
    series to draw conclusions about possible ranges of estimates in this
    area. The strengths and weaknesses of these data series are also
    discussed at great length in this paper appendix.

        Question. The BEA regularly issues preliminary data and then
    follows up with revised data for both its net income and direct
    investment income series. Your 2017, 2018, and 2019 U.S. revenue loss
    estimates rely on preliminary data. What are your views on using
    preliminary versus revised data and do you think it is important to
    highlight that the data are preliminary? Aside from an academic
    research perspective, what are your views on making major tax policy
    decisions using preliminary data rather than waiting for revised data?

        Answer. Typically BEA preliminary data are quite similar to the
    revised data, so I (and other researchers) frequently use these data
    for the most recent year, as opposed to using one less year of data.

        Question. You also state in your published work that you made
    significant adjustments in method that raise the figures from 2016.\13\
    ---------------------------------------------------------------------------
        \13\ Id.

            Still, relative to the replication of Clausing (2016) in Blouin
            and Robinson (2019), after removing my erroneous adjustment,
            the new numbers remain far higher than those reported in Blouin
            and Robinson. Even if we take their ``subtraction series'' at
            face value, which itself is not warranted due to missing
            foreign-to-foreign shifting in the data, other adjustments in
            method between Clausing (2016) and Clausing (2020) would
            substantially raise the numbers relative to Blouin and
    ---------------------------------------------------------------------------
            Robinson.

        What would your estimates in 2020 be if you used the same method
    that you have been using to estimate revenue losses from 1982 until
    your newest paper in 2020?

        Answer. The above paper, mentioned several questions ago, includes
    a full description of my best estimates for analyzing these questions,
    with a detailed description as to why I made those choices.

        Question. Do you think that direct investment income tells you
    where income is reported for tax purposes, as opposed to where income
    is earned from an accounting perspective? Why or why not?

        Answer. The strengths and weaknesses of this data series, alongside
    the others, are also discussed at great length in this paper appendix.

        Question. Direct investment income is derived from the net income
    series published by the BEA by multiplying net income by the U.S.
    parent's direct ownership percent in the affiliate. You raise issues
    with the subtraction method such as book/tax differences, differences
    in coverage, definitional differences, etc. If the subtraction method
    suffers from these issues, why does direct investment income not suffer
    from these issues? Again, both direct investment income and the
    subtraction income derive from the same underlying income statements
    collected by the BEA using financial accounting methods and principles
    to prepare the data.

        Answer. The strengths and weaknesses of this data series, alongside
    the others, are also discussed at great length in this paper appendix.

        Question. As described above, your published work references an
    erroneous adjustment to direct investment income that overstated your
    previous estimate of U.S. revenue loss.\14\ How significant was the
    overstatement? Does that mean that both of your pre-TCJA estimates of
    U.S. revenue loss were overstated in your 2016 article; i.e., both
    using gross income (which double counted income) and using direct
    investment income (which was inflated and therefore had the effect of
    double counting income)?\15\
    ---------------------------------------------------------------------------
        \14\ Clausing, Kimberly A., ``How Big Is Profit Shifting?'' (May
    17, 2020). Available at: https://ssrn.com/abstract=3503091.
        \15\ Clausing, Kimberly. ``The Effect of Profit Shifting on the
    Corporate Tax Base in the United States and Beyond'' (June 17, 2016).
    Available at: https://papers.ssrn.com/sol3/papers.cfm?
    abstract_id=2685442.
        \15\ Id.

        Answer. The above paper includes a full description of my best
    estimates for analyzing these questions, with a detailed description as
    to why I made those choices. The issues in your prior questions take
    many pages to answer satisfactorily, so it is best to consult that
    ---------------------------------------------------------------------------
    paper.

        Question. Some economists have argued that direct investment income
    should not be used to study profit shifting and that a profit-type
    return, which closely tracks the subtraction method, is preferred
    because ``it always excludes equity income.''\16\ You have received
    numerous comments from Dr. Zucman on your work. Please comment on the
    reason for your disagreement with his preferred measure as being profit
    type return (which is the most similar to the subtraction method).
    ---------------------------------------------------------------------------
        \16\ https://www.nber.org/system/files/working_papers/w24701/
    w24701.pdf.

        Answer. I'm certain that Dr. Zucman would agree that no data series
    is perfect; this is why I use multiple data series to draw conclusions
    about possible ranges in this area. The strengths and weaknesses of the
    ---------------------------------------------------------------------------
    data series are also discussed at great length in the paper appendix.

        Question. Your published work states that direct investment income
    ``excludes all equity income'' and that for this reason it does not
    double count income.\17\ Please explain why you think that direct
    investment income excludes equity income.
    ---------------------------------------------------------------------------
        \17\ Clausing, Kimberly. ``The Effect of Profit Shifting on the
    Corporate Tax Base in the United States and Beyond'' (June 17, 2016).
    Available at: https://papers.ssrn.com/sol3/papers.cfm?
    abstract_id=2685442.

        Answer. Again, see paper appendix for a discussion of the strengths
    ---------------------------------------------------------------------------
    and weaknesses of these data sources.

        Question. As referenced during the hearing, JCT released a pamphlet
    in advance of the hearing.\18\ The JCT report includes return
    information for tax years 2017 and 2018, including information reported
    on Form 8975 relating to country-by-country reporting. However, in
    footnote 238, the JCT report provides a disclaimer regarding the
    interpretation of data included in Forms 8975:
    ---------------------------------------------------------------------------
        \18\ https://www.jct.gov/publications/2021/jcx-16-21/.

            There are several important ambiguities to note when
            interpreting this data. MNEs can and do use a variety of
            financial reporting standards and can choose whichever one they
            would like to use for reporting information on Form 8975 (i.e.,
            if these MNEs have different permanent establishments with
            separate books that differ from the parent corporation).
            Consequently, what is in the income and tax items will differ
            across MNEs. Additionally, the rules were not clear on whether
            to include dividend income in profits, even though it was clear
            that it should not be included in revenues. As a result, there
            could be some double counting of dividend income in the profits
            line. Also, related party revenues are not on a consolidated
            basis. Rather, they are reported in aggregate. So, related
            party revenues will have some double counting in jurisdictions.
            Taxes paid on a cash basis could include taxes owed in a prior
            year or a refund from a prior year. (JCT report, footnote 238,
    ---------------------------------------------------------------------------
            page 57)

        Are you aware that prior to 2019 (including in tax years 2017 and
    2018), there was no guidance provided to companies to exclude
    intercompany dividends from the Form 8975? Does this not mean that Form
    8975 data may also have a double counting issue as was identified in
    your research? Specifically, given that intercompany dividends likely
    increased between 2017 and 2018 due to section 965 in the TCJA, doesn't
    this mean that the intercompany dividend/double counting issue
    highlighted was exacerbated, thereby lowering the average tax rate?

        Answer. In the 2017 data, country-by-country data appeared quite
    similar (in totals) to those from other sources that did not include
    any possibility of double counting. These issues are also addressed in
    the appendix to my paper cited above. I agree that the 2018 data report
    larger numbers, and it will take time to fully understand the strengths
    and weaknesses of these data, and how the repatriation provisions of
    the 2017 law may have affected the data.

        Question. Your testimony and academic work describes some of our
    trading partners as ``tax havens.'' For example, your work has
    described Ireland, Luxembourg, the Netherlands, Switzerland, and Puerto
    Rico as tax havens. The rate currently being contemplated for a global
    minimum tax at the OECD is 12.5 percent. Ireland's headline corporate
    tax rate is also 12.5 percent.

        What is the administration's precise definition of a tax haven?

        Answer. In my work, I notice that a handful of jurisdictions, all
    with very low effective tax rates, account for the vast bulk of the
    profit shifting problem. These very low tax jurisdictions are often
    referred to as ``havens'' in the literature. The literature typically
    distinguishes such jurisdictions by their low effective tax rates. I do
    not believe that the administration has a formal definition for the
    term ``tax haven.''

        Question. Is it the administration's position that Ireland,
    Luxembourg, the Netherlands, Switzerland, and Puerto Rico are tax
    havens?

        Answer. See prior answer.

                                     ______

                   Questions Submitted by Hon. John Barrasso
        Question. I'm going to use Senator Cantwell's phrase and ``go
    local'' for just a moment.

        Dr. Clausing and Ms. Huang, I heard both of you testify about how
    U.S. policy needs to focus on workers. I've heard Chairman Wyden and
    Democrats on the committee talk about doing what is right for American
    workers.

        On Day 1 of the Biden administration, with the stroke of a pen,
    President Biden eliminated thousands of good-paying American jobs when
    he blocked construction of the Keystone Pipeline.

        Given your support for doing everything we can to support American
    jobs in the United States, do you agree President Biden's actions are
    inconsistent and in conflict with your beliefs that we should be
    helping, not hurting, all American workers whose jobs are located
    within the boundaries of the United States?

        Answer. All of President's Biden's policy priorities are focused on
    the essential priority of American job creation. However, the policies
    should be viewed holistically. For example, ending fossil fuel
    subsidies, as the American Jobs Plan proposes to do, reduces incentives
    for producing oil and gas. However, the same proposal includes much
    larger subsidies for green energy production, many multiples the size.
    Thus, on net, these proposals encourage job creation and also use tax
    policy to respond to the urgent priority of mitigating climate change.

        Question. The President, Democrats, and their supporters have
    suggested various tax proposals that will drive up the cost of doing
    business for American businesses who operate solely within the United
    States and whose products or services are sensitive to global prices.

        Enacting tax policies that increase the operating costs for the
    U.S. businesses described above will make those companies less
    competitive with foreign companies that (1) offer the same product or
    service in the global marketplace, and (2) are not impacted by the
    added operating costs created by U.S. tax policy.

        Do you agree or disagree with this statement? Please explain.

        Answer. U.S. corporate tax revenues are far lower than those in
    peer countries. Over 10 years, the Biden proposals increase corporate
    taxes modestly, to about 1.7 percent of GDP. In years prior to the 2017
    law, U.S. corporate tax revenues averaged about 2 percent of GDP, and
    in the years since the 2017 law, U.S. corporate tax revenues averaged
    about 1 percent of GDP. In contrast, our trading partners raise about 3
    percent of GDP in corporate taxes.

        It is also important to remember that competitiveness is about more
    than the success of U.S. companies in foreign merger and acquisition
    bids. It is also about ensuring that our tax code doesn't incentivize
    foreign operations at the expense of those at home. And, it is about
    nurturing the many fundamental strengths that make the United States a
    good place to do business. Investing in our institutions, in the
    abilities and education of American workers, in the quality of our
    infrastructure, and in cutting-edge research is all important.

                                     ______

                    Questions Submitted by Hon. Bill Cassidy
        Question. Insurance and banking--limits to reshoring: As we look to
    bring business back to the United States, we should recognize that some
    companies in regulated industries like banking and insurance are
    required by local regulatory authorities to have a significant
    presence, including in people and capital, in the country where their
    customers are located. As a result, these companies can't serve
    international customers from the United States.

        Have you given consideration to industries like these and how any
    proposed tax changes in GILTI could negatively impact U.S. companies
    ability to be competitive or grow and serve markets that are not the
    United States?

        Answer. The administration is committed to reforming the GILTI
    system to ensure that the U.S. tax system eliminates preferences for
    conducting business offshore while maintaining the status of the United
    States as a desirable business location. The administration is also
    very engaged in the OECD Pillar 2 process to work with our trading
    partners to end the race to the bottom on global tax rates and building
    a tax system for the global middle class. We look forward to working
    with the committee on these reforms.

        Question. How can we make sure we do not penalize companies for
    changes they can't make due to local law and regulation?

        Answer. See immediately above.

        Question. Insurance and OECD minimum tax rules: As you know, the
    OECD is engaged in a significant two-part project to ensure
    multinational enterprises are sufficiently taxed in locations where
    they create value and are subject to a minimum level of taxation
    regardless of where they are headquartered.

        Some in the insurance industry in my State have concerns with the
    second part of the project, known as Pillar 2. Because of the insurance
    industry's unique business model, the peculiar nature of its accounting
    rules, and the regulatory environment in which it operates, insurance
    companies could suffer double taxation if proposed changes to the
    project are not adopted.

        Are you aware of the concerns raised by the insurance industry on
    Pillar 2 and if so, what is the administration doing to address these
    concerns?

        Answer. The administration is engaged in the OECD Pillar 2 process
    to work with our trading partners to end the race to the bottom on
    global tax rates and build a tax system for the global middle class. We
    are engaged with all stakeholders in this process and are aware of the
    concerns voiced by the insurance industry. We look forward to working
    with the committee on these reforms.

                                     ______

                    Questions Submitted by Hon. Steve Daines
        Question. During the hearing, I cited a response provided by
    Secretary Yellen to a question from Senator Tillis at a Senate Banking
    Committee hearing. Senator Tillis asked Secretary Yellen whether, ``. .
    . in your opinion, the increase of the corporate tax rate up to 28
    percent will not cause any significant competitive disadvantage for the
    United States for corporate expansion?''

        Secretary Yellen replied, ``Well, I think it would be important to
    make sure that it is done in the context of a global agreement.''

        Would you agree with Secretary Yellen's reply?

        Answer. The global agreement is an important complement to the U.S.
    domestic policy agenda, but the American Jobs Plan is sound tax policy
    even in the absence of an agreement, as the tax changes proposed within
    the plan will end offshoring incentives, curtail profit shifting, and
    generate a more equitable and efficient tax system.

        As noted above, U.S. corporate tax revenues (as a share of GDP) are
    far lower than those in peer countries and would remain so after the
    proposed tax law changes. Still, it is useful to work together with
    other countries to solve vexing international collective action
    problems, including those of tax competition.

        Question. There is an expectation that a global agreement on a
    minimum tax could be reached this summer. Even if a deal is reached at
    the OECD, it is widely expected that any minimum tax would be far lower
    than President Biden's proposed 21 percent minimum tax. Can you explain
    how tax increases of this magnitude on U.S. companies would not
    reignite inversions?

        Answer. The United States is seeking a global agreement on a
    minimum tax at the highest possible rate. Even if it settles somewhat
    below 21 percent, today the global minimum tax rate is 0, far below our
    10.5-percent rate.

        To the extent that foreign countries also adopt strong minimum
    taxes, that will also reduce any competitiveness worries, while
    protecting our tax base from the profit shifting of foreign
    multinational companies. Still, even absent agreement, we are not
    powerless to address these problems. The SHIELD proposal can counter
    foreign company profit shifting. And simple anti-inversion measures, or
    even changes through regulation, can be quite effective in stemming the
    incentive to invert, as shown by the U.S. experience after the anti-
    inversion (and anti-income stripping) regulations of the late Obama
    years.

                                     ______

                    Questions Submitted by Hon. Rob Portman
        Question. The original purpose of taxing tax haven profits as
    explained by Secretary Dillon in proposing the anti-deferral measures
    was to eliminate incentives to foreign direct investment (FDI). Since
    the 1960s, the international tax system has dramatically changed.
    However, low or no tax jurisdictions still exist and are often used to
    entice direct investment in those countries. Similarly, we employ
    certain incentives to spur investment in the U.S.

        As the purpose of these foreign tax systems is supposed to affect
    location of job-producing business investment, what is the comparative
    effect of deferred U.S. tax vs. location of markets, location of
    supplies, comparative worker efficiency and wage costs, energy and
    transportation infrastructure, and costs of social overhead for
    specific social priorities of the alternative investment locations?

        Answer. It is certainly the case that there are many factors beyond
    tax that determine where companies invest. Ensuring the strength of our
    institutions, and investing in infrastructure, education, R&D, and
    cutting-edge technology, will help ensure that the United States
    remains a strong place to do business.

        Question. What percentage of the Fortune Global 2000 was
    represented by U.S. companies in 2005-2019? 1980-2000? 1968-1980? Is
    the percentage increasing or decreasing? To what extent do factors
    other than comparative tax rates affect direct investment location
    decisions?

        Answer. The data that I have access to do not allow me to compare
    all of the above time periods. However, the United States has an
    outsized role among Global 2000 companies. While we account for about
    24 percent of world GDP in 2019 (and only 16 percent in purchasing
    power parity terms), U.S. multinationals are 29 percent of the Forbes
    2000 list, and 37 percent of Forbes 2000 profits, and 48 percent of
    Forbes 2000 market capitalization.

        In recent years, countries like China and India have seen
    increasing numbers of their companies on the Forbes 2000 list. This is
    completely expected, as we'd expect countries with rapid economic
    growth to host increasingly successful global companies.

        Question. Describe the impact of U.S. Federal tax incentives on
    FDI, and what percentage of U.S. FDI is attributable to comparative
    labor efficiency, access to markets, access to supplies, access to
    technology, access to educated workforce, and differences in business
    regulation to achieve noneconomic goals?

        Answer. This sort of question would entail a sophisticated
    econometric analysis, and even then, there would be issues of causality
    that would be difficult to determine. The United States is host to much
    inward FDI due to the fact that we have a large market, a skilled
    workforce, and many other advantages. Likewise, U.S. companies often
    choose large, successful economies when deciding where to invest and
    hire abroad.

        Question. Can you provide the committee with a detailed comparison
    of the factors listed above as applied to OECD and the 10 largest non-
    OECD destinations for direct investment by U.S. parented multinational
    groups?

        Answer. I am not aware of existing analyses that provide these
    breakdowns. See prior answer regarding the difficulty of such an
    analysis.

        Question. In your written testimony, you say ``concerns about the
    competitiveness of U.S. multinationals ignore the evidence. Both before
    and after the 2017 Tax Act, U.S. multinational companies are the envy
    of the world.'' However, as we heard at the hearing, before the Tax
    Cuts and Jobs Act (TCJA), the competitiveness of U.S. companies was a
    problem, as evidenced by the number of companies that inverted or were
    targets for foreign acquisition. Before TCJA, even Senator Wyden said
    that ``a modern tax code should fight gamesmanship and bring down the
    corporate rate to make American businesses more competitive.''

        If you think the pre-TCJA system didn't impair U.S. companies'
    ability to compete, does that mean you would be comfortable with
    returning to the pre-TCJA international tax system?

        Answer. The pre-2017 tax regime did not include the offshoring
    incentives that are part of current law under GILTI and FDII, but the
    prior regime did have some undesirable features that can be improved
    upon. For example, the statutory rate was high but the base was narrow,
    leading to large gaps between the statutory and the effective rate. In
    addition, there was no tax on foreign income until it was repatriated,
    which incentivized offshore operations and profits, yet simultaneously
    disappointed investors who wanted access to their offshore cash.
    (Nonetheless, effects on U.S. investment were minor, since companies
    could borrow against offshore profits, and offshore profits were often
    still invested in U.S. markets.)

        Ideally, corporate tax reform would fix the problems of both prior
    law and current law. The American Jobs Plan proposal does just that. By
    eliminating the (QBAI) exemption for the first ten percent return on
    offshore tangible assets, and by repealing FDII, offshoring incentives
    are eliminated. A much stronger minimum tax (with country-by-country
    administration and a higher rate) will put an end to the profit
    shifting incentives that were baked into current and prior law.
    Accompanying this change, we recommend reforms to the BEAT (in our
    SHIELD proposal) that will curtail foreign multinational company profit
    shifting.

        Question. Have trading partner corporate taxes as a share of GDP
    increased or decreased since the 1950s?

        Answer. I am not sure about the 1950s comparison, but overall
    trading partner corporate taxes as a share of GDP have been remarkably
    stable in recent decades, at about 3 percent of GDP (see: https://
    data.oecd.org/tax/tax-on-corporate-profits.htm#indicator-chart). Note
    that these data do not imply that profit shifting has not been a rising
    problem during this time, as corporate profits have generally been
    increasing as a share of GDP.

        Question. Additionally, you state: ``Based on the early evidence in
    the 2 years after the law, the use of tax havens to avoid tax continues
    unabated.''

        What evidence do you recommend the committee review? Is the
    information based on U.S. corporate tax return information for those
    taxable years? Has JCT or the Department of the Treasury conducted the
    review? What criteria were used to compare tax haven income before and
    after the enactment?

        Answer. The data provided in my testimony is from the Bureau of
    Economic Analysis foreign direct investment earnings series. That
    series now extends to 2020. The share of U.S. multinational company
    profits in low-tax jurisdictions was nearly identical in the years
    after the law (2018-2020) as it was in the years prior to the law
    (2013-2017).

        Question. The Biden administration has proposed a series of changes
    to the GILTI provisions including: doubling the tax rate to 21 percent,
    mandating that the tax be computed on a country-by-country basis
    instead of an aggregate basis, and eliminating the ordinary return
    exclusion for a qualified business asset investment (QBAI). Each of
    these proposed changes will increase the tax burden on U.S.-based
    companies while having almost no impact on their foreign competitors
    that provide similar services or sell similar goods. Taken together,
    these proposed GILTI changes would put U.S. companies at a severe
    competitive disadvantage and are out of step with ongoing OECD
    discussions to impose a minimum tax rate of 12.5 percent.

        With respect to QBAI, can you provide evidence of multinationals
    who moved facilities from the United States to a foreign jurisdiction?
    Or is this more of an academic concern that ``cross- crediting'' could
    occur?

        Answer. I expect that future studies will provide clearer evidence
    on the magnitude of these mechanisms, but some early evidence is
    suggestive. For example, Beyer et al. (see https://papers.ssrn.com/
    sol3/papers.cfm?abstract_id=3818149) find that for U.S. multinational
    corporations, higher levels of pre-TCJA foreign cash are associated
    with increased post-TCJA foreign property, plant, and equipment
    investments. They do not find a similar increase in domestic property,
    plant, and equipment. Atwood et al. (see https://papers.ssrn.com/sol3/
    papers.cfm?abstract_id=
    3600978) find the GILTI provisions introduced new incentives for U.S.
    multinational corporations to invest in foreign target firms with lower
    returns on tangible property so that they might shield income generated
    in havens from U.S. tax liability under the GILTI minimum tax.

                                     ______

                     Questions Submitted by Hon. Todd Young
        Question. President Biden recently unveiled his infrastructure
    proposal in which he warned of the global ``race to the bottom'' on
    corporate tax rates. He has proposed raising the corporate rate to 28
    percent, which would make the U.S. subject to the highest corporate tax
    rate in the OECD. Additionally, he expressed interest in finding a
    multilateral agreement on a global minimum tax.

        Given research by the Joint Committee on Taxation and other
    nonpartisan bodies that estimate workers bear at least 25 percent and
    possibly over 50 percent of the burden, should we be concerned about
    the effects of higher corporate taxes on job creation and retention,
    especially as we work towards economic recovery?

        Answer. Economic models from organizations as varied as the U.S.
    Treasury, the Joint Committee on Taxation, the Congressional Budget
    Office, the Tax Policy Center, and the American Enterprise Institute
    all assign the vast majority of the corporate income tax burden to some
    combination of capital and excess profits. These models also assume
    that the deficits created by corporate tax cuts will be offset sometime
    in the future--yet do not account for the potential costs of those
    offsets for typical workers. It is important to remember that other tax
    options (such as labor income taxes, payroll taxes, and sales taxes)
    fall almost entirely on labor.

        Furthermore, since these models were developed, two factors have
    likely lessened the long-run burden of the corporate income tax on
    labor. First, since current law exempts the normal return to capital
    for much investment, in theory the corporate tax should fall even less
    on labor than it did in years past. The mechanism by which corporate
    taxes burden labor requires a reduction in investment to reduce worker
    productivity, lowering wages.Second, the role of market power in the
    U.S. economy has continued to increase, making more and more of the
    corporate tax base excess profits rather than the normal return to
    capital. See Phillipon, Thomas, The Great Reversal: How America Gave up
    on Free Markets, Cambridge: Harvard University Press, 2019.

        Question. During the hearing, you stated that the Biden
    administration's proposal to increase the corporate tax rate could be
    borne by excess capital. However, as I just noted above, the Joint
    Committee on Taxation estimates that at least 25 percent of corporate
    income taxes are borne by American workers--and that estimate is on the
    low end. Isn't that a significant and alarming share that should not
    and cannot be ignored?

        Answer. See prior answer.

        Question. You have characterized Ireland as a ``tax haven'' given
    its 12.5-percent corporate tax, yet this is the exact rate the OECD is
    considering for its global minimum tax. Do you believe President
    Biden's proposal is out of step with other developed nations when it
    comes to corporate taxes?

        Answer. The administration seeks to obtain a sustainable global
    agreement on a robust minimum tax at the highest rate possible. Such an
    agreement would help all countries defend their tax bases from erosion
    due to profit shifting, and it would end the ``race to the bottom'' in
    corporate taxation. Ensuring that a global economy can still tax mobile
    capital is essential to creating a more equitable globalization.
    Erosion of capital taxation has meant that workers' labor income is
    shouldering more and more of the burden of financing fiscal priorities.
    Instead, multinational corporations can be asked to pay their fair
    share.

                                     ______

                    Prepared Statement of Hon. Mike Crapo,
                           a U.S. Senator From Idaho
        Mr. Chairman, thank you for holding this hearing today. Thank you
    to our panelists for joining us today.

        Before the Tax Cuts and Jobs Act (TCJA), we shared a common concern
    for the many threats to the U.S. corporate tax base and the collateral
    threats to U.S.-
    centered economic activity, including investment, growth, and jobs.
    Corporate inversions were on the rise as a defensive strategy adopted
    by U.S. businesses to ward off foreign takeovers. The combination of
    one of the world's highest corporate tax rates of 35 percent and the
    disadvantages of the U.S. worldwide deferral system made it a losing
    proposition to be a U.S.-based company when competing in overseas
    markets.

        That environment led this committee's bipartisan working group
    chaired by Senators Portman and Schumer to conclude that our
    international tax system was ``clearly broken.'' I challenge anyone to
    reasonably argue that we should return to the pre-TCJA international
    tax landscape.

        Our shared view was not limited to the state of our flawed system;
    there was also bipartisan agreement on the optimal path forward.
    President Obama, then-Senate Finance Committee chairman Baucus, and
    then-House Ways and Means Committee chairman Camp all proposed lower
    tax rates with minimum taxes on foreign earnings.

        There is nothing controversial about the problems that plagued our
    international tax system or our collective acknowledgment of the
    fundamental changes that needed to be made. Consistent with these
    bipartisan objectives, TCJA reduced the corporate tax rate, ended the
    deferral system, and introduced a new minimum tax on foreign earnings
    of U.S. companies, as well as other anti-abuse rules to prevent base
    erosion.

        While the reduced corporate rate moved the United States more in
    line with the rest of the world, the anti-base erosion measures that
    were enacted into law are the most robust in the world. Indeed, they
    are prompting other countries, through the OECD, to consider similar
    measures. The goal of our new system was to both ensure the United
    States, and U.S. companies, are competitive in the global marketplace
    and to protect the U.S. tax base.

        TCJA is a vast improvement over the prior system. Since TCJA, the
    flood of inversions has ceased entirely, and U.S. companies are no
    longer easy targets for takeovers. Prior to the pandemic, U.S.
    companies were sharing their business stories of increased investment,
    wages paid to workers, and jobs in the United States--outcomes I expect
    to resume once our economy can reopen completely provided adverse
    changes are not made to the tax rules.

        It is, of course, healthy to deliberate and consider refinements to
    allow U.S. companies to further invest and expand in the United States
    without harming their ability to compete, especially considering the
    precarious environment many businesses find themselves in as they
    recover from the pandemic. Markets abroad are vast, and we want U.S.
    companies to be competitive in their ability to serve those markets and
    not be hamstrung by uncompetitive taxation.

        What we should not do is hastily change the system purely for
    purposes of raising revenue, bringing inversions and foreign takeovers
    of U.S. companies right back to the forefront. Unfortunately, that may
    be the misguided direction in which the administration wishes to
    proceed.

        Let us not forget, those inversions and foreign takeovers were
    real, and not just academic estimates from certain questionable studies
    we have seen in the area of international effects of taxation. Some of
    those studies, dealing with so-called stateless income, profit
    shifting, and base erosion, play very fast and loose with data and
    methods. Sometimes, in those analyses, politics and advocacy for
    political position overcome rigor, and it shows.

        Under President Biden's proposed corporate rate increase, which
    would result in a combined U.S. rate of nearly 33 percent, we again
    would have one of the highest combined statutory tax rates among
    developed countries. Worse, the President's proposed 100-percent
    increase in the GILTI rate, one current provision of the international
    part of the tax code, would put the United States at an even greater
    disadvantage, as no other country taxes foreign earnings at even close
    to that rate.

        America's future jobs, income growth, and prosperity will depend on
    how well U.S. businesses compete, in this country and in foreign
    markets. American headquarters, research, and other domestic jobs
    depend on U.S. firms' viability here and abroad. Strong U.S. companies
    mean financial security for millions of Americans who need look no
    further than their 401(k) accounts and IRAs, which hold the largest
    plurality of publicly traded stock.

        As the Schumer-Portman working group said, ``When U.S. businesses
    can compete and win in this growing global market, the real winners are
    U.S. workers.'' As we examine proposals that would dramatically alter
    TCJA's international provisions, we should test the potential outcomes
    against our shared policy objectives voiced before and since the TCJA.

        Will the U.S. tax base be strengthened? Will U.S. growth rise? Will
    U.S. workers have better job opportunities and wages? Will U.S. workers
    and retirees see their retirement account balances rise?

        Mr. Chairman, I look forward to hearing from today's witnesses.

                                     ______

     Prepared Statement of James R. Hines, Jr., Ph.D., Richard A. Musgrave
        Collegiate Professor of Economics and L. Hart Wright Collegiate
                    Professor of Law, University of Michigan
        Chairman Wyden, Ranking Member Crapo, and members of this
    distinguished committee, it is an honor to participate in these
    hearings on international tax policy. I teach at the University of
    Michigan, where I am the Richard A. Musgrave collegiate professor of
    economics in the department of economics and the L. Hart Wright
    collegiate professor of law in the law school, and where I serve as
    research director of the Office of Tax Policy Research in the Stephen
    M. Ross School of Business. I taught for years at Princeton and Harvard
    prior to joining the Michigan faculty, and have been a visiting
    professor at Columbia University, the London School of Economics, the
    University of California--Berkeley, and Harvard Law School. I am a
    research associate of the National Bureau of Economic Research,
    research director of the International Tax Policy Forum, and former co-
    editor of the American Economic Association's Journal of Economic
    Perspectives.

        The international provisions of the Internal Revenue Code
    significantly affect the vitality of the economy and the welfare of
    U.S. residents, so it is important that they be well designed. As with
    other components of our tax laws, the challenge is to craft rules that
    promote efficient resource use while also collecting the revenue that
    the country needs. This challenge is particularly acute in the
    international arena because the world economy is highly, and
    increasingly, competitive. U.S. firms compete with foreign firms for
    business operations and sales to customers; and the United States
    competes with other countries to attract business activity. Because we
    do not live in a bubble, but instead in a world with many competitors,
    it is critical in designing U.S. policy to be cognizant of the policies
    of other countries and the way that U.S. taxes position U.S. taxpayers
    relative to their foreign competitors.

        The United States has a competitive labor market, which from
    elementary economic theory means that labor compensation--wages,
    salaries, and fringe benefits--is determined by labor productivity.
    Consequently, the way to maintain and improve the well-being of U.S.
    workers is to adopt policies that make U.S. labor as productive as it
    can be. Since people work for businesses, it follows--again, from
    economic theory--that an efficient and thriving business sector
    promotes labor productivity, creating the greatest demand for labor and
    therefore the highest standard of living for U.S. workers. It is not
    possible for the economy to compensate people with more than the
    economy produces, so in order to improve standards of living it is
    necessary to adopt policies that maximize production given available
    resources. This is what efficient policies do, and it is why efficient
    policies are desirable.

        Multinational firms are major U.S. employers. In 2017, the last
    year for which high-quality data are currently available, U.S.-based
    multinational firms were responsible for 20.1 percent of U.S. private-
    sector employment and 23.8 percent of U.S. private-sector labor
    compensation.\1\ These figures illustrate not only that these jobs
    represent a significant portion of the U.S. private workforce, but also
    that they are well-paid, with average compensation 18 percent higher
    than the economy's average. In the same year foreign-based
    multinational firms accounted for an additional 6.4 percent of U.S.
    private employment and 8.0 percent of private employee compensation.
    Some sectors of the economy are particularly multinational-intensive,
    with U.S.-based multinational firms providing 51.6 percent of U.S.
    manufacturing employment and 59.9 percent of manufacturing employee
    compensation, and
    foreign-based multinationals contributing an additional 21.0 percent of
    U.S. manufacturing employment and 23.8 percent of U.S. manufacturing
    employee compensation. It is obviously in the interest of the U.S.
    economy and U.S. workers to maintain thriving business operations by
    multinational firms.
    ---------------------------------------------------------------------------
        \1\ The evidence described in this paragraph is drawn from C. Fritz
    Foley, James R. Hines Jr., Raymond J. Mataloni Jr., and David Wessel,
    ``Multinational activity in the modern world,'' in C. Fritz Foley,
    James R. Hines Jr., and David Wessel eds., Global Goliaths:
    Multinational Corporations in the 21st Century Economy (Washington, DC:
    Brookings, forthcoming).

        There is understandable concern that the foreign operations of U.S.
    multinational firms might come at the expense of their U.S. operations.
    To take an evocative example, a U.S.-based multinational manufacturing
    firm might close a U.S. plant and replace it with a plant in a lower-
    cost foreign country. This type of substitution clearly occurs, and
    when it does, it has the effect of reducing U.S. labor demand. It does
    not, however, follow from this example that foreign direct investment
    by U.S. firms generally reduces their demand for labor in the United
    States, because there is an offsetting productivity effect of foreign
    business operations, and this productivity effect is a major stimulant
    to U.S. labor demand. The opportunity to earn profits with operations
    in foreign countries generally increases the productivity of U.S.
    business operations, and thereby stimulates additional business
    activity, and additional employment, in the United States. For example,
    greater opportunities for a U.S.-based multinational to sell locally-
    produced consumer products to foreign customers typically increases the
    return to U.S. operations that develop and refine the product, so in
    such cases an expansion of foreign business operations should be
    associated with greater employment, and greater employee compensation,
    ---------------------------------------------------------------------------
    in the United States.

        There are therefore two important channels by which the foreign
    operations of U.S.-based multinational firms influence their domestic
    employment and employee compensation. The substitution effect, in which
    foreign operations replace what these firms otherwise would have done
    in the United States, depresses U.S. labor demand. The productivity
    effect, in which foreign operations enhance firm productivity, augments
    U.S. labor demand. The aggregate impact of foreign operations on U.S.
    labor demand depends on the relative magnitudes of these two effects.
    As a general matter, the more internationally competitive is the
    economic environment, the more important is the productivity effect
    compared to the substitution effect, and therefore the more likely is
    it that foreign operations by U.S.-based multinational firms increase
    demand for labor in the United States. In an industry with extremely
    keen competition, firms can survive only by taking advantage of every
    sales possibility and every opportunity to economize on costs. In such
    cases, if foreign operations enhance profitability then firms cannot
    survive and thrive without them, so the foreign operations of U.S.
    firms contribute to U.S. employment and employee compensation.

        The available evidence suggests that the magnitude of the
    productivity effect generally exceeds that of the substitution effect,
    so greater foreign business activity of U.S.-based firms is associated
    with greater demand for labor in the United States. Mihir Desai, Fritz
    Foley, and I found that for U.S.-based multinational firms between 1982
    and 2004, 10 percent greater foreign capital investment was associated
    with 2.6 percent greater domestic investment, and 10 percent greater
    foreign employment was associated with 3.7 percent greater domestic
    employment. Greater foreign investment also had positive estimated
    effects on exports from the United States, and on U.S. research and
    development spending, indicating that foreign expansions stimulate
    demand for tangible and intangible domestic output. Subsequent work by
    Lindsay Oldenski and others reports similar evidence of foreign
    expansions by U.S.-based multinational firms being associated with
    greater U.S. employment in data through 2014; and studies of
    multinational firms based in other countries including Australia,
    Canada, Germany, and the United Kingdom offer analogous evidence that
    when these companies expand their operations in foreign countries they
    also enhance their employment and employee compensation in their home
    countries.\2\
    ---------------------------------------------------------------------------
        \2\ For the evidence discussed in this paragraph, and references to
    other studies, see Mihir A. Desai, C. Fritz Foley, and James R. Hines
    Jr., ``Domestic effects of the foreign activities of U.S.
    multinationals,'' American Economic Journal: Economic Policy, February
    2009, 1 (1), 181-203, and Lindsay Oldenski, ``Do multinational firms
    export jobs?'' in C. Fritz Foley, James R. Hines Jr., and David Wessel
    eds., Global Goliaths: Multinational Corporations in the 21st Century
    Economy (Washington, DC: Brookings, forthcoming).

        From the standpoint of U.S. tax policy, it is clearly important not
    to impede
    productivity-enhancing foreign operations of U.S.-based firms, because
    doing so has the effect of reducing demand for labor in the United
    States. A more robust multinational sector has the potential to expand
    highly compensated employment beyond 26.5 percent of the U.S. private
    sector workforce. But tax policy clearly has the potential to have the
    ---------------------------------------------------------------------------
    unwanted effect of discouraging business operations by these firms.

        The U.S. taxation of international joint ventures offers a
    cautionary tale. Late in the negotiations and amendments leading up to
    passage of the Tax Reform Act of 1986, it transpired that additional
    tax revenue was needed to make the 1986 Act revenue-neutral. One of the
    revenue raisers inserted very late in the process was a provision
    requiring that each 10-50 corporation, foreign affiliates owned between
    10 and 50 percent by American companies, calculate its foreign tax
    credits in separate ``baskets.'' 10-50 corporations are international
    joint ventures. This provision of the 1986 Act prevented taxpayers from
    being able to calculate their foreign tax credit limits on an average
    basis across countries and even across business operations within the
    same countries, and thereby imposed higher U.S. taxes on international
    joint ventures, doing so on something of a selective basis. This tax
    cost sharply discouraged U.S. firms from participating in international
    joint ventures. The evidence shows that in subsequent years U.S. firms
    significantly reduced their international joint venture activity, which
    represented roughly 22 percent of their foreign activity prior to
    passage of the Tax Reform Act of 1986, but within a few years afterward
    had fallen to just 15 percent. Furthermore, the decline in joint
    venture activity was concentrated in low-tax foreign countries, which
    is consistent with the additional tax costs imposed by the 1986 Act.\3\
    Recognizing the unwanted effects of this ``basket'' provision, Congress
    subsequently repealed it in 1997,\4\ and U.S. international joint
    venture activity ultimately recovered. But obviously it would have been
    better never to have had this episode, which illustrates the potential
    for U.S. tax policy to impede the ordinary business activities of U.S.
    firms.
    ---------------------------------------------------------------------------
        \3\ Mihir A. Desai and James R. Hines Jr., `` `Basket' cases: Tax
    incentives and international joint venture participation by American
    multinational firms,'' Journal of Public Economics, March 1999, 71 (3),
    379-402.
        \4\ ``Indeed, the Congress was aware that recent academic research
    suggests that the present-law requirements may distort the form and
    amount of overseas investment undertaken by U.S.-based enterprises. . .
    . The Congress believed that the joint venture can be an efficient way
    for American business to exploit its know-how and technology in foreign
    markets. If the prior-law limitation was discouraging such joint
    ventures or altering the structure of new ventures, the ability of
    American business to succeed abroad could be diminished. The Congress
    believed it is appropriate to modify the prior-law limitation to
    promote simplicity and the ability of American business to compete
    abroad.'' United States Congress, Joint Committee on Taxation, 1997,
    General Explanation of Tax Legislation Enacted in 1997, U.S. Government
    Printing Office, Washington, DC, p. 302.

        The partial disappearance of international joint ventures is just
    one of the examples of business opportunities lost due to the operation
    of U.S. tax rules. Prior to 2018, the high U.S. statutory tax rate of
    35 percent together with the U.S. system of worldwide taxation had the
    effect of discouraging foreign business activity by U.S. firms,
    particularly activity in low-tax foreign countries. Firms from other
    countries were generally not subject to home country taxes on their
    foreign incomes, and as a result, were better able than U.S. firms to
    compete for business in low-tax countries. For example, if there were a
    business opportunity in Singapore--a promising tech company that was
    open to being acquired by a foreign buyer--then U.S. firms might
    compete not only with each other but also with Canadian, Japanese,
    German, and other firms for the acquisition. Companies from all of
    these other countries were in better tax positions to make the
    acquisition, because the U.S. tax system imposed a residual tax on
    foreign income earned in countries with lower tax rates than the United
    States. This does not mean that U.S. firms could not compete at all in
    these international markets, but that they were hampered in doing so by
    ---------------------------------------------------------------------------
    the operation of the U.S. tax system.

        It is worth reflecting on the implications of this competition
    among firms from multiple countries for this Singapore acquisition. If
    a British firm successfully completes the acquisition due in part to
    its more favorable tax position, this is very much like a corporate
    inversion. In a classic corporate inversion, a U.S. might decide to
    reincorporate as a British firm for tax purposes. Of course even the
    inverted firm's U.S. operations would still have a U.S. home and be
    taxable by the United States, but Congress is concerned about corporate
    inversions because the firm's foreign operations that heretofore had
    been controlled by a U.S. firm would then, after the inversion, be
    controlled by a foreign company. Notably, the same thing is true when a
    British firm wins the bidding war for a Singapore company because U.S.
    firms are unable to compete on equal terms: foreign business activities
    are controlled by foreign firms due to the operation of the U.S. tax
    system. This loss of foreign business might be called an ``invisible
    inversion''--invisible because the United States would never know that
    it lost the business. But its economic effects are the same as classic
    inversions. Notably, in the pre-2018 era, these invisible inversions
    took place every day, because the U.S. tax system was so much less
    competitive than the tax systems of other countries that were homes to
    firms with which U.S. firms compete. While not as visibly dramatic as a
    corporate inversion or a foreign takeover of a U.S. company, they had
    the same economic impacts in shrinking the size of the U.S. business
    sector relative to what it would be otherwise, and distorting the
    pattern of asset ownership. This in turn reduced the demand for U.S.
    labor, and thereby depressed wages and employment opportunities in the
    United States.

        Since almost all major capital-exporting countries have territorial
    tax systems, it follows that the way to compete with them on even terms
    is for the United States to maintain a territorial tax system also.
    Failure to do so distorts patterns of asset ownership, reducing the
    efficiency of the economy, disadvantaging U.S. firms, making them less
    productive, and reducing their demand for labor in the United
    States.\5\ In this competitive environment, failing to impose a home
    country tax on lightly taxed foreign income is not a mistake or
    implicit subsidy, but instead just the efficient and correct policy to
    pursue. The opportunity to earn income in low-tax foreign jurisdictions
    can be thought of simply as the opportunity to do business in places
    where a certain kind of cost--in this case, foreign tax cost--is lower.
    As a general matter, the United States benefits when its companies have
    low-cost business opportunities. If this were a different kind of
    business cost--the cost of a raw material, for example--there would be
    no discussion of the need to impose an offsetting charge on the foreign
    operations of U.S. companies that use low-cost materials abroad. We
    should think of the tax system similarly, and be appropriately
    skeptical of the desirability of subjecting foreign income to U.S.
    taxation in order to compensate for low tax rates in some countries.
    ---------------------------------------------------------------------------
        \5\ This reflects the absence of Capital Ownership Neutrality, as
    described in Mihir A. Desai and James R. Hines Jr., ``Evaluating
    international tax reform,'' National Tax Journal, September 2003, 56
    (3), 487-502, and Mihir A. Desai and James R. Hines Jr., ``Old rules
    and new realities: Corporate tax policy in a global setting,'' National
    Tax Journal, December 2004, 57 (4), 937-960.

        Given the competitiveness of the international economic
    environment, and the policies of foreign governments, imposing heavier
    taxes on the foreign business activities of U.S. firms would put them
    at disadvantages in foreign markets and thereby reduce their ability to
    compete. The same is of course also true of taxes on domestic economic
    activities, since the United States competes with other countries for
    business. If U.S. government revenue needs are such that additional tax
    revenue simply has to be obtained from the business sector, then
    economic theory says that the damage-minimizing way to do so is to
    impose taxes on activities that are least influenced by taxation. This
    maxim implies that the international sector is not a good candidate for
    heavier tax burdens, due to competition produced by firms from other
    countries and the resulting high degree of responsiveness of economic
    activity to taxation. It does not help theU.S. economy, U.S. tax
    collections, or U.S. workers to impose tax burdens that make U.S. firms
    uncompetitive in international markets. Industries with activities that
    are particularly internationally mobile, such as shipping,
    manufacturing, technology, and finance, also represent poor candidates
    for heavier taxation, and indeed as international competition for them
    ---------------------------------------------------------------------------
    intensifies they become strong candidates for favorable tax provisions.

        Part of the motivation for international tax reform is concern over
    international tax avoidance, and more specifically, the loss of tax
    revenue by the United States. These concerns are entirely reasonable,
    since taxpayers often have incentives to arrange their affairs in ways
    that produce taxable income in countries other than the United States.
    Furthermore, it is well-documented that the location of taxable income
    is sensitive to tax rates. As a result, and particularly in the pre-
    2018 environment with a high U.S. corporate tax rate, taxpayers used
    financial and other means to report income in lower-tax foreign
    countries rather than the United States. Both in the past and now this
    shifting of tax base outside of the United States is a concern--but it
    is very easy, and indeed very common, greatly to exaggerate the extent
    of this problem.

        The challenge in understanding the magnitude of international tax
    avoidance lies in understanding how much, and where, income would have
    been reported in the absence of tax-motivated profit shifting. This is
    extremely difficult to do, as a result of which studies use highly
    imperfect proxies. And studies also use imperfect data on the tax
    obligations of multinational firms.

        The statistical evidence largely compares the reported
    profitabilities of multinational affiliates located in high-tax
    countries with the profitabilities of affiliates located in low-tax
    countries. This evidence consistently points to there being a problem
    with international income shifting, but that the problem is modest in
    size. Some of the best evidence \6\ suggests that the semi-elasticity
    of income reporting is roughly 0.4, which means that a corporation with
    operations in two countries, one facing a 25-percent tax rate, and the
    other a 15-percent tax rate, will typically arrange its financial and
    other affairs to increase the reported income of the low-tax affiliate
    by four percent of what it would otherwise have been. Other, rather
    more persuasive, evidence suggests that the effect on reported profits
    might be only half as large as this.\7\
    ---------------------------------------------------------------------------
        \6\ For thoughtful interpretive surveys of this literature, see
    Scott Dyreng and Michelle Hanlon, ``Tax avoidance and multinational
    firm behavior,'' in C. Fritz Foley, James R. Hines Jr., and David
    Wessel eds., Global Goliaths: Multinational Corporations in the 21st
    Century Economy (Washington, DC: Brookings, forthcoming), and Dhammika
    Dharmapala, ``What do we know about base erosion and profit shifting? A
    review of the empirical literature,'' Fiscal Studies, December 2014, 35
    (4), 421-448.
        \7\ Dhammika Dharmapala and Nadine Riedel, ``Earnings shocks and
    tax-motivated income-shifting: Evidence from European multinationals,''
    Journal of Public Economics, January 2013, 97, 95-107.

        It is noteworthy that almost all of the available evidence reflects
    the behavior of taxpayers subject to enforcement by tax authorities
    other than those of the United States. A typical study considers the
    profitability of a multinational firm with operations in multiple
    countries such as Italy and Bulgaria. Since Italy imposes a 24-percent
    corporate tax, and Bulgaria a 10-percent tax, there is an incentive to
    reallocate taxable income from the Italian operation to the Bulgarian
    operation. By comparing the reported profitabilities of the two
    operations, studies attempt to infer the extent to which this income
    reallocation occurs, and then extrapolate this pattern to apply to
    other situations. The difficulty with this exercise--and one of the
    reasons why it can offer of misleading implications for the United
    States--is that U.S. rules and U.S. enforcers are not involved in
    policing any attempts to reallocate taxable income out of Italy.
    Despite resource limitations and other challenges, U.S. tax enforcement
    remains extremely effective compared to that of other countries. As a
    result, patterns of apparent income reallocation between other
    countries need not, and probably do not, appear to anywhere near the
    ---------------------------------------------------------------------------
    same degree when the United States is involved.

        A separate issue that has come to light recently is that much of
    the data used to analyze international tax avoidance is commonly
    misinterpreted, and in particular, has been improperly construed to
    imply that multinational firms allocate much more income out of high-
    tax countries and into tax havens than in fact they do.\8\ The problem
    arises because multinational firms commonly own foreign affiliates
    through holding companies in low-tax jurisdictions, and the accounting
    conventions mean that in such circumstances all of the income earned by
    lower-tier foreign affiliates are attributed to the tax haven holding
    company. Thus, a U.S. firm that invests in Germany via a Bermuda
    holding company might have taxable income of 100 in Germany, but the
    statistics would show income of 100 in Germany and 100 also in Bermuda.
    Since this type of arrangement is quite common for U.S. firms,
    particularly in the pre-2018 era when the use of tax haven holding
    companies facilitated deferral of U.S. tax obligations on foreign
    income,\9\ the data showed the tax haven affiliates of U.S. companies
    to have disproportionate incomes. The statistics are not wrong, but
    they are readily misinterpreted. In the example, the Bermuda affiliate
    in fact owns the shares of the German affiliate, so in that sense the
    Bermuda affiliate has an income of 100. But the essential point is that
    this 100 of income is taxed in Germany, and that is what had not been
    properly appreciated prior to the appearance of the recent paper by
    Jennifer Blouin and Leslie Robinson. Much of the reported income of tax
    haven affiliates is taxed by governments of higher-tax countries
    elsewhere, and in that sense is double-counted. As a result, most
    statistical studies greatly overstate the extent to which income is
    shifted into low-tax countries.\10\
    ---------------------------------------------------------------------------
        \8\ Jennifer Blouin and Leslie Robinson, ``Double counting
    accounting: How much profit of multinational enterprises is really in
    tax havens?'' Available at SSRN: http://dx.doi.org/10.2139/
    ssrn.3491451.
        \9\ For an explanation and evidence of the role of tax haven
    holding companies in facilitating deferral, see Mihir A. Desai, C.
    Fritz Foley, and James R. Hines Jr., ``The demand for tax haven
    operations,'' Journal of Public Economics, March 2006, 90 (3), 513-531.
        \10\ My own work, such as James R. Hines Jr. and Eric M. Rice,
    ``Fiscal paradise: Foreign tax havens and American business,''
    Quarterly Journal of Economics, February 1994, 109 (1), 149-182, is not
    exempt from this critique.

        It has long been clear that many of the estimates of income
    shifting by multinational firms greatly overstate the extent of the
    problem. Two simple empirical patterns reveal that it could not be the
    ---------------------------------------------------------------------------
    case that international tax avoidance is as prevalent as some claim.

        The first evidence comes from the location of foreign business
    activities. Studies consistently find that multinational firms locate
    more employment, property, plant, and equipment in low-tax locations,
    and less in high-tax locations, than the structures of these economies
    would ordinarily warrant.\11\ This business activity pattern is itself
    a form of base erosion from the standpoint of high-tax countries,
    albeit of a rather mundane form, since it is hardly surprising that
    high tax rates discourage business activity, whereas low tax rates
    attract it. From the standpoint of profit shifting, however, this
    pattern makes it clear that firms are unable to reallocate pretax
    income with impunity. If it were easy to reallocate taxable income
    there would be no benefit to locating real business activity in a low-
    tax country. The
    profit-maximizing strategy would be to locate business activity
    wherever it generates the highest pretax profits, and use financial or
    other means to reallocate taxable income to an affiliate located in a
    zero-tax location. It would be a mistake to let tax rates influence
    where pretax profits are actually earned, since doing so reduces the
    amount that is ultimately destined to be reported as income by the
    affiliate in a tax haven. In fact, this is not what firms do: the
    evidence consistently indicates that multinational firms tend to locate
    greater real business activity in countries with low tax rates than
    would otherwise be expected. This is consistent with maximizing after-
    tax profits only if it is costly and difficult to shift pretax income.
    ---------------------------------------------------------------------------
        \11\ See, for example, Mihir A. Desai, C. Fritz Foley, and James R.
    Hines Jr., ``Foreign direct investment in a world of multiple taxes,''
    Journal of Public Economics, December 2004, 88 (12), 2727-2744; Shafik
    Hebous, Martin Ruf, and Alfons J. Weichenrieder, ``The effects of
    taxation on the location decisions of multinational firms: M&A versus
    greenfield investments, National Tax Journal, September 2011, 64 (3),
    817-838; and Johannes Becker, Clemens Fuest, and Nadine Riedel,
    ``Corporate tax effects on the quality and quantity of FDI, European
    Economic Review, 2012, 56 (8), 1495-1511.

        Second, there is evidence from the limited use of tax haven
    affiliates by multinational corporations. The tax havens are the lowest
    tax-rate countries, so are the destinations of choice, if one has
    unfettered choice, for profits to be reallocated from high-tax
    countries. Despite the potential appeal of using tax haven affiliates
    for this purpose, slightly fewer than 50 percent of U.S. multinational
    firms had any tax haven affiliates in 2014, the last year for which
    these high quality data are available.\12\ Similar recent evidence is
    available from a study of the country-by-country income reports of
    large German multinational firms, which reveal that just 8.7 percent of
    the global incomes of these companies are reported in all tax haven
    countries taken together.\13\
    ---------------------------------------------------------------------------
        \12\ C. Fritz Foley, James R. Hines Jr., Raymond J. Mataloni Jr.,
    and David Wessel, ``Multinational activity in the modern world,'' in C.
    Fritz Foley, James R. Hines Jr., and David Wessel eds., Global
    Goliaths: Multinational Corporations in the 21st Century Economy
    (Washington, DC: Brookings, forthcoming) indicates that in 2014, 49.8
    percent of U.S. multinationals had one or more tax haven affiliates. In
    other years for which there are available data--1982, 1989, 1994, 1999,
    2004, and 2009--the fraction of U.S. multinational firms with tax haven
    affiliates varied between 33.9 percent and 42.4 percent. While these
    data are comprehensive, they exclude the smallest multinational firms,
    and since the smallest firms are the least likely to have tax haven
    affiliates, it follows that these percentages if anything overstate the
    fraction of U.S. multinational firms with tax haven affiliates.
        \13\ Clemens Fuest, Felix Hugger, and Florian Neumeier, ``Corporate
    profit shifting and the role of tax havens: Evidence from German
    country-by-country reporting data,'' CESifo Working Paper No. 8838,
    January 2021. The data come from German companies with annual aggregate
    revenues exceeding 750 million euros.

        It is striking that fewer than half of U.S. multinational firms had
    any tax haven operations at all in 2014. The majority of U.S.
    multinational firms obviously did not reallocate taxable income to tax
    havens, as they had no method of doing so, given the absence of legal
    presence there. Similarly, even if all of the tax haven income of large
    German multinational firms were actually earned in Germany and
    misattributed to tax haven affiliates--which obviously is a vast
    exaggeration--the total magnitude of the resulting base erosion would
    be 8.7 percent. The most noteworthy feature of this evidence is that
    there is nothing that prevents a U.S. or German multinational firm from
    establishing a tax haven affiliate. The reason not to do so is that it
    is not worth it--and the reason it is not worth it is that it is too
    difficult or costly to reallocate taxable income from high-tax
    countries to tax haven countries. Since the same logic applies even to
    the less than half of U.S. multinational firms that do have tax haven
    operations, evidence of the limited use of tax haven operations by U.S.
    and German companies immediately implies that the problem of tax-
    ---------------------------------------------------------------------------
    motivated income reallocation is modest in magnitude.

        The fact that a problem is modest in magnitude does not mean that
    it should not be addressed, of course. The United States should enforce
    its tax laws and protect its tax base. However, when it comes to
    designing policy, we should do so with a clear sense of the scope of
    current problems and priorities and objectives for reform. It is in the
    country's interest, and more specifically in the interest of U.S.
    workers, to have a competitive tax system that supports the economy
    while collecting the revenue that we need. This problem is difficult
    enough without exaggerating any of its components. Wise design of U.S.
    policy has the potential to position the country for robust economic
    growth as it comes out of the pandemic-induced recession, and U.S.
    economic fortunes going forward depend on it.

                                     ______

          Prepared Statement of Chye-Ching Huang, Executive Director,
               Tax Law Center, New York University School of Law
        Chairman Wyden, Ranking Member Crapo, and distinguished members of
    the committee, thank you for the opportunity to testify today. It is an
    honor to participate in this hearing.

        The COVID-19 recession was a heavy blow to the incomes of low-wage
    workers and workers of color, and it followed decades of near-stagnant
    incomes and wages for low- and moderate-income households.\1\ These
    workers and families should be a top priority when making U.S. tax
    policy, including reforms to the U.S. international tax regime.
    ---------------------------------------------------------------------------
        \1\ Chad Stone, ``Jobs Recovery Still Long Way Off, Especially for
    Low-Wage Workers and Workers of Color,'' Center on Budget and Policy
    Priorities, February 5, 2021, https://www.cbpp.org/blog/jobs-recovery-
    still-long-way-off-especially-for-low-wage-workers-and-workers-of-
    color; Chuck Marr, Brandon DeBot, and Emily Horton, ``How Tax Reform
    Can Raise Working Class Incomes,'' Center on Budget and Policy
    Priorities, October 13, 2017, https://www.cbpp.org/research/federal-
    tax/how-tax-reform-can-raise-working-class-incomes; Jane. G. Gravelle,
    ``Wage Inequality and the Stagnation of Earnings of Low-Wage Workers:
    Contributing Factors and Policy Options,'' Congressional Research
    Service, February 5, 2020, p. 2, https://crsreports.congress.gov/
    product/pdf/R/R46212; Opportunity Insights Economic Tracker, https://
    tracktherecovery.
    org/.

        To prioritize workers and families, lawmakers may soon make overdue
    investments in areas including infrastructure, education, securing
    permanent historic reductions in child poverty, and ensuring low-wage
    workers are not taxed into poverty. Doing so would help secure U.S.
    competitiveness and innovation in ways that benefit ordinary workers
    and families. For example, expanding economic security for children in
    low- and moderate-income families can help ensure that those who have
    talent for innovation and entrepreneurship have opportunities to fully
    realize those abilities.\2\
    ---------------------------------------------------------------------------
        \2\ See Wesley Tharpe, Michael Leachman, and Matt Saenz, ``Tapping
    More People's Capacity to Innovate Can Help States Thrive,'' Center on
    Budget and Policy Priorities, December 9, 2020, https://www.cbpp.org/
    research/state-budget-and-tax/tapping-more-peoples-capacity-to-
    innovate-can-help-states-thrive.

        Lawmakers may decide to finance some of these investments with tax
    revenues, and international tax reform is one of a suite of sound tax
    policies that could contribute. Such reform could ensure that highly
    profitable multinationals contribute adequately to national investments
    ---------------------------------------------------------------------------
    from which they benefit.

        Even aside from the substantial revenues that would be raised,
    sound international tax reform would help strengthen the economy by
    reducing current tax incentives for companies to locate profits and
    investments offshore or, potentially, invert. Many large multinationals
    use cross-border tax avoidance as a profit center. Reducing their
    ability to do so would help other U.S. businesses that cannot or do not
    want to use tax avoidance as a business strategy to compete while
    staying focused on customers, products, and innovation.

        The 2017 tax law, including its corporate and international
    provisions, did not serve national priorities well. The law's large
    permanent corporate tax cuts did not lead to a perceptible increase in
    investment or wages above the trends underway under the prior tax
    law.\3\ It did not adequately curtail profit shifting: multinationals
    still shift hundreds of billions in profits offshore each year.\4\ But
    it dramatically shrank corporate tax revenues and increased after-tax
    inequality.\5\
    ---------------------------------------------------------------------------
        \3\ See Jason Furman, ``Prepared Testimony for the Hearing `The
    Disappearing Corporate Income Tax,' '' February 11, 2020, https://
    waysandmeans.house.gov/sites/democrats.waysand
    means.house.gov/files/documents/Furman%20Testimony.pdf.
        \4\ Kimberly Clausing, ``Profit Shifting Before and After the Tax
    Cuts and Jobs Act,'' National Tax Journal, Vol. 73, No. 4, 2020, p. 11,
    https://papers.ssrn.com/sol3/papers.cfm?abstract
    _id=3274827.
        \5\ Jane G. Gravelle and Donald J. Marples, ``The Economic Effects
    of the 2017 Tax Revision: Preliminary Observations,'' Congressional
    Research Service, last updated June 7, 2019, p. 7, https://
    crsreports.congress.gov/product/pdf/R/R45736; Furman, supra note 3.

        My testimony offers three further points about the international
    ---------------------------------------------------------------------------
    tax regime and how it can be reformed:

            I.  The post-2017 legal structure of the U.S. international tax
    regime contains defects that are opportunities and incentives for
    multinationals to locate profits and activities offshore.

           II.  Elements of the U.S. international tax regime can be
    salvaged and strengthened. A more robust minimum tax and a re-tooled
    provision to address base erosion by foreign-resident multinationals
    could form part of a workable, coherent tax structure that raises
    revenues, while reducing the current tax tilt towards offshore profits
    and investment.

          III.  2021 offers timely opportunities to make these reforms. The
    U.S. can strengthen its tax system to benefit U.S. workers and families
    and improve the economy's recovery and long-run health. In doing so the
    U.S. can take a leadership role by seizing the once-in-a-century
    opportunity offered by current multilateral negotiations to build the
    framework for a robust, cooperative international tax system.
                     i. defects in the current legal regime
        The 2017 tax law not only cut the domestic corporate tax rate to 21
    percent, but also moved the U.S. tax regime to a partial
    ``territorial'' system, including by permanently excluding certain
    income of U.S. multinationals from tax. Today, U.S. parent companies
    can enjoy a far lower rate of tax on their foreign profits--often zero
    percent--than the rate on U.S. profits if they meet certain conditions.

        The drafters of the 2017 law were aware that a much lower permanent
    rate on foreign profits than U.S. profits is a large, permanent
    incentive for multinationals to both report profits offshore, and
    locate real investment overseas. Recognizing the danger of this
    lopsided basic structure, the 2017 law included provisions aimed at
    limiting the damage: GILTI, BEAT, and FDII.\6\ The anti-abuse rationale
    of some of these provisions is sound, and the provisions contain some
    novel and promising elements. But their design undermines their
    effectiveness, and retains incentives to locate profits or investment
    overseas in some circumstances, and increases those incentives in
    others.
    ---------------------------------------------------------------------------
        \6\ Global Intangible Low-Taxed Income, the Base Erosion and Anti-
    Abuse Tax, and Foreign-Derived Intangible Income.

        Treasury regulations cannot be expected to cure all the major flaws
    of such statutory provisions. In some cases, however, regulations have
    enlarged the statute's problems. Some regulations probably overstepped
    the scope of legal authority. Others did not take the best
    interpretation of the law within the range of regulatory authority.
    Instead, some regulations interpreted the law to permit U.S.
    multinationals to use various planning techniques to reduce their taxes
    and avoid the potential impact of the law's anti-abuse provisions,
    ---------------------------------------------------------------------------
    contrary to the basic purpose of those statutory rules.

        Some notable defects in the legal regime include:

        1.  GILTI's promising minimum tax structure has three large flaws.
    A well-designed minimum tax on foreign profits can ensure that profits
    that U.S. multinationals report offshore, and that are taxed not at all
    or very lightly in foreign countries, are subject to some tax by the
    U.S. A robust minimum tax would greatly reduce the incentive for
    multinationals to shift profits and investment offshore, because it
    would reduce or eliminate tax savings from doing so. It would also
    reduce the incentive for U.S. multinationals to report income generated
    in other non-U.S. source countries as having been made in tax havens.

            GILTI, however, is not robust: large classes of profits are
    exempt from its reach, its design creates new incentives to shift
    profits and investment offshore, and its rate on foreign profits is too
    far below the U.S. corporate tax rate.\7\ Specifically:
    ---------------------------------------------------------------------------
        \7\ This section draws on prior work of the author in Chuck Marr,
    Brendan Duke, and Chye-Ching Huang, ``New Tax Law Is Fundamentally
    Flawed and Will Require Basic Restructuring,'' Center on Budget and
    Policy Priorities, August 14, 2018, https://www.cbpp.org/research/
    federal-tax/new-tax-law-is-fundamentally-flawed-and-will-require-basic-
    restructuring.

              Substantial profits are entirely outside of the reach of
    GILTI, meaning zero U.S. tax applies to certain income from real
    activity or paper profits that are reported offshore. GILTI applies
    only to foreign profits that are greater than 10 percent of a company's
    investment in tangible assets (such as factories) in foreign countries.
    That means a U.S. tax rate of zero percent on swaths of U.S.
    ---------------------------------------------------------------------------
    multinationals' foreign income.

               This is an incentive for firms to shift or locate plants,
    equipment, and other physical assets offshore, because the more such
    assets a corporation has overseas, the more of that firm's offshore
    income will face a U.S. tax rate of zero percent rather than the
    domestic corporate tax rate of 21 percent. That is true even when the
    firm's foreign tangible assets generate little or no profits
    themselves.\8\ In other words, if a U.S. multinational puts physical
    plants and other tangible assets offshore, it can get a tax rate of
    zero percent on profits from intellectual property and other intangible
    assets that it has also moved on paper into tax havens.\9\
    ---------------------------------------------------------------------------
        \8\ A 10-percent rate of return is far higher than the historical
    rate of return on low-risk assets. The interest rate on a 10-year
    Treasury bond is currently below 2 percent.
        \9\ Clausing, supra note 4, Figure 2.

               Furthermore, the value of assets that is used to calculate
    the 10-percent exemption is the basis used for the purpose of
    calculating depreciation, so newer property generally gets a bigger
    ---------------------------------------------------------------------------
    exemption, bolstering the incentive to locate new investment offshore.

              GILTI's global approach creates a perverse incentive in some
    circumstances to favor locating profits in both countries that have
    lower and higher tax rates than the U.S. GILTI is calculated based on a
    multinational's global income and non-U.S. taxes, instead of its income
    and taxes for each country separately.\10\ GILTI therefore allows
    multinationals to aggregate income and taxes from countries where they
    pay little or no tax and those where they pay significant tax. The
    blending or averaging feature of GILTI is a serious weakness. It leads
    to the striking outcome that the U.S. can be the least attractive place
    for a multinational to invest or place its profits, from a tax
    perspective.
    ---------------------------------------------------------------------------
        \10\ With a credit of up to 80 percent on foreign taxes they do
    pay. A firm paying $100 in foreign taxes can thus reduce its U.S.
    minimum tax by $80.

               On the one hand, if a multinational already has a lot of
    profits generated in high-tax countries (a so-called excess credit
    position), it creates an incentive for multinationals to book profits
    in tax havens because no U.S. tax will apply. Because the multinational
    can average the profits newly booked in a tax haven with the existing
    profits in high-tax countries, its average tax rate on foreign income
    may be high enough to avoid any GILTI tax. Indeed, even after the 2017
    tax law, more than half of multinational corporations' foreign income
    is still booked in Bermuda and six other large tax havens.\11\
    ---------------------------------------------------------------------------
        \11\ Clausing, supra note 4, Figure 2.

               On the other hand, if the multinational already has a lot of
    profits located in low-tax countries or tax havens and is therefore
    paying the GILTI tax, it can benefit by shifting U.S. profits or real
    activities to foreign countries with a tax rate similar to the U.S--
    including to countries with rates that are somewhat higher than those
    in the U.S. Doing so will result in a similar amount of tax due on the
    shifted profits or real activities. But it will reduce the total tax on
    the profits located in low-tax countries by reducing or eliminating the
    GILTI owed, due to the ability to average across countries under the
    ---------------------------------------------------------------------------
    GILTI.

               As tax advisor, former Treasury international tax official,
    and Director of the International Tax Program at NYU Law, David
    Rosenbloom has said, this feature of GILTI can mean that it:\12\
    ---------------------------------------------------------------------------
        \12\ Symposium, ``The Future of the New International Tax Regime,''
    Fordham Journal of Corporate and Financial Law, Vol. 24, No. 2, 2019,
    p. 292, https://ir.lawnet.fordham.edu/jcfl/vol24/iss2/1/.

               ``[. . .] creates a great incentive to send investment
    outside the United States because averaging always produces an
    incentive to go outside the United States. If you are low, you have an
    incentive to average up by going outside the United States; if you are
    ---------------------------------------------------------------------------
    high, you have an incentive to go abroad to bring the average down.''

              The GILTI rate is still far below the rate on U.S. profits,
    leaving a large tilt towards offshore profits and activity. The maximum
    effective GILTI rate currently ranges between 10.5 and 13.125
    percent.\13\ This is only roughly half the headline rate that domestic
    companies face on their U.S. profits.
    ---------------------------------------------------------------------------
        \13\ Income subject to GILTI is taxed with a 50-percent deduction,
    and only up to 80 percent of foreign tax credits are creditable. This
    means that the effective GILTI rate is 10.5 percent when no foreign tax
    credits are available, and up to 13.125 percent when full foreign tax
    credits are available. Other circumstances involving further
    limitations on foreign tax credits are discussed below.

               Having a minimum tax like GILTI is a recognition that
    allowing U.S. multinationals to earn tax-free profits abroad (a
    ``pure'' territorial system) is a very harmful incentive to locate
    profits and investments offshore. GILTI attempts to offset that tilt by
    somewhat closing the gulf between the rate on foreign and domestic
    profits, without going all the way to equalizing them. There is,
    however, much room for tax-motivated profit and investment shifting in
    the space between 10.5 percent (or sometimes zero percent) and 21
    percent, and the only way to curb much of that tax avoidance activity
    ---------------------------------------------------------------------------
    is to narrow the tax rate gap.

        2.  BEAT aims at an important problem, but its ``irrational'' rules
    need retooling. The BEAT is also intended to address a serious problem.
    Multinationals, including foreign-based multinationals, shift profits
    out of the U.S. and into low-tax countries by making large payments
    from their U.S. affiliates to their foreign affiliates. The payments
    can be deductible by the U.S. affiliate in the U.S. (reducing U.S.
    profits taxed at the U.S. domestic corporate tax rate). But even though
    those payments are income of the foreign affiliate, if the affiliate is
    in a tax haven, the payments can face little or no U.S. or foreign tax.
    The multinational corporate group is on both sides of the payments, so
    there may be opportunities to inflate the payments beyond a realistic
    price for the transfer of actual assets, goods, or services. Such base
    erosion payments are a problem encompassing all multinationals, but are
    particularly severe for foreign-resident multinationals because they
    are not subject to GILTI. This also means an incentive for U.S.
    multinationals to invert.

            The BEAT is an add-on alternative minimum tax. Broadly
    speaking, the BEAT disallows some deductions that a multinational would
    otherwise be able to claim for payments to related foreign parties if
    those payments exceed a threshold. BEAT's rules on what payments and
    entities are counted or excluded are complex. The rules have politely
    been called ``curious''\14\--also, ``weird,'' ``irrational,'' and
    ``truly bizarre.''\15\
    ---------------------------------------------------------------------------
        \14\ Clausing, supra note 4, p. 15.
        \15\ Symposium, supra note 12, p. 287.

            The BEAT catches some payments that do not appear to be a base
    erosion risk yet ignores other large categories of payments that are a
    base erosion risk.\16\ The implementing regulations created further
    exclusions to the BEAT that are not well-supported by the statute,
    noted below. Thus, while the BEAT has a sound objective to prevent
    payments that artificially shift profits out of the U.S. for tax
    purposes, the BEAT needs to be substantially revamped to hit its mark.
    ---------------------------------------------------------------------------
        \16\ Id.

        3.  FDII has an unclear purpose and muddled design. FDII allows a
    multinational to deduct a share of its ``foreign-derived intangible
    income.'' That is, if a multinational holds intangible assets (such as
    patents or other IP) in the U.S., its above-normal profits from exports
    of products, services, and assets related to those intangibles get a
    tax break. This structure favors selling such products to foreign
    consumers rather than U.S. consumers, which makes it very likely
    subject to WTO challenge as an export subsidy.\17\ Compounding that
    (perhaps fatal) flaw, FDII creates incentives for certain
    multinationals to sell their U.S. tangible assets or locate them
    offshore to get more income taxed at the favorable FDII rate. This is
    because the FDII deduction is allowed only to the extent that profits
    from covered exports exceed a set rate of return on tangible assets
    located in the U.S., so the fewer tangible assets a company has in the
    U.S., all else equal, the larger its FDII tax break.\18\ FDII's tax
    break is also on income from both old and new investments alike,
    meaning a large part of it is a wasteful giveaway on profits from old
    investments.
    ---------------------------------------------------------------------------
        \17\ Rebecca M. Kysar, ``Critiquing (and Repairing) the New
    International Tax Regime,'' Yale Law Journal Forum, Vol. 128, October
    25, 2018, pp. 350-51, https://www.yalelawjournal.org/pdf/
    Kysar_su38oca6.pdf; Congressional Research Service, ``Issues in
    International Corporate Taxation: The 2017 Revision'' (Pub. L. 115-97),
    April 23, 2020, pp. 32-33, https://fas.org/sgp/crs/misc/R45186.pdf.
        \18\ Dhammika Dharmapala, ``The Consequences of the Tax Cut and
    Jobs Act's International Provisions: Lessons From Existing Research,''
    National Tax Journal, Vol. 71, No. 4, 2018, pp. 722-723, https://
    www.ntanet.org/NTJ/71/4/ntj-v71n04p707-728-Consequences-of-the-Tax-Cut-
    and-Jobs-Acts-International-Provisions.html; Clausing, supra note 4, p.
    14.

        4.  Regulations cannot be expected to fix the flaws of a statute,
    but under trying circumstances, the regulations introduced some new
    problems. When a tax law's design or drafting is flawed, Treasury and
    the IRS cannot be expected to fix those flaws fully through regulation
    and guidance. But when faced with a law's flaws, ideally regulation
    would not add to them. The circumstances of the enactment of the 2017
    ---------------------------------------------------------------------------
    tax law, however, were not ideal.

            After a truncated legislative process, the under-resourced
    agencies were required to propose and finalize a tremendous number of
    regulations quickly. Comments on proposed regulations came
    overwhelmingly from corporations and their representatives seeking an
    interpretation of the law that would lower (or further lower) their tax
    liability.\19\ With notable exceptions, there were very few comments
    from a broad public interest perspective, despite the large
    consequences of these technical decisions.
    ---------------------------------------------------------------------------
        \19\ For discussion of regulatory processes, see Rebecca Kysar,
    ``TCJA's Business Provisions: Design Flaws and Undemocratic
    Implementation,'' testimony before the U.S. House of Representatives
    Ways and Means Committee, February 11, 2020, https://
    waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/
    documents/Kysar%20Testimony.pdf. For an example of the one-sided nature
    of comments on regulations generally, see Shu-Yi Oei and Leigh Osofsky,
    ``Legislation and Comment: The Making of the Sec. 199A Regulations,''
    Emory Law Journal, Vol. 69, No. 2, January 2019, https://
    lawdigitalcommons.bc.edu/cgi/viewcontent.cgi?article=2273&
    context=lsfp. Oei and Osofsky found that comments on the regulations
    implementing the lower rate for pass-through businesses were
    overwhelmingly from taxpayers, industries, or other private interests.
    Only 1 out of 51 communications during the pre-notice period were
    submitted by public interest-oriented individuals or groups, and only 5
    out of 388 comments during the notice and comment period.

            Several regulations exacerbated weaknesses in the law, even
    when the statute gave scope for better alternatives. Neither usual
    congressional estimation and scorekeeping processes, nor Treasury's
    regulatory processes provide explicit estimates of the net impact of
    the 2017 tax law's regulations on revenues or distribution.\20\ There
    are indications, however, that the law's international tax regulations
    were consequential. Together with new information on corporations'
    financial reporting and on multinationals' tax planning around the law,
    CBO projected in 2020 that the international tax regulations will lower
    projected revenues by roughly $110 billion over 10 years relative to
    earlier estimates.\21\
    ---------------------------------------------------------------------------
        \20\ Either compared to the regulatory settings that were assumed
    when the revenue impact of the law as enacted was first estimated, or
    compared to a scenario where no regulations were issued. For an
    explanation of how OIRA review of tax regulations has failed to produce
    informative revenue or distribution analysis of tax regulations, see
    Greg Leiserson, ``Cost-Benefit Analysis of U.S. Tax Regulations Has
    Failed: What Should Come Next?'', Washington Center for Equitable
    Growth, September 30, 2020, https://equitablegrowth.org/research-paper/
    cost-benefit-analysis-of-u-s-tax-regulations-has-failed-what- should-
    come-next/.
        \21\ Samantha Jacoby, ``Corporation-Friendly Treasury Regulations
    Reducing Federal Revenues,'' Center on Budget and Policy Priorities,
    last updated February 13, 2020, https://www.cbpp.org/research/federal-
    tax/corporation-friendly-treasury-regulations-reducing-federal-
    revenues. That loss is likely to be mechanically lower now in dollar
    terms due to the recession.

            International tax regulations implementing the 2017 tax law
    that are highly questionable in terms of both authority and policy
    ---------------------------------------------------------------------------
    include:

              The foreign bank exception to BEAT, that, according to The
    New York Times, is estimated to reduce the BEAT's revenues by up to $50
    billion.\22\
    ---------------------------------------------------------------------------
        \22\ Jesse Drucker and Jim Tankersley, ``How Big Companies Won New
    Tax Breaks From the Trump Administration,'' New York Times, December
    30, 2019, https://www.nytimes.com/2019/12/30/business/trump-tax-cuts-
    beat-gilti.html. For further analysis of the statutory authority issue,
    see Kysar, supra note 19.

              The GILTI high-tax exception election. Regulations allow
    multinationals facing usual limitations on their foreign tax credits
    (intended to serve an anti-abuse purpose) to elect out of GILTI when
    the tax credit limits cause them to face an effective foreign tax rate
    above 18.9 percent.\23\
    ---------------------------------------------------------------------------
        \23\ Stephen E. Shay, ``A GILTI High-Tax Exclusion Election Would
    Erode the U.S. Tax Base,'' Tax Notes, November 18, 2019, https://
    papers.ssrn.com/sol3/papers.cfm?abstract_id=3490053. The strained
    interpretation may also carry risks for other parts of the code. See
    Jasper Cummings, ``Not GILTI `by Reason of' the High-Tax Exclusion,''
    Tax Notes, October 5, 2020, https://www.taxnotes.com/tax-notes-federal/
    global-intangible-low-taxed-income-gilti/not-gilti-reason-high-tax-
    exclusion/2020/10/05/2czwq.

              The failure to allocate R&D to GILTI, meaning that a
    multinational's R&D expenses are not adequately matched to their
    foreign income, increasing their ability to maneuver foreign tax
    credits to reduce U.S. tax liability under GILTI.\24\
    ---------------------------------------------------------------------------
        \24\ Stephen E. Shay, Reuven S. Avi-Yonah, Patrick Driessen, J.
    Clifton Fleming, and Robert J. Peroni, ``Why R&D Should Be Allocated to
    Subpart F and GILTI,'' Tax Notes, June 22 2020, https://
    papers.ssrn.com/sol3/papers.cfm?abstract_id=3633962.

              A weakened statutory interest expense limit on the 10-
    percent return exempt from GILTI with a highly permissible rule for
    calculating the amount of interest allocated under this rule.\25\
    ---------------------------------------------------------------------------
        \25\ See Kysar, supra note 19; Symposium, supra note 12, pp. 290-
    91.

               This is not to say all the regulations were maximally
    generous to multinationals. As tax law expert Samantha Jacoby noted,
    ``Companies and lobbyists didn't get everything they asked for,'' but
    ``[in] some very important areas, they got a lot of what they asked
    for.''\26\
    ---------------------------------------------------------------------------
        \26\ Richard Rubin, ``Trump-Era Tax Rule Benefiting Some
    Multinationals May Get Revised Under Biden,'' Wall Street Journal, 7
    December 2020, https://www.wsj.com/articles/trump-era-tax-rule-
    benefiting-some-multinationals-may-get-revised-under-biden-11607337001.

               The lopsided process of corporations seeking more favorable
    tax treatment from the law and regulations has not yet finished.
    Strained statutory interpretations taken by some regulations open a
    door for taxpayers to push for similarly stretched interpretations of
    other parts of the tax code--but only when it would lower their
    taxes.\27\ Multinationals wishing to make the international tax
    regulations even more favorable to them can also challenge them in
    court. This is a one-sided ratchet, because it is not clear who can
    challenge legally flawed regulations that are overly generous.\28\
    ---------------------------------------------------------------------------
        \27\ Cummings, supra note 23.
        \28\ See Shay et al., supra note 23, section VI. For discussion of
    who may challenge overly generous tax regulations, see Daniel J. Hemel
    and David Kamin, ``The False Promise of Presidential Taxation,'' Yale
    Journal on Regulation, Vol. 36, No. 2, 2019, https://papers.ssrn.com/
    sol3/papers.cfm?abstract_id=3184051.

               Furthermore, if adequate funding is not restored to a deeply
    under-resourced IRS--which since 2010 has lost more than a third of its
    revenue agents who are expert enough to deal with the most complex tax
    audits--even the laws and regulations that are on the books will not be
    adequately enforced.\29\
    ---------------------------------------------------------------------------
        \29\ Chye-Ching Huang, ``Depletion of IRS Enforcement Is
    Undermining the Tax Code,'' testimony before the House Ways and Means
    committee, February 11, 2020, https://www.cbpp.org/research/federal-
    tax/depletion-of-irs-enforcement-is-undermining-the-tax-code/.
    ---------------------------------------------------------------------------
      ii.  salvaging and strengthening elements of the international tax
                                     regime
        Reform to U.S. international tax law that focuses on workers, jobs,
    and investment would address the law's flaws while strengthening its
    promising elements. A robust minimum tax on U.S. multinationals and a
    retooled provision to address base erosion, especially by foreign
    multinationals, could be part of a workable, durable structure that
    raises revenues while reducing the current tilt towards offshore
    profits and investment. Broad directions for reform include:

        1.  Crafting a robust minimum tax out of GILTI. Professor Susan
    Morse has observed that ``GILTI will perhaps end up saving the
    corporate tax.''\30\ GILTI would be a robust minimum tax on U.S.
    multinationals if it were reformed to:
    ---------------------------------------------------------------------------
        \30\ Symposium, supra note 12, p. 259. Morse's comments also
    related to the potential role of GILTI in multilateral negotiations;
    this is discussed further below.

              Exclude less foreign income from its reach. This means
    eliminating the 10-percent return on tangible assets that is currently
    ---------------------------------------------------------------------------
    exempt and eliminating the high-tax exception election.

              Eliminate or reduce various opportunities to blend and
    shelter income, expenses, and credits from different sources to avoid
    GILTI. Calculating GILTI on a country-by-country basis is one key way
    to achieve this objective. It would mean that every dollar earned in a
    tax haven would be subject to GILTI tax. It would also eliminate the
    incentive for multinationals to shift profits and activities to foreign
    countries with similar tax rates as the U.S. in order to reduce or
    eliminate the minimum tax that would be otherwise due on profits booked
    in tax havens. Reforms should also address the calculation of the
    interest expense allocation, and the failure to allocate R&D to GILTI.

              Set a minimum rate far closer to, and certainly no less
    than, 75 percent of the U.S. domestic rate. This is the most
    straightforward way to limit incentives to locate profits and
    investment offshore.

            Another attraction of a strong GILTI with these features is
    that it could allow the U.S. to more strongly advocate for a robust
    global minimum tax in multilateral negotiations, as discussed below.

        2.  Re-working BEAT. The BEAT diagnoses a serious problem--payments
    that shift profits into tax haven countries--but little about the BEAT
    rules make sense. A substantially reworked BEAT could more precisely
    and effectively target payments that are in fact more likely to be base
    erosion, while exempting those that are not. It could apply to payments
    only to countries where the payments are not subject to a reasonable
    tax rate, so that it does not capture payments that are not likely to
    be ``base erosion.'' On the other hand, BEAT should be reformed to
    catch other payments that may be base erosion (such as its exclusions
    for costs of goods sold, and the treatment of the portion of certain
    payments that do not represent mark-up).\31\ As with a robust GILTI, a
    reworked BEAT could also support the development of a cooperative
    multilateral approach, as discussed below.
    ---------------------------------------------------------------------------
        \31\ Ksyar, supra note 17, p. 357.

        3.  Leaving FDII behind. I am skeptical that FDII can be salvaged
    given its muddled rationale and WTO problems. Some commentators have
    suggested making FDII into a ``patent/innovation box'' that gives a
    discounted tax rate on profits for IP located in the U.S., regardless
    of the location of the end consumer. Patent boxes are a not a good
    solution to any well-defined problem: they deliver windfall tax cuts to
    already profitable investments of the sort that already enjoy
    substantial tax subsidies, and patent boxes are a magnet for tax
    avoidance. Public resources intended to support innovation would be
    better directed towards public investment in science, basic research,
    broadband infrastructure, education, and ensuring all children can
    thrive.\32\
    ---------------------------------------------------------------------------
        \32\ Alex Bell, Raj Chetty, Xavier Jaravel, Neviana Petkova, and
    John van Reenen, ``Who Becomes an Inventor in America? The Importance
    of Exposure to Innovation,'' Opportunity Insights, November 2018,
    https://opportunityinsights.org/paper/losteinsteins/; Tharpe et al.,
    supra note 2.

        4.  Seizing missed opportunities in areas like check-the-box and
    transfer pricing. While providing some promising new structures that
    can be the basis of further reform, the 2017 tax law largely failed to
    address several other weaknesses of the prior regime. These could also
    be revisited. For example, it would be timely to consider the ``check-
    the-box'' rules that allow U.S. multinationals to avoid paying taxes on
    their foreign subsidiaries' passive earnings (such as interests and
    royalties) by checking a box on an IRS form that has the effect of
    making those offshore subsidiaries and their passive income invisible
    for U.S. tax purposes. Check-the-box has spawned complex regulatory
    attempts to limit its abuses, and it can now be used to reduce
    GILTI.\33\ Various transfer pricing rules also deserve further
    scrutiny. There may be both regulatory and legislative opportunities to
    address such issues.
    ---------------------------------------------------------------------------
        \33\ Moshe Spinowitz and Robert Stevenson, ``To Check or Not to
    Check? The TCJA's Impact on Entity Classification Decisions,''
    International Tax Journal, March-April 2019, https://www.skadden.com/
    insights/publications/2019/04/to-check-or-not-to-check.

        5.  Creating more coherent, less gameable rules. The scaffolding of
    a reformed international tax regime will need detailed and robust rules
    ---------------------------------------------------------------------------
    layered on top of it. Some rules of thumb for crafting them are:

              Eliminate blending/averaging in some cases or reduce its
    extent in others. The late Edward Kleinbard, former tax practitioner,
    Joint Committee on Taxation staff director, and then University of
    Southern California professor, described international rules that
    permit averaging of income, deductions, and credits across high and
    low-taxed sources as being a ``tax distillery.'' In this distillery,
    ``tax master blenders'' at each company perfect the mix of income,
    deductions, and credits reported in each entity, country, and other
    relevant categories to lower the ultimate rate on foreign profits.\34\
    ---------------------------------------------------------------------------
        \34\ Edward D. Kleinbard, ``Stateless Income,'' Florida Tax Review,
    Vol. 11, 2011, p. 727, https://gould.usc.edu/centers/class/class-
    workshops/usc-legal-studies-working-papers/documents/C11_1_paper.pdf.

               An example of the tax minimization benefits of averaging
    include where high-taxed profits can be used to shield low-tax profits,
    such as in the global approach of GILTI. A similar structure is when
    different categories of income or expenses can be averaged before
    allocating them to different sets of entities or countries, such as in
    the interest computation rules for calculating exempt income under
    GILTI. Permissive averaging structures can protect incentives to book
    profits in tax havens, and can create other perverse incentives. Such
    structures should generally be avoided (such as moving to country-by-
    country for GILTI). Any other averaging (or blending, cross-crediting,
    etc.) that is permitted should occur only within boundaries drawn as
    ---------------------------------------------------------------------------
    tightly as possible.

              Minimize electivity. Letting multinationals choose how to be
    taxed under various regimes--as is the case with the GILTI high-tax
    exception election--simply means most multinationals will claim a tax
    cut for having competent tax advisors. If the election is annual, as
    for the high-tax exception, it can mean switching in and out of
    different regimes from year to year.

               International tax rules will never be especially simple. But
    elective rules create the type of unnecessary complexity that benefits
    only multinationals and their advisors. When large tax benefits are at
    stake, it can seem that multinationals' calls for simplicity and
    certainty can grow quieter, while their calls for (complex and
    variable) electivity that lowers taxes grow louder.

              Align different regimes. Different parts of the
    international tax code serve different purposes, but where rules
    misalign for no good reason, they can create opportunities to plan into
    and out of whichever regime results in less tax. Limiting electivity is
    one way to minimize such gaming; aligning rules (such as expense
    allocation rules for GILTI that are more like other foreign tax credit
    allocation rules, or the various aspects of FDII and GILTI that are
    misaligned \35\) is another.
    ---------------------------------------------------------------------------
        \35\ For discussion of misalignments between GILTI and FDII, see
    Jonathan S. Brenner and Josiah P. Child, ``The Nitty-Gritty of FDII,''
    Tax Notes, September 17, 2018, http://www.
    capdale.com/files/24250_the_nitty-gritty_of_fdii.pdf.
    ---------------------------------------------------------------------------
           iii. the unique opportunity to make needed reforms in 2021
        Sound reforms of the U.S. international tax system will deliver
    benefits to U.S. workers and the economy, as discussed above. Lawmakers
    can also ensure that such reforms are consistent with the U.S. taking a
    constructive and leading role in the current effort to ensure the
    global international tax system moves toward a strong, cooperative
    framework. Doing so could also profoundly benefit U.S. workers and the
    economy by potentially eliminating the current race to the bottom
    amongst countries, where each seeks to undercut the others' corporate
    tax systems in order to attract corporate residence, profits, or
    investments. This race to the bottom depletes revenues that are
    critical to making the investments with widely shared benefits that
    would strengthen the living standards of workers and families while
    improving the strength of the economy.

        The global international tax system is at a once-in-a-century
    crossroads.\36\ Its current framework was constructed in the 1920s and
    focused on preventing double taxation, so that income would not be
    taxed twice (or more) by different countries. It was not designed to
    prevent double non-taxation, where multinationals report income in
    neither their home country nor where they made the income, but instead
    in tax havens where they are taxed at zero or very low rates.
    Multilateral attempts to address double non-taxation were sporadic
    until recently, and often focused on trying to discipline low-tax
    countries and tax havens. These efforts were ineffective, in part
    because they paid insufficient attention to the role of high-income
    countries' tax rules in allowing resident multinationals to enjoy large
    tax benefits when those companies shift their profits to tax havens.
    But the Great Recession, long-run fiscal challenges, and growing
    inequality increased countries' focus on holes in the international tax
    system.\37\
    ---------------------------------------------------------------------------
        \36\ For some discussion of the development of the global
    international tax system and recent developments, see the discussion in
    the Symposium proceedings at supra note 12; Ruth Mason, ``The
    Transformation of International Tax,'' The American Journal of
    International Law, Vol. 114, No. 3, July 2020, https://papers.ssrn.com/
    sol3/papers.cfm?abstract_id=3576520; Steven A Dean, ``FACTCA, the U.S.
    Congressional Black Caucus, and the OECD Blacklist,'' Tax Notes, July
    7, 2020, https://www.taxnotes.com/tax-notes-today-international/
    competition-and-state-aid/fatca-us-congressional-black-caucus-and-oecd-
    blacklist/2020/07/07/2cns4.
        \37\ See Mason, supra note 38.

        OECD/G20 multilateral efforts are now seeking to build a new
    international framework to address ``base erosion and profit shifting''
    and curtail the race to the bottom on corporate tax rates and
    international tax rules, while still preventing double taxation. These
    efforts have faced challenges. For instance, the prior administration's
    efforts in multilateral forums were not as constructive as they might
    have been.\38\ The COVID-19 recession created new fiscal pressures, and
    many countries have started to consider, propose, and implement Digital
    Services Taxes (``DSTs'') on sales of intangible digital services to
    customers in those countries. These destination countries argue they
    have a claim to some tax on corporate profits and note that that
    profits deriving from intangible assets often go entirely untaxed.
    However, some features of some DSTs have given rise to claims that they
    target U.S. companies, and uncoordinated responses could create an
    incoherent patchwork of taxation and raise the specter of some double
    tax. But there is still a chance to achieve a cooperative framework to
    prevent double non-taxation and the race to the bottom, while avoiding
    a proliferation of uncoordinated unilateral measures.
    ---------------------------------------------------------------------------
        \38\ Alan Rappeport, Ana Swanson, Jim Tankersley, and Liz Alderman,
    ``U.S. Withdraws From Global Digital Tax Talks,'' New York Times, June
    17, 2020, https://www.nytimes.com/2020/06/17/us/politics/us-digital-
    tax-talks.html.

        Building a strong global framework will require the U.S. to use its
    intellectual and economic gravity. Secretary Yellen has stated that the
    Biden administration will engage ``robustly'' in the OECD/G20
    multilateral process, and withdrew an unconstructive demand made by the
    prior administration.\39\
    ---------------------------------------------------------------------------
        \39\ James Polti, Aime Williams, Chris Giles, Sam Fleming, and
    Miles Johnson, ``U.S. Removes Stumbling Block to Global Deal on Digital
    Tax,'' Financial Times, February 26, 2021, https://www.ft.com/content/
    c2a6808e-ec6d-41d5-85e9-3a27c2b2c1bc.

        Given the opportunity presented by the OECD/G20 negotiations,
    reforms to GILTI of the types outlined above could have dual benefits.
    First, they would deliver significant benefits to the U.S. in their own
    right. Second, such reforms could support a cooperative effort. For
    instance, lawmakers can ensure that GILTI reforms are drafted
    consistently with potential commitments in ``Pillar 2'' of the OECD/G20
    Inclusive Framework. Pillar 2 seeks to ensure that all companies pay a
    minimum level of tax, including through the adoption of Income
    Inclusion Rules (``IIRs'') which could have the features of a reformed
    GILTI. The adoption of strong IIRs would help reduce multinationals'
    gains from profit shifting to tax havens (as those profits would still
    face minimum taxes in multinationals' countries of residence) and help
    to curtail the race to the bottom by reducing the incentive for
    countries to set their corporate tax rates below the minimum rate (as
    doing so would have less impact on the worldwide tax liability of
    ---------------------------------------------------------------------------
    multinationals).

        Assuming GILTI were strengthened, and the BEAT reformed so that it
    more adequately captures base erosion by foreign-headquartered
    multinationals, U.S.-headquartered multinationals could be exempt from
    the BEAT, because base erosion payments by U.S. multinationals would be
    more adequately addressed by the reformed GILTI. This would help
    rationalize the BEAT so it is more targeted and effective, and make it
    more consistent with the structures being considered under Pillar 2.
    (The OECD Blueprint for Pillar 2 notes that the Inclusive Framework
    ``strongly encourages'' the U.S. to turn off BEAT when entities are
    resident in countries that have an IIR.)

        The fact that a minimum tax along the lines of GILTI is now a focus
    of multilateral negotiations shows the U.S.'s intellectual and economic
    gravity in international tax. The Obama administration was reportedly
    ``laughed out of the room'' when it first floated minimum taxes as the
    basis of a multilateral approach.\40\ Today, however, the enactment of
    GILTI in 2017 has helped change the conversation such that a reformed
    GILTI could now be a model for a cooperative international regime. Even
    if a multilateral agreement among countries that represent a major
    slice of the global economy takes time to finalize, therefore,
    lawmakers should not hesitate to reform GILTI, BEAT, and FDII in ways
    that would deliver significant benefits to the United States.
    ---------------------------------------------------------------------------
        \40\ Symposium, supra note 12, p. 294.

                                     ______

             Questions Submitted for the Record to Chye-Ching Huang
                 Questions Submitted by Hon. Michael F. Bennet
                  tax havens; base erosion and profit shifting
        Question. For decades, corporations have used overseas tax havens
    to avoid their share of taxes, which has shifted an ever-larger share
    of the tax burden onto
    working-class and middle-class Americans. Governments across the globe
    are losing an estimated $427 billion per year in revenue, and the U.S.
    alone loses about $90 billion per year--money that could be used to
    shore up public education, repair our roads, or lift our children out
    of poverty.\1\ The 2017 tax law lowered the corporate tax rate and
    adopted the base-erosion and anti-abuse tax (BEAT), yet companies are
    still shifting jobs and profits offshore.
    ---------------------------------------------------------------------------
        \1\ Jeanne Whalen, ``Tax cheats deprive governments worldwide of
    $427 billion a year, crippling pandemic response: Study,'' The
    Washington Post, November 19, 2020, https://www.
    washingtonpost.com/us-policy/2020/11/19/global-tax-evasion-data/.

        What are the inadequacies of the 2017 tax law on this issue? Did it
    ---------------------------------------------------------------------------
    further incent offshoring?

        Answer. The large revenue cost of the tax law's corporate and
    international provisions nevertheless left in place substantial profit
    shifting.\2\ Some of the law's new provisions also introduced new
    incentives to locate profits and investment offshore. The basic
    structure of the law with a much lower rate on foreign profits than
    U.S. profits is the biggest structural flaw of the law that creates a
    tilt towards offshore profits and investment.
    ---------------------------------------------------------------------------
        \2\ How U.S. International Tax Policy Impacts American Workers,
    Jobs, and Investment: U.S. Senate Committee on Finance, 117th Congress
    (2021) (testimony of Kimberly A. Clausing), https://
    www.finance.senate.gov/download/03252021-clausing-statement.

        Recognizing the danger of this lopsided basic structure, the 2017
    law included provisions aimed at limiting the damage: GILTI, BEAT, and
    FDII.\3\ The anti-abuse rationale of some of these provisions is sound,
    and the provisions contain some novel and promising elements. But their
    design undermines their effectiveness, and retains incentives to locate
    profits or investment overseas in some circumstances, and increases
    those incentives in others.
    ---------------------------------------------------------------------------
        \3\ Global Intangible Low-Taxed Income, the Base Erosion and Anti-
    abuse Tax, and Foreign-
    Derived Intangible Income.

        My written testimony submitted for the hearing record includes
    further details of how specific design elements of these provisions
    operate to create these incentives.\4\
    ---------------------------------------------------------------------------
        \4\ How U.S. International Tax Policy Impacts American Workers,
    Jobs, and Investment: U.S. Senate Committee on Finance, 117th Cong.
    (2021) (testimony of Chye-Ching Huang), https://www.finance.senate.gov/
    imo/media/doc/Huang%20testimony%2003220221%20rev.pdf.

        Question. How would you fix it to ensure that corporations pay
    ---------------------------------------------------------------------------
    their fair share in taxes on their international activities?

        Answer. Reforms to the U.S. international tax law that focuses on
    workers, jobs, and investment would address the law's flaws while
    strengthening its promising elements. Broad directions for reform
    include:

          1.  Crafting a robust minimum tax out of GILTI. This would mean
    excluding less foreign income from its reach, reducing or eliminating
    various opportunities to blend and shelter income, expenses, and
    credits from different sources to avoid GILTI (such as through a
    country-by-country calculation of GILTI), and setting the minimum rate
    far closer to (and certainly no less than) 75 percent of the domestic
    rate.

          2.  Re-working BEAT to more precisely and effectively target
    payments that are in fact more likely to be base erosion, while
    exempting those that are not.

          3.  Repealing FDII and directing public resources intended to
    support innovation towards public investment in science, basic
    research, broadband infrastructure, education, and ensuring all
    children can thrive.

          4.  Consider taking a leading role in curbing harmful tax
    competition. One such proposal is the administration's proposal to
    Discourage Offshoring by Strengthening the Global Minimum Tax for U.S.
    Multinational Corporations (colloquially referred to as the ``SHIELD''
    proposal).\5\ This proposal is conceptually consistent with my
    recommendations regarding BEAT reform.
    ---------------------------------------------------------------------------
        \5\ U.S. Office of the Press Secretary, ``Fact Sheet: The American
    Jobs Plan,'' The White House, March 13, 2021, https://
    www.whitehouse.gov/briefing-room/statements-releases/2021/03/31/fact-
    sheet-the-american-jobs-plan/.

        My written testimony sets out further detail in these and other
    areas, and also explains how such reforms would in themselves deliver
    strong domestic benefits, while also helping to push towards a modern
    global framework for international tax that could have further strong
    ---------------------------------------------------------------------------
    benefits.

        Question. What alternative policy options should the U.S. consider
    to prevent corporations from avoiding taxes, and to secure investments
    in the American workforce?

        Answer. Tax compliance by large businesses, and the wealthy people
    who own them, is a significant area of concern. Ensuring large
    businesses, including those with international operations, pay the
    taxes that they owe would help businesses--including purely domestic
    businesses and small businesses that cannot use complex international
    tax avoidance schemes that can sometimes cross the line into evasion--
    to compete on a level playing field.\6\ Audit rates on some of these
    largest businesses and corporations have been cut in half since 2010.
    ---------------------------------------------------------------------------
        \6\ The Disappearing Corporate Income Tax: U.S. House Committee on
    Ways and Means, 116th Cong. (2020) (testimony of Chye-Ching Huang),
    https://www.cbpp.org/research/federal-tax/depletion-of-irs-enforcement-
    is-undermining-the-tax-code.

        Ensuring that the IRS has adequate resource, including a mandatory
    stream to rebuild its workforce of auditors able to handle the complex
    returns of multinational corporations, is key to achieving this goal.
    Doing so would raise substantial net revenue for investments in workers
    ---------------------------------------------------------------------------
    and families.

                                     ______

                     Questions Submitted by Hon. Mike Crapo
        Question. The nonpartisan Joint Committee on Taxation (JCT) has
    estimated that 25 percent of the corporate income tax is borne by
    workers. More recent estimates have concluded that the amount of the
    corporate income tax borne by workers is closer to 50 percent. Do you
    agree that the percentage of the corporate tax borne by workers is at
    least 25 percent? If not, why do you believe the JCT analysis is
    incorrect?

        Answer. Twenty-five percent is a mainstream estimate. It is
    important to note that even estimates that assume that 25 percent of
    the corporate income tax flows through to workers find that more than
    one third of the benefit of a corporate tax cut goes to the highest-
    income one percent of filers, while less than 15 percent of the benefit
    goes to households in the bottom 60 percent of the income
    distribution.\7\ This is because the share that goes to shareholders
    and other investors is highly concentrated at the top of the income
    distribution, and even the share that goes to ``workers'' is
    distributed in proportion to incomes, so much of that benefit flows to
    highly compensated workers (such as CEOs and other executives), not
    low- and
    middle-income workers.
    ---------------------------------------------------------------------------
        \7\ Chye-Ching Huang and Brandon DeBot, ``Corporate Tax Cuts Skew
    to Shareholders and CEOs, Not Workers as Administration Claims,''
    Center on Budget and Policy Priorities, August 16, 2017, https://
    www.cbpp.org/research/federal-tax/corporate-tax-cuts-skew-to-
    shareholders-and-ceos-not-workers-as-administration.

        The mainstream models underpinning the assumption that any of a
    corporate tax cut flows through to shareholders also assume that the
    corporate tax cut is ultimately paid for (otherwise the increase in
    deficits and decrease in national investment would raise interest rates
    and offset any impacts of the corporate rate cut). If low- and
    moderate-income filers end up paying for the cost of the corporate rate
    cut, they may be made worse off on net.\8\
    ---------------------------------------------------------------------------
        \8\ Ibid.

        Question. The Global Intangible Low-Taxed Income (GILTI) minimum
    tax provides an exclusion for a return on tangible assets (Qualified
    Business Asset Investment or QBAI). The provision has been criticized
    by Dr. Clausing and Ms. Huang for encouraging offshoring. However, the
    Organisation for Economic Co-operation and Development (OECD) Pillar 2
    minimum tax being considered provides an exclusion similar to QBAI,
    although the proposed Pillar 2 exclusion would exempt a return
    attributable to both tangible assets and payroll. Even President
    Obama's proposals for a minimum tax provided an exclusion for a return
    on active assets ``to exempt from the minimum tax a return on the
    ---------------------------------------------------------------------------
    actual activities undertaken in a foreign country.''

        Isn't this type of exclusion a normal feature of a global minimum
    tax because there is a recognition that profits attributable to hard
    assets are less susceptible to profit shifting, and returns on hard
    assets are normally taxed by the local jurisdiction? Do you believe the
    OECD Pillar 2 proposal would encourage domestic companies to invest in
    foreign jurisdictions?

        Answer. Global minimum taxes are relatively novel, and their design
    is still the subject of intense discussion. Exempting some flat rate of
    return is one method of attempting to proxy for return on actual
    activities undertaken in foreign jurisdictions. As a proxy, this method
    is imperfect at exempting those returns but only those returns, so
    there are tradeoffs to taking this approach. Further, the rate of
    return set and how it is calculated are design details that can have
    potentially large impacts on whether this proxy meets its target
    without creating large new opportunities and incentives for locating
    profits and investment offshore.

        Question. Dr. Clausing says in her testimony that the corporate tax
    is an efficient tax. However, many economists, including those at the
    OECD, find that the corporate income tax--out of all the different
    types of taxes countries impose--is the most harmful to economic
    growth. In their report--``Tax and Economic Growth,'' the OECD
    economists say ``lowering statutory corporate tax rates can lead to
    particularly large productivity gains in firms that are dynamic and
    profitable, i.e., those that can make the largest contribution to GDP
    growth.''

        Do you agree or disagree with the OECD economists on this point?
    Couldn't raising the corporate tax rate have the opposite effect and
    cause a drag on economic growth?

        Answer. I believe the referenced quotation is from a 2009 OECD and
    Middle East and North Africa working group summary report in response
    to the Great Recession.\9\ The summary report refers to an underlying
    study, published in final form in 2011.\10\ The final study notes that
    in the context of an economic recovery, ``The tax change that shows the
    most promise in terms of both increased growth and economic recovery is
    the reduction of income taxes (including social security contributions)
    of those on low incomes. This would stimulate demand, increase work
    incentives and reduce income inequality.''\11\
    ---------------------------------------------------------------------------
        \9\ https://www.oecd.org/mena/competitiveness/
    assessingthetaximplicationsofthefinancialcrisis.
    htm; and https://www.oecd.org/mena/competitiveness/41997578.pdf, ``Tax
    and Economic Growth: Summary and Main Findings.''
        \10\ Jens Matthias Arnold, Bert Brys, Christopher Heady, Asa
    Johansson, Cyrille Schwellnus, and Laura Vartia, ``Tax Policy for
    Economic Recovery and Growth,'' The Economic Journal, 2011, available
    at https://academic.oup.com/ej/article-abstract/121/550/F59/5079707?
    redirectedFrom=fulltext.
        \11\ Id.

        The study also makes the important point that how tax cuts are
    financed matters for the net impact on growth. (And conversely, what
    tax increases finance matters for the net impact on growth.)\12\
    ---------------------------------------------------------------------------
        \12\ For further discussion of this and other studies, see: Huang
    and Frentz, ``What Really Is the Evidence on Taxes and Growth,'' Center
    on Budget and Policy Priorities, February 18, 2014, https://
    www.cbpp.org/research/what-really-is-the-evidence-on-taxes-and-growth.

        More recent evidence suggests that the 2017 tax law's corporate tax
    cuts did little to increase growth, investment, or wages above the
    trends already underway before the law's enactment.\13\
    ---------------------------------------------------------------------------
        \13\ See Jason Furman, ``Prepared Testimony for the Hearing `The
    Disappearing Corporate Income Tax,' '' February 11, 2020, https://
    waysandmeans.house.gov/sites/democrats.waysand
    means.house.gov/files/documents/Furman%20Testimony.pdf.

        The administration has proposed significantly raising the corporate
    statutory rate and the GILTI rate. The GILTI minimum tax already
    imposes a higher rate of tax on foreign income of U.S. companies than
    other countries apply to the foreign income of their domestic
    ---------------------------------------------------------------------------
    companies.

        If the OECD fails to reach an agreement or if member states fail to
    adopt the agreement, the effect would be even higher comparative
    effective tax rates on U.S. businesses, potentially a differential of
    an effective minimum tax rate of over 21 percent compared to 0 percent
    imposed by most foreign countries.

        Question. In answering a question on the effects of the TCJA
    reforms on locating or maintaining a U.S.-based business in the United
    States, Ms. Olson said that higher levels of taxation imposed on U.S.
    companies would discount the value of assets in the hands of a U.S.
    company. Over time, the diminution in the value of those assets would
    make them, relatively speaking, more valuable in the hands of foreign-
    owned companies. Doesn't this impact on asset value have to be true? Is
    there any reason to ignore this basic financial reality?

        Answer. As the Congressional Research Service has explored in
    detail in its assessment of the standard of ``capital ownership
    neutrality,'' ``In light of the many ways in which the efficiency costs
    of capital ownership non-neutrality are unlikely to be significant
    compared to location distortions, it seems questionable to use meeting
    this standard of neutrality to evaluate tax reform changes and
    questionable to see source-based taxation as an efficient international
    tax regime.''\14\
    ---------------------------------------------------------------------------
        \14\ Jane G. Gravelle, ``Reform of U.S. International Taxation:
    Alternatives,'' Congressional Research Service, August 1, 2017, https:/
    /fas.org/sgp/crs/misc/RL34115.pdf.

        Question. The U.S. Congress cannot write the rules for sovereign
    members of the G7, G20, or the OECD. That is the case even if the OECD
    were to reach an Inclusive Framework agreement. The Peoples Republic of
    China, for instance, America's greatest economic rival, has indicated
    skepticism towards the OECD Inclusive Framework. Without such an
    agreement, wouldn't the United States be unilaterally raising the
    comparative effective tax rates of U.S.-based companies to
    uncompetitive levels? How should Treasury proceed if other countries,
    such as China, are not willing to impose a global minimum tax? The
    United States was already a first mover with GILTI. Why should the
    ---------------------------------------------------------------------------
    United States move again before other countries move at all?

        Answer. As my written testimony submitted for the record sets out
    in more detail, there would be strong domestic benefits from
    strengthening the U.S. corporate tax system to reduce incentives for
    locating profits and investment offshore and reducing the ability to
    invert, regardless of how other countries act. The U.S. also has
    economic and intellectual gravity in this space, as demonstrated by how
    the novel enactment of GILTI has shaped conversations around the
    potential shape of an international framework.

        Question. Chairman Wyden and Dr. Clausing engaged in a dialogue
    where Chairman Wyden went as far as to question the policy motives of
    those on the Republican side as using competitiveness as simply
    ``code'' for cutting taxes for ``mega-
    corporations.'' Do you believe that tax policies that raise the
    effective tax rate on the foreign operations of U.S. businesses well
    above that of their foreign competitors has no effect on their ability
    to succeed in foreign markets?

        Answer. I do not believe that the proposals contained in my written
    testimony create a significant barrier to U.S. businesses succeeding in
    foreign markets. Further, I am not aware of sound empirical evidence
    that shows that before the 2017 tax law, U.S.-resident multinational
    corporations were having difficulty succeeding in (making large profits
    in) foreign markets. U.S. multinationals prior to the 2017 tax law were
    reporting very large profits in foreign markets annually, such that one
    of the provisions in the 2017 tax law deemed the repatriation of the
    stock of those profits (in excess of $2 trillion) reported offshore.

                                     ______

                    Question Submitted by Hon. John Barrasso
        Question. I'm going to use Senator Cantwell's phrase and ``go
    local'' for just a moment.

        Dr. Clausing and Ms. Huang, I heard both of you testify about how
    U.S. policy needs to focus on workers. I've heard Chairman Wyden and
    Democrats on the committee talk about doing what is right for American
    workers.

        On Day 1 of the Biden administration, with the stroke of a pen,
    President Biden eliminated thousands of good-paying American jobs when
    he blocked construction of the Keystone Pipeline.

        Given your support for doing everything we can to support American
    jobs in the United States, do you agree President Biden's actions are
    inconsistent and in conflict with your beliefs that we should be
    helping, not hurting, all American workers whose jobs are located
    within the boundaries of the United States?

        Answer. This falls outside of my area of expertise, so I do not
    have views to offer on the impact of policy in this area.

                                     ______

                    Questions Submitted by Hon. Rob Portman
        Question. The original purpose of taxing tax haven profits as
    explained by Secretary Dillon in proposing the anti-deferral measures
    was to eliminate incentives to foreign direct investment (FDI). Since
    the 1960s, the international tax system has dramatically changed.
    However, low or no tax jurisdictions still exist and are often used to
    entice direct investment in those countries. Similarly, we employ
    certain incentives to spur investment in the U.S.

        As the purpose of these foreign tax systems is supposed to affect
    location of job-producing business investment, what is the comparative
    effect of deferred U.S. tax vs. location of markets, location of
    supplies, comparative worker efficiency and wage costs, energy and
    transportation infrastructure, and costs of social overhead for
    specific social priorities of the alternative investment locations?

        Answer. There was broad agreement that the deferral features of the
    U.S. international tax system prior to the 2017 tax law were unsound
    and included incentives for both shifting profits and activity abroad.
    As my testimony submitted for the record notes, however, the current
    U.S. international tax regime includes a number of incentives to locate
    profits and investment offshore, and there a number of ways that this
    structure could be improved upon to reduce those incentives.

        Question. What percentage of the Fortune Global 2000 was
    represented by U.S. companies in 2005-2019, 1980-2000, 1968-1980? Is
    the percentage increasing or decreasing? To what extent do factors
    other than comparative tax rates affect direct investment location
    decisions?

        Answer. I believe this question may refer to the Forbes Global
    2000, which in my understanding has been compiled since only 2003.\15\
    I have not compiled these data over time, but I would expect that the
    U.S. share of companies in these and other global corporate rankings
    will have been affected over time by trends including relative
    population growth in the U.S. and other countries.
    ---------------------------------------------------------------------------
        \15\ https://www.forbes.com/lists/global2000/#6eca74195ac0.

        Question. Describe the impact of U.S Federal tax incentives on FDI,
    and what percentage of U.S. FDI is attributable to comparative labor
    efficiency, access to markets, access to supplies, access to
    technology, access to educated workforce, and differences in business
    ---------------------------------------------------------------------------
    regulation to achieve noneconomic goals?

        Answer. While I do not have a strongly preferred empirical
    decomposition, I agree that structural factors that are supported and
    can be strengthened by public investments are an important driver of
    FDI, and in many cases, supporting higher public investments is a more
    promising route to encouraging investment and productivity with broadly
    shared benefits than cutting corporate tax rates on U.S.-sourced
    income.

                     Question Submitted by Hon. Todd Young
        Question. In your testimony you described the GILTI tax as being
    not robust. When it was passed in 2017, the Joint Committee on Taxation
    projected that GILTI would raise revenue by $112 billion and more
    recently found the effective rate of GILTI is around 16 percent.

        Given that the United States was the first and only country to
    enact a global minimum tax, and the tax being considered by the OECD is
    weaker than the current GILTI rate, do you believe that the GILTI tax
    is the most robust global minimum tax in the world?

        Answer. I agree that a unique or novel tax provision is by
    definition simultaneously both the strongest and weakest of its kind,
    and my written testimony submitted for the record also outlines a
    number of ways that GILTI can be strengthened to be made more
    robust,\16\ and details my view that U.S. leadership in this space can
    affect the direction of the global international discussions to which
    you refer.
    ---------------------------------------------------------------------------
        \16\ How U.S. International Tax Policy Impacts American Workers,
    Jobs, and Investment: U.S. Senate Committee on Finance, 117th Cong.
    (2021) (Testimony of Chye-Ching Huang), https://www.finance.senate.gov/
    imo/media/doc/Huang%20testimony%2003220221%20rev.pdf.

                                     ______

            Prepared Statement of Pamela F. Olson, Former Assistant
              Secretary for Tax Policy, Department of the Treasury
        Chairman Wyden, Ranking Member Crapo, and distinguished members of
    the committee, I appreciate the opportunity to appear this morning as
    the committee considers the impact of U.S. international tax policy. I
    had the honor of serving as Treasury's Assistant Secretary for Tax
    Policy from 2002 to 2004, led PwC's Washington National Tax Services
    practice from 2012 until last year, and am currently a consultant to
    PwC. I am appearing on my own behalf and not on behalf of PwC or any
    client. The views I express are my own.
                                  introduction
        The title of this hearing cuts straight to the bottom line
    regarding what really matters: the impact of tax policy on American
    workers, jobs, and investment. While international tax policy is
    replete with esoteric details, it must be judged by whether it delivers
    what Americans of all political stripes want: jobs and investment that
    lead to rising wages, economic security for American workers and their
    families, and more broadly shared prosperity. As Yogi Berra once
    observed, ``If you don't know where you're going, you might not get
    there.'' The committee's focus on the bottom line results it wants
    should give it strategic direction.

        To evaluate our international tax policy, my testimony will examine
    the past, present, and future: what our international tax rules were
    prior to 2018, how the rules changed in 2018, and how Congress might
    change the rules, with a particular focus on the potential effect of
    the OECD's digitalization project and what other countries may do
    independently or in response. The latter is important because the
    actions of other governments affect the attractiveness of the United
    States as a location for jobs and investment.

        As the Finance Committee charts a path for the future, it will be
    important to assess where we've been, where we are, and to make an
    informed judgment of where we want to go for the sake of American
    workers, jobs, and investment.
        international tax policy before the tax cuts and jobs act (tcja)
        The unintended consequence of U.S. international tax policy prior
    to the TCJA was to disadvantage U.S. workers and U.S. investment. Under
    prior law, the United States had what has been described as a nominally
    worldwide system and a factually territorial system. The U.S. worldwide
    system subjected a U.S. company's profit to tax wherever earned around
    the globe, currently if the profit fell into categories deemed to be
    mobile or passive under subpart F, and upon repatriation for the
    remainder of its active business income. The U.S. system was also
    described as a hybrid system, and to be sure, it contained the most and
    least attractive features of both.

        What the prior system sought to achieve was a level playing field
    for U.S. companies competing with foreign companies in countries with
    lower tax rates than the United States. The leveling of the playing
    field was temporary, lasting only until the profits were repatriated,
    but the benefit allowed U.S. headquartered companies to compete in
    foreign markets with companies subject to lower tax rates. That matters
    because being globally competitive increases the value of U.S.-created
    assets and intellectual property that are deployed to serve markets
    around the globe, increasing investment in these assets and creating
    more and better paying jobs for American workers. It is understood by
    business executives and shown by academic research that U.S. companies'
    foreign investments benefit American workers because they create more
    jobs in the United States--a point also made by Prof. Hanlon in her
    testimony to the committee last week.

        The unfortunate result of the prior system is that it
    disincentivized the reinvestment of foreign profits in the United
    States to the detriment of American workers. U.S. investments needed
    not only to pass an investment hurdle rate, but they also had to
    generate a return sufficient to cover the added tax owed on
    repatriation of the profit. The growing differential between the U.S.
    corporate rate and that of other OECD countries made it increasingly
    costly to repatriate earnings to the United States, an effect evidenced
    by the growing amounts of foreign ``permanently reinvested earnings''
    reported on U.S.-headquartered companies' pre-2018 financial
    statements.

        The ``permanently reinvested earnings'' were often referred to as
    ``untaxed profits'' though the reality was that most earnings had been
    taxed by the foreign country where the earnings originated (in some
    cases, the same earnings were taxed by more than one country), and the
    only sense in which the sums were untaxed was by the United States. By
    deferring the taxation of the earnings until they were repatriated, the
    United States eased the uncompetitive nature of its relatively high
    corporate rate but discouraged the reinvestment of foreign earnings in
    the United States. From the perspective of the American worker, the
    pre-TCJA playing field was not level.

        The U.S. corporate tax rate, highest among OECD countries, coupled
    with a worldwide system affected values in merger and acquisition
    transactions. Assets could fetch a higher price from foreign buyers who
    would not be subject to U.S. taxes on their foreign operations and
    could minimize their tax burdens.\1\ A benefit of a merger and
    acquisition transaction with a foreign headquartered company was the
    possibility of redomiciling the U.S. company's headquarters outside of
    the United States. In effect, higher tax costs put a discount on the
    value of business assets in the hands of American owned companies.
    ---------------------------------------------------------------------------
        \1\ Andrew Lyon, ``Insights on Trends in U.S. Cross-Border M&A
    Transactions After the Tax Cuts and Jobs Act,'' Tax Notes
    International, October 26, 2020, pp. 497-507.

        The loss of a corporate headquarters can have broad consequences
    for both the local community and the governments where the headquarters
    were located. The migration of headquarters jobs overseas can lead to
    diminished Federal, State, and local revenue and to potential follow-on
    job and investment losses for the shops, restaurants, businesses, and
    charities that depended on or benefited from the activities and
    employment of the corporate headquarters. The loss of corporate
    headquarters jobs can also reduce local civic involvement adversely
    ---------------------------------------------------------------------------
    affecting charitable, cultural, and educational institutions.

        The OECD observed the United States' tax system pre-2017 was out of
    sync with the rest of the world, which had reduced corporate tax rates,
    adopted territorial tax systems, and enacted laws to safeguard their
    domestic tax bases. Other governments also relied increasingly on
    consumption taxes like the value-added tax (VAT) as a mechanism to meet
    their revenue needs. The premise underlying the OECD's Base Erosion and
    Profit Shifting (BEPS) project, commenced in 2013, was the instability
    of the international tax regime. The distortion of investment decisions
    caused by United States' policy pre-TCJA contributed to the
    instability. The increasing amounts of ``permanently reinvested
    earnings,'' attributable to the United States' high rate and worldwide
    system, became an attractive target for other governments as a
    perceived unclaimed pot of earnings.\2\ The United States failed to
    stake its claim or counter the stateless income assertion until the
    ``untaxed,'' ``nowhere,'' and ``stateless'' income labels had stuck.
    The labels skewed the global political debate because they created the
    appearance that the earnings belonged nowhere and consequently were up
    for grabs. Although the perception should have been changed by the
    TCJA's enactment, with its tax on accumulated unrepatriated foreign
    earnings and its new global minimum tax on foreign income referred to
    as GILTI, that has not been the case. While that was a failing more of
    messaging than of substance, it was not without consequence. To wit,
    foreign government complaints of unfair competition based on companies
    not being taxed shifted quickly to complaints, not about whether the
    companies were being taxed, but to where the companies were being
    taxed. Foreign governments, it turned out, cared not so much about
    perceptions of unfair competition as they cared about asserting
    jurisdiction to tax a share of U.S. companies' global profits.
    ---------------------------------------------------------------------------
        \2\ Companies headquartered in countries with territorial tax
    systems received a comparable but permanent benefit, meaning that
    unlike U.S. companies, there was no similar residual tax claim to
    report on their financial statements.
    ---------------------------------------------------------------------------
           policy coalescence around the need for and shape of change
        U.S. international tax policy before 2017 was an inherently
    unsustainable system, a fact that was broadly recognized on a
    bipartisan basis before 2017. Chairman Wyden, you were a leader in this
    area with your bipartisan comprehensive tax reform bill in 2010
    lowering the corporate rate to 24 percent and significantly broadening
    the base. Other Democrats, including President Obama and then-Vice
    President Biden, and Republicans, beginning with then House Ways and
    Means Committee Chairman Dave Camp, put forward proposals to lower the
    corporate rate, broaden the corporate base, and transition to an
    international system that ended the disincentive to repatriate foreign
    earnings. Then Finance Committee Chairman Max Baucus likewise put
    forward proposals to reform the international tax rules. This
    committee's working group on international tax reform, chaired by
    Senators Portman and (now Majority Leader) Schumer, called for a
    dividend exemption system with ``robust and appropriate base erosion
    rules'' that would end the disincentive to repatriate foreign earnings.
    The international tax reform working group also examined the need to
    make the United States a more hospitable environment for headquartering
    companies and to reduce the corporate rate. In 2014, Senator Cardin
    introduced legislation that coupled a 10 percent VAT with a reduction
    in the corporate tax rate to 17 percent.

        To be sure, there were differences among the many proposals put
    forward, but the differences were of degree, not direction.

        The OECD's BEPS project, which was explicitly about closing
    loopholes and gaps in the tax systems between countries and not about
    reallocating jurisdiction to tax global profits, included a number of
    ``best practices'' to prevent base erosion and profit shifting. Some of
    the OECD's recommendations reflected concepts originated in and
    advocated for by the United States. Whether the BEPS recommendations
    motivated TCJA provisions, many of the recommendations were enacted in
    TCJA.
                    international tax policy after the tcja
        As an observer of the legislative process, the TCJA's corporate
    reforms reflect a remarkable triumph of bipartisan policy development,
    despite the ultimate absence of Democratic votes for the final
    legislation. It lowered the corporate rate, taxed offshore earnings,
    ended the disincentive to reinvest foreign earnings in the United
    States, and adopted a number of provisions intended to protect the U.S.
    fisc from base erosion and profit shifting, many of which were also
    among the OECD's BEPS recommendations. These include anti-hybrid rules,
    tightened transfer pricing rules, and interest deduction limitations.
    TCJA included not just one minimum tax but two aimed at cross-border
    transactions and foreign earnings (i.e., GILTI and BEAT), thus far
    surpassing the OECD's recommendations. In addition to the overall
    corporate rate reduction--possibly the greatest base protection measure
    any country can enact--TCJA also included an incentive for the use of
    intangibles in the United States that aimed to level the playing field
    for American jobs and investments and correct the imbalances of the
    prior system.

        The TCJA and its base broadening provisions, in particular, have
    generated criticism as too generous and too onerous. The mutual
    dissatisfaction may suggest an appropriate balance was struck. Tax
    return data for the period since the TCJA was enacted is not yet
    available but initial data on the activities of U.S. multinational
    companies collected by the Bureau of Economic Analysis are quite
    favorable. According to the BEA, U.S. multinational companies grew
    faster in 2018 in their U.S. employment, U.S. value added, and U.S.
    investment in plant, equipment, and research and development than in
    their corresponding foreign activities. In fact, growth at home by
    these U.S. companies in terms of their employment, value added, and
    investment was above their average growth rate of the past 20 years.\3\
    In addition, the BEA has reported that U.S. companies have repatriated
    $1.5 trillion in foreign earnings to the United States since the
    enactment of TCJA through the third quarter of 2020--this is more than
    three times greater than the amount repatriated over a similar time
    period prior to the enactment of TCJA.
    ---------------------------------------------------------------------------
        \3\ Bureau of Economic Analysis, ``Activities of U.S. Multinational
    Enterprises, 2018,'' News Release BEA 20-40, August 21, 2020, available
    at: https://www.bea.gov/news/2020/activities-us-multinational-
    enterprises-2018.

        What follows are further observations regarding the TCJA's
    provisions that are most significant and that have garnered the most
    ---------------------------------------------------------------------------
    attention, positive or negative.

        Corporate rate. Reducing the corporate tax rate was the single most
    significant change Congress could have made to address base erosion and
    increase the attractiveness of the United States as a location for
    investment and job creation. The lower rate reduces the incentives for,
    and rewards from, efforts to avoid taxes. The flip side is it increases
    the rewards from hiring and investing in the United States. The 21-
    percent corporate rate, after taking into account State and local
    taxes, dropped the United States from its highest ranking among OECD
    countries, a position we occupied for a number of years, to the middle
    of the pack.\4\
    ---------------------------------------------------------------------------
        \4\ In 2020, the United States had the 12th highest combined
    Federal and State statutory corporate rate in the 37-country OECD, and
    the U.S. rate was 2.3 percentage points higher than the average rate of
    the other 36 countries. On a GDP-weighted basis, the United States was
    less than 1 percentage point below the average of the other OECD
    countries.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The notes to the chart above indicate there are two scheduled
    rate reductions yet to take effect--France and Colombia--and one rate
    increase--the United Kingdom. The chart also indicates where the United
    States would stand if it were to increase its Federal rate to 28
    percent: including State and local taxes, the United States would again
    be number one, and not in a good way, undoing the benefits of the TCJA
    that incentivize investing and job creation here. With scheduled rate
    reductions in France and Colombia, even a 25 percent rate would put the
    United States effectively in a tie for second place, behind only
    ---------------------------------------------------------------------------
    Portugal. That is a contest we do not want to win.

        Recently, concern about a ``race to the bottom'' has garnered
    significant attention. The facts suggest the race to the bottom, if
    there was one, has evolved to a race to the middle. As can be seen in
    the chart below, the United States had first-mover advantage when it
    enacted the Tax Reform Act of 1986, moving from a rate above the OECD
    average to a rate below it. But that is where the United States
    remained, except for a one percentage point increase in 1993. Other
    countries initiated their own rate reductions in the 1980s and 1990s,
    and soon left the United States behind. Indeed, in 2016, President
    Clinton, who signed the legislation raising the corporate rate to 35
    percent, noted ``I was the President who urged it to be raised to 35
    percent, but when I did it, it was precisely in the middle of OECD
    countries. It isn't anymore.''\5\ Based on PwC's calculations from OECD
    data, approximately 90 percent of the global corporate tax rate
    reductions between 1981 and 2020 had occurred by 2007. The two
    countries with upcoming reductions scheduled are currently the first
    and second highest on the previous chart. The reductions will leave
    them at or above the OECD average. As the notes indicate, the United
    Kingdom has proposed an increase in its corporate tax rate to 25
    percent, which would put it in the middle of the OECD pack, but still
    below the current U.S. all-in rate.
    ---------------------------------------------------------------------------
        \5\ https://www.cnbc.com/2016/09/21/bill-clinton-supports-lower-
    corporate-tax-rate-says-reasoning-for-tpp-clear.html.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

       Tax rate changes are easier to understand than changes to the
    tax base to which the tax rate is applied. That may explain why tax
    base changes are generally overlooked, even though the tax base change
    may be more significant or even offset the effect of the rate change.
    Both the U.S. tax rate changes in the Tax Reform Act of 1986 and in the
    TCJA were accompanied by significant broadening of the corporate tax
    base. Applying a lower rate to a broader base means that many companies
    did not see a change in their tax liabilities despite the significant
    drop in the rate. Some industries calculated that the base broadening
    provisions in the TCJA completely offset the rate reduction. A rate
    increase with the same TCJA base for these industries will increase the
    cost of doing business in the United States above the cost before
    ---------------------------------------------------------------------------
    enactment of the TCJA.

        Base broadening has often accompanied rate reduction in other
    countries as well. Going the other direction, the United Kingdom's
    corporate tax rate increase is to be preceded by significant base-
    narrowing investment incentives that will offset the impact of the rate
    increase. The coupling of rate andtax base changes likely accounts for
    the fact that corporate receipts as a share of corporate income have
    stayed relatively unchanged despite the general trend of rate
    reduction. The chart below illustrates the constancy of U.S. corporate
    tax receipts over time, taking into consideration only the domestic
    income of corporations that are taxed under the corporate income tax
    and excluding the income of S corporations, whose owners are taxed
    directly on all income under the individual income tax.\6\
    ---------------------------------------------------------------------------
        \6\ It is important to account for the increased share of business
    income earned by pass-throughs, such as S corporations, when evaluating
    tax revenues collected on business income. For example, IRS data
    indicate that in 1980, S corporations earned only 1 percent of the
    income earned by C corporations, but by 2016 they earned nearly 50
    percent of the income of C corporations.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mandatory deemed repatriation of foreign profits. Because of
    the high rate differential between the United States and other
    countries, U.S.-headquartered companies had accumulated significant
    profits outside the United States. The mandatory deemed repatriation of
    all of those profits wiped the slate clean, subjecting all of the
    foreign earnings to tax and allowing companies to repatriate the
    earnings for reinvestment in the United States. The tax cost of the
    deemed repatriation, even paid over a period of 8 years, was
    significant for many companies, especially those whose foreign
    investments were treated as cash and subject to tax at the higher rate.
    Going forward, however, it reduced borrowing needs, simplified Treasury
    functions, and facilitated investing and job creation in the United
    ---------------------------------------------------------------------------
    States.

        Minimum taxes. TCJA included two minimum taxes: the tax on global
    intangible low-taxed income (GILTI), which was drawn from the proposals
    put forward by President Obama, former Chairman Camp, former Chairman
    Baucus, and other members of Congress; and the base erosion and anti-
    abuse tax (BEAT), a new starter that denies a deduction, generating an
    additional tax liability, if the U.S. taxpayer's payments to foreign
    affiliates exceed a percentage threshold. Relative to the norms of
    international taxation, both GILTI and BEAT have quirks. GILTI, for
    example, limits foreign tax credits to 80 percent and permits no
    carryover of unused credits. BEAT applies without regard to whether the
    deductible payments are subject to tax in the jurisdiction to which
    they are paid, which is the jurisdiction with primary taxing rights.
    BEAT was designed and intended to create a level playing field and
    operates as such. It applies equally to payments to foreign-
    headquartered companies and foreign affiliates of U.S.-headquartered
    companies providing cross-border services to their U.S. affiliates.

        There are other features that produce unintended results. Under the
    GILTI rules, for example, expense allocation against foreign income can
    push the tax rate above the foreign country's rate, even when that rate
    exceeds the U.S. statutory rate. The mechanics of BEAT make it a
    procyclical tax. Despite steps being taken to reduce the difficulty of
    compliance, such as computing GILTI on a global rather than country-by-
    country basis, both taxes add considerable complexity to the tax code.

        GILTI, like other minimum tax proposals, is designed to reduce
    opportunities for base erosion and ensure all income from intangible
    assets is subject to a minimum level of tax. It has been asserted that
    TCJA created incentives to shift income offshore, but that is simply
    untrue. GILTI applies to profits that under prior law would not have
    been subject to U.S. tax unless and until they were repatriated to the
    United States. The 13.125-percent tax (that GILTI generally equates to
    after factoring in the foreign tax credit haircut), applied currently,
    clearly reduces the pre-TCJA incentives to create and hold assets
    outside the United States, deferring tax indefinitely. If the GILTI
    rate were increased, for example, by reducing the 50-
    percent exclusion, then U.S.-headquartered companies would be subject
    to significant additional tax on much of their foreign income that
    foreign-headquartered companies are not.

        While the connection of foreign operations to American workers,
    jobs, and investments is not always obvious, burdening U.S. companies
    with an expense not borne by their foreign competitors will cost them
    opportunities. As mentioned at the outset of my testimony and as
    Professor Hanlon noted in her testimony at last week's hearing, a U.S.
    company's foreign operations create jobs here in America. This is an
    important point to consider in the design of U.S. international tax
    policy: growth abroad creates jobs at home. Conversely, lost
    opportunities abroad are likely to translate to fewer jobs and reduced
    investments in the United States.

        Examples are often given of facilities built abroad that, it is
    asserted, could have been built in the United States, but many
    industries serve markets around the globe and can only do so if they
    have facilities from which to serve those markets. Hotels, restaurants,
    and stores are obvious examples, but so are plants that manufacture
    products for which shipping costs from the United States to the foreign
    market would be excessive relative to the value of the product or to
    satisfy local content requirements. The foreign operations of those
    U.S. companies require supporting headquarters jobs for American
    workers and mean a stronger and healthier employer. Setting a tax rate
    on those foreign operations that exceeds the tax borne by their
    competitors in the local market could cost American workers their jobs.

        There are proposals to eliminate the exception from GILTI of a 10-
    percent return on qualified business asset investment (QBAI), which are
    the tangible assets a company uses in its foreign operations. When
    first devised in the minimum tax context, the 10-percent return on
    tangible assets served as a rough proxy for intangible income. If the
    return exceeded 10 percent, it was deemed to be intangible income.
    Concern about the mobility of intangibles is what generated the minimum
    tax proposals and what motivated the OECD's BEPS project. Thus, the
    exception for a return on QBAI is a means of measuring the intangible
    income--the excess of the 10-percent return on QBAI--that should be
    captured by a minimum tax. In effect, it recognizes the primary taxing
    right that the country in which the operations are located has to
    income from the tangible assets there. Including that income in GILTI
    would increase opportunities for double taxation and disputes. The QBAI
    exception allows U.S. companies to compete on a level playing field
    with foreign companies with respect to investments in tangible assets
    that yield normal rates of return, by subjecting them to only the
    foreign tax rate in the country in which the tangible assets are
    located. A 10-percent return on fixed assets is not what minimum taxes
    were intended to capture.

        Concerns have been expressed that QBAI and other features of GILTI
    may encourage companies to invest outside of the United States. The BEA
    data described above is compelling evidence that should lay the concern
    to rest. It indicates that U.S.-headquartered companies' investment in
    property, plant, and equipment in the United States increased faster
    than in their foreign affiliates. The BEA data also put the U.S. growth
    rate above its 20-year average. Anecdotally, I am unaware of any
    company being induced by the design of GILTI to invest outside the
    United States. Indeed, articles have been written on the benefits of
    electing into subpart F, full current taxation of foreign income, as
    preferable to GILTI.\7\
    ---------------------------------------------------------------------------
        \7\ Libin Zhang, ``To the Frying Pan: New Virtues of Subpart F
    Income Over GILTI,'' Tax Notes [TA], July 2, 2018, pp. 73-81.

        The deduction for foreign-derived intangible income (FDII) was
    designed and intended to create a level playing field in the tax rate
    applied to U.S. income derived in foreign markets from products and
    services. It uses the same rough proxy as GILTI for computing income
    from intangible assets--the excess over a 10-percent return on fixed
    assets--and the 37.5-percent deduction against a 21-percent corporate
    rate yields a 13.125-percent rate for FDII. The goal of the deduction
    is to equate the tax rate applicable to intangible income whether
    generated in the United States or abroad. The GILTI tax rate is
    scheduled to increase after 2025, with a matching adjustment to FDII,
    ---------------------------------------------------------------------------
    keeping the tax rates equal.

        Other TCJA base broadening provisions. In addition to the lower
    rate, the tax on unrepatriated foreign profits, two minimum taxes, and
    other international changes that fell into the OECD's ``best
    practices'' category, the TCJA included a switch from expensing to
    capitalization and amortization of R&D expenses. Since R&D received
    significant attention from the committee at last week's hearing, I will
    only observe that there is tremendous global competition for R&D jobs.
    Why? Because companies' R&D investments create jobs and have knock-on
    effects that positively affect investment and the economy. Every
    decision to conduct R&D elsewhere makes it more logical to make the
    next investment elsewhere. Some countries, including China, recognize
    the knock-on effects and are willing to offer subsidies and deductions
    equal to multiples of the R&D expense in order to attract R&D
    investment. Others offer favorable treatment of income generated by R&D
    through intellectual property incentives (so called ``IP box regimes'')
    to which FDII is a partial response. The United States already ranks
    27th least favorable out of 37 OECD countries in R&D tax incentives,
    before capitalization and amortization of R&D becomes effective,
    weakening our position further. For the benefit of American jobs and
    investments, the United States should give careful consideration to the
    comparability of its R&D tax incentives to those of other countries to
    maintain its leading position in the global economy.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

            where should international tax policy go from here?
        The OECD's project on taxation of the digitalizing economy is not
    on the list of topics for this hearing, but it is the elephant in the
    room. As was the case with the BEPS project that preceded the
    digitalizing economy project, the U.S. Treasury has been a very active
    participant in the discussions. As was also the case with the BEPS
    project, the work began and proceeded without the direction of Congress
    that ought to precede a discussion in which the allocation of U.S.
    taxing jurisdiction is at stake. Members of Congress, including in
    particular the leaders of this committee, have been vocal in stating
    their opposition to digital services taxes, ring-fencing the digital
    economy for tax purposes, and changes in international tax agreements
    that target U.S. companies, and they have stated their desire for
    resolution through multilateral discussions at the OECD rather than
    unilateral measures. No congressional guidance has been provided,
    however, regarding the content of the agreement even though the
    proposals on the table would require legislation and, in addition,
    amendments to treaties or the entry into a multilateral instrument,
    both of which would require Senate ratification. Waiting for the
    Treasury Department negotiators to return with a deal is too late to
    begin consideration of what the Senate would like to see in it.

        One part of the digitalizing economy project--``Pillar 2''--matches
    up relatively well with the two minimum taxes enacted in the TCJA.
    Pillar 2 proposes that countries enact a global minimum tax that
    resembles GILTI and an undertaxed payments rule that resembles BEAT.
    The Pillar 2 version of BEAT may be better designed than BEAT, but
    avoiding multiple levels of taxation will require careful coordination
    with the global minimum taxes, and logically the minimum tax should
    have priority in determining whether a deductible payment is
    undertaxed. Only time will tell whether other countries' implementation
    of Pillar 2 follows this construct, or whether they use the template of
    Pillar 2 as an opportunity to enact an undertaxed payment rule, denying
    deductions for or imposing withholding taxes on payments to U.S.
    companies.

        Secretary Yellen has voiced support for the OECD project, noting
    that a global minimum tax would put a floor under corporate tax rates
    and end the ``race to the bottom.'' As previously noted, the facts
    suggest a race to the bottom in headline corporate tax rates may be a
    thing of the past, but that said, broadly subjecting
    foreign-headquartered companies to the same kind of a minimum tax as
    U.S.-headquartered companies may help level the playing field. The
    problem with a minimum tax--unless other countries follow suit--is that
    it can disadvantage a country's own headquartered global companies
    relative to foreign companies. GILTI, for example, raises the tax paid
    by U.S.-headquartered companies on their foreign operations, but it
    cannot raise the tax paid by foreign companies on their foreign
    operations. A robust OECD agreement pursuant to which all or most other
    countries with major corporate headquarters enacted similar minimum
    taxes could be beneficial to U.S. companies.

        There are three concerns with this rosy scenario.

        The first is that there are questions whether GILTI would be
    considered a compliant minimum tax under Pillar 2. It is passing
    strange for countries, none of which have enacted minimum taxes, to
    pass judgment on whether GILTI is sufficiently stringent, but setting
    that aside, the OECD has acknowledged that GILTI is more stringent
    overall in its application than the Pillar 2 design. GILTI could be
    amended to bring it into greater conformity with the details of the
    Pillar 2 design, but note that that would require Congress to enact
    legislation the terms of which would be dictated by the OECD.

        If GILTI does not qualify--and other countries' treatment of U.S.
    companies under their anti-hybrid rules demonstrates their willingness
    to not treat GILTI as a compliant minimum tax--then U.S.-headquartered
    companies may be subject to the implementation of the undertaxed
    payment rule in any country that adopts that part of Pillar 2,
    resulting in double tax on U.S. companies and/or revenue loss to the
    U.S. fisc.

        The second concern is whether other countries would enact the
    agreed-upon minimum taxes. The concept of a foreign minimum tax has
    been around at least since the late 1990s when the OECD launched work
    on ``harmful tax competition.'' Interest in the concept returned when
    President Obama proposed a foreign minimum tax, Chairman Camp included
    it in his draft international legislation, and the Obama Treasury
    pushed for inclusion of foreign minimum taxes as an action item in the
    OECD's BEPS project. Despite more than 20 years of international
    attention to the concept, no country other than the United States has
    chosen to enact one or, to my knowledge, entertained the possibility of
    doing so.

        Countries may sign on to a Pillar 2 agreement but fail to enact an
    effective foreign minimum tax on their multinational companies, giving
    them a competitive advantage while denying deductions or imposing
    withholding taxes on payments made by U.S. multinationals to both their
    foreign affiliates and to the U.S. parent. The complexity of the OECD's
    proposed approach alone will discourage many countries from proceeding.
    It will be difficult to prevent countries from simply selecting those
    aspects of the Pillar 2 framework that appeal to them or can easily be
    implemented (like denying deductions or imposing withholding taxes)
    while failing to implement the meaningful minimum tax that should be
    the foundation of Pillar 2.

        A crucial unknown is at what level the Pillar 2 minimum tax rate
    will be set. Most discussions assume a rate comparable to Ireland's
    12.5 percent. At 13.125 percent, the U.S. GILTI rate is already higher
    and will be several points higher when the scheduled change to GILTI
    takes effect in 2026. Pillar 2 will not provide a floor that protects
    U.S.-headquartered companies, particularly if President Biden's
    proposed increase in the GILTI rate is enacted.

        The third concern is that some countries that have displayed little
    interest in Pillar 2 refuse to agree to Pillar 2 without the
    reallocation of taxing jurisdiction that is Pillar 1, and Pillar 1 is a
    whole different kettle of fish.

        The BEPS project was technically difficult. It required the
    identification of loopholes in and between national taxing regimes that
    allowed income to fall into gaps and one country's tax system to be
    used to erode the tax base of another. It also required determining and
    agreeing on the best method of closing those loopholes and gaps.
    Although BEPS has had limited time to work, the anecdotal evidence
    suggests it has had (and continues to have) a significant effect on
    business operations that have been adjusted to satisfy BEPS's
    substantive requirements.

        Although technically difficult, BEPS was politically easy because
    it did not seek to reallocate companies' global profits among
    countries, but rather to align corporate taxation with economic
    activity and ensure all profit was booked and taxed in the location of
    the economic activity. BEPS brought countries an expectation of
    increased tax revenue, not that they would be asked to reallocate
    global profits within their taxing jurisdiction to another country.
    This politically fraught question is exactly what Pillar 1 puts on the
    table.

        Pillar 1 diverges from longstanding international tax rules and no
    discernible economic (or other) principle underlies it. It is true that
    technological advances permit a company to operate in a country without
    a physical presence, but borders open to trade have allowed market
    access for sales of products for decades, if not centuries. That has
    not led to countries in which sales are made requiring payment of
    income tax on a share of the product manufacturer's global profits.

        The Pillar 1 discussion would have an effect on U.S. taxing rights
    that differs from any other country. Based on information PwC has
    gathered, over half of the global profits taxable by market countries
    under the Pillar 1 proposal are profits of U.S. companies. It should
    not be a surprise then that the United States Treasury has been
    reticent about agreeing to Pillar 1. Rather than acknowledging the
    surrender of taxing jurisdiction the proposal asks of the United
    States, however, the OECD discussion has largely revolved around not
    whether, but how much of global profits to reallocate.

        In exchange for agreeing to Pillar 1, the United States received
    two commitments: (1) agreement that other countries will repeal or
    refrain from implementing ``unilateral'' measures such as digital
    services taxes that target U.S. companies, and (2) agreement to
    mandatory binding dispute resolution procedures to resolve
    intergovernmental disputes over taxing jurisdiction. The first is hard
    to square with continuing proposals for or adoption of digital services
    taxes without plans to roll them back once OECD agreement has been
    reached. To the credit of Secretary Yellen's negotiating team, however,
    defining a ``unilateral measure'' has been added as an OECD workstream.
    Reports indicate the second has encountered unyielding resistance from
    governments unwilling to surrender control over tax disputes.

        To borrow Hegelian dialectics--we have thesis, we have antithesis,
    but we are nowhere near synthesis. There are many other significant
    issues to be resolved under Pillars 1 and 2. The details of these are
    matters with which this committee should be familiar because they will
    land in your lap: the expectation is that an agreement reached at the
    OECD will be implemented by the United States Congress. These details
    may affect the latitude the committee has to design and enact policies
    you believe are in the best interest of American workers, jobs, and
    investments.

        Perhaps most important, whatever the outcome of the OECD
    negotiations, other governments are going to act, and they will act in
    a manner they believe will foster the interest of workers, jobs, and
    investments in their countries, not in the United States.
                                   conclusion

        The committee's focus on international tax policy's effect on
    American workers, jobs, and investments is timely and proper. As the
    committee considers tax policy changes, whether directly to the
    international provisions or to the provisions that determine the
    attractiveness of the United States as a place to invest and create
    jobs, it will be important to apply lessons from the past and
    understand how the actions of other governments will affect American
    workers, jobs, and investment. U.S. policy-makers do not operate in a
    political or economic vacuum.

        Thank you again for inviting me to testify. I would be pleased to
    answer any questions you may have or otherwise to assist the committee
    in its important work.

                                     ______

             Questions Submitted for the Record to Pamela F. Olson
                     Questions Submitted by Hon. Mike Crapo
        Question. The nonpartisan Joint Committee on Taxation (JCT) has
    estimated that 25 percent of the corporate income tax is borne by
    workers. More recent estimates have concluded that the amount of the
    corporate income tax borne by workers is closer to 50 percent. Do you
    agree that the percentage of the corporate tax borne by workers is at
    least 25 percent? If not, why do you believe the JCT analysis is
    incorrect?

        Answer. Estimates of the portion of corporate income tax burden
    borne by workers with which I am familiar range from 20 to 70 percent.
    Estimates at the high end of the range are based on the openness of the
    global economy. Given the openness of the U.S. economy, 25 percent
    seems like a conservative estimate. The experience post-Tax Cuts and
    Jobs Act and pre-pandemic may provide empirical evidence of the burden
    of the corporate tax falling on workers given the decline in the
    unemployment rate, especially among groups subject historically to
    higher unemployment rates, and the rise in wages among low- and
    moderate-income workers.

        Question. The Global Intangible Low-Taxed Income (GILTI) minimum
    tax provides an exclusion for a return on tangible assets (Qualified
    Business Asset Investment or QBAI). The provision has been criticized
    by Dr. Clausing and Ms. Huang for encouraging offshoring. However, the
    Organisation for Economic Co-operation and Development (OECD) Pillar 2
    minimum tax being considered provides an exclusion similar to QBAI,
    although the proposed Pillar 2 exclusion would exempt a return
    attributable to both tangible assets and payroll. Even President
    Obama's proposals for a minimum tax provided an exclusion for a return
    on active assets ``to exempt from the minimum tax a return on the
    actual activities undertaken in a foreign country.''

        Isn't this type of exclusion a normal feature of a global minimum
    tax because there is a recognition that profits attributable to hard
    assets are less susceptible to profit shifting, and returns on hard
    assets are normally taxed by the local jurisdiction? Do you believe the
    OECD Pillar 2 proposal would encourage domestic companies to invest in
    foreign jurisdictions?

        Answer. Yes, the QBAI exception in GILTI focuses the provision on
    income for which there is a risk of profit-shifting and recognizes the
    primary jurisdiction of the foreign country to tax the activities
    undertaken there. Eliminating QBAI would change GILTI from an anti-base
    erosion measure to a trade protectionist measure, burdening the foreign
    operations of U.S.-based companies, but not their local or
    foreign-headquartered competitors. It is my personal experience that
    QBAI does not incentivize companies to relocate operations from the
    United States or to increase their investment in foreign jurisdictions.
    It merely provides U.S.-headquartered businesses a level playing field
    on which to compete with foreign-headquartered companies. Based on that
    experience, I would not expect the Pillar 2 proposal's exemptions to
    encourage domestic companies to invest in foreign jurisdictions.

        Question. Dr. Clausing says in her testimony that the corporate tax
    is an efficient tax. However, many economists, including those at the
    OECD, find that the corporate income tax--out of all the different
    types of taxes countries impose--is the most harmful to economic
    growth. In their report--``Tax and Economic Growth,'' the OECD
    economists say ``lowering statutory corporate tax rates can lead to
    particularly large productivity gains in firms that are dynamic and
    profitable, i.e., those that can make the largest contribution to GDP
    growth.''

        Do you agree or disagree with the OECD economists on this point?
    Couldn't raising the corporate tax rate have the opposite effect and
    cause a drag on economic growth?

        Answer. I agree with the OECD economists who concluded the
    corporate tax is the most inefficient tax and favor consumption taxes
    like a VAT to raise revenue. Raising the corporate tax rate would
    remove capacity from businesses to invest in their workforce, in
    property, plant, and equipment, and in R&D, all of which are tied to a
    healthy, thriving economy.

        Question. The administration has proposed significantly raising the
    corporate statutory rate and the GILTI rate. The GILTI minimum tax
    already imposes a higher rate of tax on foreign income of U.S.
    companies than other countries apply to the foreign income of their
    domestic companies.

        If the OECD fails to reach an agreement or if member states fail to
    adopt the agreement, the effect would be even higher comparative
    effective tax rates on U.S. businesses, potentially a differential of
    an effective minimum tax rate of over 21 percent compared to 0 percent
    imposed by most foreign countries.

        In answering a question on the effects of the TCJA reforms on
    locating or maintaining a U.S.-based business in the United States, Ms.
    Olson said that higher levels of taxation imposed on U.S. companies
    would discount the value of assets in the hands of a U.S. company. Over
    time, the diminution in the value of those assets would make them,
    relatively speaking, more valuable in the hands of foreign-owned
    companies. Doesn't this impact on asset value have to be true? Is there
    any reason to ignore this basic financial reality?

        Answer. Tax is a cost that is factored into calculations of returns
    on investment and thus affects the amount a company can pay for or
    invest in assets to generate a positive return. The higher the costs,
    including tax, the lower the amount the company can pay for the assets.
    Subjecting U.S. companies to tax in excess of the tax imposed on
    foreign competitors gives the foreign competitor a cost advantage. It
    makes business assets less valuable in the hands of a U.S. company than
    a foreign company. Over time, that will give rise to an increase in the
    ``invisible inversions'' to which Professor Hines referred in his
    testimony. This will have an effect on where production is located,
    where R&D occurs, and where companies are headquartered. Deriding this
    financial reality as an M&A scorecard ignores the significant economic
    loss to communities that have benefited from a business presence,
    particularly headquarters locations, when a U.S. company is acquired
    and becomes foreign-owned.

        Question. The U.S. Congress cannot write the rules for sovereign
    members of the G7, G20, or the OECD. That is the case even if the OECD
    were to reach an Inclusive Framework agreement. The Peoples Republic of
    China, for instance, America's greatest economic rival, has indicated
    skepticism towards the OECD Inclusive Framework. Without such an
    agreement, wouldn't the United States be unilaterally raising the
    comparative effective tax rates of U.S.-based companies to
    uncompetitive levels? How should Treasury proceed if other countries,
    such as China, are not willing to impose a global minimum tax? The
    United States was already a first mover with GILTI. Why should the
    United States move again before other countries move at all?

        Answer. Yes, most other OECD countries have territorial systems
    that subject their companies' foreign operations to no or only de
    minimis levels of tax. Through the enactment of GILTI, the United
    States has already put a higher tax on U.S.-headquartered companies'
    foreign operations than the tax imposed by other governments on their
    companies' foreign operations. The Biden administration's proposal with
    the current law denial of 20 percent of foreign tax credits would
    increase the rate imposed on U.S. companies' foreign operations to more
    than 26 percent, meaning U.S. companies--unlike their foreign
    competitors--would pay a minimum tax in addition to the local corporate
    tax on their operations in more than three-quarters of EU countries,
    more than two-thirds of OECD countries, and China, based on the
    statutory tax rates in these countries.

        The concept of a global minimum tax has been the occasional subject
    of discussion for at least 25 years. It was considered by the OECD
    beginning in 1996 and was proposed by the Obama administration for
    inclusion in the OECD's BEPS project in 2013. Both times, the concept
    failed to attract the interest of other governments. After the United
    States enacted GILTI in 2017, the OECD again began considering minimum
    tax options. It is worth noting that while the minimum tax has been the
    subject of discussion, no country has followed the United States' lead
    and enacted its own minimum tax. With that historical background, it
    would be prudent to await OECD Inclusive Framework agreement on Pillar
    2 and its implementation by other major countries, including China,
    before enacting any changes to GILTI that would further disadvantage
    U.S. companies.

        Question. Chairman Wyden and Dr. Clausing engaged in a dialogue
    where Chairman Wyden went as far as to question the policy motives of
    those on the Republican side as using competitiveness as simply
    ``code'' for cutting taxes for ``mega-
    corporations.'' Do you believe that tax policies that raise the
    effective tax rate on the foreign operations of U.S. businesses well
    above that of their foreign competitors has no effect on their ability
    to succeed in foreign markets?

        Answer. Higher taxes on foreign operations mean U.S.-headquartered
    companies incur higher costs than their foreign competitors, which will
    make it more difficult for U.S. businesses to gain and maintain market
    share absent some advantage over their competitors. When U.S. companies
    do not succeed in foreign markets, it costs the jobs in the United
    States that support the foreign market operations, reduces the value of
    the companies, and shrinks the U.S. tax base.

        Question. The administration and Dr. Clausing have, in my view
    incorrectly, described both Foreign Derived Intangible Income (FDII)
    and GILTI as provisions that encourage offshoring. As you know, FDII
    works in tandem with GILTI. While a competitive effective tax rate is
    needed to prevent GILTI from harming the competitiveness of U.S.
    corporations relative to their foreign competitors, FDII is important
    as a disincentive to moving intangible property offshore. To quote from
    the legislative history of FDII:

            [O]ne of the committee's goals in tax reform is to remove the
            tax incentive to locate intangible income abroad and encourage
            U.S. taxpayers to locate intangible income, and potentially
            valuable economic activity, in the United States.

        The administration has proposed the repeal of FDII. Do you believe
    that doing so would risk undermining the attractiveness of the United
    States as not only a location for holding intangible property, but also
    as a place for high-paying jobs in research and manufacturing?

        Answer. Yes, repealing FDII would make the United States a less-
    attractive location for holding intangible property and for locating
    the jobs, such as R&D, that produce valuable intangible property (IP).
    Many other countries have enacted ``IP boxes'' or similar incentives to
    encourage the location of activities such as R&D within their borders.
    Relative to other countries' IP incentives, FDII provides a modest
    incentive to locating IP-producing activities in the United States. As
    noted in my testimony, the United States ranks 27th out of 37 OECD
    countries with respect to R&D tax incentives. Repealing FDII would
    further reduce the United States' ranking.

        Question. Dr. Clausing testified that U.S. corporate tax revenues
    are significantly lower than the revenue collected by our trading
    partners. Chairman Wyden's statement concluded that ``corporate tax
    revenues have fallen through the floor.'' What is the problem with
    comparing U.S. corporate tax revenues as a share of GDP to the
    corporate tax revenues of OECD countries as a share of GDP?

        Answer. The United States has a large pass-through business sector,
    the income of which is reported on individual rather than corporate tax
    returns, relative to other OECD countries. The U.S. pass-through sector
    has increased significantly over the last 4 decades making a comparison
    of U.S. corporate taxes as a share of GDP relative to other countries
    highly misleading. In addition, the revenue cost of the business and
    international provisions of the TCJA were frontloaded, particularly due
    to full expensing of equipment investment. As a result, CBO projects
    that longer-term, corporate taxes as a percentage of GDP will rise much
    higher than in 2018 and 2019. Indeed, Joint Committee on Taxation
    projections show that the international provisions of TJCA are about
    revenue-neutral in 2027, excluding one-time deemed repatriation
    revenue. Through April 2021, fiscal year 2021 corporate tax revenues
    are about 60 percent higher than for the comparable pre-pandemic period
    in fiscal year 2019, though that could change later in the year as a
    result of pandemic-related net operating loss carrybacks.

        Question. Since TCJA was enacted, it has been illustrated that
    under the existing GILTI structure, the effective GILTI rate of 13.125
    percent is pushed significantly upward when the effects of expense
    allocation on the GILTI basket play out in practice. As a strong
    supporter of TCJA, I recognize that this policy outcome does not align
    with Congress' stated intent in the legislative history.

        No matter what the outcome of next steps on the international
    reforms, shouldn't we expect this issue to be remedied?

        Answer. Yes, the effect of the expense allocation rules is to
    subject foreign income to GILTI that is already subject to foreign tax
    at a rate much higher than 13.125 percent. In fact, expense allocation
    causes companies to be subject to GILTI whenever the foreign tax rate
    is above 13.125 percent, even when the foreign rate exceeds 21 percent.
    The expense allocation is a particular issue given the inability to
    carryover unused FTC. This problem would be exacerbated by the Biden
    administration's proposal to eliminate QBAI and convert the calculation
    from global to country-by-country. It is worth noting that, unlike
    GILTI, the OECD Pillar 2 minimum tax provides for loss and credit
    carryovers, which would produce less irrational results.

        Question. If the expense allocation rules applicable to the GILTI
    foreign tax credit basket are considered, couldn't the policy proposed
    by the Biden administration create a GILTI rate that exceeds the 28
    percent proposed headline corporate rate?

        Answer. Based on the experience with GILTI as it is currently
    formulated, that seems likely. In addition, the Treasury Department has
    confirmed its plan to keep the 20-percent reduction of FTC under
    current law, which would increase the 21-percent rate to more than 26
    percent without taking the expense allocation rule into account.

                                     ______

                    Question Submitted by Hon. John Barrasso
        Question. The changes made by the 2017 Tax Cuts and Jobs Act (TCJA)
    encourage companies to invest in the U.S. and move their intellectual
    property back to the U.S.

        Specifically, the competitive corporate tax rate, bonus
    depreciation, and foreign derived intangible income rules remove the
    tax incentive to locate intangible income abroad. These changes
    encourage U.S. taxpayers to locate intangible income, and potentially
    valuable economic activity, in the U.S. This was the fundamental
    objective of these provisions. However, testimony provided during the
    hearing points to data from 2018--to argue TCJA failed at encouraging
    onshoring.

        Given your experience and understanding regarding U.S. corporate
    strategic planning, how long would it take a company to analyze changes
    to U.S. law, restructure their operations and move those operations
    back to the United States?

        Answer. Little happens overnight. Moreover, data from 2018 is too
    early to assess the effectiveness of the TCJA in attracting investment
    to the United States. Much of it is a snapshot of the last year before
    the TCJA. Fiscal year taxpayers did not become subject to many TCJA
    provisions until sometime during 2018, delaying until 2019 the
    reporting on their tax returns of the impact of the TCJA.

        Although the high-level benefits of the TCJA were readily apparent
    and could be analyzed--the 21-percent rate, for example--other changes
    required regulatory guidance to provide necessary details regarding how
    the provisions would work. Although Treasury produced guidance on a
    remarkably short timeframe, some essential guidance took up to 3 years
    to produce. Once guidance was produced, companies had to analyze the
    details to determine the best course of action for their foreign
    operations.

        After the analysis was complete, the time required to restructure
    operations would vary based on the type of operation. Some operations
    would require regulatory approvals to relocate, which can take many
    months or even years to obtain. Other property was more readily
    moveable--IP, for example. Based on the benefits readily apparent, some
    companies reported that they quickly moved IP back to the United
    States.

        Stability matters to restructuring and relocation decisions. Parts
    of the TCJA either expire or become less advantageous over time. Even
    the parts of the TCJA that are permanent have been a cause of concern
    for companies that have questioned whether beneficial provisions such
    as the 21-percent rate and FDII would be changed by subsequent
    Congresses. Some companies have been reluctant to move IP or operations
    to the United States without confidence in the long-run stability of
    the system. The changes to the TCJA under consideration illustrate the
    reason for those concerns.

                                     ______

                   Questions Submitted by Hon. Chuck Grassley
        Question. As the author of 2004 legislation that cracked down on
    so-called inversion transactions, I've long been concerned about
    companies moving overseas simply to avoid U.S. tax. But, I've always
    understood inversions as a symptom of our outdated and anti-competitive
    corporate tax code. In 2017, we modernized our international tax system
    and brought our corporate rate in-line with other developed nations.
    Since tax reform, I haven't heard of any companies with inversion
    plans. In fact, companies have called off inversions and even brought
    operations back to the U.S. Do you agree that the 2017 tax law has
    largely stopped inversions transactions?

        Answer. Yes, in particular, the reduction in the corporate rate
    substantially lessened the detriments of being headquartered in the
    United States and diminished the beneficial effect of inverting.
    Besides halting inversion activity, the TCJA reversed the trend of
    foreign companies prevailing in acquisition transactions.

        Question. If the international reforms implemented by the 2017 law
    were reversed, would you expect inversion transactions to once again
    pick up?

        Answer. Although further barriers to inversions could be enacted to
    prevent such transactions, they are unlikely to prevent the ``invisible
    inversions'' to which Professor Hines referred in his testimony because
    of the disadvantageous treatment of U.S.-headquartered companies. For
    the same reason, the fact of foreign companies prevailing in
    acquisition transactions would be likely to reemerge.

        Question. During her nomination process, Treasury Secretary Yellen
    expressed support for doubling the tax rate on foreign subsidiaries of
    U.S. firms in anticipation that other OECD countries will agree to
    implement a global minimum tax. However, it's unclear when, or even if,
    other OECD countries will adopt a minimum tax. Doubling our tax rate on
    U.S. foreign affiliates without action by our major trading partners is
    fraught with risks. Indeed, even the liberal Tax Policy Center recently
    wrote that increasing U.S. taxes on foreign income without actions by
    other countries will ``put U.S. firms at a disadvantage'' and
    ``reignite corporate inversions.''

        Do you agree it would be foolish for the U.S. to double taxes on
    its international firms when the rest of the world hasn't even agreed
    to a minimum tax in the first place? Isn't there a risk that some or
    even all of the other OECD countries refuse to follow our lead?

        Answer. Yes, as I stated in response to a QFR from Senator Crapo,
    in the nearly 4 years since the United States enacted a minimum tax on
    income from foreign operations, no other country has enacted a similar
    minimum tax, and the history of global consideration of minimum taxes
    should give pause to anyone counting on global adoption. Even if a
    Pillar 2 agreement is reached at the OECD, there is no assurance that
    other countries will actually take the steps to implement a minimum tax
    that conforms to the OECD agreement. It should also be noted that the
    terms of the minimum tax under consideration at the OECD appear less
    onerous in many respects than current law GILTI and far less onerous
    than the Biden administration's proposed changes to GILTI.

        Question. Under current U.S. law, U.S. foreign subsidiaries are
    effectively subject to a global minimum tax of about 13 percent or
    potentially higher. Doubling this rate would subject foreign affiliates
    of U.S. firms to at least a 26-percent rate. But, my understanding is
    the OECD is discussing a 12.5-percent global minimum tax. Thus, even if
    all OECD countries agree to implement such a tax, it still would be
    less than half the rate proposed by the administration.

        Doesn't this suggest that even under the administration's most
    optimistic scenario, U.S. international firms will be at a competitive
    disadvantage?

        Answer. Yes, as noted in response to the last QFR, the OECD's
    proposed minimum tax appears far less onerous than the administration's
    proposed GILTI changes. The administration's GILTI rate is sufficiently
    high that U.S. companies would owe GILTI on operations in many, if not
    most, EU and OECD countries.

        Question. How would you expect U.S. international firms to respond,
    and what do you expect would be the effect on the U.S. economy?

        Answer. U.S. companies would be disadvantaged relative to companies
    headquartered in foreign countries and, over time, would likely find it
    difficult to compete with those companies. That would make it difficult
    to grow or maintain foreign country market share. It likely would make
    the companies or their foreign operations the target of foreign
    acquisitions, which would reduce the U.S. jobs supporting the foreign
    operations, the value of the companies, and the U.S. tax base.

        Question. The Biden administration has proposed a number of tax
    increases on U.S. international businesses. This includes increasing
    the corporate tax rate to 28 percent, imposing a corporate alternative
    minimum tax on book income, doubling the tax rate on foreign
    subsidiaries of U.S. firms, and modifying several international rules
    to subject more foreign income to U.S. tax. These changes would
    undoubtedly push our international tax rules out of line with other
    OECD countries. How would you expect this to affect business investment
    in the U.S. and in turn, American jobs and wages?

        Answer. In the most recent survey data, China has displaced the
    United States as the number one recipient of foreign direct investment.
    Tax changes that push the United States further from the global norm
    could add to the advantage of investing in China and other countries
    relative to the United States. The changes would also disadvantage
    U.S.-headquartered companies competing in foreign markets. The impact
    of reduced FDI and direct investment will be reduced jobs and wages in
    the United States.

                                     ______

                   Questions Submitted by Hon. James Lankford
                                     energy
        Question. In a previous hearing on supply chains and manufacturing,
    we heard directly from the witnesses that the best way to incentivize
    mineral production and processing in the U.S. is to have a competitive
    tax environment.

        We also understand that some critical minerals and nutrients have
    to be imported, as they are not physically located in the U.S.--
    however, U.S. companies with extraction operations abroad could be hit
    with President Biden's proposed ``import penalty'' if they try to bring
    these materials back to the United States.

        We need to incentivize domestic production, but this penalty
    proposal ignores our global critical mineral supply chains. These U.S.
    companies, who have extraction operations abroad and bring those
    materials back to the U.S., would face this penalty, as well as the
    increased corporate rate being proposed. Meanwhile, any international
    competitor selling into the U.S. wouldn't face this penalty or the
    corporate rate.

        Don't these proposals threaten our global competitiveness and give
    U.S. headquartered companies a disadvantage both abroad and here at
    home?

        Answer. I assume the ``import penalty'' refers to a proposal in
    President Biden's campaign that was not included in the American Jobs
    Plan.

        Yes, like U.S. business operations that exist to supply foreign
    markets, extractive industries that must operate where the minerals are
    would be harmed by changes that make the United States less competitive
    and particularly harmed by proposals that would hike taxes on
    companies' foreign operations. Such operations may not be capable of
    being ``onshored.'' U.S. companies would suffer a disadvantage relative
    to local companies or companies headquartered in countries without
    added taxes or penalties on foreign operations.

        Question. In addition, couldn't these suggested changes, the
    penalty and increased rate, actually incentivize businesses to
    ultimately relocate their headquarters entirely out of the U.S.?

        Answer. The penalty and higher tax rates would reduce the value of
    the foreign operations in the hands of U.S.-headquartered companies,
    making them attractive targets for takeover or acquisition by foreign-
    headquartered companies not subject to the penalty or higher tax rate.
                                     china
        Question. We've continued to hear rhetoric from the administration,
    including Secretary Yellen, regarding the OECD's minimum tax
    initiative, and how changes to the U.S.'s GILTI regime are permissible
    because the OECD is considering a proposal itself--that that will act
    as a stop gap and prohibit a ``race to the bottom'' regarding tax
    rates. However, we know that one of our biggest competitors, China, has
    been publicly skeptical of the OECD's proposal.

        If China doesn't agree, but the U.S. has enacted even stricter,
    more punitive minimum taxes on its own companies, aren't we, once
    again, yielding an advantage to the Chinese--who refuse to keep their
    commitments to international agreements or refrain from participating
    altogether?

        Answer. Yes, U.S.-headquartered companies would be disadvantaged
    relative to Chinese companies. Indeed, the effective GILTI rate of more
    than 26 percent the administration has proposed would mean that U.S.
    companies were subject to GILTI on their Chinese operations when
    competing in the Chinese market.

                                     ______

                    Questions Submitted by Hon. Rob Portman
        Question. The United States was a first mover when it relates to
    global minimum taxes. Currently, the OECD is pursuing a proposal
    similar to GILTI. Even if 140 countries were to agree to the proposal
    this year, none would be as far down the road as the U.S.

        Does it make sense for the U.S. to be making onerous changes to
    GILTI before any other countries have adopted a similar proposal, let
    alone before the OECD finalizes their proposal?

        Answer. As noted in response to a question from Senator Crapo, the
    concept of a global minimum tax has a long history, but to date the
    United States is the only country that has enacted one. Moreover, even
    in its current form, GILTI is in many respects a more stringent regime
    than the minimum tax being considered by the OECD Inclusive Framework.
    As the Biden administration has proposed revising GILTI, it seems
    likely to be far more stringent than the Pillar 2 proposal under
    consideration.

        It would seem wise for Congress to delay consideration of changes
    to GILTI until agreement has been reached by the OECD Inclusive
    Framework, and then to delay the effective date of any changes until
    conforming minimum taxes have actually been implemented by other
    countries, including China and European governments whose unilateral
    actions targeting U.S. companies led to the current OECD project.

        Answer. An important feature of GILTI that allows U.S. businesses
    to be competitive is the aggregate nature of the GILTI calculation. To
    be competitive in high tax jurisdictions, U.S. businesses are going to
    have to do business in high tax jurisdictions; to be competitive in
    low-tax jurisdictions, U.S. businesses are sometimes going to have to
    do business in low-tax jurisdictions. The aggregate nature of GILTI
    helps to ensure that U.S. businesses doing business where their
    customers are based are not penalized for doing so, while still
    penalizing those who are shifting all of their income to low tax
    jurisdictions. Further, I'm afraid moving to a country-by-country
    approach, as proposed by the Biden administration, would deter U.S.
    businesses from expanding operations to new parts of the world (as
    start-up deductions generally cause low tax liability) and would have
    strange anomalies like forcing businesses to pay tax even when they
    have overall losses in their foreign operations.

        Can you discuss some of the competitive aspects of retaining an
    aggregate approach to GILTI and expand on some of the complexity
    aspects that you mentioned in your testimony as well?

        Answer. There are a number of features of GILTI that make it a
    stringent regime. Examples include expense allocation, the 20-percent
    haircut on FTCs, and the lack of a carryover for FTCs. In addition,
    many companies incur a GILTI liability that is solely attributable to
    timing differences in the recognition of income and expense between the
    U.S. and foreign tax rules. Further, it is common for companies
    starting a new line of business or expanding their operations into
    additional markets to experience losses from these initiatives, often
    for several years. Operations in multiple jurisdictions that are
    aggregated in the calculation of GILTI moderate the harshness of these
    rules. If GILTI calculations were required on a country-by-
    country basis, there would be no amelioration of these harsh results.
    The result, in many common fact patterns, would be the imposition of
    U.S. tax on income that has already been taxed by a foreign country in
    a different year or imposition of U.S. tax significantly in excess of a
    company's actual income. Because a U.S. company's
    foreign-based competitors would face none of these issues, U.S.
    companies would be at a serious disadvantage in their efforts to enter
    new lines of business or penetrate new markets against established
    foreign-based competitors. Current law GILTI already presents
    significant challenges for companies in these fact patterns; moving to
    a per-country approach would dramatically increase these concerns.

        The calculation of GILTI even on a global or aggregated basis is
    extraordinarily complicated. Requiring the calculation on a country-by-
    country basis would multiply the complexity by the number of countries
    in which a company has operations and effectively require multiple
    GILTI FTC baskets. The United States previously had a per-country FTC
    basket system but eliminated it in the 1970s. Congress considered
    reinstituting a per-country system but abandoned the idea because of
    the complexity, favoring instead a 9-basket approach in the Tax Reform
    Act of 1986. This approach has been subsequently modified and
    simplified to today's 4-basket FTC system. Compared to the 1970s when
    Congress moved away from a per-country approach, globalization has
    resulted in the United States having many more globally engaged
    companies, and those that are globally engaged have operations in many
    more countries. Accordingly, many such companies would have more than
    100 foreign tax credit baskets under a per-country GILTI computation,
    requiring detailed segregation and analysis (including, e.g., the
    allocation of domestic expenses across more than 100 different baskets)
    that does not exist for any other purpose. Further, as noted above, a
    per-country approach would greatly exacerbate double tax or excessive
    tax issues caused by, e.g., startup losses or timing differences.
    Attempting to address these issues in a per-country computation would
    require the tracking of attributes by country over a multiyear period,
    resulting in a level of complexity greatly in excess of any in the
    history of the U.S. international tax rules.

        Question. The Base Erosion and Anti-abuse Tax (BEAT) was added to
    the code by the TCJA, and it imposes an additional tax on certain U.S.
    corporate taxpayers that make deductible payments to foreign
    affiliates. A U.S. taxpayer's BEAT liability is the difference between
    (1) 10 percent of the taxpayer's ``Modified Taxable Income,'' and (2)
    the taxpayer's Regular Tax Liability. Currently, the BEAT rate is 10
    percent (11 percent for certain financial institutions), and that rate
    will increase in 2026. As JCT has noted, ``[t]he amount of regular tax
    liability is reduced (and the [BEAT liability] increased) by all income
    tax credits except for the research credit and a certain portion of
    applicable section 38 credits'' (i.e., low-income housing tax credits
    and certain energy credits) [JCX-16-21, page 24]. Due to how the BEAT
    liability is calculated, U.S. taxpayers that claim certain credits may
    be subject to the BEAT or may have an increased BEAT liability solely
    because the taxpayer claims a credit to which the taxpayer is entitled.
    Even U.S. taxpayers that claim low-
    income housing tax credits, renewable energy production tax credits,
    and energy investment tax credits are harmed because they lose a
    portion of the credit now under current law, and will lose the benefit
    of the credit entirely in 2026.

        This calculation reduces--and can even eliminate--the benefit to
    U.S. taxpayers of claiming the Low-Income Housing Tax Credit, the
    Investment Tax Credit, the Production Tax Credit, and foreign tax
    credits, among many others. Through these credits, Congress provides
    incentives to U.S. taxpayers to engage in certain activities, such as
    developing affordable housing or investing in wind and other renewable
    energy projects, that it has deemed beneficial and worthy of
    investment. The foreign tax credit prevents double taxation of the same
    income and ensures that the U.S. tax system does not discourage the
    export of American-made products, American-created or acquired IP, or
    American businesses' participation in the global economy. Congress did
    not intend to eliminate the benefit of these credits when it enacted
    the BEAT. I am concerned that reducing or eliminating the benefit of
    these credits could disincentivize U.S. taxpayers from engaging in
    these activities in the first place.

        Do you share my concern that the BEAT's disparate treatment of tax
    credits results in unintended consequences for U.S. taxpayers, many of
    whom are engaged in productive activities that Congress intended to
    incentivize by providing tax credits in the first place, and that these
    unintended consequences provide a disincentive for U.S. taxpayers to
    engage in these activities?

        Answer. Yes, the reduction in tax credits increases the risk of
    double taxation and lessens the benefits of the investment incentives
    Congress has provided. The loss of the intended tax benefits will
    reduce the investments in those activities or cause companies to
    restructure operations to minimize BEAT's limitations on credits,
    either of which reduces Congress's ability to incentivize desired
    activities.

        Question. There has been bipartisan support to move the U.S. to a
    more territorial system for taxing the foreign earnings of U.S.
    companies, and there was bipartisan support to provide a backstop to
    that system aimed at preventing U.S. companies from moving profits
    offshore.

        Do you think reduction of the corporate rate, along with FDII/GILTI
    regime, reduced tax incentives to move profits and investment offshore
    and helped U.S. companies better compete in a global marketplace?

        Answer. As I said in my testimony, the TCJA represents a remarkable
    bipartisan policy achievement that put the United States in a much more
    competitive position to attract investment and jobs. The enactment of a
    tax rate comparable to other countries, elimination of the disadvantage
    to reinvesting foreign profits in the United States, and provisions
    protecting the U.S. tax base from profit shifting and incentivizing the
    location of IP in the United States were a sorely needed change in U.S.
    tax policy. Taken together, the TCJA changes have made U.S. companies
    more competitive and the United States a more attractive location for
    investment and job creation, which is consistent with BEA data post-
    TCJA and prior to the pandemic.

        Question. If so, how would Biden administration tax proposals
    impact U.S.-based companies compared to their foreign counterparts?

        Answer. The administration's corporate rate increase would once
    again vault the United States to number one in corporate tax rates
    among advanced economies, and its GILTI changes would mean that U.S.-
    headquartered companies pay GILTI on their foreign operations
    regardless of whether the operations exist solely to serve foreign
    markets or access raw materials unavailable domestically and regardless
    of whether the operations have borne a full local tax. The carrying of
    a cost, including tax, that far exceeds the cost carried by their
    competitors would make it more difficult for U.S. companies to succeed
    in maintaining or growing their operations in foreign markets, with
    adverse consequences for the jobs in the United States reliant on sales
    to the 95 percent of the world's population in these markets.

        Question. The original purpose of taxing tax haven profits, as
    explained by Secretary Dillon in proposing the anti-deferral measures,
    was to eliminate incentives to foreign direct investment (FDI). Since
    the 1960s, the international tax system has dramatically changed.
    However, low- or no-tax jurisdictions still exist and are often used to
    entice direct investment in those countries. Similarly, we employ
    certain incentives to spur investment in the U.S.

        As the purpose of these foreign tax systems is supposed to affect
    location of job-producing business investment, what is the comparative
    effect of deferred U.S. tax versus location of markets, location of
    supplies, comparative worker efficiency and wage costs, energy and
    transportation infrastructure, and costs of social overhead for
    specific social priorities of the alternative investment locations?

        Answer. Businesses consider many factors when deciding where to
    locate investment among the many opportunities available to them. While
    no factor alone is likely to be determinative, differences across
    locations in any benefits and costs, including taxes, matter on the
    margin. For companies earning routine returns, taxes may be a very
    small consideration in location decisions as differences in costs of
    labor, materials, energy, transportation, and other costs may be larger
    than potential tax savings. By contrast, for companies earning very
    high profit margins, corporate tax rate differences may have a more
    significant effect on location decisions. As a result, policy-makers in
    the United States as in other countries may design public tax and
    spending systems in such a way as to enhance, on the margin, the
    attractiveness of their jurisdiction for investment relative to other
    locations.

        Because of the different sensitivity of low-margin and high-margin
    businesses to taxes, the TCJA specifically targets high-margin income,
    discouraging tax-motivated location of high-margin operations in low-
    tax jurisdictions through GILTI and encouraging these operations to be
    located in the United States through FDII.

        Question. What percentage of the Fortune Global 2000 was
    represented by U.S. companies in 2005-2019, 1980-2000, 1968-1980? Is
    the percentage increasing or decreasing? To what extent do factors
    other than comparative tax rates affect direct investment location
    decisions?

        Answer. Fortune has published a list of the world's 500 largest
    companies since 1995. (There is a Forbes Global 2000 list, but it has
    only been published since 2003.) The percentage of the Fortune Global
    500 companies represented by U.S. companies was 30 percent in 1995 and
    rose to a peak of 39 percent in 2002. It has been declining steadily
    since 2002, reaching a low of 24 percent in both 2019 and 2020.

        By contrast, over this same period Chinese companies increased from
    fewer than 1 percent of the Fortune Global 500 in 1995 to 25 percent by
    2020.

        Businesses consider many factors when deciding where to locate
    investment among the many opportunities available to them. These
    factors may include access to inputs like raw materials or skilled
    labor, access to customers including the effect of transportation
    costs, access to a stable legal system that protects property rights
    including intellectual property, among other considerations. While no
    factor alone is likely to be determinative, differences across
    locations in any benefits and costs, including taxes, matter on the
    margin.

        Question. Describe the impact of U.S. Federal tax incentives on
    FDI, and what percentage of U.S. FDI is attributable to comparative
    labor efficiency, access to markets, access to supplies, access to
    technology, access to educated workforce, and differences in business
    regulation to achieve noneconomic goals?

        Answer. Economic research has sought to identify the principal
    determinants of foreign direct investment (``FDI''). Among the most
    significant factors are the size and scale of economic activity in the
    host country. Because the United States has a large market, it benefits
    from a large amount of FDI. A number of other key variables include
    openness of the economy, exchange rates, rates of return, costs of
    production, quality of infrastructure, human capital, and political
    stability.

        Taxes have also been shown to affect FDI. Generally, competitive
    corporate tax rates provide an incentive for foreign investment in the
    host country; however, measuring the magnitude of the effect may be
    confounded by various issues. Importantly, how policies in the host and
    home country address potential double taxation can substantially alter
    the investment incentive effects. For companies earning routine
    returns, taxes may be a very small consideration in location decisions
    because differences in costs of labor, materials, energy,
    transportation, and other costs may be larger than potential tax
    savings. By contrast, for companies earning very high profit margins,
    corporate tax rate differences may have a more significant effect on
    location decisions.

        Because of the different sensitivity of low-margin and high-margin
    businesses to taxes, the TCJA specifically targets high-margin income,
    discouraging tax motivated location of high-margin operations in low-
    tax jurisdictions through GILTI and encouraging these operations to be
    located in the United States through FDII.

                                     ______

                     Questions Submitted by Hon. Todd Young
        Question. We heard a lot of testimony during the hearing about how
    U.S. companies are engaging in significant profit shifting that allows
    them to pay no tax on foreign earnings. Ms. Huang's testimony suggested
    that Global Intangible Low-Taxed Income (GILTI) is not robust and
    allows companies to pay zero tax on foreign earnings. However, the
    Joint Committee on Taxation pamphlet for this hearing stated that U.S.
    companies' foreign earnings are being taxed at about 16 percent on
    average.

        Doesn't this data suggest that U.S. companies are not only subject
    to the expected 13.125-percent effective rate on GILTI, but actually
    are subject to a higher rate of tax at 16 percent?

        Answer. Yes, based on the structure of GILTI, it is difficult to
    conceive of a situation where a U.S. company with significant
    intangible income (the target of GILTI) would be able to avoid paying
    any tax on foreign earnings. Indeed, the structure of GILTI often
    results in companies paying GILTI despite income being subject to
    foreign tax at rates far in excess of the target effective rate of
    13.125 percent.

        Taking into account the tax rates of other major economies in which
    U.S. companies may have operations, the Joint Committee's finding of a
    16-percent rate of foreign tax on foreign income is unsurprising. Note
    that the Joint Committee's finding does not count U.S. income tax
    imposed on the foreign income through GILTI, the subpart F rules, or on
    branch operations.

        Question. Doesn't this indicate that GILTI is a robust minimum tax
    that is working as intended?

        Answer. Yes, perhaps the best indication of the stringent nature of
    GILTI is that the minimum tax under consideration by the OECD Inclusive
    Framework is less onerous in many respects than GILTI. There are many
    features of GILTI that produce results that likely were not intended,
    but those features make GILTI more, not less, onerous for the companies
    subject to it.

        Question. Last month, this committee held a hearing on the impact
    of the U.S. tax code on the domestic supply chain and manufacturing
    sector. The policies and ideas we discussed at last week's hearing
    will, of course, have a clear impact on that sector, particularly when
    we consider the tax code more holistically.

        Ms. Olson, how do you believe the implementation of these proposed
    GILTI changes, combined with the penalizing surtax on U.S. firms with
    foreign operations, would change the incentives on U.S. firms to invest
    robustly in the United States given the combined increase in domestic
    taxation?

        Answer. The GILTI changes would impose a cost on the foreign
    operations of U.S.-headquartered companies that local and foreign-
    headquartered companies would not bear, which would reduce the ability
    of U.S.-headquartered companies to expand and maintain their foreign
    operations relative to foreign companies, with adverse effects on the
    American jobs that support and depend on the success of the foreign
    operations. As a consequence, the changes would reduce the capacity of
    U.S. companies to invest in and create jobs in the United States.

        Question. Do you think that this is a net positive or a net
    negative for low- and middle-income job creation?

        Answer. The economics literature indicates that, on average,
    foreign and domestic operations of U.S. MNCs are complementary, meaning
    that tax changes that reduce foreign affiliate investment and
    employment also reduce the U.S. parent company's domestic investment
    and employment. In other words, changes that harm companies' incentive
    and capacity for investment, including investment outside the United
    States, would reduce job opportunities in the United States.Many of the
    jobs lost would likely be low- and middle-income jobs. In addition, the
    economic impact of the reduced investment would have spillover effects
    further reducing opportunities up and down the income scale.

        The post-TCJA and pre-pandemic economic data indicate growing
    employment opportunities, evidenced by record low unemployment rates,
    including for categories of workers with historically high unemployment
    rates, and rising wages for low- and middle-income workers.

                                     ______

                     Prepared Statement of Hon. Ron Wyden,
                           a U.S. Senator From Oregon
        The Finance Committee meets today to discuss international
    corporate taxes, and the 2017 Trump tax law will be a significant part
    of that discussion. The lesson of the Trump tax law is that somehow,
    you can spend hundreds of billions on multinational corporate tax
    handouts and not produce any lasting boost in jobs and investment.

        This hearing comes just days after the release of a jaw-dropping
    new report from the Joint Committee on Taxation. That report found that
    the Trump tax law slashed the average U.S. tax rate paid by the biggest
    mega-corporations by more than half. Add to that data from the
    Congressional Budget Office, which tells us that corporate tax revenues
    have fallen through the floor. From 2016 to 2019, they dropped by one-
    third.

        The fact is, before 2017 the U.S. already collected relatively
    little tax from corporations compared to other major economies. Despite
    this, Trump and Republicans still sent the U.S. diving headlong into
    the global race to the bottom on corporate taxes. After all, that race
    to the bottom is based on the same old trickle-down tax philosophy
    that's been misleading the American people, blowing budgets, and
    driving inequality for 50 years. The worst part is, it was done in a
    way that makes this country less competitive, not more.

        Under the Trump tax law, multinational corporations got special new
    breaks for shipping jobs and profits overseas. There's a specific new
    tax break for investing in factories outside the country. There are
    even new barriers to bringing back good-paying jobs in management and
    R&D or investing in key areas like clean energy or affordable housing.
    So it's no surprise that the investment boom Republicans talked about
    turned out to be more of an investment whisper. Manufacturing even went
    into recession in 2019, months before the pandemic hit.

        Hearing this has to be a punch in the gut for Americans who live in
    communities where hulking, shuttered factories sit there as reminders
    of what prosperity used to look like. Americans have recognized this
    kind of basic unfairness and imbalance in the Trump tax law from the
    get-go. Colossal benefits for colossal multinationals, but the promises
    made to workers have always come up empty.

        Here's my bottom line. As we begin today, I reject the proposition
    that the U.S. has to participate in the worldwide race to rock bottom
    on corporate taxes to compete or create good-paying jobs. This country
    does not need to behave like some minor island off the coast of
    nowhere, selling zero-tax P.O. boxes to corporate headquarters for a
    quick buck. Whether it was the result of shoddy legislating or
    misleading double-speak, the Trump incentives for shipping jobs
    overseas are a disaster for working people in Oregon and across the
    country.

        It's time the Congress took a fresh approach. In the coming days,
    joined by Senator Brown and Senator Warner, I'll be releasing a new
    framework for international taxation that reverses the Trump-era
    handouts to multinationals.

        Our new framework is based on a few simple propositions. First,
    multinationals must pay a fair share, just like Americans who work for
    a living. There were too many corporate loopholes and opportunities for
    gamesmanship before the Trump tax law, and the Trump tax law only made
    the situation worse. Rates are too low, and it's too easy for
    corporations to skip out on paying a fair share by gaming the system
    and shifting profits.

        Second, the tax code must reward companies that invest and create
    good-paying jobs in the U.S., and stop rewarding companies that ship
    jobs and factories overseas. Inequality is getting worse, and millions
    of Americans are out of a job. The provisions of the Trump tax law that
    shortchange American workers and make us less competitive have got to
    go.

        I'm pleased to be able to say that members are already hard at work
    on these issues, and I know other members of this committee are going
    to have big ideas to bring to this debate.

        Let me also thank our witnesses for joining the committee today.
    This issue represents a big, difficult challenge, but today's hearing
    is an opportunity for us to move the debate forward. I look forward to
    Q&A.

                                     ______

                                 Communications

                                  ----------

                        Letter Submitted by Neil Allara
    To whom it may concern,

    The U.S. extraterritorial tax regime is an unfair and unnecessary
    burden upon voting Americans living abroad. Yes, there are taxation
    agreements between some countries, but the time and/or money needed to
    file every year needs to stop. Additionally, there are negative
    implications related to planning for retirement as well. There is no
    other advanced country in the world that imposes such extraterritorial
    taxation on its citizens abroad.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you for your time and consideration of this issue.

    Neil Allara

                                     ______

                       Alliance for Competitive Taxation

                                  PO Box 34346

                              Washington, DC 20043

                            info@ACTontaxreform.com

                          https://actontaxreform.com/

    The 46 members of the Alliance for Competitive Taxation are: 3M, Abbott
    Laboratories, ADP, Alcoa Corporation, American Express Company, Bank of
    America Corp., Boston Scientific Corp., Carrier Global Corp.,
    Caterpillar Inc., Cisco Systems, Inc., The Coca-Cola Company, Corteva
    Inc., Danaher Corporation, Dell Technologies, Inc., The Dow Chemical
    Company, DuPont, Eli Lilly and Company, Emerson Electric Co., Exxon
    Mobil Corporation, General Electric Company, General Mills Inc.,
    Google, Inc., The Home Depot Inc., Honeywell International Inc., IBM
    Corporation, International Paper Company, Johnson & Johnson, Johnson
    Controls, Inc., JPMorgan Chase & Co., Kellogg Company, Kimberly-Clark
    Corp., MasterCard Inc., McCormick & Company, Inc., Morgan Stanley,
    Oracle Corporation, Otis Worldwide Corp., PepsiCo, Inc., Procter &
    Gamble Co., Prudential Financial Inc., Raytheon Technologies Corp., S&P
    Global Inc., State Street Corporation, Texas Instruments, Inc., United
    Parcel Services, Inc., Verizon Communications Inc., and The Walt Disney
    Company.

                   How U.S. International Tax Policy Impacts
                     American Workers, Jobs, and Investment

    The Alliance for Competitive Taxation (ACT), a coalition of leading
    American companies from a wide range of industries, welcomes this
    opportunity to submit testimony on the importance of maintaining a
    globally competitive U.S. corporate tax system to help restore U.S.
    economic growth, good jobs, and rising wages for American workers.\1\
    ---------------------------------------------------------------------------
        \1\ For more on the Alliance for Competitive Taxation, see https://
    actontaxreform.com/.

    This hearing is taking place as the economy continues to recover from
    the worst recession since the Great Depression. Job losses as of
    February 2021 were 9.5 million--more than all the jobs lost at the
    ---------------------------------------------------------------------------
    worst point of the 2008-2009 recession.

    A strong recovery means not only returning these Americans to work but
    also creating new well-paying job opportunities for the nearly 5
    million people who would have joined the labor force in 2020 and 2021
    if economic growth had continued at its pre-pandemic pace.

    We are American companies committed to doing our part to support the
    country and the communities where we operate. We look forward to our
    factory floors and offices returning to full capacity, our purchasing
    managers filling the order books of our suppliers, and ``help wanted''
    signs hanging in every storefront.

    We support the goal of Congress and the Administration to return the
    economy to a position of strength as soon as possible. But a tax
    increase on employers now would inevitably slow economic growth. For
    many companies, it would dampen plans to expand hiring; for others, it
    would slow re-hiring. Reduced demand for workers and stalled investment
    would suppress wages.

    A tax increase would withdraw funds from the economy at a time that is
    already precarious and would directly counter the federal government's
    actions to inject funds into the economy. As we seek to recover
    millions of lost jobs, now is the worst time to raise corporate taxes.

    It took six years to restore employment to its pre-recession level
    following the last recession. America cannot risk any actions that
    would slow the present recovery.

    We urge you to consider the benefits to a strong economic recovery,
    built on the success of American businesses. We believe America can be
    the best place in the world for a company to expand its workforce,
    increase wages, undertake new capital investment, develop new
    technologies, and manage a global enterprise. But higher taxes now on
    America's employers, especially taxes that make it harder for American
    companies to compete in global markets, would put a sustainable
    recovery at risk.

    Key Points:

        1.  Raising taxes during a recession is a recipe for a stagnant
    economy. Raising taxes on employers during a recession will slow the
    re-hiring of workers.

        2.  Competitive U.S. tax policy has been a bipartisan priority for
    decades because it creates jobs and boosts wages for American families.

              Prior to the pandemic, real wage growth was
    increasing at a faster rate than it had in decades, unemployment
    reached 50-year lows, and companies were hiring and making new
    investments in the United States. In the absence of the pandemic,
    strong wage growth and employment gains were forecast to have
    continued.\2\
    ---------------------------------------------------------------------------
        \2\ In its January 2020 economic projections, the Congressional
    Budget Office wrote ``Solid economic growth and continued strength in
    labor demand are projected to keep the unemployment rate low and drive
    employment and wages higher in 2020.'' CBO's median run forecast
    projected employment ``to remain above its maximum sustainable level
    over the next five years, supporting relatively robust wage growth
    during that time.'' Congressional Budget Office, The Budget and
    Economic Outlook: 2020 to 2030, January 2020, p. 29.

        3.  Corporate income taxes, like any other business cost, factor
    into a company's decisions to hire workers and invest in plant and
    equipment. Higher corporate taxes will lead to less cash available for
    paying wages and investing in capital. Less investment ultimately
    results in reduced productivity and lower wages for American workers,
    and less output for American consumers to enjoy. Higher corporate taxes
    also may result in lower returns for the company's shareholders,
    including the retirement plans of millions of workers and retirees.
    Finally, raising corporate taxes can also result in higher prices for
    the company's products, straining the budgets of low- and middle-income
    ---------------------------------------------------------------------------
    families at a time when funds are already tight.

              Studies show that workers bear a significant
    share of the corporate tax burden through lower wages.\3\ The Joint
    Committee on Taxation, the Congressional Budget Office, and the U.S.
    Treasury Department all agree in this assessment.\4\
    ---------------------------------------------------------------------------
        \3\ See, for example, Clemens Fuest, Who Bears the Burden of
    Corporate Income Taxation?, European Tax Policy Forum Policy Paper,
    2015; Juan Carlos Suarez Serrato and Owen Zidar, Who Benefits from
    State Corporate Tax Cuts? A Local Labor Markets Approach with
    Heterogeneous Firms, American Economic Review, 2016; Clemens, Andreas
    Peichl, and Sebastian Siegloch. 2018. Do Higher Corporate Taxes Reduce
    Wages? Micro Evidence from Germany. American Economic Review, 2018.
        \4\ The Joint Committee on Taxation assumes 25% of the corporate
    income tax is borne by workers (Modeling the Distribution of Taxes on
    Business Income, JCX-14-13, October 16, 2013); CBO also assumes 25
    percent of the corporate income tax is borne by workers (The
    Distribution of Household Income and Federal Taxes, 2008 and 2009,
    Congressional Budget Office, July 2012, p. 24); and Treasury assumes
    18% of the corporate income tax is borne by workers (Distributing the
    Corporate Income Tax: Revised U.S. Treasury Methodology, Office of Tax
    Analysis, Technical Paper 5, May 2012).

              The portion of the corporate income tax burden on
    shareholders affects not just the top 1%, but the more than 50% of
    American families who hold stock either directly or in their IRAs and
    401(k)s.\5\ State and local government and private pension plans across
    the country--those of nurses, schoolteachers, police officers and
    firefighters--all depend on sustained returns from their stock market
    investments.
    ---------------------------------------------------------------------------
        \5\ Federal Reserve Board, Changes in U.S. Family Finances from
    2016 to 2019: Evidence from the Survey of Consumer Finances, September
    2020.

        4.  Raising taxes on income earned abroad by U.S. companies will
    not increase domestic employment. The foreign operations of American
    companies create jobs for American workers, they do not displace jobs
    ---------------------------------------------------------------------------
    for American workers.

              The foreign operations of U.S. companies give
    American workers access to global markets to sell the goods and
    services they produce at home. Nearly 90% of the goods and services
    produced by the foreign operations of American companies are sold to
    foreign customers--sales that might not be possible without these
    operations.\6\
    ---------------------------------------------------------------------------
        \6\ Bureau of Economic Analysis, Worldwide Activities of U.S.
    Multinational Enterprises: Preliminary 2018 Statistics, Table E.1.

              U.S. multinational companies account for the
    majority of U.S. exports of goods and services, creating millions of
    jobs throughout the U.S. supply chain.\7\
    ---------------------------------------------------------------------------
        \7\ U.S. Census Bureau, Annual Trade Highlights; Bureau of Economic
    Analysis, Worldwide Activities of U.S. Multinational Enterprises:
    Preliminary 2018 Statistics, Table I.R 1.; BEA, A Profile of U.S.
    Exporters and Importers of Services, 2017.

              Foreign operations also create economies of scale
    that support additional investment in plant and equipment and more
    research and development at home, resulting in more jobs and higher
    wages for American workers.\8\
    ---------------------------------------------------------------------------
        \8\ Mihir Desai, C. Fritz Foley and James R. Hines, Jr., ``Domestic
    Effects of the Foreign Activities of U.S. Multinationals,'' American
    Economic Journal: Economic Policy, February 2009.

        5.  The current tax system does not advantage American companies
    over their foreign competitors, nor does it encourage U.S. companies to
    ---------------------------------------------------------------------------
    invest abroad rather than at home.

              The United States is the only country to subject
    the active foreign earnings of its companies to a minimum tax, a tax
    that their foreign-headquartered competitors do not have to pay. This
    puts American companies--and workers--at a disadvantage in global
    markets compared to their foreign counterparts.

              The ability to deduct domestic expenditures on
    equipment and machinery immediately, a provision that was adopted at
    the same time as the foreign minimum tax, favors investment in the
    United States, spurring greater investment at home.

        6.  Recent estimates of profit shifting are greatly overstated.

              Data used in profit-shifting studies pre-date
    implementation of both (i) the minimum tax on foreign income adopted in
    2017, which was not fully effective for most companies until 2019, and
    (ii) the base erosion and profit shifting (``BEPS'') measures
    recommended by the OECD in 2015 and adopted by countries in recent
    years.

              Moreover, some of these studies rely on data that
    treat operating income earned in one country as earned by holding
    companies located in another country, resulting in a misattribution of
    the source of income and in some cases a double counting (or more) of
    the income earned abroad by U.S. companies. The improper use of these
    data overstates earnings where the holding company is located,
    typically a country that does not tax dividends from a related company,
    and gives the false appearance of low-taxed income in these
    countries.\9\
    ---------------------------------------------------------------------------
        \9\ The Bureau of Economic Analysis explains with respect to its
    data on multinational companies, ``Because the balance sheet statistics
    reflect the cumulative balance sheets of each foreign affiliate (both
    the top and lower tiers), ownership in lower-tier affiliates results in
    `double (or more) counting' in the aggregate statistics. The income
    statement is similarly affected.'' (Bureau of Economic Analysis, ``How
    are BEA's statistics on the activities of U.S. multinational
    enterprises (MNEs) affected by the complex corporate structures of
    MNEs?,'' available at: https://www.bea.gov/help/faq/1402.) With respect
    to country-by-country data, the Joint Committee on Taxation cautions
    that ``there could be some double counting of dividend income in the
    profits line,'' which will lead to an understatement of the effective
    tax rate of the company (Joint Committee on Taxation, U.S.
    International Tax Policy: Overview and Analysis (JCX-16-21), March 19,
    2021.) The OECD makes a similar caution (OECD, Important Disclaimer
    Regarding the Limitations of the Country-By-Country Report Statistics,
    July 2020). For an analysis, see Jennifer Blouin and Leslie Robinson,
    Double counting accounting: How much profit of multinational
    enterprises is really in tax havens? May 20, 2020, available at:
    https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3491451.
    ---------------------------------------------------------------------------

     I. Raising taxes on employers during a recession will place economic
                        recovery at risk

    Coming on the heels of the worst recession since the Great Depression,
    the economy is still fragile, and the path forward is uncertain. While
    no tax should be raised during a recession, taxes on employers would
    have particularly harmful consequences.

    The economy depends on America's employers--whether small businesses or
    large employers--to help restore and expand the economy by rehiring
    millions of workers, boosting wages, increasing purchases from their
    suppliers, and making new investments. Raising taxes on employers now
    would pull resources out of the economy and would put a strong and
    sustainable economic recovery at risk.

    No one can know for sure the path of the virus or the path of recovery,
    and raising taxes now with the expectation of an economic recovery soon
    is unnecessarily perilous. The Federal Reserve Board's own projections
    show it believes the risk of slowing the economic recovery are high
    enough that it does not intend to raise interest rates before 2024 at
    the earliest.

    Federal Reserve Board Chairman Jerome Powell has emphasized the need
    for caution before the economy returns to full employment. ``The
    economic recovery remains uneven and far from complete, and the path
    ahead remains uncertain,'' Powell explained earlier this month. ``The
    economy is a long way from our employment and inflation goals, and it
    is likely to take some time for substantial further progress to be
    achieved.''

    Chairman Powell has also said that now is not the time to worry about
    the deficit, the appropriate time ``will be when the economy is back to
    full employment and taxes are rolling in and we're in a strong economy
    again.''

     II. Competitive U.S. tax policy has been a bipartisan policy because
                        it creates jobs and boosts wages for American
                        families

    For decades there has been bipartisan support for lowering the
    corporate tax rate to an internationally competitive level and
    modernizing the outdated U.S. international tax rules.

    Bipartisan proposals for reform highlighted that the United States had
    fallen behind by standing still. Over three decades, other countries
    had lowered their corporate tax rates and adopted territorial tax
    systems. These changes provided a more attractive environment for job-
    creating investments and made companies headquartered in those
    countries more globally competitive. By 2017, the U.S. corporate tax
    rate was the highest in the developed world, and the United States was
    the only G7 country that taxed the repatriation of foreign business
    income.

    High corporate taxes reduced investment in the United States and
    resulted in slower growth in wages for American workers. As explained
    by the OECD, the corporate income tax is the greatest deterrent to
    economic growth of all taxes:

            ``Corporate income taxes are the most harmful for growth as
            they discourage the activities of firms that are most important
            for growth: investment in capital and productivity
            improvements.''\10\
    ---------------------------------------------------------------------------
        \10\ OECD, Tax Policy Reform and Economic Growth, 2010, p. 22.

    At the same time, a disadvantageous U.S. international tax system made
    it harder for U.S. companies to compete in foreign markets. Less
    success in foreign markets for U.S. companies reduced demand for their
    products and services and resulted in fewer jobs for American workers.
    Announcements of major companies looking to leave the United States
    regularly made newspaper headlines and affected communities in every
    state.\11\
    ---------------------------------------------------------------------------
        \11\ See, for example, Kate Linebaugh and Liz Hoffman, ``U.S. Firms
    Pack Up for Tax Benefits,'' Wall Street Journal, May 12, 2014; Hester
    Plumridge and Peter Loftus, ``Inversion Frenzy Rocks Drug Sector,''
    Wall Street Journal, June 21, 2014; Dana Mattioli, ``Acquirers Plot
    Escape from a Turn on Taxes,'' Wall Street Journal, July 7, 2014; Liz
    Hoffman and Hester Plumridge, ``Race to Cut Taxes Fuels Urge To
    Merge,'' Wall Street Journal, July 15, 2014; Tom Fairless and Shayndi
    Raice, ``In Inversion Deals, U.K. Is a Winner; Location, Language,
    Lifestyle Are Draws as U.S. Companies Buy Firms Abroad,'' Wall Street
    Journal, July 28, 2014; Emily Chasan, ``Companies are Running the
    Numbers on Potential Tax Inversions,'' Wall Street Journal, August 26,
    2014. For an analysis, see Congressional Budget Office, ``An Analysis
    of Corporate Inversions,'' September 2017.

    Following tax reform, the U.S. economy was strong

    Pre-pandemic, the economy was strong and income gains were shared
    throughout the workforce:

          Real wages grew 4.9% for the two years 2018-2019, the fastest
    two-year growth rate in real earnings since 1998-1999. This compares to
    no real wage growth over the 2 previous years, 2016-2017.\12\
    ---------------------------------------------------------------------------
        \12\ Bureau of Labor Statistics, Employed full time: Median usual
    weekly real earnings: Wage and salary workers: 16 years and over
    [LES1252881600Q].
    ---------------------------------------------------------------------------
          Wage growth was greater for those on the factory floor and in
    nonsupervisory roles than for their managers from the start of 2018 to
    the end of 2019, reversing prior trends.\13\
    ---------------------------------------------------------------------------
        \13\ Bureau of Labor Statistics, series for ``Average Hourly
    Earnings of Production and Nonsupervisory Employees'' [CES0500000008]
    and ``Average Hourly Earnings of All Employees'' [CES0500000003].
    ---------------------------------------------------------------------------
          Unemployment reached a 50-year low of 3.5% in 2019.\14\
    ---------------------------------------------------------------------------
        \14\ Bureau of Labor Statistics, series for unemployment
    [LNS14000000].
    ---------------------------------------------------------------------------
          Investment by companies in plant and equipment and research and
    development was strong. Real business investment in equipment and R&D
    grew at 5.6% and 12.1%, respectively, in the 2-year period 2018-2019,
    faster than in the two preceding years.\15\
    ---------------------------------------------------------------------------
        \15\ Bureau of Economic Analysis, Table 5.3.6. Real Private Fixed
    Investment by Type, Chained Dollars.
    ---------------------------------------------------------------------------
          Bureau of Economic Analysis data show that in 2018, the most
    recent year for which data are available, U.S. companies with global
    operations grew faster in the United States than they did abroad--
    growing their employment, capital expenditures in property, plant and
    equipment, and R&D investment faster in the United States than they did
    abroad.\16\
    ---------------------------------------------------------------------------
        \16\ Bureau of Economic Analysis, ``Activities of U.S.
    Multinational Enterprises, 2018,'' News Release BEA 20- 40, August 21,
    2020.
    ---------------------------------------------------------------------------
          Companies that had moved their headquarters from the United
    States through acquisitions prior to 2017 began to return as the United
    States established more competitive tax rules.\17\
    ---------------------------------------------------------------------------
        \17\ Amanda Athanasiou, Inverters Return to the U.S., and Not Just
    for the Tax Rate, Tax Notes Federal, August 19, 2019.
    ---------------------------------------------------------------------------
          And the CBO forecast wage growth would continue to be
    strong.\18\
    ---------------------------------------------------------------------------
        \18\ Congressional Budget Office, The Budget and Economic Outlook:
    2020 to 2030, January 2020, p. 29.

    Increases in corporate taxes would jeopardize a fragile economic
    recovery.

     III. Corporate income taxes ultimately affect people in their roles as
                        employees, suppliers, customers, and investors--and
                        these people will be worse off by increasing
                        corporate taxes

    Corporations are legal entities in which ordinary individuals
    participate in their roles as workers, consumers, and savers as
    retirement plan participants, mutual fund investors and direct
    shareholders. Studies show that workers bear a substantial share of the
    corporate tax burden through lower wages, although the precise amount
    varies from study to study.\19\ One effect of the corporate income tax
    is to discourage productivity-increasing investments in equipment and
    technology. With labor less productive, employer demand for workers
    declines, and their wages fall. The Joint Committee on Taxation, the
    Congressional Budget Office, and the U.S. Treasury Department all agree
    with this assessment.\20\
    ---------------------------------------------------------------------------
        \19\ For example, Suarez Serrato and Zidar (2016) estimate workers
    bear 30-35% while Clemens, Peichl, and Siegloch. (2018) estimate 50%.
    See footnote 1 for complete references.
        \20\ The Joint Committee on Taxation and Congressional Budget
    Office assume 25% of the corporate income tax is borne by workers,
    while Treasury assumes 18% is borne by workers. See references in
    footnote 2.

    A recent OECD survey concludes ``empirical estimates suggest that it
    [the corporate tax] is borne only partially by capital owners and often
    at least as much by workers in the form of lower wages.''\21\
    ---------------------------------------------------------------------------
        \21\ Anna Milanez, Legal tax liability, legal remittance
    responsibility and tax incidence: Three dimensions of business
    taxation, OECD Taxation Working Papers No. 32, 2017.

    If half of the corporate tax burden is borne by workers, that implies a
    $100 billion corporate tax increase--approximately the revenue raised
    over 10 years from a one percentage point increase in the corporate tax
    ---------------------------------------------------------------------------
    rate--would reduce the wages of U.S. workers by $50 billion.

    The portion of the corporate income tax burden that falls on
    shareholders affects not just the top 1% but harms the more than 50% of
    American families who hold stock either directly or through their IRAs
    and 401(k)s.\22\ In addition, state and local government and private
    pension plans across the country--those of nurses, schoolteachers,
    police officers, and firefighters--all depend on sustained returns from
    their stock market investments.
    ---------------------------------------------------------------------------
        \22\ Federal Reserve Board, Changes in U.S. Family Finances from
    2016 to 2019: Evidence from the Survey of Consumer Finances, September
    2020.

    Across the 59 million workers with 401(k) accounts, more than 90% have
    some investment in equities, and 82% had at least 40 percent of their
    account balances invested in equities in 2018.\23\ Among 401(k)
    participants in their 20s, nearly three-quarters had more than 80
    percent of their account balances invested in equities.
    ---------------------------------------------------------------------------
        \23\ Employee Benefit Research Institute, 401(k) Plan Asset
    Allocation, Account Balances, and Loan Activity in 2018, March 4, 2021.

    The Treasury Department estimates that between the portion of the
    corporate income tax borne by workers and the portion borne by direct
    and indirect investment in equities, the poorest half of all families
    on average face a larger tax burden through the corporate income tax
    than they do from the individual income tax.\24\ A corporate income tax
    hike will hurt those struggling the most.
    ---------------------------------------------------------------------------
        \24\ Office of Tax Analysis, U.S. Treasury Department, Distribution
    of Tax Burden, Current Law, 2019.

    Corporate earnings distributed as a dividend to taxable shareholders
    currently are subject to a top federal combined corporate and
    individual tax rate of 39.8%.\25\ Under the campaign proposal of
    President Biden, this would increase by nearly 50 percent to 59.2%.\26\
    Taking into account average state income tax rates, corporate earnings
    distributed as a dividend to taxable shareholders currently are subject
    to a top combined federal and state tax rate of 47.5%.\27\ Under the
    campaign proposal of President Biden, the top combined federal and
    state tax rate on corporate earnings would increase to 65.4% based on
    average state income tax rates--taking nearly two-thirds of the return
    on corporate investments. This combined U.S. tax rate on dividends
    would be the highest among the 37 countries in the OECD. And the top
    combined tax rate on corporate earnings would surpass 70% in California
    and New York City.\28\
    ---------------------------------------------------------------------------
        \25\ This is computed under current law as a top federal corporate
    tax rate of 21% and a top federal individual tax rate on dividend
    income of 23.8%, 39.8% = (.21 + (1-.21)(.238)).
        \26\ This is computed under current law as a top federal corporate
    tax rate of 28% and a top federal individual tax rate on dividend
    income of 43.4% (39.6% plus the 3.8% net investment income tax) under
    the Biden campaign proposal, 59.2% = (.28 + (1-.28)(.434)).
        \27\ OECD Tax Database, 2020 rates, https://stats.oecd.org/
    Index.aspx?DataSetCode=TABLE
    _II4.
        \28\ This assumes a 28% federal corporate tax rate and a top
    individual federal tax rate of 39.6% under the Biden campaign proposal,
    along with OECD assumed average state tax rates for corporations of
    6.03% (before deductibility) and for individuals of 5.43%. In New York
    City and California, individuals are subject to a top tax rate of 12.7%
    and 13.3%, respectively. The current law 3.8% net investment income tax
    is assumed to be retained under the Biden campaign proposal.

    The corporate income tax also may fall on consumers. One recent study
    estimates that approximately one-third of the burden of corporate
    income taxes is borne by consumers in the form of higher prices for
    goods produced by corporations.\29\ The study found a greater impact on
    prices of products ``commonly purchased by households with lower
    incomes relative to those purchased by high-income households.''
    ---------------------------------------------------------------------------
        \29\ Scott R. Baker, et al. ``Corporate Taxes and Retail Prices.''
    Working Paper 27058, National Bureau of Economic Research, April 2020.

    While studies will differ on the precise incidence of the corporate
    income tax, it is clear that the burden ultimately falls on people in
    all income ranges.

     IV. Raising taxes on income earned abroad by U.S. companies will not
                        increase domestic employment. The foreign
                        operations of American companies create jobs for
                        American workers, they do not displace jobs for
                        American workers.

    Most foreign operations of U.S. companies serve foreign markets. The
    most recent government data show that approximately 90% of the sales of
    goods and services by the foreign operations of U.S. companies are to
    foreign customers.\30\ Some foreign operations are required due to
    local content requirements, while others reduce costs of transportation
    and tariffs. Access to natural resources also drives location
    decisions.
    ---------------------------------------------------------------------------
        \30\ Bureau of Economic Analysis, Worldwide Activities of U.S.
    Multinational Enterprises: Preliminary 2018 Statistics, Table E.1,
    https://apps.bea.gov/international/xls/usdia2018p/Part-II-E1-E17.xls.

    Many foreign operations are the result of the acquisition of a foreign
    company. These acquisitions often provide new technology, patents, and
    nohow that can be adopted globally by the acquiring company, boosting
    ---------------------------------------------------------------------------
    its productivity.

    Research has shown that the foreign activities of U.S. businesses allow
    them to expand their investment and employment at home. This is because
    the foreign activities open up new markets for the company and boost
    its productivity, all of which increase the demand for its U.S.
    activities and make its U.S. operations more valuable.

    One study based on data of U.S. manufacturers finds that increases in
    sales by a company's foreign affiliates lead to an increase in its U.S.
    exports and domestic R&D.\31\ The study also finds a strong positive
    relationship between a company's foreign employment and its domestic
    employment: for every 10-percent increase in foreign employment by a
    U.S. company, on average, U.S. employment increases by 6.5%. Given that
    U.S. multinational companies employ twice as many workers in the United
    States as they do abroad, this implies that an increase of 100 workers
    abroad is associated with an increase of 129 workers in the United
    States. A recent study of European companies finds that an increase in
    their use of foreign high-skilled R&D workers leads to an increase in
    their domestic research employment.\32\
    ---------------------------------------------------------------------------
        \31\ Mihir Desai, C. Fritz Foley and James R. Hines, Jr.,
    ``Domestic Effects of the Foreign Activities of U.S. Multinationals,''
    American Economic Journal: Economic Policy, February 2009.
        \32\ Laura Abramovsky, Rachel Griffith, and Helen Miller, Domestic
    Effects of Offshoring High-skilled Jobs: Complementarities in Knowledge
    Production, Review of International Economics, 2017.

    Subjecting the foreign operations of U.S. companies to higher taxes
    than their foreign-headquartered rivals would make it more difficult
    ---------------------------------------------------------------------------
    for U.S. companies to compete.

    A tax disadvantage imposed on U.S.-headquartered companies results in
    their foreign assets being less valuable when owned by an American
    company than when owned by a foreign company. As a result, U.S.
    companies may lose out in bidding for foreign acquisitions.

    These lost foreign acquisitions have been called ``invisible
    inversions'' by Professor Hines, as they have the same economic effect
    as a U.S. company moving its headquarters overseas: the U.S. business
    sector is smaller than it otherwise would be, resulting in reduced
    demand for U.S. workers and lower wages.\33\
    ---------------------------------------------------------------------------
        \33\ Statement of James R. Hines, Jr., U.S. Senate, Committee on
    Finance, How U.S. International Tax Policy Impacts American Workers,
    Jobs, and Investment, March 25, 2021.

    Imposing taxes on the foreign operations of U.S. headquartered
    companies that their foreign competitors do not equally bear will
    decrease the ability of U.S. companies to compete in foreign markets,
    and lead to losses in U.S. employment, investment and R&D that support
    the foreign operations of U.S. companies.

     V. The current tax system does not advantage American companies over
                        their foreign competitors, nor does it encourage
                        U.S. companies to invest abroad rather than at home

    Current law aims to allow U.S. companies to be competitive with their
    foreign-headquartered rivals. It neither advantages them over their
    competitors nor encourages U.S. companies to invest abroad rather than
    in the United States.

     U.S. corporate rate reduction still left the U.S. with an above
                        average tax rate

    The combined U.S. federal and state corporate tax rate at 25.8% is more
    than two percentage points higher than the average of other OECD
    countries.\34\ Among the 37 OECD countries, the U.S. corporate tax rate
    is 12th highest. Current law does not advantage U.S. companies over
    their foreign competitors, it merely reduced the prior law tax
    disadvantage. In contrast, the 28% corporate tax rate proposed by
    President Biden would give the United States the highest corporate tax
    rate in the OECD.\35\
    ---------------------------------------------------------------------------
        \34\ OECD Tax Database, 2020 rates, https://stats.oecd.org/
    Index.aspx?QueryId=78166.
        \35\ Together with average state tax rates, a 28% federal tax rate
    combined with average state tax rates would be a combined tax rate of
    32.3%.
    ---------------------------------------------------------------------------

    GILTI does not advantage U.S. companies over foreign companies

    Regarding international income, current law has been referred to as a
    ``quasi-
    territorial'' tax system--a territorial-type system for dividends
    combined with a foreign minimum tax to protect the U.S. tax base from
    income shifting. The foreign minimum tax--the global intangible low-
    taxed income (``GILTI'') provision--can be loosely described as
    applying a ``top up'' tax to active foreign business income that is
    taxed by foreign countries at a rate below 13.125%. While it is beyond
    the scope of this testimony to provide a detailed explanation of GILTI,
    practitioners observe that U.S. companies with average foreign tax
    rates above 13.125% still have to pay GILTI tax.\36\
    ---------------------------------------------------------------------------
        \36\ Richard Rubin, ``Tax Changes Hit Overseas Profits of Some U.S.
    Companies,'' Wall Street Journal, March 27, 2019.

    The United States is the only advanced economy that imposes a minimum
    tax on active foreign business income.\37\ And while discussions are
    taking place within the OECD on a model foreign minimum tax, the OECD
    Secretariat has described GILTI as tougher than the model the OECD is
    considering.\38\
    ---------------------------------------------------------------------------
        \37\ Other countries often tax passive income meeting certain
    conditions, as the United States also does.
        \38\ OECD, Tax Challenges Arising from Digitalisation--Report on
    Pillar Two Blueprint, 2020, p. 19.

    An increase in the rate of tax under GILTI would only further
    disadvantage U.S. companies relative to their foreign-headquartered
    competitors.

     The GILTI deduction for a 10% normal return on depreciable assets does
                        not encourage foreign investment over U.S.
                        investment

    GILTI provides an exclusion of a 10% return on foreign tangible
    investments in plant and equipment. This provides territorial-like
    treatment for these earnings. The rationale for the exclusion is to
    allow U.S. companies to compete on an equal playing field with their
    foreign rivals on the ``ordinary'' or ``normal'' return to these
    investments. But unlike the territorial tax systems of other countries,
    the U.S. tax law does not exempt from U.S. tax any ``above normal''
    returns on foreign investments. Instead, these above normal returns are
    subject to tax under GILTI.

    While the location of high-return investments may be sensitive to tax
    rates, companies are unlikely to make a business decision to move
    investments that earn a low or normal return from the United States to
    another country on the basis of tax differences. Locational decisions
    for these lower return investments are swamped by factors such as
    operational costs, transportation and logistics.

    More importantly, the structure of GILTI provides no tax incentive to
    move low or normal return investments from the United States. Under
    current law, domestic investment in most plant and equipment is
    eligible for 100% expensing--providing an immediate deduction for the
    full cost of the investment.\39\ Expensing is equivalent in present
    value to exempting the normal return of the investment from taxation.
    Thus, the normal return to these investments is exempt in the United
    States. If the same investment is made abroad, its income will be taxed
    at the rate of the foreign country. As a result, the U.S. tax system
    favors investment of these assets in the United States if there is any
    foreign tax on the earnings of the investment.
    ---------------------------------------------------------------------------
        \39\ Investment in new and used equipment and structures with a tax
    life of 20 years or less is eligible for expensing.

    The Joint Committee on Taxation reached a similar conclusion on the
    ---------------------------------------------------------------------------
    effect of post-2017 tax law:

            ``The macroeconomic estimate projects an increase in investment
            in the United States, both as a result of the proposals
            directly affecting taxation of foreign source income of U.S.
            multi-national corporations, and from the reduction in the
            after-tax cost of capital in the United States due to more
            general reductions in taxes on business income.''\40\
    ---------------------------------------------------------------------------
        \40\ Joint Committee on Taxation, Macroeconomic Analysis of the
    Conference Agreement for H.R. 1, The Tax Cuts and Jobs Act, JCX-69-17,
    December 22, 2017.

    Data published by the Bureau of Economic Analysis for 2018, the most
    recent year available, show that U.S. companies with global operations
    increased their U.S. capital investment, U.S. employment, U.S.
    compensation, and U.S. R&D at a faster rate than in their foreign
    subsidiaries. Domestic capital investment for these companies grew by
    8.3% while that of their foreign affiliates grew by 0.4%. In addition,
    U.S. multinational companies' growth in domestic capital investment,
    employment, value added, and R&D was above their 20-year average in
    2018, and growth abroad in these factors was below their 20-year
    average.\41\
    ---------------------------------------------------------------------------
        \41\ Bureau of Economic Analysis, ``Activities of U.S.
    Multinational Enterprises, 2018,'' News Release BEA 20- 40, August 21,
    2020, and historical data available at https://apps.bea.gov/iTable/
    index_MNC.cfm.

    There is no empirical evidence to suggest that GILTI or the deduction
    for a 10% normal return have resulted in U.S. companies investing
    abroad rather than in the United States.

     VI. The U.S. should protect its tax base, but estimates of revenue
                        losses from income shifting are vastly overstated,
                        do not reflect current law, and therefore should
                        not give rise to a disproportionate policy response

    Taxpayers rightfully owe U.S. tax on their U.S. income and the United
    States should enforce its laws to ensure that taxpayers cannot shift
    income earned in the United States to other jurisdictions. The most
    effective deterrent to income shifting is a competitive U.S. tax rate.
    Post 2017, the corporate tax rate is at a more competitive level and
    multiple new provisions have been added to prevent taxpayers from
    shifting income offshore, including:

          The new foreign minimum tax, GILTI;
          A new base erosion and anti-abuse tax (``BEAT''), designed to
    attack related-party payments from the United States;
          A tough new limitation on the deductibility of net interest
    expense;
          New anti-hybrid rules to prevent a mismatch between deductions
    and income in cross-border payments; and
          New anti-inversion penalties for a company that inverts.\42\
    ---------------------------------------------------------------------------
        \42\ New anti-inversion penalties include recapture of rate relief
    on previously unremitted foreign earnings, inclusion of cost of goods
    sold payments under BEAT, taxing dividends of such companies at
    ordinary rates, and increasing the excise tax on stock compensation
    paid to top executives of such companies.

    In addition, current law provides a lower rate on foreign-derived
    domestic income (FDII), intended to provide an incentive to attract and
    ---------------------------------------------------------------------------
    retain intangible property in the United States.

    Similarly, other countries are implementing measures as recommended
    under the OECD Base Erosion and Profit Shifting project, including the
    European Union's two Anti-Tax Avoidance Directives.

    Little new data exist to examine the effect of these rules on income
    shifting. The Joint Committee on Taxation recently analyzed 2018
    country-by-country data, covering companies with tax years ending
    between July 2018 and June 2019.\43\ Unfortunately, as noted by the
    Joint Committee on Taxation, the country-by-country data are known to
    suffer from double counting of income--the same income can be reported
    multiple times due to the income of lower-tier foreign subsidiaries
    potentially being included in the income of higher-tier subsidiaries,
    making these data problematic for assessing income shifting.\44\
    ---------------------------------------------------------------------------
        \43\ Joint Committee on Taxation, U.S. International Tax Policy:
    Overview and Analysis (JCX-16-21), March 19, 2021.
        \44\ As noted by Martin Sullivan, ``Under the country-by-country
    reporting regulations, reported profit in a country may or may not be a
    multiple of the actual profit generated in that country. Using this
    data as reported makes effective tax rates appear low and profit levels
    appear high. So what looks like a profit-shifting problem might be
    nothing at all.'' (Sullivan, Economic Analysis: Are Country-by-Country
    Reports Worthless?, Tax Notes International, Jan. 13, 2020). The OECD
    also notes that ``it is likely that profits in the current iteration of
    the CbCR statistics are overstated, in some cases potentially
    substantially.'' (OECD, Important Disclaimer Regarding the Limitations
    of the Country-by-Country Report Statistics, July 2020).

    The 2018 data, the most recent available, also capture only a portion
    of the effect of the current law GILTI provision, as many companies
    have foreign affiliates with tax years that were not subject to GILTI
    until 2019. BEAT also phased in beginning in 2018 at a 5% tax rate,
    increasing to 10% in 2019. Revenue raised by BEAT not only includes
    direct tax payments under BEAT but also additional corporate income tax
    paid by companies that avoid related-party transactions that would give
    ---------------------------------------------------------------------------
    rise to BEAT. Only the former is directly observable.

    Some researchers have used earlier year releases of country-by-country
    data to estimate income shifting, but the double counting of income
    makes these data unreliable for this purpose.\45\ Bureau of Economic
    Analysis data, properly used, can avoid the double counting of income
    but instead may misallocate income from the lower-tier subsidiary that
    generated the earnings to higher-tier holding companies. This
    misallocation is one reason for the disproportionate reported earnings
    in tax havens, where such holding companies are often located.\46\
    ---------------------------------------------------------------------------
        \45\ The UK government blocked the OECD from publishing UK country-
    by-country data, citing the ``distortive effect of the inclusion of
    intragroup dividends,'' which the government stated ``compromise how
    representative and comparable the aggregate CbC [reporting] data is for
    U.K. multinational groups.'' Stephanie Soong Johnston, U.K. Blocking
    OECD From Posting Aggregated CbC Reporting Data, Tax Notes
    International, May 11, 2020.
        \46\ See references in footnote 7.

    Accounting professors Jennifer Blouin and Leslie Robinson have examined
    the misallocation of income in Bureau of Economic Analysis data and
    call it a ``fatal flaw'' in the work of researchers unaware of how this
    affects the reported location of income. As an example, they consider
    the findings of Professor Kimberly Clausing, the current U.S. Treasury
    Deputy Assistant Secretary for Tax Analysis. Blouin and Robinson
    estimate that corrected for misallocation of income, losses to the
    United States are one-tenth the amount estimated by Clausing.\47\
    ---------------------------------------------------------------------------
        \47\ Jennifer Blouin and Leslie Robinson, Double counting
    accounting: How much profit of multinational enterprises is really in
    tax havens? May 20, 2020, available at: https://papers.ssrn.com/sol3/
    papers.cfm?abstract_id=3491451.

    Unfortunately, even this estimate likely overstates the amount of
    income loss to the United States. Clausing's methodology assumes the
    ``excess income'' of low-tax countries was predominantly earned in the
    United States rather than in other high-tax foreign countries in which
    U.S. companies operate; it is not based on any tracing of actual
    transactions between low-tax countries and the United States or other
    countries.\48\ It also ignores the stricter controlled foreign
    corporation rules of the United States than other countries.\49\
    Legitimate, related-party transactions that would be permitted to
    reduce taxes in high-tax foreign countries would fail to reduce U.S.
    tax when conducted between the United States and a foreign affiliate
    due to U.S. Subpart F rules.
    ---------------------------------------------------------------------------
        \48\ Clausing assumes two-thirds of the income in low-tax countries
    is shifted from the United States. See, Kimberly Clausing, Profit
    Shifting Before and After The Tax Cuts And Jobs Act, June 2020,
    available at: https://papers.ssrn.com/sol3/
    papers.cfm?abstract_id=3274827.
        \49\ Professor Hines notes that stricter U.S. rules and better
    enforcement than other countries imply less income is reallocated from
    the United States relative to that from other countries. (Statement of
    James R. Hines, Jr., U.S. Senate, Committee on Finance, How U.S.
    International Tax Policy Impacts American Workers, Jobs, and
    Investment, March 25, 2021.)

    Critical decisions on tax policy should not be made on the basis of
    inaccurate data, nor on data that does not yet allow one to assess the
    effectiveness of recently enacted anti-base erosion provisions in the
    United States and other countries. Raising taxes on the foreign
    operations of U.S. companies on income attributable to functions,
    assets, and risks actually located outside the United States instead
    will make U.S. companies less competitive in the foreign markets they
    ---------------------------------------------------------------------------
    serve, hurting American workers in the process.

                                     ______

                        Letter Submitted by Seth Allison
    I am a proud citizen of the United States of America, and someone who
    has engaged with the political system my entire adult life. I live
    outside the United States in Finland where I am a tax resident and
    where I am subject to full taxation on my worldwide income while
    residing here. I am writing to this committee to ask that relief and
    consideration be given to individuals living abroad. U.S. tax law
    currently treats individuals living abroad (often working very normal
    jobs) as subject to the same oversight and regulation as multinational
    corporations. This makes it extremely difficult to be a U.S. citizen
    and plan for retirement while living or working abroad.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. U.S. regulation imposes many ``invisible taxes'' on
    citizens abroad, where reporting and compliance penalties are so high
    that you are simply locked out of many markets or investment
    opportunities. I will likely retire in Finland, and trying to plan for
    the next 30-40 years in a foreign country is hard enough. But U.S. law
    makes it nearly impossible to have a normal investment/retirement plan,
    despite my best efforts.

    To illustrate how difficult it is simply to plan for retirement,
    consider that:

          I am not able to invest my Finnish's companies 401k equivalent
    retirement fund due to U.S. double taxation, but also I cannot legally
    invest in U.S. mutual funds while abroad, due to U.S. regulation.
          Most European banks and brokerages will not take me as a client
    because FACTA compliance and the risk of sanctions vastly outweigh my
    worth as a retail client.
          Most American banks and brokerages will not take me as a client
    while abroad, due to EU GPDR and other cross-national regulations. This
    also prevents me from buying U.S.-based ETFs--removing index funds from
    potential options.
          I must track taxable events in both countries because generally
    I must pay the worst of the two country's rates to remain compliant.
          FBAR reporting made it difficult to even get my modest mortgage,
    as my local bank was terrified that loaning me money would run afoul of
    unknown/boogeyman U.S. federal or California state law. I had to sign
    affidavits that I did not own any assets in America just to receive a
    mortgage--that's how afraid they are to have normal U.S. citizens as
    clients.
          Despite having no material assets or income from America, I am
    subject to double taxation (3.8% NIIT) on capital gains/dividend income
    from shares in my Finnish company. This means I earn less than my
    coworkers for the same job simply for being American.
          I am subject to double taxation on the sale of my home and other
    assets--despite all of the income being earned and spent in Euros, I
    must track the USD value of my assets which is subject to fluctuating
    exchange rates.
          Even after living 40+ more years in Finland, even if I never
    return to the USA, the IRS can assert estate tax on my entirely Euro-
    earned estate before it passes to my family.
          And all of this I had to discover myself--the complexity of
    expatriate finance means its nearly impossible to find a fiduciary who
    can assist you in both U.S. and EU taxes. I must pay 2 professionals
    and piece together the overlapping feedback because no one can
    reasonably do both expertly.

    Some of these regulations originate from the U.S. or the EU, but all
    could be solved by simply treating Americans abroad as tax residents of
    the country they reside in. This is not simply an issue that is solved
    by Foreign Income Tax Exemptions or Credits--I am happy to pay my fair
    share in taxes. The problem is overlapping restrictions are
    frustrating, limit opportunities, and incentivize highly risky or
    speculative investments simply because it's easier to be individually
    compliant than traditional investments.

    Many solutions are possible here, including several that shouldn't be
    controversial politically:

          Simply allow individuals abroad to be solely tax residents of
    their resident country, as every other major developed economy does.
    Decouple the tax code for foreign individuals vs. multinational
    corporations;
          Add/Raise the minimum income/MAGI limits for FBAR/FACTA/NIIT to
    something more befitting multinational corporations or extremely
    wealthy individuals;
          Modify tax treaties with friendly countries to relax regulation
    on their tax residents while keeping it stringent on nationals from
    more hostile countries.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax
    rate. 9 million U.S. citizens live abroad and we will all be affected
    if you continue to treat us as multinationals corporations. Currently,
    U.S. citizens abroad receive the worst of both worlds and that is not
    befitting the self-proclaimed freest country on earth.

    Thank you for considering my input.

                                     ______

                           American Chemistry Council

                               700 Second St., NE

                              Washington, DC 20002

                                 (202) 249-7000

                       https://www.americanchemistry.com/

    April 8, 2021

    The Honorable Chairman Wyden
    The Honorable Ranking Member Crapo
    U.S. Senate
    Committee on Finance
    Dirksen Senate Office Bldg.
    Washington, DC 20510-6200

            Re: How U.S. International Tax Policy Impacts American Workers,
            Jobs, and Investment--Hearing Thursday March 25, 2021 9:30 am

    Dear Chairman Wyden and Ranking Member Crapo:

    The American Chemistry Council (ACC) represents the leading companies
    engaged in the business of chemistry. ACC member companies apply the
    science of chemistry to create and manufacture innovative products that
    make people's lives better, healthier, and safer. The business of
    chemistry is a $565 billion enterprise and a key element of the
    nation's economy. Over 25% of U.S. GDP is generated from industries
    that rely on chemistry, ranging from agriculture and automotive to
    semiconductors and electronics, textiles, pharmaceuticals, and building
    and construction. Materials and technologies from our industry are used
    to create solutions that enhance sustainability, including electric and
    fuel-efficient vehicles, wind turbines, solar panels, advanced
    batteries, and energy-efficient building materials.

    ACC appreciates the opportunity to submit comments in response to the
    Committee's hearing last week on the effect of the international
    provisions in the Internal Revenue Code on domestic workers, jobs and
    investment. Since 2010, the chemical industry has invested $97 billion
    in new or expanded facilities in the United States. These 229 projects
    are completed and operating. Another 40 projects cumulatively valued at
    $31 billion are under construction, while 80 projects valued at $81
    billion are in the planning phase. This investment in facilities drives
    business and job growth in the United States.

    In light the vigorous discussion during the March 25 hearing, the ACC
    makes the following observations regarding potential changes to the
    international provisions of the Tax Cuts and Jobs Act (TCJA).

    At the outset, it is important to note the OECD and Inclusive Framework
    countries are working toward a deal on Pillars 1 (profit split to
    address the digital economy) and Pillar 2 (controlled foreign company
    rules/global minimum tax). If the United States agrees to a deal on
    Pillar 2 this summer or by the end of 2021, then Congress will be
    required to change many provisions in the TCJA to align with new global
    tax standards. It is therefore premature to recommend and make changes
    to the U.S. international tax system before the outcome of the
    Inclusive Framework negotiations is known.

    Under current law, global intangible low taxed income (GILTI) taxes
    income in excess of 10% of qualified business asset investment (QBAI).
    The purpose of the QBAI exemption is to exempt the ordinary returns and
    tax the income associated with intellectual property. Due to the
    proration of foreign tax credits, the GILTI applies a tax rate of at
    least 13.125%.

    During the hearing, witnesses expressed concerns that multinational
    enterprises (MNEs) could manipulate GILTI and offset high-tax income
    with low-tax income by moving facilities out of the United States.
    There is much confusion about the roles tax departments play in site
    selections for new plants. Contrary to the claims of some witnesses,
    the tax department of a MNE does not select the new location of a
    plant. Business needs drive the location and growth of business, and
    the tax department can play a role in maximizing tax benefits once the
    decision is made. The tax department does not drive site selection. ACC
    is unaware of a U.S. MNE moving a facility abroad in order to obtain a
    GILTI benefit.

    For these reasons, ACC recommends retaining QBAI and the current
    structure and rates for GILTI. Failure to do so will make the United
    States uncompetitive in the bid for manufacturing investment dollars
    and resulting economic benefits. The movement to a full inclusion
    system without deferral would make it more difficult for U.S. MNEs to
    compete abroad for market share.

    If the Committee decides to modify GILTI, it should also address issues
    that will be exacerbated by a country-by-country regime. First, a
    controlled foreign corporation (CFC) should be permitted to carry
    forward tested losses. Failure to do so will undermine the growth of
    U.S. businesses. For example, a chemical company may decide to build a
    greenfield facility in Germany in order to be close to market and to
    minimize shipping costs. If the group does not already have a taxable
    presence in Germany, then the German operations will generate losses
    until the plant is operating and able to turn a profit. Such losses
    should offset future income. Without a carry forward, U.S. businesses
    will be at a competitive disadvantage overseas in pricing in a foreign
    market. Second, Congress should restore the full foreign tax credit for
    GILTI.

    We urge the Committee to consider ways to retain and strengthen the
    foreign derived intangible income (FDII) to encourage businesses to
    export products from the United States. ACC members benefit from FDII,
    which replaced the domestic production deduction (former section 199)
    as an incentive to manufacture in the U.S. for export. FDII supports
    U.S. manufacturing and jobs.

    ACC agrees with the majority of the Committee that the base erosion and
    anti-abuse tax (BEAT) should be revised. It targets behavior that is
    not base erosion (e.g., the Work Opportunity Tax Credit, a domestic
    jobs credit, is treated as base erosion) and is also under-inclusive.
    The cost of goods sold exception (COGs is not treated as a deduction
    for BEAT purposes) is important for ACC, and we urge retention of the
    exception. We welcome the opportunity to work with the Committee to
    create a sensible anti-base erosion regime.

    We look forward to continuing engagement regarding potential changes to
    the TCJA. Our tax code should create an environment in which U.S.
    companies can compete effectively in global markets and ensure
    investment dollars, output, and jobs stay in the United States.

    Sincerely,

    Robert B. Flagg
    Senior Director, Federal Affairs

                                     ______

                            American Citizens Abroad

                          2001 L Street, NW, Suite 500

                              Washington, DC 20036

                            Phone: + 1 540-628-2426

                        Email: info@americansabroad.org

                   Website: https://www.americansabroad.org/

    U.S. Senate
    Committee on Finance
    Dirksen Senate Office Bldg.
    Washington, DC 20510-6200

                   HOW U.S. INTERNATIONAL TAX POLICY IMPACTS
                     AMERICAN WORKERS, JOBS, AND INVESTMENT

    American Citizens Abroad, Inc. appreciates the opportunity to submit
    this statement.

    American Citizens Abroad, Inc. (ACA) is a qualified section 501(c)(4)
    non-profit membership organization, which advocates on behalf of
    Americans abroad. Its sister organization, American Citizens Abroad
    Global Foundation (ACAGF), is a qualified section 501(c)(3) tax-exempt
    public charity, which identifies subjects that affect Americans abroad,
    develops information about these subjects and provides such information
    to Congress, Treasury Department and other relevant persons. ACA and
    ACAGF (collectively, ACA) favor a balanced approach to subjects,
    supporting efforts that provide tangible results and practical
    solutions. ACA is the premier thought-leader on issues affecting US
    citizens living and working overseas.

    Overwhelmingly, attention to the subject of US international tax policy
    and the statutory and regulatory rules that surround this subject
    focuses on corporations and other business entities. Individuals, in
    particular American citizens residing outside the United States, are
    almost always ignored. In the early 1960s, when Congress was enacting
    Subpart F for corporations, it tinkered a bit with rules for
    individuals that had sat in the Code since 1926. When it did work on
    rules for Americans abroad it focused almost solely on the foreign
    earned income exclusion,\1\ which helps US corporations that employ
    expats under agreements to provide for tax equalization. This explains
    why at hearings on the foreign earned income exclusion (section 911)
    witnesses typically represented oil and gas, construction and aircraft
    companies. The day-to-day plight of ordinary Americans living and
    working abroad was not so much front and center.
    ---------------------------------------------------------------------------
        \1\ Section 911, Internal Revenue Code.

    The 2017 Tax Cuts and Jobs Act is a prime example. The focus was
    entirely on moving to rules that would more favorably tax foreign
    source income of US corporations. Broadly speaking, this is referred to
    as a territorial approach. In the final moments of enactment, the
    absence of any action on US individuals was flagged, but it was too
    late to do anything other than say it was something to come back to.\2\
    ---------------------------------------------------------------------------
        \2\ The following House floor colloquy on Nov. 16, 2017 makes the
    point:
        REPRESENTATIVE GEORGE HOLDING: ***As companies begin to see the
    benefits of this new territorial system, I look forward to continue to
    work with the Chairman to explore ways to move towards a residency-
    based taxation system to ensure that American citizens have a level
    playing field around the globe as well. ***
        CHAIRMAN KEVIN BRADY: Mr. Holding, I want to thank you for your
    leadership on this issue. In particular, about international
    competitiveness for our workers. So residence-based taxation is an idea
    we should continue to explore. We'll continue to work on this issue
    with you as leadership, and with that I yield back.
        https://www.c-span.org/video/?c4692161/user-clip-congressman-
    holdings-comment-rbt

    The territorial approach for taxing US companies, not taxing or lightly
    taxing foreign income, is the same thing as residence-based taxation
    (RBT) for individuals. RBT would generally not tax the foreign income
    of individuals truly resident outside the U.S. They would remain
    taxable on US income, and they would remain in the tax system, filing
    ---------------------------------------------------------------------------
    returns and being subject to examination.

    Residence-based taxation is the approach, we believe, followed by every
    other country in the world except for hard-put-upon Eritrea. Certainly,
    all other industrialized countries apply RBT.

    Congress should enact RBT. RBT can be made revenue-neutral,
    extraordinarily tight against abuse, and such that no one is worse off
    under RBT than he or she is under current citizenship-based taxation
    (CBT).

    ACA has described in detail a roadmap of "vanilla" approach to how
    taxing US citizens resident overseas based on residence might be
    structured.\3\
    ---------------------------------------------------------------------------
        \3\ https://www.americansabroad.org/media/files/page/60567bc4/
    residency-based-taxation-aca-side-by-side-comparison-current-law-and-
    vanilla-approach-180420-1600.pdf; https://www.
    americansabroad.org/media/files/files/8c367212/Residency-
    Based_Taxation_Vanilla_Approach
    _171015.pdf.

    ACA, with the help of District Economics Group, has analyzed this so-
    called ``vanilla'' RBT approach.\4\
    ---------------------------------------------------------------------------
        \4\ ACA and DEG continue to update and examine further the baseline
    data. https://www.
    americansabroad.org/media/files/files/dc1e1c4e/
    DEG_short_memo_on_RBT_proposal_11.06.20
    17.pdf.

    On behalf of Americans living abroad, ACA hereby requests that this
    Committee hold a hearing on taxation of Americans abroad and what it
    would mean to adopt residence-based taxation. Ask the Treasury
    Department what it thinks about this as a matter of tax policy. Ask the
    economists at Treasury Department and Joint Committee on Taxation what
    the historical and background information is and what is the baseline
    data affecting this subject. How many Americans abroad are there? How
    many are filing federal tax returns and owe a significant amount of
    tax? What are the income and assets profiles of these individuals? How
    might RBT be structured to be revenue neutral? How might it be made
    very tight against abuse? What are the implications for the US's
    approach to tax havens? What are the implications for exchanges of
    information? How do Americans abroad contribute to the creation of jobs
    ---------------------------------------------------------------------------
    in the US and the export of goods and services from the U.S.?

    Congress, ACA believes, will want soon to revisit portions of TCJA.
    This means the door is ajar for considering residence-based taxation
    for individuals. In the distant past, Congress has always at least
    taken some action with respect individuals when dealing with
    corporations. Congress should not again ignore the Americans abroad.

    Thank you for your attention to this statement.

    Jonathan Lachowitz
    Chairman--ACA

    Charles Bruce
    Chairman--ACAGF

    Marylouise Serrato
    Executive Director--ACA

                                     ______

                      Letter Submitted by Garrett Anderson
    As a U.S. Army veteran, I hear from Americans who do not service
    because they were too busy with their lives, ``Thank you for your
    service.'' That is a disguised attempt to ask forgiveness for their
    selfishness. It is also an admission that they have no idea why anyone
    would serve their country. I serviced the United States of America
    because it was the right thing to do. I did not do it to hear someone
    say, ``Thank you.''

    Right now, I want to say to every member of this committee that your
    continuing actions to backdoor your way into foreign corporations
    because big Fortune 500 corporations are hiding their profits outside
    of the U.S. is a disservice to every American residing outside of the
    United States who runs a small business to make a living. You should be
    ashamed of yourselves.

    My wife is French. I left the Army after six years of active duty and
    moved to France. It is a decision that I do not regret, and I did it
    for love. Moreover, I did not do it because of some crazy idea of
    avoiding U.S. taxes. If that were the case, I would not have
    religiously filled U.S. taxes for over 40 years.

    I have had the pleasure to see firsthand American companies cheat
    France of taxes by moving its French profits to the Netherlands and
    Switzerland. It is a spectacular thing to watch the magic of American
    big business using ``management fees'' from a two-person office in a
    tax haven move millions of dollars away from the country where it was
    made with thousands of customers and hundreds of employees. But that is
    the American way. Aren't you all proud to be Americans who cheat other
    countries of their legitimate tax base?

    Now, you are having hearings to figure out how the United States can be
    the best tax haven for foreign investment while ensuring that American
    corporations do not cheat the U.S. of its part of their profits. The
    only problem is that you, Senators, had no idea what you are doing. You
    are ruining the lives of Americans who do not reside within the borders
    of the United States.

    I had a small one-person consulting business in France. I started it in
    2004. In 2005, I started filling out Form 5471. That damn form takes
    two to four weeks per year to fill out. Moreover, I was filling out the
    same form that Apple and Google have to fill out. Unlike them, I did
    not have the funds to get professional help with this reporting mess.
    (By the way, how many members of the committee fill out their own
    ways?)

    In 2014, I contacted my representative, Susan Davis (D-CA). Of course,
    she cares about tax issues. I had to log my request on her website
    under ``other issues.'' (Oddly, ``women issues'' was listed twice.) The
    answer I got back was hurtful to say the least. She could not help
    because she was not a member of the Ways and Means Committee. Moreover,
    she was really there to help only ``hard-working American families''.
    If I am not chopped liver, then I am at least ``Un-American''.

    Luckily after living in France for over half of my life, I became a
    naturalized France citizen. The naturalization process cost me a lot of
    frustration, but it opened my eyes to how much the United States
    considers itself to be the navel of the world. To get a $20 apostille
    from the State of California, I had to fly to New York to get a money
    order. The government of California did not accept credit card or cash
    payments. It accepted only money orders or checks from U.S. banks. I do
    not have a U.S. bank account because I do not have a residency in the
    U.S. (That is a cute little side-effect of the Patriotic Act.) U.S.
    money orders are not available outside of the United States. Brilliant
    example of stupid governmental procedures. (It is like reading Catch-
    22, again.)

    The TCJA was the last straw for me. When the United States backdoored
    their way into foreign small businesses by being creating FAKE taxable
    income for the American owner, my mind was made up. That is not the
    America that I served. I paid my $2,350 ``punishment'' to State
    Department, stood in front of a bullet-proof window and then swore in
    front of the American flag and a completely disinterested Foreign
    Service officer that I renounced my U.S. citizenship.

    You should be very proud of your incompetence. An American veteran who
    ancestors fought for the United States as far back as the Revolutionary
    War, now needs to get a visa to visit their graves. What you did to me
    is un-American. So, let me say facetiously, ``Thank you for your
    service. I would still be an American citizen if you cared about us and
    did your job with competence.''

    Good luck in your work to Make America The Greatest Tax Haven for
    foreigners at the expense of Americans who live and work abroad. You
    are definitely headed in the right direction.

                                     ______

                       Letter Submitted by Alissa Andrews
    I am a proud citizen of the United States of America. I live outside
    the United States in Australia where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I will be living abroad for
    at least the next several years. I am a tax resident of my country of
    residence. I am required to organize my financial and retirement
    planning in that country. The problem I have is that the U.S. tax laws
    make it very difficult for me to live the same kind of life that my
    friends and neighbours live. You see, they are subject to only one tax
    system. As a U.S. citizen, I am subject to the tax system where I live
    and the U.S. tax system. Those systems are generally not compatible.
    Most attempts at responsible financial/retirement planning where I live
    are frustrated by the need to comply with U.S. tax laws. How can this
    be fair? How can the United States impose taxation on the non-U.S.
    income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the U.S.A. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational''. I am a ``dual-national'' living in
    my country of second residency. It doesn't make me less American. But,
    it does mean that I am subject to the laws of the country where I live.
    I am not GILTI of anything. I ask only to be able to carry on my small
    business and/or my life without interference from the Internal Revenue
    Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God Bless the United States of America!

                                     ______

                         Letter Submitted by Ray Anton
    I am a proud citizen of the United States of America. I live outside
    the United States in New Zealand where I am a tax resident and where I
    am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America in 1995. Although the
    days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad with a kiwi wife and children born both un the U.S. and New
    Zealand. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. As a salaried employee the government collects
    income taxes using a PAYE system (Pay as you Earn) with taxes paid from
    the first dollar and a top marginal tax rate of 39%. I also pay
    additional kinds of taxes such as a 15% Goods and Services Tax (GST) to
    my country of residence, comparable to the sales tax in the U.S.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational''. I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally, the U.S. extraterritorial tax regime makes it difficult
    for me to save, invest, participate in pension plans and generally
    behave in a financially responsible way. This is because all of these
    essential activities are taking place in my country of residence and
    not in the United States. My retirement investments are foreign to the
    United States, but local to me. In addition, the United States impose
    taxes on things (for example sale of principal residence) when my
    country of residence does not. Because I am required to live my life
    with the USD as my functional currency, I am subject to ``fake income''
    on nothing but changes in the exchange rate.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                         Letter Submitted by Ron Aries
    I'm a Dutch citizen living outside the United States in The Netherlands
    where I am a tax resident and where I am subject to full taxation.

    You see I am an ``accidental American''. I was born in the United
    States. My father was a Dutch Air force officer, stationed in New
    Jersey at the time of my birth. As a baby we (my family) returned to
    the Netherlands. I don't remember ever living in the U.S., except for
    some family pictures. My only experience of America is from geography
    lessons during elementary school in the Netherlands, I learned English
    during high school in the Netherlands, and from television, movies and
    an occasional holiday to America. Yet, (at first I couldn't believe
    this could be possible) I am required to file U.S. tax returns and pay
    tax on my non-U.S. income to America. But, it gets worse. I am also
    required to file complex information returns describing the details of
    my finances to the IRS. I can't even understand the forms. How can this
    be? What is the reason for this? No other country does this! I have no
    idea how to comply with the complex tax filing rules imposed on me.
    Also, I can't afford the expensive tax consultants. What am I supposed
    to do? Renounce my U.S. citizenship? I can't even afford the U.S. $2350
    renunciation fee to do so. I simply don't know what to do, I'm at my
    wits end and I can't deal with the stress putting on me and my family.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, simply because of my birthplace I am a U.S. person, I am subject
    to the U.S. extraterritorial tax regime, which means the United States
    imposes taxation on my non-U.S. income even though I am a fully taxable
    on that income in the country where I reside, and do not live in the
    U.S., I have no ties with the U.S. and zero assets in the U.S.. There
    is no other advanced country in the world that imposes such
    extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although I am an individual person,
    a human being, not one single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen? Why are you not willing
    to recognize that human beings should not be treated as entities?

        2.  I was shocked that there was no witness present who experienced
    threats with closure of his/her individual bank accounts in the country
    they live! In fact destroying their personal life, being excluded from
    participation to normal life. No more bank account means not being able
    to receive salary nor pension, no more payments possible for mortgage,
    insurance, medical care etc. Nobody, not one witness, had this personal
    experience. Not a single one! This is outrageous and incomprehensible.
    I respectfully suggest that subsequent hearings include witnesses who
    actually live outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational''. I am a ``dual-national'' citizen
    living in my country of premier citizenship. Due to your tax laws I am
    downgraded to a second class citizen, treated like a pariah in my own
    country. I don't feel American, I'm Dutch, however due to your
    birthright citizenship I am apparently American, so it doesn't make me
    any less American. But, it does mean that I am subject to the laws of
    the country where I happened to be born. I am not knowledgeable of your
    GILTI, FATCA, FBAR, or anything. I only ask to be able to carry on to
    live my life without interference from the Internal Revenue Code of the
    United States. How was I supposed to know about the U.S. practice of
    citizen-based taxation? My Dutch parents certainly weren't aware of
    this (had they been, I would have immediately renounced my unwanted
    U.S. citizenship when I turned 18).

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Even more
    important is the fact that individuals are not immune to the effects of
    raising the U.S. corporate income tax rate and/or doubling the GILTI
    tax or FATCA taxation.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. Again, being denied having a bank account, really
    means, exclusion of a ``normal'' life, thus violating my human rights!
    This is because all of these essential activities are taking place in
    my country of residence and not in the United States. My retirement
    investments are foreign to the United States, but local to me. In
    addition, the United States imposes taxes on things (for example sale
    of principal residence, Capital Gains Tax)) when the Netherlands does
    not. In the Netherlands it is custom that people sell their houses as a
    part of their pension plan! Because I am required to live my life with
    the USD as my functional currency, I am subject to ``fake income'' on
    nothing but changes in the exchange rate. As a tax resident of both the
    United States and my country of residence, I get the worst of both tax
    systems. What one country gives, the other one takes.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. It doesn't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence based taxation.
    Kind regards,

    Ron Aries

                                     ______

                        Letter Submitted by Irene Artuso
    I am a proud citizen of the United States of America. I live outside
    the United States in Canada where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America 33 years ago to marry my
    husband, a Canadian citizen. Although the days sometimes go slowly, the
    years go quickly. I long ago realized that although I will always love
    America, I am living permanently abroad. I am a tax resident of my
    country of residence. I am required to organize my financial and
    retirement planning in that country. The problem I have is that the
    U.S. tax laws make it very difficult for me to live the same kind of
    life that my friends and neighbours live. You see, they are subject to
    only one tax system. As a U.S. citizen, I am subject to the tax system
    where I live and the U.S. tax system. Those systems are generally not
    compatible. Most attempts at responsible financial/retirement planning
    where I live are frustrated by the need to comply with U.S. tax laws.
    How can this be fair? How can the United States impose taxation on the
    non-U.S. income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the U.S.A. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational''. I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God Bless the United States of America!
                      Letter Submitted by Julian E. Asher
    I am a proud citizen of the United States of America. Since 2002, I
    have lived outside the United States in the United Kingdom, where I am
    a tax resident and where I am subject to full taxation.

    I run a small business--a consulting firm focused on sustainability and
    eco-tourism providing advice to governments and NGOs--in the UK. My
    business is not a multinational corporation and all of its income is
    domestic to the country where I live. However, because I am a U.S.
    citizen, the U.S. tax code treats me the same as Apple or Google. If I
    use a local business structure that's treated as a corporation under
    U.S. tax law, then I'm forced to fill in the same form 5471 as Apple
    must complete for each foreign subsidiary--translating all of my
    business records into U.S. dollars even though I do no business in that
    currency. My business is subject to GILTI even though I have no
    intangible income.

    Complying with all these rules costs me thousands of dollars a year.
    How can I compete with my neighbours who are not U.S. citizens and who
    have only one tax system to deal with?

    I'm not a millionaire. I do not live ``offshore.'' I live in a country
    where I pay very high income taxes. I also pay additional kinds of
    taxes (including VAT and corporation tax) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground.

    I understand the need to prevent companies like Apple and Google from
    evading their fair share of tax. However, I am not a ``mini-
    multinational''. I am a small business owner who happens to be a
    ``dual-national'' living in my country of second citizenship. It
    doesn't make me less American. But, it does mean that I am subject to
    the laws of the country where I live. I am not GILTI of anything. I ask
    only to be able to carry on my small business and my life without
    interference from the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    To address this issue, I suggest creating a threshold for the
    application of GILTI and other rules. Small businesses should be exempt
    from rules designed for major multinationals. The Small Business
    Administration's definitions of what constitutes a small business would
    be a useful place to start. This would enable entrepreneurs like me to
    carry on our small businesses and live our lives just like our fellow
    small business owners in the U.S.--which is all we ask.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                   Association of Americans Resident Overseas

                               4 rue de Chevreuse

                              75006 Paris, France

                            Tel: +33 (0)1 4720 2415

                             Website: www.aaro.org

                            Email: contact@aaro.org

                                                          April 7, 2021
    U.S. Senate
    Committee on Finance
    Dirksen Senate Office Bldg.
    Washington, DC 20510-6200

                   How U.S. International Tax Policy Impacts
                     American Workers, Jobs, and Investment

    The Association of Americans Resident Overseas (AARO) welcomes the
    Committee's review of U.S. international tax policy and its impact on
    American workers. Such a review is badly needed, especially in view of
    the damage the current U.S. tax framework has caused to American
    workers, retirees and small business owners resident overseas and their
    families.

    We are aware that Congress plans to revisit the 2017 Tax Cuts and Jobs
    Act (TCJA), focusing mainly on its impact on multi-national enterprises
    (MNEs): the framework for taxing them, applicable rates and the impact
    on federal revenues. MNEs and their employees are important, but they
    are only a subset of the businesses and workers affected by
    international tax policies. We encourage the Committee to broaden its
    work to take full account of the impact of these policies beyond the
    large company sector to avoid inadvertent damage to small business
    owners and overseas American workers and entrepreneurs.

    Congress' immediate task in this regard should be to reverse the damage
    caused by the TCJA itself. For overseas workers, entrepreneurs and
    small businesses this means fixing the Global Intangible and Low Income
    (GILTI) Tax and the so-called ``Transition Tax'' imposed under the
    TCJA. Only a small number of large companies owe meaningful taxes under
    these provisions. But even small amounts of tax and heavy compliance
    costs create a massive burden on large numbers of small businesses
    owned by Americans outside the United States. Congress should fix the
    problems.

    Congress should also take care to ensure that no new provisions
    damaging to small American-owned businesses overseas are introduced
    inadvertently. The Committee can play an important role here by
    insisting that any implementing measures affecting businesses located
    overseas are subjected to a serious regulatory impact analysis and
    ensuring that this is reflected in the measures.

    We strongly encourage Congress to extend its review of policies toward
    international taxation beyond businesses to individuals. Its purpose
    should be to correct the damage caused by longstanding features of the
    tax code and badly targeted enforcement provisions aimed at overseas
    Americans. Most problems would be substantially mitigated by ending
    taxation on the basis of citizenship and respecting international norms
    that would limit the application ofU.S. tax laws to areas over which
    the United States has jurisdiction.

    The most important issues (a broad survey is available on AARO's web
    site \1\) include:
    ---------------------------------------------------------------------------
        \1\ https://www.aaro.org/images/pdf/Talking_Points_End_Citizen-
    based_Taxation.pdf.

          Collective investment instruments (e.g., mutual funds) and
    savings vehicles (e.g., 401[k] plans and IRAs) that are tax favoured in
    the United States, to encourage saving and retirement planning, are
    often targeted punitively by the U.S. tax code when located where their
    American owners resident overseas live. The GAO reported extensively on
    this to Chairman Wyden (then the Ranking Member) on January 31, 2018
    (GAO-18-19 \2\), summarizing the situation well.\3\ Tax treatment of
    these savings instruments and vehicles should be aligned regardless of
    their location.
    ---------------------------------------------------------------------------
        \2\ https://www.gao.gov/assets/gao-18-19.pdf.
        \3\ https://www.aaro.org/images/pdf/Talking_Points_End_Citizen-
    based_Taxation.pdf#page=9.

          Issues of double taxation and irreconcilable inconsistencies
    between U.S. and country of residence tax frameworks remain significant
    problems for many overseas Americans, especially those whose earnings
    are above the earned income exclusion ($108,700 in 2021) specified in
    ---------------------------------------------------------------------------
    Form 2555.

          Americans abroad increasingly encounter extreme difficulties in
    trying to contact the IRS and are left in the dark concerning the
    status of their filing, as they can no longer obtain status
    transcripts.

          Reporting requirements for tax filing are excessively complex
    and time-
    consuming. Skilled, expensive, in many countries bilingual,
    professional assistance is often required. IRS estimates of time
    typically needed by non-resident filers for record-keeping and filing
    are summarized HERE.\4\ To take an example, for a simple 401(k)
    equivalent, deemed to be a foreign employees' trust covered by section
    402(b) of the tax code (thus requiring Forms 3520 and 3520A),
    containing two mutual funds (requiring Form 8621 for each fund), could
    involve more than 160 hours of record-keeping and reporting. This would
    only be a part of the full return.
    ---------------------------------------------------------------------------
        \4\ https://www.aaro.org/images/pdf/Talking_Points_End_Citizen-
    based_Taxation.pdf#page=
    12.

          Multiple reporting requirements for foreign financial accounts,
    applying to both individuals (i.e., FINCEN Form 114 and IRS Form 8938)
    and their local banks (IRS Form 8966), are duplicative, overlapping and
    serve no known useful purpose. In addition, compliance costs to banks
    and the risk of disproportionate penalties have led banks to reject
    American clients on a large scale, making access to the financial
    system, necessary for making payments, one of the most serious problems
    confronting Americans overseas. In 2019 the GAO reported on these
    issues in detail.\5\
    ---------------------------------------------------------------------------
        \5\ https://www.aaro.org/images/pdf/Talking_Points_End_Citizen-
    based_Taxation.pdf#page=
    18.

          The same GAO report (GAO-19-180) also called attention to the
    adverse impact financial reporting requirements were having on overseas
    American workers, jobs and promotion prospects.\6\
    ---------------------------------------------------------------------------
        \6\ https://www.aaro.org/images/pdf/Talking_Points_End_Citizen-
    based_Taxation.pdf#page=
    20.

    As a final point, AARO takes this occasion to reiterate its
    longstanding request that the Committee and the rest of Congress move
    away from its persistent tendency to regard the overseas American
    community through a distorted lens that perceives all Americans living
    outside the U.S. as well as the businesses they might operate as being
    in the same basket as rich individuals who have sought to hide their
    wealth overseas or large and nominally American corporations that have
    used various legal means to minimize their fiscal liability. The vast
    majority of the millions of Americans living and working overseas are
    exactly like the millions living in the United States. Their continued
    stigmatization and subjection to unfair tax policies as a consequence
    is patently unjust and unseemly for a country like the U.S., which is
    committed to the principle of fairness and justice for all its
    ---------------------------------------------------------------------------
    citizens.

    Although AARO is committed to the larger goal of ending the current
    system of citizenship- based taxation, it calls, in this instance, for
    a careful and well-studied examination of the real challenges facing
    American small businesses and entrepreneurs overseas. Americans who
    moved overseas did not lose their citizenship as a result of doing so.
    It is wrongheaded for Congress to inflict punitive measures on everyone
    due to understandable concern about the illegal or questionable
    practices of a few. Justice and fairness demand better.

    We thank the Committee for the opportunity to comment on these
    important issues.

    Paul Atkinson
    Chair, Banking Committee

    Fred Einbinder
    Vice-President for Advocacy

    William Jordan
    President

                                     ______

                      Letter Submitted by Elizabeth Austin
    I am a proud citizen of the United States of America. I live outside
    the United States in France where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                         Letter Submitted by V.K. Baker
    I am a citizen of the United States of America. I live outside the
    United States in Europe where I am a tax resident and where I am
    subject to full taxation.

    I am an American expat. I have been living outside the United States
    for reasons of work and career advancement. When I first moved abroad I
    learned a lot. I learned that other countries have well developed tax
    systems that require payment of a wide range of taxes. I can tell you
    that I pay a lot of taxes. I can also tell you that the U.S. tax system
    treats my non-U.S. income and assets very unfairly. The fact that I am
    temporarily living abroad doesn't mean that I don't have to plan for
    retirement.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    If such unjust laws continue for U.S. expats abroad, I (like many
    others) will be forced to renounce my U.S. citizenship.

                                     ______

                        Letter Submitted by Amy Balcerak
    I am a proud citizen of the United States of America. I live outside
    the United States in Switzerland, where I am a tax resident and where I
    am subject to full taxation.

    I am an American expat. I am temporarily living outside the United
    States for reasons of work and career advancement. When I first moved
    abroad I learned a lot. I learned that other countries have well
    developed tax systems that require payment of a wide range of taxes. I
    can tell you that I pay a lot of taxes. I can also tell you that the
    U.S. tax system treats my non-U.S. income and assets very unfairly. The
    fact that I am temporarily living abroad doesn't mean that I don't have
    to plan for retirement.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                    Letter Submitted by Wendy O. Barbellion
    I am a proud citizen of the United States of America. I live outside
    the United States in France where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America 52 years ago. Although
    the days sometimes go slowly, the years go quickly. I am very attached
    to my American roots, but I happened to marry a French national in
    1972, and acquired French nationality at that time.

    I have been a tax resident of France for those 52 years. I am required
    to organize my financial planning in that country. The problem I have
    is that the U.S. tax laws make it very difficult for me to live the
    same kind of life that my friends and neighbours live. You see, they
    are subject to only one tax system. As a U.S. citizen, I am subject to
    the tax system where I live and the U.S. tax system. Those systems are
    generally not compatible. My husband and I file our French taxes
    jointly, but I have to file my U.S. taxes ``married filing
    separately''. Most attempts at responsible financial planning where I
    live are frustrated by the need to comply with U.S. tax laws. How can
    this be fair? How can the United States impose taxation on the non-U.S.
    income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States?

    I have no financial nor other assets in the U.S. I am not eligible for
    U.S. social security. I do not live ``offshore.'' I do live in a
    country where I pay very high income taxes. I also pay additional kinds
    of taxes (example VAT) to my country of residence. This creates double
    taxation, as these indirect taxes are not eligible for tax credits.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside. There is no other advanced
    country in the world that imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save and
    invest. This is because all of these essential activities are taking
    place in my country of residence and not in the United States. My
    retirement investments are foreign to the United States, but local to
    me. In addition, the United States impose taxes on things (for example
    sale of principal residence) when my country of residence does not.
    Because I am required to live my life with the USD as my functional
    currency, I am subject to ``fake income'' on nothing but changes in the
    exchange rate. As a tax resident of both the United States and my
    country of residence, I get the worst of both tax systems. What one
    giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                  Letter Submitted by William Michael Barkley
    I am a proud citizen of the United States of America. I have been
    living in Canada for 52 years now, all my children live here. I am a
    tax resident in Canada and I am subject to full taxation.

    Yes, I am an emigrant from America. I love America, my entire extended
    family before 1969 live in the U.S.. I am the only one who moved away.
    But, we never know where life will take us or why. Although the days
    sometimes go slowly, the years go quickly. I long ago realized that
    although I will always love America, I am living permanently abroad.

    I am a tax resident of my country of residence. I am required to
    organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. They
    are subject to only one tax system. As a U.S. citizen, I am subject to
    the tax system where I live and the U.S. tax system. Despite various
    tax treaties those systems are generally not compatible. Most attempts
    at responsible financial/retirement planning where I live are
    frustrated by the need to comply with U.S. tax laws. How can this be
    fair? How can the United States impose taxation on the non-U.S. income
    and assets of a person who is a tax resident of another country--with
    no economic connection to the United States? I have no property,
    business interests or bank or investment accounts in the United States.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional taxes such as property and
    Harmonized Sales Taxes to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in Canada and do not live in the United States. There is no
    other country in the world, except for Ethiopia, that imposes such
    extraterritorial taxation.

    Let me also speak for my two daughters who were born in Canada and have
    never lived in the U.S. but are accidental U.S. citizens. They make
    around $50,000 a year and have to submit their 1040's every year,
    costing them $400.00 each to have them prepared properly. They will
    never pay U.S. taxes but are forced to submit an annual return just
    like I do. This is money they do not have. This is absolutely crazy.

    Let me add one more thing to this. In all the years I have lived here I
    have never made enough money or been in any financial situation where I
    would have been required to pay U.S. taxes, yet every year I pay to
    have these complex tax returns filed. In today's dollars I have paid
    over $20,000 for tax return preparation for what? So you can hire more
    civil servants to review forms that will always show no tax payment
    required.

    Many of my American friends are fed up and have renounced their
    citizenship. It is sad for them as they have renounced their heritage
    simply because the U.S. considers itself exceptional and refuses to
    adopt residence-based taxation like the rest of the world.

    I would also like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. So as
    President Biden would say ``so, here's the thing . . .'' the reality
    is: U.S. tax rules treat individuals living outside the United States,
    the same way they treat U.S. multinationals doing business outside the
    United States. Although, I am jar and individual person, not a single
    hearing participant recognized how individuals are affected by these
    rules. Yet, the focus of the hearing was supposed to be about
    individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States as a non-business owner.

    I am not a ``mini-multinational.'' I am a ``dual-citizen'' living in
    Canada. It doesn't make me less American. But, it does mean that I am
    subject to the laws of the country where I live. I am not GILTI of
    anything. I ask only to be able to carry on my life without
    interference from the Internal Revenue Code of the United States.
    Following the Canada Revenue Tax Code is plenty.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States,
    especially those that are running small business with no financial or
    other connection to the USA. Individuals are not immune to the effects
    of raising the U.S. corporate income tax rate and/or doubling the GILTI
    tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and Canada, I get the worst of both tax systems. What one
    giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thanks you for listening and God bless the United States of America!

                                     ______

                      Letter Submitted by Shon M. Barnett
    I am a proud citizen of the United States of America. I live outside
    the United States in Canada where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure, I love America. But we never know
    where life will take us. I moved from America 39 years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I did not move away from the USA to dodge taxes as has been
    falsely stated by experts in prior hearings to explain the need to
    monitor U.S. expats. The thought of rescinding my U.S. citizenship has
    never entered my mind. I am a tax resident of my country of residence.
    I am required to organize my financial and retirement planning in that
    country. The problem I have is that the U.S. tax laws make it very
    difficult for me to live the same kind of life that my friends and
    neighbours live. You see, they are subject to only one tax system. As a
    U.S. citizen, I am subject to the tax system where I live in addition
    to the U.S. tax system. Those systems are generally not compatible.
    Most attempts at responsible financial/retirement planning where I live
    are frustrated by the need to comply with U.S. tax laws. I cannot take
    advantage of legal retirement planning in Canada because it doesn't
    always apply to U.S. tax law. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic benefit from
    the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay many additional kinds of taxes (examples
    GST and PST) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation. On top of all that, there is the annual
    requirement to file duplicate documents to the Treasury for all my
    banking transactions, reporting all financial account information as
    well as assets. FATCA and FBAR requires financial reporting with
    onerous penalties and it is costly to provide all this information
    annually. My bank account information is reported to the Treasury by
    the Canadian government (IGA) for all my financial accounts as though I
    am a criminal. The U.S. has the power to gather that info if they have
    suspicion of criminal activity. Why must an expat be required to do
    this? How would any U.S. resident citizen react to being monitored like
    this by the government?

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and Canada I get the worst of both tax systems. What one giveth,
    the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! A tax Treaty
    with another country doesn't mean that taxes aren't paid in both
    countries even though it is intended to eliminate double taxation. A
    dividend paid in one country isn't treated the same in both countries.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.
    In past hearings there has been the accusation that people leave the
    U.S. in order to avoid paying taxes. Try coming to Canada and paying
    less tax than you pay in the U.S. . . . people don't move here to avoid
    taxes.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation. Taxes collected probably don't cover the
    expense of administering the extraterritorial tax regime.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Daniel Baron
    My comments are related to FATCA.

    False perception among U.S. lawmakers: Of 9 million Americans living
    abroad, most are not in the ``wealthy'' category. Living in Tokyo does
    not mean I am a ``wealthy expat.'' I am not wealthy. My American
    friends in Japan are also not wealthy.

    FATCA hinders American citizens in conducting business: Not a single
    U.S. bank has a retail banking operation in Japan. Japanese banks are
    free to refuse U.S. citizens for accounts or to close existing
    accounts. It is nearly impossible for U.S. citizens to get a credit
    card in Japan due to required declaration of U.S. citizenship. This
    also affects loan applications. Being a U.S. citizen has created a two-
    tier foreign community: the ``untouchable'' Americans and rest of
    world.

    Unreasonable filing requirements: annual U.S. tax filing documents are
    a convoluted tangle of technical lingo and impossible to complete
    correctly without a tax specialist. Even though I owe no tax every
    year, I am forced to pay a consultant approximately $1,200 to prove it.
    There is no legal justification for imposing on citizens an obligation
    that can not be fulfilled without significant financial burden. The
    U.S. should adopt residence based taxation, with a single page document
    for annual IRS filing.

    Nine million U.S. citizens abroad represent invaluable soft brand
    power: Brand America benefits immeasurably from the daily contacts that
    Americans have with locals in their adopted country. We are the
    ambassadors on the ground who create long-lasting bonds of trust, who
    inspire young people to travel or study in the U.S., who help cultivate
    business and cultural ties. Collectively, we are an asset that the U.S.
    Government should value. It is in the country's own interest to ensure
    that U.S. citizens can thrive abroad and are not penalized by misguided
    legislation like FATCA. The U.S. should find a smarter way to go after
    tax criminals and stop punishing average citizens for being Americans.

    Thank you for the opportunity to submit my thoughts.

    Daniel Baron

                                     ______

                     Letter Submitted by Claude Beauregard
    I am a proud citizen of the United States of America. I live outside
    the United States in Canada where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Alice Beberman
    I am a proud citizen of the United States of America. I live outside
    the United States in --Scotland UK where I am a tax resident and where
    I am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbors live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

    Alice Beberman

                                     ______

                       Letter Submitted by Nathan E. Beck
    I am a proud citizen of the United States of America. I live outside
    the United States in the Czech Republic where I am a tax resident and
    where I am subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (VAT, local
    real estate taxes, etc.) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income. I must pay U.S. tax even though I am a
    fully taxable on that income in the country where I reside, and do not
    live in the United States. I do work for an American 501(c)3 tax-exempt
    charitable organization, but also run two businesses in Czech in order
    to comply with local taxation laws (per the U.S.-Czech Totalization tax
    treaty). There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States the same way they treat U.S. multinationals doing
    business outside the United States. Although I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business outside the
    USA. Not a single one! This is crazy. I respectfully suggest that
    subsequent hearings include witnesses who have experienced running
    businesses outside the United States and/or actually living outside the
    United States. To put it another way: Subsequent hearings should deal
    with the reality on the ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am an American citizen, and all my
    children are ``dual-nationals'' living in the country of their second
    citizenship. It doesn't make me or my children less American. It does
    mean that we are subject to the laws of the country where we live. When
    I took my teenage daughters to open their first bank accounts, I had to
    explain U.S. reporting requirements for these accounts and the IRS tax
    filing requirements on their part-time student jobs that none of their
    peers have. We are not GILTI of anything. We ask only to be able to
    carry on our small business and/or live our lives without interference
    from the Internal Revenue Code of the United States.

    In addition, the Internal Revenue Service cannot even keep up with
    current service to Americans residing abroad. As Americans residing
    abroad and paying Social Security taxes to another country, we are
    required to file paper tax returns. The IRS delay in processing paper
    returns is currently extreme and is not improving. I am still waiting
    for both my 2019 and 2020 tax refund from the IRS (my 2020 tax return
    was filed one month ago). If the IRS cannot maintain the ability to
    process tax returns in a timely manner that U.S. tax code requires,
    then why tax Americans residing abroad?

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    The majority of my bank accounts and savings are foreign to the United
    States, but local to me. In addition, the United States imposes taxes
    on things (for example, sale of principal residence) when my country of
    residence does not. Because I am required to live my life with the USD
    as my functional currency, I am subject to ``fake income'' on nothing
    but changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems.

    And please don't believe that Foreign Tax Credit and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. The time has come for the United States to
    abandon its extraterritorial tax regime and join the rest of the world
    in adopting a system of residence-based taxation.

    God bless the United States of America!

                                     ______

                      Letter Submitted by Michael Benedict
    I am a U.S. citizen living in Canada where I am a tax resident and
    subject to full taxation, twice. Once to Canada where my earnings and
    savings are and then again in the U.S. where my earnings and savings
    are not.

    Most attempts at responsible financial/retirement planning where I live
    are frustrated by the need to comply with U.S. tax laws. How is it fair
    to tax non-U.S. income and assets of a person who is a tax resident of
    another country--with no economic connection to the United States?
    There is no other advanced country in the world that imposes such
    extraterritorial taxation.

    The U.S. extraterritorial tax regime makes it difficult for me to save,
    invest, participate in pension plans and generally behave in a
    financially responsible way. In addition, the United States imposes
    taxes on things (for example sale of principal residence) when my
    country of residence does not.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Yours truly,

    Michael Benedict

                                     ______

                        Letter Submitted by Diane Benny
    I am a proud citizen of the United States of America. I have lived
    outside of the United States in England for 40 years. My move to the UK
    was prompted by my marriage to a UK citizen. I have worked in the UK
    for the majority of my adult life, for UK companies such as the BBC.
    For the past 10 years I have been self-employed. I am a tax resident in
    the UK subject to full taxation.

    I feel blessed to have an American heritage and upbringing, and I will
    always love America. I long ago realized that due to my marriage to a
    UK citizen I would be living outside of America permanently. I am a tax
    resident of my country of residence. I am required to organize my
    financial and retirement planning in that country. The problem I have
    is that the U.S. tax laws make it very difficult for me to live the
    same kind of life that my friends and neighbours live. While they are
    subject to only one tax system, I, as a U.S. citizen, am subject to the
    tax system where I live and the U.S. tax system. Those systems are
    generally not compatible, and even worse, the U.S. tax system is highly
    complex and difficult for an ordinary person like myself to understand.
    This complexity particularly affects my options for making responsible
    financial/retirement plans. I have had to engage expensive accountants
    to ensure that my tax returns to both countries are done correctly--I
    am terrified of making an error on my returns due to not fully
    understanding what the IRS requires from me as a resident of the UK. I
    understand that errors can (and will) result in very steep financial
    penalties. I also need expert tax guidance to ensure that I don't
    unwittingly get hit with double taxation, and to provide information on
    U.S. tax implications for specific common actions such as selling my
    primary residence, or cashing in an ISA (neither of which are taxable
    in the UK).

    I am planning to stop working at some point this year and will have to
    rely on a small, fixed pension as my only regular income source. The
    cost of engaging accountants every year to guide me through the complex
    U.S. tax system will severely eat into that income, which is all the
    more frustrating in that I usually don't owe a cent of U.S. tax! In
    addition to the extra expense of hiring tax experts for my tax returns,
    the requirements for producing the FBAR each year is time-consuming and
    causes a great deal of anxiety. For these reasons I am starting to
    seriously look into the option giving up my U.S. citizenship. As
    heartbreaking as this would be for me, I cannot afford financially or
    mentally to be at the mercy of the U.S. tax system when I am not a U.S.
    resident. The U.S. tax system is incredibly difficult to understand,
    and does not take into account the impact many of the tax laws have on
    citizens who, like myself, live outside of the United States. It seems
    as if we are being penalised for the fact that we are not U.S.
    residents. The current U.S. system of citizenship-based tax is totally
    unfair. How can the United States impose taxation on the non-U.S.
    income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                     Letter Submitted by Charlotte Berwick
    I am a proud citizen of the United States of America. I live outside
    the United States in the United Kingdom where I am a tax resident and
    where I am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America as a child. Although the
    days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. As a doctor qualified outside of the U.S., I could not return
    without a huge number of professional examinations, at great time and
    expense, so I am unable to return for that reason also. I am married to
    a non-U.S. citizen and have built a life in the UK. I am a tax resident
    of the UK. I am required to organize my financial and retirement
    planning in that country. The problem I have is that the U.S. tax laws
    make it very difficult for me to live the same kind of life that my
    friends and neighbours live. You see, they are subject to only one tax
    system. As a U.S. citizen, I am subject to the tax system where I live
    and the U.S. tax system. Those systems are generally not compatible.
    Most attempts at responsible financial/retirement planning where I live
    are frustrated by the need to comply with U.S. tax laws. How can this
    be fair? How can the United States impose taxation on the non-U.S.
    income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I ask only to be able to carry on my life without interference
    from the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                      Letter Submitted by A. Julie Beyers
    I am a proud citizen of the United States of America, but I have made a
    permanent home in Australia where I am a tax resident and where I am
    subject to full taxation.

    I moved from the United States over 16 years ago and permanently made
    Australia home to be with the person to whom I am now married. I chose
    to be with the person I love rather than stay in the country I love
    (America), and now I have a wonderful family and two countries that I
    love. While I will always love America, I do consider Australia to be
    my permanent home--the country where my children will grow-up and the
    country in which I will retire. While I am richer in experience from
    living in two countries, I am poorer when it comes to the consequences
    of the USA's extraterritorial taxation scheme.

    Obviously, I am a tax resident of Australia as it is my country of
    residence. I am required to organize my financial and retirement
    planning in Australia. The U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live, and
    force me to face complexities and worries that only Americans who have
    made homes outside of America have to deal with; the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not--but my country of residence taxes other investments such as
    capital gains on shares at a higher rate than the USA which means I get
    the worst of both tax regimes. In addition, because I am required to
    live my life with the USD as my functional currency for tax reporting
    purposes, I am subject to ``fake income'' on nothing but changes in the
    exchange rate.

    As a tax resident of both the United States and Australia, I face the
    harshest impact of both tax systems. And the foreign tax rules and/or
    the Foreign Earned Income Exclusion do not solve these problems. I
    stress every tax time (which is 2/year--June for Aus taxes and
    December for USA taxes). I spend a fortune on an accountant well-versed
    in both systems as I fear ``getting it wrong.''

    What I would like is to be like other Australians, which is subject to
    only one tax system. The USA tax system and the Australian tax system
    are generally not compatible. Most attempts at responsible financial/
    retirement planning where I live are frustrated by the need to comply
    with U.S. tax laws. How can this be fair? How can the United States
    impose taxation on the non-U.S. income and assets of a person who is a
    tax resident of another country--with no economic connection to the
    United States? No other advanced country in the world imposes
    extraterritorial taxation in the harsh way that the USA does.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is not responsible
    nor is it just. I respectfully suggest that subsequent hearings include
    witnesses who have experienced running businesses outside the United
    States and/or actually living outside the United States. To put it
    another way: Subsequent hearings should deal with the reality of the
    many ``average Joes and Josephines'' who have made their permanent home
    outside of America and not some theoretical impact (aka
    ``speculation'').

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. I ask only to be able to carry on my
    life having to take into account the taxation system of my country of
    permanent residence (Australia).

    Bottomline, the current USA system of extraterritorial taxation on
    individuals who have permanently made another country home is extremely
    unjust. For many years, Americans abroad have been attempting to get
    both Treasury and Congress to address these issues. The time has come
    for the United States to abandon its extraterritorial tax regime and
    join the rest of the world in adopting a system of residence-based
    taxation.

    Thank you for your time.

                                     ______

                      Letter Submitted by Lena Bickerstaff
    I am a proud citizen of the United States of America. I live outside
    the United States in--Sweden--where I am a tax resident and where I am
    subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Nina Blackwell
    To Whom it May Concern:

    I am a citizen of the United States of America. I live outside the
    United States in Australia where I am a TAX RESIDENT and where I am
    subject to FULL TAXATION. I have no financial holdings or interest
    whatsoever in the United States.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes and thus receive the care, protection and benefits of
    my ``home'' country. I receive no benefits from the United States. I
    also pay additional kinds of taxes (example VAT) to my country of
    residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational''. I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    Please do not believe that foreign tax rules and/or the Foreign Earned
    Income Exclusion solve these problems. They do not!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Respectfully,

    Nina Blackwell

                                     ______

                         Letter Submitted by Joan Blore
    I am a proud citizen of the United States of America. I live outside
    the United States in England where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25tnh.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or life my life without interference from the
    Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                     Statement Submitted by Jennifer Blouin

                 The Wharton School, University of Pennsylvania

                                3620 Locust Walk

                             Philadelphia, PA 19104

                                  215-898-1266

                                      and

                                Leslie Robinson

                   Tuck School of Business, Dartmouth College

                                 100 Tuck Drive

                               Hanover, NH 03755

                                  603-646-4018

    I. EXECUTIVE SUMMARY. As financial accounting experts working on tax
    policy issues, we provide our insights on the effect of accounting
    standards on U.S. national statistics that measure country-level U.S.
    multinational company (``MNC'') activity. We emphasize that these
    statistics, which are commonly used in empirical studies that inform
    international tax policy, are frequently misinterpreted by the research
    community.\1\ These misinterpretations generate overstated estimates of
    U.S. MNC income in tax havens as well as the loss of U.S. corporate tax
    revenue from profit shifting. When the financial data are interpreted
    correctly, a commonly cited estimate of the U.S. tax revenue loss drops
    from 30-45% to 4-8% of U.S. corporate tax revenue.\2\
    ---------------------------------------------------------------------------
        \1\ E.g., see Clausing 2009, 2011, 2016, 2020. Multinational Firm
    Tax Avoidance and Tax Policy, 62(4) National Tax Journal 703-725
    (2009); The Revenue Effects of Multinational Firm Income Shifting, Tax
    Notes (March 28, 2011) 1580-1586; The Effect of Profit Shifting on the
    Corporate Tax Base in the United States and Beyond, 68(4) National Tax
    Journal 905-934 (2016); Profit Shifting Before and After the Tax Cuts
    and Jobs Act, 73(4) National Tax Journal 1,233-1,266 (2020). Note that
    these measurement issues are not isolated to U.S. national statistics.
    Any data source that attempts to measure MNC income (and assets) by
    country is impacted by accounting standards.
        \2\ See Blouin and Robinson (2020), Double Counting Accounting: How
    Much Profit of Multinational Enterprises Is Really in Tax Havens?,
    https://papers.ssrn.com/sol3/papers.
    cfm?abstract_id=3491451.

    ---------------------------------------------------------------------------
    Based on our concerns, we have three recommendations for policymakers:

    (1)  Do not rely on existing estimates of the U.S. corporate tax
    revenue loss from profit shifting, or on estimates of changes in profit
    shifting after the 2017 tax reform, to make important tax policy
    decisions without considering the measurement issues we raise;
    (2)  Involve financial accounting experts in the design, collection and
    analysis of cross- country operating and financial data to inform tax
    policy;
    (3)  Before making important policy decisions, reconcile measures of
    economic activity across U.S. national statistics data and Treasury
    data.\3\ Be skeptical when two data sources that purport to measure the
    same constructs indicate widely different levels of MNC business
    activity within and across countries.
    ---------------------------------------------------------------------------
        \3\ The Bureau of Economic Analysis or BEA collects and
    disseminates U.S. national statistics.

    II. WHAT INFORMS TAX POLICY? Empirical research plays two key roles in
    policy settings. First, the research informs policy makers of the
    salience of the issue being considered. In the context of tax policy,
    this would include insights into the tax revenue raised or lost from an
    existing policy in a representative population of taxpayers. Second,
    the research should provide feedback about actual or contemplated
    changes in a policy. This type of research should inform policy makers
    of the consequences of reform, whether it be implications for tax
    revenue or changes in behavior. This empirical work is difficult
    because it must isolate the effects of tax policy on behavior in the
    ---------------------------------------------------------------------------
    presence of many confounding factors.

    To guide international tax policy decisions, researchers must measure
    three key constructs. First, we need the aggregate amount of worldwide
    activity (e.g., income, assets, employment). Second, we need the amount
    of activity occurring in each individual country (domestic and
    foreign), paying particular attention to tax haven countries. Third, we
    need the tax rates faced by MNCs in the U.S. and in each foreign
    country. With these measures, a researcher can plausibly assess the
    role of tax policy on the location of MNCs' employment, income and
    investment. In a carefully constructed analysis, a researcher may also
    estimate the effects of tax policy changes on revenue.

    Unfortunately, several prominent economic studies fail to understand
    how accounting standards affect the data used to measure MNCs'
    activities. We describe how researchers' misunderstanding influences
    the measurement of the income and tax rates of U.S. MNCs' foreign
    affiliates. We begin by reproducing the figure from Dr. Clausing's
    testimony in Fig 1.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The solid lines indicate the share of U.S. outward direct
    investment income (DII) reported by the Bureau of Economic Analysis
    (BEA) in Bermuda, Caymans, Ireland, Luxembourg, Netherlands, Singapore
    and Switzerland.\4\ Many researchers mistakenly rely on DII as a
    measure of U.S. MNC income generated solely within the BEA-reported
    jurisdiction. However, as explained in Section III below, DII often
    captures U.S. MNC income in more than one country. To Fig. 1, we add
    dashed lines using the correct measure of U.S. MNCs' jurisdiction-
    specific income, adjusted pre-tax income. Note that DII overstates
    income earned in those seven tax haven countries as a share of GDP in
    the year just prior to the 2017 tax reform by 67%.
    ---------------------------------------------------------------------------
        \4\ Note that 2018 and 2019 are preliminary data. Also, Clausing
    (2020) uses preliminary data from 2017 to estimate U.S. revenue loss.
    There are frequent and sometimes significant revisions to preliminary
    BEA data. For example, preliminary DII in 2017 was reported as $471
    billion while revised data was reported as $519 billion. Another
    example is that the estimate of U.S. revenue loss in Clausing (2016) of
    $111 billion using preliminary data for 2012 is $102 billion using
    revised data for 2012. The BEA posts regular updates on its website to
    alert researchers when preliminary data is replaced with revised data:
    https://apps.bea.gov/iTable/index_
    MNC.cfm Dr. Clausing frequently uses preliminary BEA data in her
    research.

    In Fig. 2 we contrast three measures of income taken from BEA data, as
    a share of GDP: (1) pre-tax income, (2) DII, and (3) adjusted pre-tax
    income.\5\ The latter measure, indicated by the bottom dashed line in
    Fig. 2 corresponds to the ``Share of GDP (Corrected)'' line shown in
    Fig 1. In Dr. Clausing's work on profit shifting published in 2009,
    2011, 2016, and 2020, she fails to recognize that adjusted pre-tax
    income correctly captures the amount and location of U.S. MNCs' foreign
    affiliate income.\6\ Fig. 2 reveals that the income measures used by
    Dr. Clausing significantly overstate income in tax havens. For example,
    in 2016, a period preceding tax reform, one of Dr. Clausing's preferred
    measures overstates income as a share of GDP by 310%.
    ---------------------------------------------------------------------------
        \5\ We provide the details of these three measures of income using
    an example in Section III.
        \6\ It is important to note that DII used to produce Fig. 1 from
    her testimony is DII reported by the BEA--``DII (BEA).'' In all of Dr.
    Clausing's research prior to the 2017 tax reform, she mistakenly used
    the inflated measure of DII shown in Fig. 2--``DII (Clausing).''
    Although she notes this mistake in Clausing (2020) she does not share
    the effect of this faulty adjustment on the magnitude on her previous
    estimates of U.S. revenue loss.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Misunderstanding the data not only leads researchers to overstate
    the amount of MNC income in tax havens, it mechanically leads to
    greatly exaggerated estimates of the effects of profit shifting.
    Following Dr. Clausing's methodology from Clausing (2016) but
    incorporating the correct measure of income, Fig 3. shows that her
    estimates are extremely sensitive to the BEA measure of income that she
    chooses. Our replication of Clausing (2016) confirms a U.S. revenue
    loss in 2012 between $77 and $111 billion using her preferred income
    measures--pre-tax income and her inflated DII (the top two lines
    showing in Fig 2). When we use DII without making Dr. Clausing's
    adjustment, or the correct income measure to study profit shifting, the
    estimate drops to $43 and $10 billion, respectively. Despite
    recognizing the faulty adjustment to DII, she continues to reference
    the inflated $77 billion estimate from Clausing (2016) in her current
    ---------------------------------------------------------------------------
    work.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     In Fig. 3, we also extend our replication analysis for 2012 to show
    the (hypothetical) trajectory of Dr. Clausing's estimates through 2017
    (the top two bold lines in Fig 3). Note that if she had continued to
    use her preferred income measures and methods from Clausing (2016), she
    would estimate a U.S. revenue loss in 2017 of between $154 billion and
    $168 billion. We note that this amount is more than half of U.S.
    corporate tax revenue collected in 2017. The estimate using the correct
    income measure, adjusted pre-tax income, would be $26 billion.\7\
    ---------------------------------------------------------------------------
        \7\ Note that estimates using adjusted pre-tax income and DII will
    become more similar over time if U.S. MNCs change their ownership
    structures to become ``flatter''--i.e., with more foreign affiliates
    directly owned by the U.S. parent (you can see this in our examples in
    Section III). Anecdotally, this already happening in U.S. MNCs. This is
    important because estimates of profit shifting over time using DII data
    will decline as MNCs alter their ownership structures to become
    flatter, not because they decrease their profit shifting per se.
    Adjusted pre-tax income data, in contrast, is not influenced by
    ownership structure decisions.

    It is very difficult for a casual reader of Dr. Clausing's work to
    reconcile Fig. 3 to her ``preferred estimate'' of ``over $100 billion''
    of 2017 corporate tax revenue lost to profit shifting described in
    Clausing (2020) and in her Senate testimony.\8\ Unfortunately, the
    headline results from Clausing (2016) and Clausing (2020) are not
    comparable because they are each generated using different data and
    methods.\9\
    ---------------------------------------------------------------------------
        \8\ At least one other paper cited in Dr. Clausing's testimony as
    supporting the $100 billion amount has also misinterpreted the role of
    accounting standards in the estimate of revenue lost to profit
    shifting. The other two papers cited by Dr. Clausing provide an
    estimate of the revenue lost across all 34 OECD nations not just the
    U.S.
        \9\ Interested readers can request an Excel file from the authors
    that reconciles the data and methods used in Clausing (2016) and
    Clausing (2020). The $100 billion estimate is obtained under a precise
    combination of data and methods in 2017 that do not correspond to any
    combination of data or methods she used previously.

    III. MEASURING U.S. MNC ACTIVITY BY COUNTRY. This section provides a
    simple example to illustrate why adjusted pre-tax income is the correct
    BEA measure of income to study profit shifting. At the same time, this
    example will make clear why pre-tax income and DII are not appropriate
    ---------------------------------------------------------------------------
    for studies on profit shifting.

    Consider a hypothetical MNC as shown in Fig. 4.

    The U.S. parent directly owns the stock of a subsidiary in the
    Netherlands that generates $60 of pre-tax income from its Dutch
    operation. After-tax income is $45 with an effective tax rate of 25%
    (15 tax/60 pre-tax income). This Dutch entity in turn directly owns the
    stock of a German subsidiary. The German entity generates $400 of pre-
    tax income from its German operation. After-tax income is $280 with an
    effective tax rate of 30% (120 tax/400 pre-tax income). The German
    entity pays a $10 dividend to its parent company in the Netherlands.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     In aggregate, the foreign pre-tax income of this U.S.-based MNC is
    $460, tax is $135, and after-tax income is $325. Due to the direct
    ownership of the German affiliate by the Dutch affiliate, accounting
    rules require the Dutch entity to account for the German entity's
    operations in its books and records.\10\
    ---------------------------------------------------------------------------
        \10\ This is analogous to individual investors including the change
    in value of the stocks that they hold in their net worth calculations.

    In Figs. 5a and 5b we illustrate the two primary methods for accounting
    for subsidiary earnings that influence countries' measures of MNC
    activity.\11\ In this example, the primary difference between these two
    methods will focus on the financial statements of the Dutch entity. The
    BEA requires U.S. MNCs to use the Equity Method and publishes aggregate
    foreign income, income taxes and equity income.
    ---------------------------------------------------------------------------
        \11\ There is a third method referred to as Consolidation is
    commonly used in MNCs' publicly available financial statements. This
    method is not permitted by the BEA in U.S. national statistics'
    surveys.

    Under the equity method, the Dutch entity includes the Germany entity's
    $280 of after-tax income in its pre-tax income in the year it is earned
    by the German entity. The BEA labels this income statement line item as
    ``equity income.'' Equity income is not a cash flow or other movement
    of assets from Germany to the Netherlands.\12\ The $280 of after-tax
    German income is simply being duplicated in the financial statements of
    the Dutch entity. Notice that the pre-tax income (see Fig. 2) double
    counts German income: aggregate after-tax income is $605, which is
    comprised of $325 in Netherlands and $280 in Germany.
    ---------------------------------------------------------------------------
        \12\ Under the equity method used by the BEA, the $10 dividend is
    not reported as income by the Dutch entity because the entire after-tax
    income of the Germany entity is included in the Dutch entity's income
    statement when earned. The dividend would increase cash (increase an
    asset) in the Netherlands and decrease the Dutch entity's investment in
    its German subsidiary (reduce an asset). This differs from the cost
    method which we explain next.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     Dr. Clausing recognized the double counting issue but did not
    correct for it despite the simplicity of the adjustment.\13\ Rather
    than removing the BEA-provided measure of equity income from the Dutch
    entity's income,\14\ Dr. Clausing turns to using the BEA-provided DII
    (with her adjustment) because she believes that DII ``excludes all
    equity income''. Unfortunately, this is not true. Although DII does not
    duplicate the income of lower tier subsidiaries, the measure does
    include equity income (thereby attributing the income to the wrong
    jurisdiction).
    ---------------------------------------------------------------------------
        \13\ See Clausing (2016), pg. 911.
        \14\ The BEA describes this adjustment here: https://www.bea.gov/
    help/faq/1402.

    Referring again to the example in Fig 5a, DII considers only the income
    of entities that are owned directly by the U.S. parent. When Dr.
    Clausing uses DII to study profit shifting, she sees only the $325 of
    after-tax income in the Netherlands and nothing in Germany.
    Importantly, DII includes $280 of equity income. Aggregate foreign
    after-tax income is $325, which is correct, but $280 of it--the equity
    income--is attributed to the wrong country. Note that she would also
    fail to recognize that $120 of German taxes were paid on the German
    income using DII. Since U.S. MNCs often use haven affiliates as holding
    companies for other foreign affiliates, DII systematically overstates
    the amount of income generated in tax havens. As such, DII is a biased
    ---------------------------------------------------------------------------
    measure to study the effects of tax policy on income shifting.

    The other accounting method used to measure MNCs' foreign activity is
    the Cost Method. In contrast to the equity method, the cost method
    requires the Dutch entity to include the German entity's income in its
    financial statements only when it receives a dividend from Germany. Fig
    5b illustrates that under the cost method, only $10 of German income
    would be duplicated, or attributed to the wrong location. The
    measurement issue arises precisely when the Germany entity pays a
    dividend. If there were no dividend, the cost method provides accurate
    information about the amount and location of income. Even if there were
    residual tax due on the dividend in the Netherlands the operating
    income was earned and taxed in Germany.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     Finally, it is worth noting that the double counting and
    misattribution of income to the wrong location will also produce biased
    effective tax rates. For example, in Fig 5a, not removing equity income
    from the Netherlands will generate an effective tax rate of 4.4% rather
    than the actual 25% tax rate (see Fig. 4). Fig 5b also reveals that the
    cost method can result in an understated tax rate for the Dutch
    entity.\15\ Notice that the tax rate becomes more understated as
    dividend income increases.\16\
    ---------------------------------------------------------------------------
        \15\ Due to the predominant use of source-based taxation,
    intercompany dividends typically are not taxed in the jurisdiction to
    which they are paid. In our example, Netherlands will not tax dividends
    paid to the Dutch affiliate by the German affiliate as the income
    underlying the dividend has already been taxed in Germany.
        \16\ Moreover, while our public statement focuses on how accounting
    impacts measures of income and tax rates, the amount of assets in
    havens will also be overstated by failing to consider the accounting
    standards that produce the data. For example, in the example in Fig 5a,
    the assets of the Dutch entity will increase by $280 but this increase
    is attributed entirely to its equity investment in the Germany
    subsidiary rather than an increase in cash or other assets in the
    Netherlands. As tax havens often serve as holding companies, their
    total assets too will appear outsized relative to employees or other
    measures of economic activity, relative to entities in other countries.

    IV. TREASURY COUNTRY-BY-COUNTRY REPORTING DATA. Although our comments
    have focused on the BEA data, we also want to comment on the data used
    in the JCT's ``U.S. International Tax Policy: Overview and Analysis''
    and in Dr. Clausing's most recent publication in the National Tax
    Journal that she references in her testimony. Dr. Clausing states:
    ``these data are new, but they may provide a more accurate measure of
    where U.S. companies are booking their income.''\17\
    ---------------------------------------------------------------------------
        \17\ See Clausing (2020), pg. 3 https://papers.ssrn.com/sol3/
    papers.cfm?abstract_id=3503091.

    Unfortunately, we are unaware of any empirical evidence that supports
    the notion that Treasury's Country by Country Reporting (CbyCR) data
    reported on Form 8975 does not suffer from measurement concerns. OECD
    commentary on the CbyCR data has revealed that these data are affected
    by concerns with the duplication of earnings and the resulting
    misattribution of earnings that we highlight above. In particular,
    until 2020, CbyCR data was being filed using the cost method we
    highlight in Fig. 5b. Notice that the cost method results in
    intercompany dividends duplicating income within the MNC's foreign
    affiliates.\18\
    ---------------------------------------------------------------------------
        \18\ Using 2017 CbyCR data, Horst and Curatolo (2020) suggest that
    the duplication of income through intercompany dividends only results
    in CbyCR overstating income by approximately 14.4%. See, Assessing the
    Double Count of Pretax Profit in the IRS Summary of CbC Data for Fiscal
    2017, Tax Notes (April 27, 2020), 427. However, we believe that U.S.
    MNCs' intercompany dividends were relatively low before 2018 due to the
    U.S.'s worldwide tax regime. In a report issued by the Board of
    Governors of the Federal Reserve System (https://www.federal
    reserve.gov/econres/notes/feds-notes/us-corporations-repatriation-of-
    offshore-profits-20190806
    .htm), intercompany dividend paid from MNCs' foreign affiliates to
    their U.S. parent increased from 2017 to 2018 by roughly 400% (from
    $155 billion to $777 billion). Additionally, preliminary data by the
    BEA for 2018 indicate a 111% dividend payout ratio in foreign
    affiliates of U.S. MNCs relative to 2017 of 49% (note that these are
    dividends paid by affiliates up an ownership chain that may or may not
    have been ultimately received by the U.S. parent). Thus, the Horst and
    Curatolo analysis of CbyCR in a low dividend paying year does not
    provide evidence that CbyCR data do not double count income.

    Because of the duplication of income, intercompany dividends will also
    unduly influence the tax rates that are estimated from the CbyCR data.
    This is illustrated in Fig 5b. While the true tax rate on the earnings
    generated in the Netherlands is 25%, the inclusion of the German
    dividend in the income reported in the Netherlands results in a decline
    in the estimated tax rate to 21.4%. This 21.4% is analogous to the
    ---------------------------------------------------------------------------
    average tax rates reporting in the JCT report.

    As the TCJA required that U.S. MNCs pay tax on their entire balance of
    unremitted foreign earnings, it seems likely that these firms saw
    increased intercompany dividend activity in 2018. Higher dividends will
    result in tax rates estimated from the CbyCR data to be biased
    downwards.

    Referring back to the example in Fig 5b, if the dividend paid by the
    German affiliate to the Dutch affiliate was $280 instead of $10 (a 100%
    payout ratio) then income measures that use the cost method would look
    identical to the income measures that use the equity method. The tax
    rate would be 4.4%. The OECD is aware of the issue concerning
    intercompany dividends and issued guidance in late 2019 that stipulated
    that intercompany dividend should not be included in income measures.
    Until CbyCR omits intercompany dividends from its income measures,
    policy makers and researchers should be refrain from relying on these
    data to infer the implications of the TCJA on U.S. MNCs' tax burdens.

    V. CONCLUDING REMARKS. We wrote this comment to inform policymakers of
    an important source of mismeasurement that currently underlies many
    profit shifting studies that are referenced and presumably relied upon
    in policy debates. Accounting standards impact MNC data in very
    important ways that, if not understood, can inaccurately shape our
    perceptions about the level of business activity of MNCs' abroad.

    The current international tax proposals are predicated, in part, on the
    presumption that there is a significant amount of tax revenue to be
    collected by limiting profit shifting. We do not dispute that the U.S.
    does lose revenue due to profit shifting. But given the data
    limitations we address above, we suggest that revenue actually lost is
    far lower than suggested by Dr. Clausing's work.

    With existing proposals to aggressively tax the foreign income of U.S.-
    based multinationals, it is imperative that these measurement issues be
    considered when evaluating both the behavioral and revenue consequences
    of policy changes. We believe that it would be prudent to evaluate the
    merits of international tax policy reforms without regard to the
    suspect estimates of revenue consequences. For example, estimates of
    revenues to be raised from current proposals such as the reforms to the
    Global Intangible Low-Tax Income are likely to be overstated.

                                     ______

                     Letter Submitted by Dr. Rachel Bratlie
    I am a proud citizen of the United States of America. I lived outside
    the United States in New Zealand, where I was a tax resident and where
    I am still subject to taxation.

    I was an American expat. I was temporarily living outside the United
    States for reasons of work and career advancement, for 5 years. When I
    first moved abroad I learned a lot. I learned that other countries have
    well developed tax systems that require payment of a wide range of
    taxes. I can tell you that I paid a lot of taxes. I can also tell you
    that the U.S. tax system treats my non-U.S. income and assets very
    unfairly. The fact that I was temporarily living abroad doesn't mean
    that I didn't have to plan for retirement.

    I did not live ``offshore.'' I do lived in a country where I paid very
    high income taxes. I also paid additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I was (and still am) subject to the
    U.S. extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside. I started a retirement account
    in New Zealand, thinking it was the equivalent of a 401(k), but it most
    certainly is not treated that way by the U.S. tax code. There is no
    other advanced country in the world that imposes such extraterritorial
    taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national,'' currently
    residing back again in the United States. It doesn't make me less
    American. But, it does mean that I am subject to the laws of the
    country where I lived and established a retirement account, with a view
    to eventually live between both countries in retirement. I am not GILTI
    of anything. I ask only to be able to carry on my small business and/or
    my life without interference from the Internal Revenue Code of the
    United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities that
    were taking place in my country of residence and not in the United
    States. My retirement investments are foreign to the United States, but
    local to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when New Zealand does not. Because
    I am required to live my life with the USD as my functional currency, I
    am subject to ``fake income'' on nothing but changes in the exchange
    rate. As a tax resident of both the United States and New Zealand, I
    get the worst of both tax systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Mark Breiter
    I am a citizen of the United States of America by birth. I have lived
    outside the United States for all of my adult life, and currently
    reside in Switzerland, where I am a tax resident and where I am subject
    to full taxation.

    I run a small business in Switzerland, where I am an immigrant. Look
    around you at immigrants in the U.S., from every country in the world,
    and you will find many of them operating small businesses, ethnic
    restaurants, small service companies. Why?

    Many American immigrants overseas will find it easier to earn money
    operating a small business than find gainful employment, because of
    language, cultural and qualification barriers. I am trained as a
    computer programmer, but because I don't have a computer science degree
    from a Swiss university, and because I don't speak and write fluent
    German and speak Swiss German dialect, I have virtually no chance of
    being hired as a programmer by a Swiss company.

    My business is not a multinational corporation. I'm an immigrant to
    Switzerland running a local company to offer my services directly to
    Swiss clients, because that's the best way I've found to make
    sufficient income to support myself and my family.

    Because I am a U.S. citizen, U.S. tax code treats me, an individual,
    the same as a massive U.S. multinational corporation like Apple or
    Google, and my vanishingly small Swiss company the same as subsidiary
    of a massive U.S. multinational. Perhaps the attorney that wrote this
    section of the tax code envisioned that any American living overseas
    and having a company must be a millionaire. Nothing could be further
    from the truth.

    These companies, the Apples, Facebooks and Googles of the world, have
    the resources to afford expensive international tax attorneys and
    accountants to comply with the extremely complex, ever evolving U.S.
    tax law that applies to them.

    I don't have the financial resources, no where close, to afford the
    consulting services that are absolutely necessary to comply with U.S.
    tax law as it currently applies to me and my company. That is not a
    comfortable place to occupy when the fines for incorrect or non-
    compliance run potentially to hundreds of thousands of dollars, prison,
    and the revocation of my passport.

    Under Swiss law, I am obligated to use a local business structure that
    has a separate identity known here as a GmbH or Sagl that's treated as
    a corporation under U.S. tax law. As a U.S. citizen by birth, I forced
    to comply with the same tax regulations as massive U.S. corporations
    that have foreign subsidiaries, as if I'm making millions to billions
    of dollars of income from U.S. sales and shifting those profits from my
    U.S. parent company, which I do not have, to my tiny Swiss company,
    which only has a few Swiss businesses as clients and a single employee,
    me.

    The fact that U.S. tax regulations that apply to large multinationals,
    the requirement to file form 5471, the transition tax, the GILTI tax,
    also apply to me, as an immigrant in a country that is not the United
    States, is insane. If that sounds like too strong a word, sorry. My
    apologies. We can call it wrong. We can call it unjustified. We can
    call it misguided. But here's why it seems insane to me.

    There are only very few specialist accountants and tax attorneys that
    fully understand the tax laws that apply to me. I can't afford them, no
    where close, so I've had to do my best to comply with them on my own.
    There are a variety of CPA's to be found on the Internet that advertise
    these services, but it is very difficult to sort out which of them are
    truly competent. It took me years of searching to find one that seemed
    to know precisely what she was doing in the realm of American
    expatriate taxation, and I asked her point blank, ``How do you know if
    you've completed the 5471 correctly for a client?'' She told me she
    doesn't know that. Cannot know it. ``Ultimately it depends on the
    interpretation of the IRS agent reviewing your return. The agent will
    base that interpretation on the current tax code and evolving tax case
    law. It is very, very complex. I do the best I can, but I can't predict
    how the IRS will respond.''

    Since the fines for incorrect completion of the 5471 are very steep,
    https://www.irs.gov/pub/irs-prior/i5471--2021.pdf, the fact that it is
    very difficult to discern how to do it correctly is deeply disturbing.
    The regulations clearly state that the individual taxpayer is fully
    responsible for any errors a preparer makes on the 5471. All I know is
    I have tried multiple times to attempt to understand it, and I simply
    cannot. It is well beyond my ability.

    It took me months of evenings and late nights trying to figure out how
    to file my 2017 tax return. I had to hire a specialist CPA to do my
    5471, but I could not afford her help to handle the transition tax
    aspects of the filing. She told me at the time that her understanding
    of the transition tax requirements was vague at best. Throughout 2018
    when the 2017 return was due, there were no published instructions how
    to complete the transition tax requirement.

    Very very long story short, the IRS agent that processed my return did
    not understand anything about the transition tax or the deductions it
    allowed and made major mistakes when assessing my return. I contested
    it, on my own. It took me a solid month of time to read through the
    applicable tax code, much of which I could not understand because I do
    not have the legal background to interpret the utter complexity of the
    tax law that applies to multinational corporations, and develop a 10
    page brief, attached to which were 100's of pages of highlighted tax
    code. My brief referred to the tax code and IRS instructions available
    in 2018 (or utter lack thereof, so everyone was relying on the tax code
    directly--which should not be a problem for a multinational like
    Apple).

    As far as I know, my 2017 tax issues are still not resolved. I've had
    at least 50 phone calls with the IRS and Taxpayer Advocate Service,
    many of them long calls as I struggled to explain to confused and
    befuddled rank and file IRS staff what the transition tax involved,
    what section 965 income is, why the IRS was taxing a Swiss company via
    me as an individual. Everyone I've spoken to at the IRS, every single
    person, did not understand this section of U.S. tax law. Some thought
    what I was describing was simply not true. When I attempted to refer
    directly to the provisions of the tax code that I thought highlighted
    my arguments against how the IRS had interpreted my return, I was
    simply told that agents did not receive training to that depth.

    The fact of the matter is that my return, as a low to middle income
    American, like the millions of other low to middle income Americans
    living overseas, is processed by staff that are not trained to deal
    with ``complex multinational tax returns.'' I've received dozens of
    letters from the IRS stating that they needed more time to resolve my
    case.

    My 2017 return has been pending with the IRS for 2\1/2\ years. I made
    $24,615 in 2017, and the IRS has spent years attempting to figure out
    how to correctly interpret and process my return. This is what happens
    when extremely complex international tax law is applied to low or
    middle income American individuals resident overseas.

    In addition to the $24,615 of wages, my 2017 return includes $17,927 of
    ``Section 965'' transition tax income that assumes that a pro-rated
    share of the cumulative profit my Swiss company made over all the years
    of its existence since 1986 was, for purposes of U.S. taxation,
    remitted to my U.S. parent company, which I don't have. So that
    cumulative profit should be retroactively taxed because my U.S. parent
    company enjoys all the benefits of the services the U.S. Government
    provides. That's insane, or if you like, delusional, on 3 counts.

    (1)  I don't have a U.S. parent company.
    (2)  I never received that money from my company. If I had, I would
    have needed to declare it as income on my Swiss and U.S. personal
    income tax statements, and I would have had to declare it as an expense
    in my company accounts. There is no ``fudging'' to avoid taxation
    possible.
    (3)  I am not a U.S. parent company, enjoying the benefits of the
    services the U.S. Government provides to the companies resident in the
    U.S.

    Even as an individual that lives in another country, I don't enjoy any
    of the benefits of the services the U.S. Government provides. The U.S.
    Government doesn't fix the roads I use. It doesn't provide the water
    and sewer systems I need, the garbage collection, security, fire
    protection . . . nothing. I pay for those services with the taxes I pay
    in Switzerland. The U.S. doesn't pay for any of it, not a penny.

    As I said, it has taken the IRS more than 2\1/2\ years to resolve my
    2017 tax return. I have heard from my Taxpayer Advocate Service
    representative that the case has been escalated to one of the top tier
    agents that deals with international tax law. Really? The IRS is using
    staff members that deal with Google's tax returns to process mine? Have
    you ever considered what a drain it is to uselessly tie up the limited
    capacity of the IRS with hundreds of thousands of tax returns like
    mine, because the tax code mistakenly identifies me as a ``U.S. parent
    company'' with a foreign subsidiary potentially used to avoid U.S.
    taxation.

    Now let me draw your attention to something that should be obvious, but
    does not seem to be from the way the tax code is written.

    The vast majority of U.S. citizens living outside the U.S. are not
    wealthy, and they definitely are not operating businesses overseas to
    shift profits and avoid taxation. And yet the U.S. tax code treats them
    as if they are.

    Look around you. Are all the immigrants in the United States, from
    Asia, South America, Central America, Europe, are all these people
    millionaires shifting profits from their countries of origin to avoid
    taxation? No, of course not.

    The vast majority of Americans these extremely complex tax laws apply
    to are just like those immigrants. We are running small businesses to
    simply get by where we live, like the Thai family that owns and
    operates a restaurant in your neighborhood.

    Consider how it would seem to you if Italy decided to levy a 21% tax on
    the profits of any Italian restaurant in the United States if the owner
    was of Italian descent, via the Italian individual, because the Italian
    government decided that all Italian restaurants in the U.S. were
    corporate structures designed to avoid Italian taxation. Would that
    seem rational?

    I do not live ``offshore''. I live like that Italian immigrant running
    a restaurant in an American city. He can't speak the local language
    perfectly, he has an accent, he might be intelligent and resourceful,
    but he doesn't have a degree from an American university. So he does
    what he can to get by. Every American I know in my region lives on that
    same fringe of society, either running a small business, or working
    informally for clients.

    I should point out that both I and my company pay taxes in Switzerland,
    including VAT. Even though I have only managed to make a modest income
    here so far, the amount of taxes I and my company have paid have been
    substantial, particularly because of VAT.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other country in the world that imposes such
    extraterritorial taxation.

    Why? Why isn't Italy and Germany and the UK and France, China,
    Thailand, Mexico, Poland, Canada, Japan, Austria, Bolivia, Ecuador,
    Brazil, etc., why are they all not levying taxes on their emigrants
    living in the United States and the businesses they run??? They
    certainly all need the tax revenue! The U.S. is the richest country in
    the world. Cuba, for instance, has a large expatriate community in
    Florida. I'm sure many of these Cuban immigrants run small businesses
    that Cuba could levy a tax on. Why isn't Cuba taxing them?

    I would like to make an observations about the hearing on March 25th.
    As I said, the vast majority of U.S. citizens living outside of the
    U.S. are neither wealthy, nor are they operating businesses in the
    countries they live in to shift profits away from phantom U.S. parent
    companies or any other nonsense like that. They are simply operating
    business to get by as best they can.

    But your hearing exclusively focused on U.S. multinational
    corporations, ignoring the millions of U.S. citizens living overseas
    that operate small businesses and are profoundly and negatively
    affected by the fact that U.S. tax code can't tell the difference
    between a small business owner based in another country and a massive
    multinational corporation based in the United States.

    It's not that hard to tell the difference.

    Just because I was born in America does not make me, as an individual,
    ``the parent company'' of a multinational corporation for U.S. tax
    purposes. I don't have the capacity, as a middle to lower class
    individual, to deal with be treated as a tax-dodging U.S. parent
    company, at all.

    And why should I be required to pay taxes to the United States at all
    when the United States does not provide any revenue whatsoever for the
    services I or my company require where I live? Even if I was caught up
    in a terrorist attack here in Switzerland, it is the Swiss security
    services that would come to my aid. Not only would the U.S. military
    not show up to help me, the Swiss authorities would not allow them to
    operate here.

    And now, the U.S. tax code has the audacity to demand that my Swiss
    company pay a 21% GILTI tax on its annual profit. What for?

    What services does the U.S. Government provide to either me, as a
    phantom U.S. parent company, or my Swiss company, in exchange for these
    taxes and required complex filings, the threats of severe fines and
    prison time, and the fact that my ability to utilise the financial
    services in the country I live has been completely undermined by FATCA,
    the U.S. Government's strong arm tactic to force the international
    banking community to help enforce their extraterritorial tax regime?

    None. 0

    The U.S. Government allocates no revenue whatsoever to Americans living
    overseas to provide the services that taxpayers require from their
    governments in exchange for taxation. Not for our roads, our schools,
    our health care, the infrastructure we depend on, our security. Neither
    does the U.S. Government provide any services whatsoever to our small
    businesses that we establish to provide for ourselves and our families
    in the countries we live in. On what grounds can any taxation be
    justified in this case, much less a 21% GILTI tax on my company.

    The simple reason taxation is local throughout the world is because the
    collective services that government provides with the tax revenue
    collected, those roads and schools and fire departments, the water
    systems, health care, are all local.

    It is admittedly not fair when a large U.S. multinational corporation
    headquartered in and run from the United States avoids paying taxes for
    the local services that U.S. and state governments provide, which
    enable that business to exist and operate, by shifting its profits
    overseas.

    However, it is also unfair, grossly unfair, when the U.S. Government
    imposes taxation on U.S. citizens resident in other countries and the
    small businesses they run in those countries, without providing any
    services in return, no revenue whatsoever to pay for them, while
    destroying their ability to obtain loans, mortgages, open bank
    accounts, form partnerships with American companies with their use of
    force and threats of force against the banks in the countries we live
    in.

    Can you tell the difference between these 2 cases? Let me state it
    plainly. If the U.S. is not providing the collective services that
    taxation funds in a region of the world that an individual lives in, or
    a company is based in, then there is no basis whatsoever for the U.S.
    to tax that individual or company. Why?

    Because it is not a fair exchange.

    It is conceivable, in fantasy, that the United States could collect
    taxes from me and the approximately 10 million U.S. emigrants round the
    world and fairly distribute that revenue to meet our needs. If U.S.
    emigrants were organised as a state, we'd rank about 10th in terms of
    population and be allocated something in the range of $10 billion in
    federal spending. However, practically it makes no sense whatsoever for
    the U.S. Government to: (a) Collect taxes from me and my company; (b)
    negotiate with all my local providers of government funded services,
    the trash collector and recycling services in my region, the water and
    sewer companies, the police department, the fire department, the road
    maintenance companies, the Swiss military, the Swiss rescue services,
    etc etc to compensate them all directly on my behalf; and/or (c)
    coordinate with my local tax authorities on the federal, state and
    municipal level to provide them with funds from the taxes the U.S.
    Government collects from me and all other American citizens that live
    in my village, state and Switzerland as a whole and ensure that an
    equivalent amount is deducted from my Swiss taxes; (d) do that for
    every American emigrant throughout the world, dealing with thousands of
    tax jurisdictions in hundreds of languages.

    Practically, this is impossible. It is impossible to tax American
    emigrants and fairly distribute the revenue collected to fund the
    services they use in their countries of residence.

    Hence, the only thing that makes sense in a fair system of taxation is
    to let local tax authorities handle the allocation of funds they
    collect via local taxation for local services in the countries American
    emigrants live in.

    What the United States is doing when it extracts money from U.S.
    persons living in other countries, and their small businesses they use
    to support themselves where they live, without providing anything in
    return drifts over the line from taxation into extortion, or theft. It
    is not a fair exchange.

    If that is difficult to take in, consider what would you call it if
    Germany decided to levy a 21% tax on every American company with an
    owner of German heritage, using sufficient leverage to frighten the
    entire U.S. banking sector and government into enforcing this German
    tax regime, and then Germany simply took all the money, sucked it out
    of these businesses and the American economy without providing anything
    in return. Would that seem like taxation to you, or is extortion a
    better term for it?

    There is no justification whatsoever for America's extraterritorial tax
    regime, particularly in its application to individuals living overseas
    and their small businesses. However, the most damaging part of this
    entire American effort to leverage its position in the world to enforce
    its misguided approach to worldwide taxation is FATCA, the Foreign
    Account Tax Compliance Act.

    I've been a resident of Switzerland since 2006. I am married to Swiss
    woman. In terms of a residency permit, I have the equivalent of a
    permanent ``Green Card'', nearly all of the rights of citizenship
    except the right to vote. Because of FATCA, we cannot get a mortgage.
    Because of FATCA, I cannot get a loan for my business. Because of
    FATCA, I cannot open a new bank account. Because of FATCA, I cannot
    start a new company because no bank will open an account for that
    company if I am a part owner. Because of FATCA, I cannot create a
    partnership or a joint venture with another company.

    Why? Because every bank's compliance costs, and risk of being fined by
    the United States under FATCA are so great that I not welcome as a
    client. I am treated just like a sanctioned individual by the banks,
    because to them, I have the same risk profile. They are simply opening
    themselves to severe fines and legal costs.

    Not only that, but banks here closely question every person wanting to
    open an account about any ties they might have to either America or a
    person they know to be American, even when the person is obviously
    Swiss, born and raised here. They ask Swiss residents if they have any
    American friends. Why? Because they are afraid a sympathetic Swiss
    might open an account in their name and allow an American living here
    to use it, which would open the bank to FATCA liabilities. They don't
    ask new client if they know an African dictator that might be
    sanctioned, or a Russian oligarch close to Putin. They ask if they know
    an American.

    So the vast majority of Americans living in other countries, all of us
    who are low to middle class, are simply the collateral damage of the
    American effort to impose taxation on emigrant Americans. I cannot
    explain to you how deeply it has undermined my ability to support my
    family. You wouldn't understand what it is like to walk into your local
    bank, where you have lived for 15 years, ask to open a bank account,
    explain that you are an American citizen, and be asked to ``Please
    leave the premises. We do not open accounts for Americans.'' She
    pointed at the door.

    Outside the bank, I stopped, broken, looking at the sidewalk. The only
    thought in my mind was ``How am I going to be able to support my wife
    like this?''

    It is for her that I have written this letter.

    Please stop the taxation of emigrant Americans and their small
    businesses overseas, particularly the low to middle class that make up
    the vast majority of us. At the most fundamental level, it is simply
    wrong. And with it, abolish or change FATCA to leave us out of it in a
    manner that banks worldwide are assured they will not be hit with a
    multi-million dollar fine or be forced to compromise their local
    privacy laws.

    You can restructure the legislation that is aimed at multinational
    corporations based in America to only target those companies. It is
    easy to tell the difference between an American of modest means living
    in another country and an American multinational corporation.

    There is no benefit whatsoever to the United States of America in
    causing significant damage to American emigrants' capacity to support
    themselves. There is no benefit to criminalising us, we don't have the
    money you are looking for. There is no benefit to marginalising us in
    the countries we live in as persona non grata.
    Regards,

    Mark Breiter

                                     ______

                        Letter Submitted by Julia Brenan
    The U.S. is the only advanced country that taxes its citizens on their
    world-wide income when those citizens live, work and pay tax in another
    country. I not only pay taxes in Canada where I live, but I also file a
    tax return to the IRS every year. Declaring non-U.S. income on IRS
    forms is very complicated. Hiring tax return preparers that understand
    the U.S. tax system as well as the Canadian tax system can be very
    expensive, which makes meeting U.S. tax obligations a serious financial
    burden even if no tax is owed.

    I'm an ordinary American. I moved to Canada get an education without
    going into debt. I am not wealthy, I am a student. I do not have room
    in my household budget to spend on tax return preparers, and I
    certainly cannot afford to be double-taxed. Not to mention the higher
    tax rate I already pay in Canada.

    My partner and I were considering buying a house instead of continuing
    to pay rent, the obstacle for this life changing decision that allows
    average people to a crew wealth, was the complications from my US
    taxes. We considered putting the house in his name only, but this
    leaves me financially vulnerable if we were to ever separate.

    Additionally, I'm terrified of saving for retirement in Canada. U.S.
    tax obligations are out of date for the types of retirement funds
    currently offered and it scares me that as hard as I try to comply with
    this arcane system, I may still be reporting incorrectly without
    knowing it.

    We are not trying to be wealthy, I just want to live an average life
    without the added stress of this citizenship that I have gone from
    cherishing to feeling is a burden.

    I value my American citizenship. I pay attention to U.S. politics as
    much if not more than the average citizen and I vote in every election
    for which I'm eligible. But I don't think it's fair that ordinary,
    working class Americans like me, making a living and paying tax abroad,
    are subject to inordinately complex and sometimes punitive U.S. tax
    filing.

    The current law is costly, punishing, and unfair, and it is causing
    some Americans abroad to consider renouncing U.S. citizenship. I hope
    that shocks you because it shocks and saddens me.

    I am asking the Senate Finance Committee to hold hearings on Americans
    abroad and U.S. taxation. I encourage you to invite testimony from
    experts who can provide an accurate profile of the Americans abroad
    community and describe the burden that U.S. tax filing places upon us.
    I urge you to also explore the implications of a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation.

    Thank you.

    Julia Brenan

                                     ______

                       Letter Submitted by Charlene Brown
    I was born and lived in the U.S. for 30 years and then moved to the UK
    for love where I have lived now for more than 25 years. I am a UK tax
    resident and am subject to full UK taxation.

    I am an emigrant from America and living abroad for the foreseeable
    future. I am also a tax resident of the UK as this is where I now live.
    I organize my financial and retirement planning in the UK as I have now
    formed a life here with children, grandchildren and friends. As a U.S.
    citizen, I am subject to the tax system where I live, the UK, as well
    as the U.S. tax system. Those systems are generally not compatible.
    Most attempts at responsible financial/retirement planning where I live
    are frustrated by the need to comply with U.S. tax laws. It is
    absolutely shocking that the U.S. imposes these rules on their citizens
    who have chosen to live abroad. How can the United States impose
    taxation on the non-U.S. income and assets of a person who is a tax
    resident of another country--with no economic connection to the United
    States?

    I do not live ``offshore.'' I do live in the UK where I pay very high
    income taxes. I also pay additional kinds of taxes (example VAT,
    council tax, road tax) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, the UK. There is no other
    advanced country in the world that imposes such extraterritorial
    taxation.

    I do appreciate that the average American living in the U.S. when
    hearing this ``plight'' says, ``Well, just give up your passport.'' Or
    ``Isn't it worth it to be an American?''

    The argument is more complex, as living an extremely ordinary life in
    another country should not require the paperwork and constant threat of
    penalties as well as expense as a result of non compatible tax systems.
    Each country gives and takes in their own tax code and when you are
    subject to two conflicting tax codes it's a lose lose situation for the
    individual.

    The March 25 hearing suggests that the overall view of any person or
    company that operates outside the U.S. only does so to avoid U.S. tax.
    It seems that the U.S. is such a large country people seem to be
    oblivious to Americans actually working and living outside the country
    for reasons other than tax avoidance. Because of this, when an American
    starts a small business in say the UK for work, they are punished by
    the CFC rules, hardly the American way. Large Gilti tax payments are
    due when all you're doing is just trying to live and make a little
    money for retirement. American living abroad who are small business
    owners are being unfairly treated.

    I would like to make two further observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. The
    U.S. tax rules treat individuals living outside the United States the
    same way they treat U.S. multinationals doing business outside the
    United States. As an individual, why isn't the focus on recognizing how
    U.S. individuals are being affected? Isn't that the point of the
    hearing?

        2.  Where are the witnesses with first hand experiences? I was
    shocked that there was no witness who had personal experience with a
    company or individual running a business with interests outside the
    USA. Not a single one! This is crazy. I respectfully suggest that
    subsequent hearings include witnesses who have experienced running
    businesses outside the United States and/or actually living outside the
    United States. To put it another way: Subsequent hearings should deal
    with the reality on the ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a very average ``dual-
    national'' living in my country of second citizenship with my family.
    It doesn't make me less American. But, it does mean that I am subject
    to the laws of the country where I live. I am not GILTI of anything. I
    ask only to be able to carry on my life without interference from the
    Internal Revenue Code of the United States while living in the UK.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    Even, standard plain vanilla style mutual funds invested in the UK are
    considered PFICs and the income is penalized for the U.S. investor. And
    furthermore, U.S. mutual funds won't take Americans as investors with a
    non-U.S. address! Why can everyone else take advantage of the stock
    market with mutual funds but not Americans abroad???

    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. And it really is the worst of both systems. Very unfair,
    actually mean.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    The U.S. extraterritorial tax regime is extremely unjust. For many
    years, Americans abroad have been attempting to get both Treasury and
    Congress to address these issues. The time has come for the United
    States to abandon its extraterritorial tax regime and join the rest of
    the world in adopting a system of residence-based taxation.

    Please represent American individuals abroad as you would your own
    constituents because we are your constituents. Please do not miss your
    opportunity to make a fair system for all of us.

    Yours sincerely,

    Charlene Brown

                                     ______

                      Letter Submitted by Charles Buckley
    I'm one of many who have had their lives turned upside down by
    misguided U.S. extraterritorial tax policies. I managed the additional
    costs, paperwork, and trouble with difficulty until FATCA went into
    full force in 2011. After that, Americans became perceived as instant
    liabilities as far as spouses, business partners, and employers were
    concerned. It has become difficult to survive.

    U.S. tax policy is bad for the U.S., who are known for designing
    excellent shrink-wrapped products and selling them overseas through
    expensive country networks. But U.S. tax policy effectively precludes
    service and small business international commerce. U.S. businesses and
    U.S. persons face obstacles that citizens of other countries do not.
    These countries are eating the U.S. lunch, as I discovered first-hand,
    competing to sell value-added services against the Chinese in Africa
    and the Middle East.

    Once a competitor at a Chinese company made fun of me--at a conference
    banquet in Cairo, he led me through an account review (!) of the
    customers he was working on in countries on the Denied Persons List,
    knowing there was nothing I as a U.S. person representing a U.S.
    company could do to compete with him. It was humiliating.

    I closed my local company after it became apparent the decks were
    stacked against us. U.S. accounting would never have tolerated the
    tricks that Swiss headquarters must engage in. Subsidiaries are a
    different story. Apart from these, Swiss have become wary of anything
    with an American ``taint,'' and just avoid Americans like the plague.
    Even ``regular employment'' is difficult--obligatory Swiss pension
    schemes don't take Americans, even though the Swiss FATCA IGA exempts
    these from reporting. So no companies hire Americans. Forget getting a
    mortgage. You're lucky to keep your bank account. Investing? Meh!

    This hit me particularly hard--just as the full effects of FATCA were
    felt, my partner was diagnosed with frontal temporal dementia (which
    made her crazy, not forgetful). She needed to stay in Zurich, with
    which she was familiar. Transplanting her, as we later tried, would be
    deadly (as it ultimately was). Had I abandoned her, she would have been
    institutionalized, which would have been inhuman. She died Christmas
    Day 2019, so I could at least stop bleeding money keeping her out of
    trouble and happy. Since then I've been trying to pick up the pieces of
    my life in the midst of massive anti-American discrimination and the
    COVID craziness. It's like the perfect storm.

    I don't hold the U.S. government responsible for the world economy. But
    I do expect the U.S. to clear regulatory obstacles for their citizens
    living abroad. There should be no basis for their foreign employers and
    business partners to discriminate against them because they hold a U.S.
    passport. The only way out of the spiraling deficit trap is for the
    U.S. to export massively. This will never happen if Americans can't
    sell things American without committing financial suicide. Get out of
    the way, and let those who can add value do so. When you do, tax
    revenues increase. It's that simple.

    Charles Buckley

                                     ______

                      Letter Submitted by Winnie Bulthuis
    I am a proud citizen of the United States of America. I live outside
    the United States in the Netherlands where I am a tax resident and
    where I am subject to full taxation.

    I am an emigrant from America. Sure I love America, I was born and
    raised there. But, we never know where life will take us and I moved to
    the Netherlands in 1990 and have lived here ever since, raising our
    family and making a life here. I long ago realized that although I will
    always love America, I now live permanently abroad. I am a tax resident
    of the Netherlands and thus organize my financial and retirement
    planning in that country. The problem I have is that the U.S. tax laws
    make it very difficult for me to live the same kind of life that my
    friends and neighbours live. You see, they are subject to only one tax
    system. As a U.S. citizen, I am subject to the tax system where I live
    and the U.S. tax system. Those systems are generally not compatible.
    Most attempts at responsible financial/retirement planning where I live
    are frustrated by the need to comply with U.S. tax laws. For example,
    opening a new bank account or applying for a mortgage has become nearly
    impossible. How can this be fair? How can the United States impose
    taxation on the non-U.S. income and assets of a person who is a tax
    resident of another country--with no economic connection to the United
    States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I ask only to be able to carry on my life without interference
    from the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you for your attention to this matter.

    Kind regards,

    Winnie Bulthuis

                                     ______

                              Business Roundtable

                        1000 Maine Avenue, SW, Suite 500

                              Washington, DC 20024

                                  202-872-1260

                      https://www.businessroundtable.org/

    Chairman
    Doug McMillion
    Walmart

    President and CEO
    Joshua Bolten
    Business Roundtable

    Business Roundtable, which represents over 220 Chief Executive Officers
    (CEOs) of the largest American companies from all sectors of the
    economy, appreciates the importance of this hearing and the interest of
    this Committee in understanding how U.S. international tax policy
    affects the strength of the U.S. economy and its ability to increase
    jobs and wages of American workers.

    Business Roundtable CEO members lead companies that operate throughout
    the United States and globally. Business Roundtable member companies
    employ 20 million workers, invest $225 billion annually in research and
    development, and generate more than $488 billion in sales for small and
    medium-sized businesses annually.

    As business leaders, we wish to work with Congress and the
    Administration to help design policies to quickly bring an end to the
    pandemic and usher in a strong economic recovery. At the same time, we
    caution lawmakers against pursuing policies that would slow growth and
    job creation. Those policies include some of the proposed changes to
    the U.S. international tax system discussed during today's hearing.

    Generating long-term U.S. economic growth and opportunity for more
    Americans depends, in part, on a competitive U.S. tax rate for
    companies and tax rules that allow American companies to compete on a
    level playing field internationally with their foreign-owned
    challengers. Globally competitive American companies benefit American
    workers as they increase the ability of American companies and their
    U.S. suppliers to sell products and services to the entire world. In
    contrast, if uncompetitive tax policies cause American companies to
    withdraw from foreign markets, they will also contract at home, leading
    to reduced employment for American workers and lower wages.

    Ensuring American companies can compete on the international stage
    means more companies are equipped to invest in workers back home. When
    companies can compete around the world, they can expand at home and
    create jobs for American workers. We look forward to working with
    Congress and the Administration to prioritize policies that enable the
    strongest recovery possible and sustained economic growth.

     1. Pre-Pandemic Economic Growth was Strong--We Can Return to Strong
                        Economic Growth

    A strong economy can maximize opportunities for good jobs and growing
    wages for American workers. The economy was making historic progress
    and providing gains for all income groups just prior to the pandemic.

          Prior to the pandemic, the 3.5 percent unemployment rate was the
    lowest rate since 1969 and nearly 3 percentage points below the average
    for the 15 years from 2003 through 2017.
          There were more job openings than unemployed workers starting in
    2018 and continuing through February 2020--the first time since the job
    opening statistics began in 2000.
          Low unemployment was driving wage growth--median real wages grew
    by 4.9 percent from the end of 2017 through the end of 2019, almost
    double the total growth in real wages over the 15 prior years. The
    Atlanta Federal Reserve Bank found low income workers to be the
    greatest beneficiary as wage growth in 2018 and 2019 was largest for
    those in the lowest quartile of the wage distribution.
          Many groups that historically faced economic disadvantages in
    the labor market benefited from the strong economy in 2018 and 2019.
              The unemployment rate for African Americans fell
    to 5.2 percent in 2019, the lowest rate on record since the series
    began in 1972, and down from the past recession peak of 16.8 percent in
    2010.
              The unemployment rate for Hispanics fell to 4.0
    percent in 2019, the lowest rate on record since the series began in
    1973, and down from the past recession peak of 13.0 percent in 2009.
              The unemployment rate for those with less than a
    high school education fell to 5.0 percent in 2019, the lowest rate on
    record since the series began in 1992, and down from the past recession
    peak of 15.8 percent in 2010.
          Low unemployment and higher wages served as a magnet for
    Americans to re-enter the workforce--the labor participation rate for
    Americans in their prime working years, ages 25 to 54, was at its
    highest level in more than a decade.

    Low unemployment was driven by businesses. Businesses were adding
    employees and increasing investment prior to the pandemic.

          Economy wide, business investment was a larger share of real
    (inflation adjusted) GDP in 2018 and 2019 than at any time in the past
    two decades.
          Among the large companies represented by the S&P 500, capital
    expenditures were up 20 percent over the 2-year period 2018-2019
    compared to the 2 previous years.
              Total capital investment by S&P 500 companies was
    $1.4 trillion over 2018-2019.
          R&D investment by S&P 500 companies was up 25 percent, to $707
    billion over 2018-2019.

    The pandemic has caused the economy to retreat from its historic gains
    achieved in recent years. Beyond the lives lost, the pandemic has
    caused devastating job losses and economic hardship, with lower income
    workers bearing the greatest burden. Business is ready to help rebuild
    America. A strong recovery is essential now.

     2. Globally Engaged American Companies Are Key Contributors to the
                        U.S. Economy \1\
    ---------------------------------------------------------------------------

        \1\ We define globally engaged American companies as U.S. companies
    with a direct investment in a foreign affiliate, defined as
    multinational enterprises by the Bureau of Economic Analysis.
    ---------------------------------------------------------------------------
    In 2018, globally engaged American companies:

          Directly employed 26.6 million workers in the United States and
    paid their American workers $2.3 trillion in compensation.
          Invested $722 billion in capital expenditures in the United
    States.
          Performed $322 billion of R&D in the United States.\2\
    ---------------------------------------------------------------------------
        \2\ The most recent year for which data are available is 2018. See,
    Bureau of Economic Analysis, Activities of U.S. Multinational
    Enterprises, 2018.

    Globally engaged American companies have the vast majority of their
    ---------------------------------------------------------------------------
    operations in the United States.

    In 2018, globally engaged American companies:

          Employed two-thirds of their global workforce in the United
    States and paid 79 percent of their total compensation to American
    workers.
          Invested 79 percent of their global capital expenditures in the
    United States.
          Developed 85 percent of their R&D in the United States.

    In addition to these direct effects, globally engaged American
    companies add substantial support to the U.S. economy through their
    U.S. supply chains and the boost to U.S. consumer spending from the
    incomes of their employees and those of their supply chains.

    A Business Roundtable study found these benefits to be substantial:
    each direct U.S. job in a globally engaged American company on average
    supported 2.3 additional U.S. jobs in businesses that don't have global
    operations.\3\ Altogether, globally engaged American companies directly
    and indirectly supported 48 percent of private sector employment and
    contributed 57 percent of private sector GDP in 2013.
    ---------------------------------------------------------------------------
        \3\ Economic Impacts of Globally Engaged U.S. Companies:
    Employment, Labor Income, and GDP (May 2016), available at: https://
    s3.amazonaws.com/brt.org/archive/Economic%20
    Impacts%20of%20Globally%20Engaged%20US%20Companies_FINAL%20for%20Distrib
    ution_0.
    pdf.

    As American companies expand globally, they support jobs at home.
    Approximately 90 percent of the sales by the foreign subsidiaries of
    ---------------------------------------------------------------------------
    American companies are sold to foreign customers.

    Global operations open up export markets for goods and services
    produced by American workers. In 2018, $834 billion of goods were
    exported from the United States by globally engaged American companies
    and by other U.S. businesses to the foreign affiliates of globally
    engaged American companies.

    In 2017, the most recent year for which data are available, over 90
    percent of U.S. exports of selected business services were by globally
    engaged American companies or to their foreign subsidiaries from other
    U.S. businesses. Significant U.S. business services exports include
    charges for the use of intellectual property, financial services,
    professional and management consulting services, research and
    development services, and telecommunications, computer, and information
    services.\4\
    ---------------------------------------------------------------------------
        \4\ Jennifer Bruner and Alexis Grimm, A Profile of U.S. Exporters
    and Importers of Services, 2017, Bureau of Economic Analysis, December
    2019.

    Research has shown that when U.S. companies expand abroad, they
    generally also expand at home because their foreign activities
    complement their U.S. activities, rather than substitute for them.
    Increased foreign employment within the company generally leads the
    company to increase its U.S. employment, investment, R&D, and
    exports.\5\
    ---------------------------------------------------------------------------
        \5\ Studies include Mihir A. Desai, C. Fritz Foley, and James R.
    Hines Jr., ``Domestic effects of the foreign activities of U.S.
    multinationals,'' American Economic Journal: Economic Policy, February
    2009; Gary C. Hufbauer, Theodore H. Moran, and Lindsay Oldenski,
    Outward Foreign Direct Investment and U.S. Exports, Jobs, and R&D:
    Implications for U.S. Policy, 2013. For a summary, see Theodore H.
    Moran and Lindsay Oldenski, How Offshoring and Global Supply Chains
    Enhance the U.S. Economy, 2016.

    When globally engaged American companies succeed in foreign markets,
    they expand at home. As Treasury Secretary Yellen has noted with
    respect to demand for U.S. products from other countries, ``This demand
    for American products creates U.S. jobs that pay better. Studies have
    shown that women, in particular, could earn as much as 20 percent more
    in these export-based jobs.''\6\
    ---------------------------------------------------------------------------
        \6\ Remarks by Secretary of the Treasury Janet L. Yellen on
    International Priorities to The Chicago Council on Global Affairs,
    April 5, 2021.
    ---------------------------------------------------------------------------

     3. A Level Playing Field for American Companies Benefits American
                        Workers

    Given the important role of globally engaged American companies in the
    U.S. economy, U.S. tax policy should seek to provide a level playing
    field for American companies relative to their foreign-headquartered
    competitors. A level playing field is determined by how U.S. companies
    are taxed on their U.S. income and how they are taxed on their earnings
    in foreign markets.

    The corporate tax rate, the income base against which it is applied,
    and the way in which the U.S. taxes income earned in foreign markets
    all affect the incentive to invest and create jobs in the United
    States. A more attractive U.S. tax environment gives both U.S. and
    foreign-headquartered companies an incentive to invest more capital--
    equipment, technology, and other facilities--in the United States.
    Economists agree that increased investment increases wages by making
    workers more productive.

    It is because of this widely accepted cause and effect relationship
    that a significant share of the burden of the corporate income tax
    falls on workers. For example, the Congressional Budget Office and the
    Joint Committee on Taxation each assume that 25 percent of the
    corporate tax burden is borne by workers in the form of lower wages.
    The Treasury Department assumes that 18 percent of the corporate tax
    burden is borne by workers. A range of economic studies estimate that
    workers bear a greater share of the corporate tax burden than assumed
    by these government offices.\7\
    ---------------------------------------------------------------------------
        \7\ For example, Stephen Entin's survey of the literature concludes
    that ``labor bears between 50 percent and 100 percent of the burden of
    the corporate income tax, with 70 percent or higher the most likely
    outcome.'' See, Stephen Entin, Labor Bears Much of the Cost of the
    Corporate Tax, Tax Foundation, October 2017.

    Even the relatively small share of the corporate tax burden that the
    Treasury Department assumes is borne by labor reduces the progressivity
    of the corporate income tax. In 2016, Treasury estimated that families
    with income below $379,000 in 2017 incurred more than half of the total
    burden of the corporate income tax, with higher income families bearing
    the remainder.\8\ Treasury's estimates also show that those with less
    than $37,500 of income faced a greater tax burden from the corporate
    income tax than from the individual income tax in 2017.
    ---------------------------------------------------------------------------
        \8\ See U.S. Treasury Office of Tax Analysis, Distribution of Tax
    Burden, Current Law, 2017 (March 2016), available at https://
    home.treasury.gov/system/files/131/Distribution-of-Tax-Burden-Current-
    Law-2017.pdf.

    A corporate income tax increase would be broadly borne by all
    Americans, including those with far less than $400,000 of income. Wages
    and economic growth are enhanced by providing a competitive corporate
    income tax.
    U.S. Corporate Tax Rate
    The current U.S. tax rate is not low. In 2020, the U.S. combined
    federal and state corporate tax rate of 25.8 percent was higher than
    the 23.4 percent average corporate tax rate of other OECD countries by
    more than 2 percentage points.\9\ The U.S. rate was 12th highest of the
    37 OECD countries, placing the United States well above the median of
    advanced economies.
    ---------------------------------------------------------------------------
        \9\ The combined U.S. federal and state corporate income tax rate
    is computed by the OECD to include the 21 percent federal corporate tax
    rate and an average state income tax rate of 6.03 percent. After
    accounting for the deductibility of state income taxes, this results in
    a combined corporate tax rate of 25.8 percent.

    Any increase in the U.S. rate would reduce the attractiveness of the
    United States for investment. A 28 percent federal corporate tax rate,
    as proposed by President Biden, would give the United States a combined
    federal and state corporate tax rate of 32.3 percent--once again the
    highest in the OECD.\10\ It would saddle the United States with the
    least favorable tax regime in the developed world for new investment.
    ---------------------------------------------------------------------------
        \10\ The 32.3 percent combined rate is the sum of the 28 percent
    federal rate and the average state income tax rate of 6.03 percent (4.3
    percent after accounting for deductibility against federal tax).

    In Treasury Secretary Yellen's confirmation hearing, she stated that
    the 28 percent corporate rate proposed by President Biden is ``the
    midpoint of the pre-2017 level and the rate imposed after the tax act''
    and ``would be substantially below the level that had been in place for
    decades.''\11\ But based on Joint Committee on Taxation analysis of the
    2017 act, had the act only reduced the corporate tax rate to 28
    percent, corporations would have paid more in tax than they did prior
    to 2017 due to other business and international tax increases on
    corporations.\12\
    ---------------------------------------------------------------------------
        \11\ See, Responses by Dr. Yellen, Finance Committee Questions for
    The Record, United States Senate Committee on Finance, Hearing on the
    nomination of Dr. Janet Yellen, January 21, 2021.
        \12\ Joint Committee on Taxation, Estimated Budget Effects of the
    Conference Agreement for H.R. 1 (JCX-67-17), December 22, 2017.

    The President's proposed increase in the corporate tax rate in
    combination with the expanded tax base on corporate income put in place
    by the 2017 act would make many U.S. companies less competitive than
    ---------------------------------------------------------------------------
    prior to the 2017 act.

    For over a decade, the Senate Finance Committee sought to lower the
    U.S. corporate tax rate to enhance the attractiveness of the United
    States for companies to invest and expand their operations in order to
    maintain and create well-paying jobs. A higher rate would counter these
    goals. At a time when we are seeking to restore jobs as quickly as
    possible, a higher corporate tax rate on the horizon could curtail the
    return to full employment.
    U.S. Taxation of Earnings in Foreign Markets
    When globally engaged American companies can compete on a level playing
    field with their foreign-owned counterparts, the American worker wins.
    Success in foreign markets allows American companies to expand at home.

    The United States is currently the only advanced economy that taxes the
    active foreign business income of its companies under a global minimum
    tax. While the OECD and the Inclusive Framework countries are
    discussing an approach for broader adoption of minimum taxes by other
    countries, the current U.S. minimum tax--the tax on global intangible
    low-taxed income (``GILTI'')--is acknowledged by the OECD Secretariat
    to be in many ways already more restrictive than the OECD's blueprint
    proposal.\13\
    ---------------------------------------------------------------------------
        \13\ Relative to GILTI, the OECD's blueprint has a lower effective
    tax rate, a broader substance-based carveout for tangible assets and
    payroll, and carryforward of losses and excess taxes. Further, GILTI
    allows only 80 percent of foreign taxes to be creditable and reduces
    the credit for foreign taxes through an expense allocation rule. See,
    OECD/G20 Base Erosion and Profit Shifting Project, Tax Challenges
    Arising from Digitalisation--Report on Pillar Two Blueprint, Inclusive
    Framework on BEPS (December 2020), p. 19.

    An even stricter U.S. GILTI as proposed by President Biden, which would
    more than double its effective rate of tax, would severely handicap the
    ability of American companies to compete successfully against their
    ---------------------------------------------------------------------------
    foreign-headquartered counterparts.

    The Administration has said that it wants to stop a ``race to the
    bottom.'' A unilateral approach by the United States--to impose a
    higher minimum tax on its companies while waiting for the rest of the
    world to follow--will not succeed. The rest of the world failed to
    follow when the United States kept its high corporate tax rate for over
    three decades: instead they purposefully set out to provide a more
    competitive tax system to attract global investment and jobs for their
    workforce. Nor did the rest of the world follow when the United States
    kept to its system of worldwide taxation: instead they adopted
    territorial tax systems that better allowed their multinational
    companies to compete in foreign markets and provide good jobs at home.

    Prior to 2017, many U.S. companies were approached by M&A dealmakers to
    consider combining with a foreign headquartered company and
    reincorporating in the foreign company's country. This would provide
    the U.S. company a more attractive tax system for its non-U.S. earnings
    and greater future growth opportunities. Those deals came to a halt
    after the 2017 act because the United States had established a more
    level playing field. Companies that had once left the United States
    began to return.\14\
    ---------------------------------------------------------------------------
        \14\ Richard Rubin and Jared S. Hopkins, Tax Cuts Help Keep U.S.
    Companies Home, Wall Street Journal, August 2, 2019.

    A return to a noncompetitive international tax system risks again
    reducing the ability of globally engaged American companies and their
    American workers to succeed in global markets. Thank you for the
    opportunity to submit a statement for the record for this hearing.
    Business Roundtable appreciates the opportunity to continue working
    with Congress and the Administration to ensure a competitive tax
    ---------------------------------------------------------------------------
    system.

                                     ______

                Letter Submitted by Anne-Marie Yarbrough Buzatu
    Dear Committee Members,

    I was born and raised in Texas, where I lived most of my life until I
    and my family moved to Switzerland more than 15 years ago. We didn't
    feel we had much choice. In August 2005, my husband was laid off from
    his job in the high-tech sector. We had two young boys aged 4 and 7,
    and I was working as a part-time consultant and a more than full-time
    mom. Once my husband lost his job, we suddenly were faced with
    extremely high health insurance costs (COBRA), significant student loan
    debts and a high monthly rent with no income. My husband applied for
    several jobs and had a few interviews, but the one he got was working
    in IT for the International Computing Center, a UN-affiliated computer
    services organization, located in Geneva, Switzerland.

    In Switzerland, I went back to school studying the impact of war and on
    international security and human rights. I subsequently managed to
    carve out a really fulfilling career where I work to limit the negative
    impacts of businesses on human rights, as well as work with the private
    sector to foster positive change, both on the ground as well as in the
    halls of international policy.

    I love the U.S. and have close ties with family members and several
    good friends who live there. In particular, both of my elderly parents
    are alive, but have been experiencing some serious health issues of
    late. Before the pandemic, I typically would visit them at least once a
    year, and it has been tough waiting on the sidelines, hoping that I
    will be able to see them again before too long. It is important to me
    that I am able to visit them, and to be able to spend more time with
    them should they need extra care and support, and more generally I love
    getting back to the U.S.. There are definitely things that I miss, like
    really good Tex-Mex (!) in an affordable restaurant, infinite sunsets
    over a West Texas sky, and easy, laid-back conversations with good
    friends and family.

    What I do not love is the U.S. taxation of people like me who live,
    work and pay taxes in a completely different tax system, which in many
    areas is completely incompatible with the U.S. tax system. As a matter
    of fact, the U.S. has three different distinct income tax regimes which
    creates different classes of taxation: 1. Residence--For U.S.
    residents, 2. U.S. Source--For non-resident aliens, 3.
    Extraterritorial--For Americans Abroad. This last regime to which I and
    my family are subject means that we don't get the same kinds of
    deductions and tax credits as our homeland-based compatriots. For
    example: I participate in an employer-
    contribution retirement program which is very similar to U.S. 401K
    programs: the employer matches my contributions, and I do not have to
    declare the employer nor my contributions on my Swiss taxes as they are
    paid, only when I take them out after retirement when I am likely
    earning much less. However, the U.S. taxes me on the employer
    contributions as well as my own contributions to the tax plan in the
    year that they are paid, so I am taxed by the U.S. on money I haven't
    even received, and likely at a higher tax rate than I would be at
    during retirement. Another example: my son is going to a university
    located in Berlin, Germany, however the school is not on the list of
    U.S. recognized educational institutions, so we are unable to deduct
    his tuition from our taxes.

    Furthermore, Swiss income taxes are structured completely differently
    from those of the U.S., and they are in most cases lower than the U.S.
    income tax rates. However, the cost of living in Switzerland is one of
    the highest in the world and is considerably higher than we were paying
    in Texas. People who visit from the U.S. are shocked at the prices in
    the stores and restaurants here, and renting/buying homes is extremely
    expensive. However, because of the relatively high salaries (in Geneva
    we have an appx. $25/hour min wage) and low taxes, these prices are
    generally affordable to people who work here. Less so for us: as ``U.S.
    persons,'' because we are unable to take many of the same deductions as
    our homeland compatriots, we essentially have to pay higher U.S. taxes
    than Americans living in the U.S., higher taxes than others who live
    and work in Switzerland and pay the higher Swiss prices. And to be very
    clear, we are not earning very high salaries, but rather are at that
    sour spot of earning just a little more than the Foreign Earned Income
    Exemption (FEIE) once things like our employer contributions to
    pensions and other benefits--much of which we don't get in pocket--are
    taken into account. As such, we pay U.S. taxes at a pretty high rate on
    income that doesn't make it into our bank account and given the high
    cost of living we have here, this means we are penalized financially
    relative to our colleagues who are working similar jobs.

    Moreover, as U.S. persons residing abroad, we are not able to take
    advantage of many of the tax credits that are available to those living
    in the U.S.. For example, in March 2018 we bought a Tesla Model 3 (the
    more affordable Tesla) and were under the impression that we would be
    able to get the $7,500 tax credit to help us offset the still
    significant cost. However, when we did our U.S. taxes, we learned that
    this tax credit was only available to those actually living in the
    U.S., not those living abroad. In a way I understand the rationale: our
    Tesla would not be directly benefitting those living in the U.S.
    (although it is contributing to an overall globally cleaner
    environment), and therefore we should get no incentive from the U.S. to
    buy it. However, by the same logic, we should not be paying taxes in
    the U.S. on income that we do not earn from there, to pay for an
    infrastructure and a Congress that does not directly benefit or
    represent us.

    Coming back to the incompatibility between Swiss and U.S. income tax
    systems, this is not just limited to the fact that similar Swiss
    retirement and education tax programs are not recognized by the U.S.,
    but also to completely different approaches in the manner of
    calculating income tax. For example, in Geneva the way that taxes are
    assessed in relationship to our townhouse is that the income tax
    authorities tax us on the fictional ``income'' we would have earned if
    we had been renting the house out (which we are not). The way they
    calculate this is very complicated and not fully known to me, but it
    has something to do with the type of property, when the property was
    built, where it is located, and the amount of income that we earn from
    our work (this last element helps to ensure that we will not be priced
    out of our home by property taxes even as property values rise).
    Furthermore, it is something we find out long after the fact of filing
    taxes. For example, for tax year 2020, we will file our Swiss tax
    returns in June of 2021 and we will get the calculation of this
    ``income tax on our property'' somewhere in October-November 2021, long
    after our U.S. tax returns are due and interest is being assessed on
    any unpaid amounts. Furthermore, its incompatibility with how U.S.
    assesses income and property taxes makes it really difficult to know
    how to include that in our tax returns. We tried to do it for a couple
    of years, but this did not seem to be accepted by the IRS, and then we
    had to pay additional taxes with penalties and interest. Now we do not
    even try to include these taxes we pay on our U.S. tax return, and so
    we are being double-taxed by both Swiss and U.S. jurisdictions on that
    income.

    When it comes to trying to get information, help and guidance from the
    IRS so that we can navigate these difficulties more easily, this is
    also not set up for those of us living abroad. Most of the time when I
    call the IRS, I get a message that the line is too busy and they are
    not accepting calls at that time. Sometimes I have gotten a message
    saying that the estimated wait is between a certain time, such as 7 to
    10 minutes, and then finally hung up after being on hold for more than
    30 minutes. Needless to say, there are no toll-free numbers for U.S.
    persons abroad, so of course we have to pay international long-distance
    rates. However, even many of the IRS online services are not available
    to those of us living outside of the U.S. (see below for an example).

    Another problem is that as ``U.S. persons'', nearly ALL banks will
    simply not open an account for us, which has huge implications on, for
    example, shopping for affordable mortgages from local/cantonal banks.

    Further, we are effectively banned from investing in any kind of
    stocks, bonds or mutual funds in our country of residence and
    nationality. We are getting older, and we wanted to try to invest in a
    mutual fund here to put aside a little extra money for our golden
    years. However, the only bank we found in Switzerland that would accept
    us as customers had a 250,000 Swiss Francs (about $270,000) minimum
    investment requirement--something that is definitely out of our league!
    Furthermore, we learned that even if we could and did invest in a
    mutual fund here in the country where we live (and now are also
    citizens of), that it would be treated by the U.S. as a ``Passive
    Foreign Investment Company'' and would be taxed at an exorbitant rate.

    Discrimination against me as a ``U.S. person'' has also impacted me
    professionally. After I was hired as the COO for a very small, non-
    profit Swiss NGO we learned that if I were given signatory rights on
    our organizational bank account, that the financial records of this
    Swiss organization would have to be sent to the IRS. Therefore, I do
    not have these rights, and I can't perform all of the functions of my
    role.

    Furthermore, filing and paying taxes in the U.S. is extremely
    complicated, and calculations/corrections made by the IRS are not
    transparent. We have consistently filed and tried to pay our taxes in
    accordance with the rules as we understand them, although the tax code
    is not exactly straight-forward especially for people like us living
    outside the U.S.. Sometimes we get bills years later without any
    explanation as to why or how new calculations were made. For example,
    we recently got a bill from the IRS from 2014 for nearly $8,000(!) This
    is a lot of money for us. I wrote the IRS and asked for an explanation
    of how they calculated this amount more than six years after the fact
    and got no response except for a threatening letter that they are going
    to levy taxes on our assets. I tried to go online to get a transcript
    of how they calculated this tax, however the online service is not
    available to persons who live abroad! There is a phone-in/write-in
    service to obtain tax transcripts, but it only goes back to the
    previous three years' returns. I tried to call anyway and was not able
    to get through.

    I am not against paying taxes, and fully recognize the necessity of
    them. If I were to earn any money from U.S. sources, it would make
    sense that I pay U.S. tax rates under the U.S. tax system, but not that
    I pay Swiss taxes on top of them. If every country taxed because of
    nationality (or even former permanent residence status) with no regard
    to the other nationalities and their accompanying tax systems, the
    impacts would be devastating: many persons here in Geneva have 3, 4 or
    even more nationalities, and having to satisfy the requirements of
    multiple different, incompatible national income tax systems on income
    earned in one country would not be sustainable, nor would it be fair.
    In this respect the U.S. is the only country (outside of Eritrea) that
    taxes on the basis of nationality/permanent residence, but this also
    highlights how incongruent and out of step this practice is with the
    rest of the world, and for its citizens/permanent residents who happen
    to reside in other countries. Every time Congress makes a change to the
    tax code, this directly impacts me and those of us living outside of
    the U.S. who are also subject to other tax code regulations. However,
    these impacts are rarely if ever discussed by members of Congress, and
    certainly not studied in depth as to how they will impact/interact with
    the other 190+ countries' income tax regimes where U.S. persons may be
    living, resulting in devastating unintended consequences on ordinary
    folks: if I were rich, or a multinational, I would have the resources
    to figure out how to get around the tax system, but I am not.

    Finally, I cannot express the anger and frustration I feel when I read
    that Amazon and 54 other major U.S. corporations, as recently reported
    in The New York Times,\1\ paid ZERO income taxes on incredible, record-
    setting profits in the many billions. How is it that we, a middle-class
    family who hasn't even lived or earned any income in the U.S. for more
    than 15 years, are effectively paying more income taxes than Amazon?
    ---------------------------------------------------------------------------
        \1\ https://www.nytimes.com/2021/04/02/business/economy/zero-
    corporate-tax.html.

    ---------------------------------------------------------------------------
    Therefore, we ask you to:

        (1)  Change the system of citizen-based taxation of individuals to
    that of individual taxation on income earned from U.S. sources (for a
    relatively simple and fast interim fix to this issue by the U.S.
    Treasury while waiting on lengthier legislative processes, please read
    this article);\2\
    ---------------------------------------------------------------------------
        \2\ https://papers.ssrn.com/sol3/
    papers.cfm?abstract_id=3795480&fbclid=IwAR10eXmPraGW3
    Wuaa_VgnL7HYObjUBZz3302cglQOsT2rPyxtmy5SS7ibgU.
    ---------------------------------------------------------------------------
        (2)  Create a special committee that looks at the impacts of U.S.
    taxation on its nationals residing abroad so that any changes made to
    the tax code are reviewed by this body to ensure that our situations
    are taken into consideration in such regulation and to protect against
    unintended consequences; and finally
        (3)  To include formal representation of Americans living abroad in
    our representative bodies, as the approximately 9 million of us living
    abroad need a voice. Switzerland and France include seats for their
    citizens residing abroad in their Parliaments, and the U.S. can and
    should do the same.

    We should not be penalized and discriminated against just because we
    were born in, had American parents or lived a significant time in the
    U.S., and reside in another country. Furthermore, we can be an
    important resource to the U.S.--we can play the role of ``local
    ambassador'' in our countries of residence, helping to bridge
    differences and forge understandings between the U.S. and the countries
    we call home, which is increasingly important in our highly
    interconnected, shrinking world.

    As a last note, it is more than somewhat ironic that the U.S.
    ostensibly got its start over a tax dispute with its overseas colonial
    parent, with American revolutionaries crying out the slogan ``no
    taxation without representation,'' launching a war that brought about
    the birth of our nation, and yet it taxes folks like me who earn their
    income completely outside the U.S. system and have no effective
    representation on the U.S.-created impacts we face living abroad. That
    notion of justice, of democratic representation and fair taxation is
    fundamental to the very identity of the United States, and yet somehow
    it is the only developed country that burdens individuals such as
    myself with a tax imposition that does not take into account the
    situations in which we are living, and which prevents us from fully
    participating in the societies of which we are part.

    Many have said that you, our representatives, don't care for U.S.
    persons residing abroad, that we don't matter enough in terms of votes
    or funding, that our situations don't play well on media platforms in
    terms of messaging, that we don't have enough pull or importance to get
    any attention. However, I am still hoping that you can care about
    something that is wrong and unfair, even if it isn't politically
    expeditious. In fact, it is my American-bred idealism and pragmatic,
    can-do spirit that make me believe that we can work together to develop
    an income tax system that is fair and not unduly burdensome, and that
    honors those fundamental American values which we all hold dear.

    I thank you for your time and attention, and hope that this submission
    will be fully considered by the Committee. I would be happy to provide
    any additional information or support to help you better understand the
    implications of the U.S. income tax system on folks like me who live in
    other countries.

    Sincerely,

    Anne-Marie Yarbrough Buzatu

                                     ______

                      Letter Submitted by Austin M. Byrne
    I am a proud citizen of the United States of America. I was born and
    bred as an American and a Texan, and I carry that as part of my
    identity wherever I go. I live outside the United States, in Australia,
    where I am a Permanent Resident, a tax resident, and where I am subject
    to full taxation.

    We are due with our first born next month. We hope to return to America
    in the next few years, though we're worried the cost of taxes will
    extend our plans, requiring us to save for many more years.

    As high income earners, my wife and I are subject to double taxation on
    the majority of our salary and benefits. My tax bill to the U.S. is
    often in the hundreds of thousands of dollars at the highest marginal
    bracket. I pay a similar amount to the Australian Tax Office each year.
    Our effective tax rate for 2019 was around 60%. Our accountants are
    wealthy from preparing our returns. As a result, we have struggled to
    save for a home to raise our new family.

    I moved from America three years ago, to pursue career opportunities.
    Although the days sometimes go slowly, the years go quickly. I long ago
    realized that although I will always love America, I am living
    permanently abroad. I am a tax resident of my country of residence. I
    am required to organize my financial and retirement planning in that
    country. The problem I have is that the U.S. tax laws make it very
    difficult for me to live the same kind of life that my friends and
    neighbours live. You see, they are subject to only one tax system. As a
    U.S. citizen, I am subject to the tax system where I live and the U.S.
    tax system. Those systems are generally not compatible. Most attempts
    at responsible financial/retirement planning where I live are
    frustrated by the need to comply with U.S. tax laws. How can this be
    fair? How can the United States impose taxation on the non-U.S. income
    and assets of a person who is a tax resident of another country--with
    no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    Surely the U.S. budget doesn't hinge on the taxable income of a few
    million citizens abroad.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational''. I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't--for me and
    many others. If you want your skilled, high income earners to bring
    their experience and money back into the U.S., make it easier for them
    to do so. The current rules make it harder to move back to the USA.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                    Letter Submitted by Carolyn Dara Campeau
    To Whom It May Concern:

    The U.S. is the only advanced country that taxes its citizens on their
    world-wide income when those citizens live, work and pay tax in another
    country. I not only pay taxes in Canada where I live but I also file a
    tax return to the IRS every year. Declaring non-U.S. income on IRS
    forms is very complicated. Hiring tax return preparers that understand
    the U.S. tax system as well as the Canadian tax system can be very
    expensive, which makes meeting U.S. tax obligations a serious financial
    burden even if no tax is owed.

    I'm an ordinary American. I moved to Canada when I was 16 years old
    with my family (my father accepted an opportunity to work in Canada). I
    have lived in Canada for 50 years. I am not wealthy. I don't have room
    in my household budget to spend on tax return preparers, and I
    certainly cannot afford to be double-taxed.

    I value my American citizenship. I pay attention to U.S. politics as
    much if not more than the average citizen and I vote in every election
    for which I'm eligible. But I don't think it's fair that ordinary,
    working class Americans like me, making a living and paying tax abroad,
    are subject to inordinately complex and sometimes punitive U.S. tax
    filing.

    The current law is costly, punishing, and unfair, and it is causing
    some Americans abroad to consider renouncing U.S. citizenship. I hope
    that shocks you because it shocks me.

    I am asking the Senate Finance Committee to hold hearings on Americans
    abroad and U.S. taxation. I encourage you to invite testimony from
    experts who can provide an accurate profile of the Americans abroad
    community and describe the burden that U.S. tax filing places upon us.
    I urge you to also explore the implications of a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation.

    Thank you.

    Carolyn Dara Campeau

                                     ______

                          Letter Submitted by Amy Catt
    I am a proud citizen of the United States of America. I live outside
    the United States in Great Britain where I am a tax resident and where
    I am subject to full taxation.

    I am an emigrant from America. I lived in America the first 32 year of
    my life, but we never know where life will take us. I met my British
    husband and moved to the United Kingdom 20 years ago. Although the days
    sometimes go slowly, the years go quickly. I long ago realized that
    although I will always love America, I am living permanently abroad. I
    am a tax resident of my country of residence. I am required to organize
    my financial and retirement planning in that country. The problem I
    have is that the U.S. tax laws make it very difficult for me and my
    family to live the same kind of life that my friends and neighbours
    live. You see, they are subject to only one tax system. As a U.S.
    citizen, I am subject to the tax system where I live and the U.S. tax
    system. Those systems are generally not compatible. Most attempts at
    responsible financial/retirement planning where I live are frustrated
    by the need to comply with U.S. tax laws. When FATCA was imposed, I had
    to give up all joint finances with my husband. This was to protect my
    foreign spouses income from being reported to a foreign government as
    he is not a USA citizen. How can this be fair? How can the United
    States set Womens rights back a few hundred years so I don't have
    access to my ``foreign'' husbands bank account that pays our household
    bills? How can the United States impose taxation on the non-U.S. income
    and assets of a person who is a tax resident of another country--with
    no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example 20%
    VAT) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxable on that
    income, in the country where I reside and do not live in the United
    States. I do not own property in the United States, I work for a UK
    registered charity. There is no other advanced country in the world
    that imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the U.S.A. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on
    with my life without interference from the Internal Revenue Code of the
    United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Ulises Ceja
    I am a proud citizen of the United States of America. I live outside
    the United States in Paris, France where I am a tax resident and where
    I am subject to full taxation.

    I am an American expat. I am temporarily living outside the United
    States for work and career advancement reasons. When I first moved
    abroad I learned a lot. I learned that other countries have well
    developed tax systems that require payment of a wide range of taxes. I
    can tell you that I pay a lot in taxes. I can also tell you that the
    U.S. tax system treats my non-U.S. income unfairly. The fact that I am
    temporarily living and working abroad doesn't mean that I don't wish to
    plan for retirement, whether that is France or eventually back home in
    the U.S..

    I do not live ``offshore.'' I do live in a country where I pay high
    income taxes. I also pay additional kinds of taxes (example VAT) to my
    country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not currently live in the
    United States. There is no other advanced country in the world that
    imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one. This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experience running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' But I am an American citizen
    currently living in another country. It doesn't make me less American.
    It does, however, mean that I am subject to the laws of the country
    where I live. I am not GILTI of anything. I ask only to be able to
    carry on my life without interference from the Internal Revenue Code of
    the United States if I choose to start a small business (as many other
    U.S. expats have) and/or while I reside outside of the U.S..

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because most of these essential activities are
    taking place in my country of residence and not in the United States.
    Some of my retirement investments will look like foreign investments
    for the United States, but local to me. In addition, the United States
    impose taxes on things (for example sale of principal residence) when
    my country of residence does not. Because I am required to live my life
    with the USD as my functional currency, I am subject to ``fake income''
    on nothing but changes in the exchange rate. As a tax resident of both
    the United States and my country of residence, I get the worst of both
    tax systems.

    Foreign tax rules and/or the IRS's Foreign Earned Income Exclusion do
    well with solving some of these problems. But please don't believe that
    they solve everything. I have learned that other fellow expats,
    especially hardworking small business owners, are subject to heavy tax
    obligations.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The timing is right for the United States to abandon its
    extraterritorial tax regime and join the rest of the world in adopting
    a system of residence-based taxation.

    Looking forward to hearing from you and learning more about the
    progress the Committee expects to make on this important topic.

    Kind regards,

    Ulises Ceja

                                     ______

                            Center for Fiscal Equity

                          14448 Parkvale Road, Suite 6

                              Rockville, MD 20853

                          fiscalequitycenter@yahoo.com

                        Statement of Michael G. Bindner

    Chairman Wyden and the Ranking Member Crapo, thank you for the
    opportunity to submit these comments for the record to the Committee on
    Finance. Our comments will begin where our submission from March 16th
    on the Effect of the U.S. Tax Code on Domestic Manufacturing left off.
    We are adding an additional attachment of the 2017 Tax Cuts and Jobs
    Act. To complete the record for this hearing, we are also including
    attachments on tax reform and trade policy.

    The main feature of the last tax reform, which I call the Tax and Job
    Cuts Act, was the decrease in the corporate tax rate, which was
    designed to bring money being held offshore for tax reasons back to the
    United States, where it could be used for investment in plant and
    materials, leading to job growth.

    To not pervert incentives toward choosing the corporate form, pass-
    through provisions were added to the tax code. Thus, taxing the returns
    from capital from any source would be within the same range, roughly
    21%, give or take, to include Affordable Care Act and Pease provisions.

    Generally, when doing tax reform, the idea is to lower rates while
    broadening the base. This was not done in the Job Cuts Act. Without
    cuts to tax benefits to reward profit, the Act was simply a give-away.

    The impact of the Act was to ring a starting bell in a race to the
    bottom for other nations to cut their corporate rates further. Now the
    race is on to find new sources of revenue lost due to this race, like
    additional tax on online profit.

    Whether intentionally or not, the Act was essentially a test of
    trickle-down economics, It failed.

    Even before the pandemic, GDP growth slumped from the 3% range
    experienced in the last few years of the Obama Administration, which
    carried over through the first two years of the next administration.
    The growth remained the same because tax policy had not changed.
    Changing tax policy took money out of consumption and put it into
    speculation.

    The cuts overall gave Wall Street the seed money to further fuel
    cryptocurrency and to bid up the price of exchange traded funds. The
    new feature in ETFs was the addition of mortgage backed securities
    which allowed Steve Mnuchin and Wilbur Ross, with their partners, to
    cash out the value of their single family rental holdings.

    Stop me if you have heard this story before.

    Without the pandemic and the associated assistance to prop up the bonds
    in question, the crypto and EFT bubbles were about to burst.

    Investment in savings instruments is not really investment as it exists
    as part of Gross Domestic Product. GDP is based on productive activity
    in the real economy: government purchases, household consumption, net
    exports and investment in plant and equipment.

    As an aside, the government's impact comes in more than just buying
    stuff. It is a major contributor to household consumption through
    others and including the stuff it buys. It buys or creates natural
    resources (food, oil, land, and water), supplies, buildings, military
    assets, health care (military, civil service, old age, disabled,
    Indian, international, indigent), transportation infrastructure roads,
    airports, bridges, spaceports, and private capital used to make
    government purchases.

    It also distributes current and future household income via employee
    salaries, military pay, government pensions, old age, survivors and
    disability income, interest on government trust funds, contractor pay
    and benefits, Temporary Assistance to needy Families, Food Stamps,
    supplemental security income, temporary disability income, refundable
    income and child credits, pays net interest to bondholders, and
    distribution of resource payments to tribal nations (land rentals and
    resource extraction). This amounts to more than half of household
    income resulting in consumption and savings.

    Consumption from these income streams also creates private sector
    income, leading to consumption and savings (second and third order--
    which is private sector spending and savings resulting from private
    sector consumption). All of this leads to investment in land, plant and
    equipment for household consumption and exports.

    Tax collections and double counting are the means by which all this
    spending goes round and round. The double and triple counting is what
    is known as the multiplier effect.

    Investment in plant and equipment happens when households have money
    (for example, through a higher minimum wage or child tax credit, so
    they buy more goods and services. More goods and services on a long
    term horizon cause manufacturers to purchase what is needed to make
    more: plant and equipment.

    The cost of funds has no impact on the decision to invest, only on how
    to raise the money. Firms with an excess of money, but a smaller
    customer base, will not invest. Firms with an expanding base will find
    the money. Any investment decision which depends on bringing money back
    to the U.S. for tax reasons is probably not wise in the long run.

    So where did the money go? It certainly did not go to workers. GDP the
    year following the Act declined by 1% (the one year lag is how long it
    takes for tax and spending changes to circulate through the economy).
    Answering the question would require an analysis of the executive
    compensation information provided in the annual reports of firms whose
    tax rates were reduced.

    To date, I have not seen such an analysis. No think tank who is funded
    by donations from the holders of capital would ever fund such a thing.

    Taxing labor and profit in separate systems generally distorts the
    allocation between labor and capital. Consumption taxes, by nature, tax
    all value added at the same rate. This is much better for workers and
    makes subsidies built into the tax code favoring one or another
    activity impossible.

    The existence of corporate income tax subsidies carry with them the
    very justified impression that less well connected industries must pay
    higher taxes in order to preserve these tax subsidies. Worse is the
    perception, which would arise with their use in an invoice or
    subtraction value added taxes (I-VAT and S-VAT), that such subsidies
    effectively result in lower wages across the economy. Such a
    perception, which has some basis in reality, would be certain death for
    any subsidy.

    One must look deeper into the nature of these activities to determine
    whether a subsidy is justified, or even possible. If subsidized
    activities are purchased from another firm, the nature of consumption
    taxes alleviate the need for any subsidy at all, because the VAT paid
    implicit in the fees for research and exploration would simply be
    passed through to the next level on the supply chain and would be
    considered outside expenditures for subtraction VAT calculation and
    therefore not taxable.

    In the oil industry, if research and exploration is conducted in house,
    then the labor component of these activities would be taxed under both
    the I-VAT and the S-VAT, as they are currently taxed under personal
    income and payroll taxes now.

    The only real issue is whether the profits or losses from these
    activities receive special tax treatment. Because profit and loss are
    not separately calculated under such taxes, which are essentially
    consumption taxes, the answer must be no. The ability to socialize
    losses and privatize profits through the S-VAT would cease to exist
    with the tax it is replacing.

    To return to the corporate, pass-through, dividend, Pease, Affordable
    Care Act SM taxes and capital gains taxes, a uniform tax rate will
    limit gaming. We propose enactment of an Asset Value Added Tax, as
    described in Attachment Two.

    The range of acceptable rates has been narrowing over the past 40
    years. President Reagan set the tax to 28% at the top, with a 33%
    bubble. Bush 41 settled on a 31% rate, which raised more from the
    highest incomes but, in a quirk of math, when combined with the impact
    of the FICA cap, left a proportional tax rate of 30.9% in place for
    everyone. The increased money from the wealthy still caused later
    growth.

    President Clinton took rates higher (with a top rate on capital at
    39.6%). He then cut that rate to 28%, which fueled the tech bubble (our
    best minds were working on IPOs, not innovation). This led to recession
    as the bubble burst--and the further cutting of capital tax rates by
    Bush 43 to 20% (but leaving corporate rates at 35%). Obama put
    individual capital rates back to 25% (including Pease and ACA SM),
    which Trump-Ryan notched down by a bit over 1%. President Biden now
    proposes a 28% rate for everything (as far as I know--not moving it all
    to the same rate invites gaming).

    We propose an asset value tax with a compromise 26% rate (halfway
    between the current 24% and the Biden 28%). We also propose higher tier
    subtraction VAT rates for salaried income, with a top tier rate of 26%
    on all income over $340,000. At $425,000, additional salary surtaxes
    paid by individuals would kick in, with a top surtax rate of 26% for
    salaries over $680,000. At this level, all additional dollars received,
    whether through asset or salary income, would be taxed at 26%. Shifting
    to a separate business entity would result in a 26% top rate after
    $340,000. Setting up multiple businesses to minimize taxation would be
    penny wise and pound foolish. It would cost more to pay the accountants
    than to pay the full tax, and anti-abuse language could guard against
    this.

    Why would wealthy taxpayers agree to such reforms? We cannot simply
    vote in more than the cosmetic reforms proposed by the President and
    not expect backlash in 2024. As was the case with establishing Social
    Security, the rich need to want this. I discuss why they should in
    Attachment Three on the national debt. The issue has come up recently.
    Let me provide light to balance the heat.

    The table is a bit out of date. It is based on the debt figures from
    last summer and the 2017 tax year. Revisions are ongoing and will be
    released (with copies to the Committee) within the next 6 weeks.

    Attachment Four discusses how tax reform affects trade, both in terms
    of union rights and in joining everyone else in using the zero rating
    of value added taxes for export, making American manufacturing more
    attractive. We also note how internationally based employee ownership
    of both subsidiaries and supply chains discourages wage and currency
    arbitrage, which is the best way to share the gains of reform with
    workers internationally while removing the incentive to send production
    outside our borders.

    Note that adding border-adjustable goods and services taxes allows the
    removal of other trade barriers with no loss of jobs. The last four
    years have shown us an extreme example of how not to use tariffs. The
    prior administration used economic policy as gunboat diplomacy, but
    without having a navy.

    Thank you for the opportunity to address the committee. We are, of
    course, available for direct testimony or to answer questions by
    members and staff.

     Attachment One--The Tax and Job Cuts Act

    The Tax and Job Cuts Act (not a typo) was a classic piece of Austrian
    Economics, where booms are encouraged and busts happen with no
    bailouts. Strong companies and best workers keep jobs and the devil
    takes the hindmost. It is economic Darwinism at its most obvious, but
    here is a safety valve. When tax cuts pass, Congress loses all fiscal
    discipline, the Budget Control Act baseline discipline is (as it should
    be) suspended and deficits grow. Bond purchasers pick up the slack
    caused by the TCJA, which they will as long as we run trade deficits,
    unless the President's economic naivete ruins that for us.

    Modern economics has become infected with the idea that higher tax
    rates and lower public spending hurt the economy. By definition, this
    is not the case. The exact opposite is true. To refresh our memories of
    what is in the U.S. Code and most basic economics textbooks, Gross
    Domestic Product equals equal government purchases, consumption from
    government employee, contractor, transfer recipient and second order
    private sector spending, which leads to private sector investment, and
    exports net of imports (which creates a source of funds for debt
    finance).

    Anything that is not part of GDP is considered ``savings'' or in
    reality, is asset inflation. If you want to end poverty, give poor
    people and retirees more money and the economy will grow. Increase
    government expenditure (even bombers) and the economy will grow,
    including for the now notorious upper middle class.

    Lower tax rates also made money available to chase the same supply of
    investment instruments, which bid up their price, and caused the
    invention of a whole range of new products which would be built up and
    sold by the emerging financial class, who would profit-take and watch
    what they created go bust and start yet another modern recession,
    especially the Great Recession just experienced. Only higher tax rates
    or increased deficit spending control such asset inflation (and the
    consumption cycles associated with them--which Marx thought was the
    driver of the boom bust cycle--Marx had a failure of imagination).

    A key part of our proposals is to increase income tax revenue from the
    very wealthy through our income surtax. The higher the marginal tax
    rate goes, the less likely shareholders and CEOs will go after worker
    wages in the guise of productivity while pocketing the gains for
    themselves. Since shareholders usually receive a normal profit through
    dividends, it is the CEO class that gets rich off of workers unless tax
    rates are high enough to dissuade them.

     Attachment Two--Tax Reform, Center for Fiscal Equity, March 5, 2021

    Individual payroll taxes. These are optional taxes for Old-Age and
    Survivors Insurance after age 60 for widows or 62 for retirees. We say
    optional because the collection of these taxes occurs if an income
    sensitive retirement income is deemed necessary for program acceptance.
    Higher incomes for most seniors would result if an employer
    contribution funded by the Subtraction VAT described below were
    credited on an equal dollar basis to all workers. If employee taxes are
    retained, the ceiling should be lowered to $85,000 to reduce benefits
    paid to wealthier individuals and a $16,000 floor should be established
    so that Earned Income Tax Credits are no longer needed. Subsidies for
    single workers should be abandoned in favor of radically higher minimum
    wages.

    Wage Surtaxes. Individual income taxes on salaries, which exclude
    business taxes, above an individual standard deduction of $85,000 per
    year, will range from 6.5% to 26%. This tax will fund net interest on
    the debt (which will no longer be rolled over into new borrowing),
    redemption of the Social Security Trust Fund, strategic, sea and non-
    continental U.S. military deployments, veterans' health benefits as the
    result of battlefield injuries, including mental health and addiction
    and eventual debt reduction. Transferring OASDI employer funding from
    existing payroll taxes would increase the rate but would allow it to
    decline over time. So would peace.

    Asset Value-Added Tax (A-VAT). A replacement for capital gains taxes,
    dividend taxes, and the estate tax. It will apply to asset sales,
    dividend distributions, exercised options, rental income, inherited and
    gifted assets and the profits from short sales. Tax payments for option
    exercises and inherited assets will be reset, with prior tax payments
    for that asset eliminated so that the seller gets no benefit from them.
    In this perspective, it is the owner's increase in value that is taxed.

    As with any sale of liquid or real assets, sales to a qualified broad-
    based Employee Stock Ownership Plan will be tax free. These taxes will
    fund the same spending items as income or S-VAT surtaxes. This tax will
    end Tax Gap issues owed by high income individuals. A 26% rate is
    between the GOP 24% rate (including ACA-SM and Pease surtaxes) and the
    Democratic 28% rate. It's time to quit playing football with tax rates
    to attract side bets.

    Subtraction Value-Added Tax (S-VAT). These are employer paid Net
    Business Receipts Taxes. S-VAT is a vehicle for tax benefits, including

          Health insurance or direct care, including veterans' health care
    for non-battlefield injuries and long term care.
          Employer paid educational costs in lieu of taxes are provided as
    either employee-directed contributions to the public or private
    unionized school of their choice or direct tuition payments for
    employee children or for workers (including ESL and remedial skills).
    Wages will be paid to students to meet opportunity costs.
          Most importantly, a refundable child tax credit at median income
    levels (with inflation adjustments) distributed with pay.

    Subsistence level benefits force the poor into servile labor. Wages and
    benefits must be high enough to provide justice and human dignity. This
    allows the ending of state administered subsidy programs and
    discourages abortions, and as such enactment must be scored as a must
    pass in voting rankings by pro-life organizations (and feminist
    organizations as well). To assure child subsidies are distributed, S-
    VAT will not be border adjustable.

    The S-VAT is also used for personal accounts in Social Security,
    provided that these accounts are insured through an insurance fund for
    all such accounts, that accounts go toward employee ownership rather
    than for a subsidy for the investment industry. Both employers and
    employees must consent to a shift to these accounts, which will occur
    if corporate democracy in existing ESOPs is given a thorough test. So
    far it has not. S-VAT funded retirement accounts will be equal-dollar
    credited for every worker. They also have the advantage of drawing on
    both payroll and profit, making it less regressive.

    A multi-tier S-VAT could replace income surtaxes in the same range.
    Some will use corporations to avoid these taxes, but that corporation
    would then pay all invoice and subtraction VAT payments (which would
    distribute tax benefits. Distributions from such corporations will be
    considered salary, not dividends.

    Invoice Value-Added Tax (I-VAT) Border adjustable taxes will appear on
    purchase invoices. The rate varies according to what is being financed.
    If Medicare for All does not contain offsets for employers who fund
    their own medical personnel or for personal retirement accounts, both
    of which would otherwise be funded by an S-VAT, then they would be
    funded by the I-VAT to take advantage of border adjustability. I-VAT
    also forces everyone, from the working poor to the beneficiaries of
    inherited wealth, to pay taxes and share in the cost of government.
    Enactment of both the A-VAT and I-VAT ends the need for capital gains
    and inheritance taxes (apart from any initial payout). This tax would
    take care of the low-income Tax Gap.

    I-VAT will fund domestic discretionary spending, equal dollar employer
    OASI contributions, and non-nuclear, non-deployed military spending,
    possibly on a regional basis. Regional I-VAT would both require a
    constitutional amendment to change the requirement that all excises be
    national and to discourage unnecessary spending, especially when
    allocated for electoral reasons rather than program needs. The latter
    could also be funded by the asset VAT (decreasing the rate by from
    19.5% to 13%).

    As part of enactment, gross wages will be reduced to take into account
    the shift to S-VAT and I-VAT, however net income will be increased by
    the same percentage as the I-VAT. Adoption of S-VAT and I-VAT will
    replace pass-through and proprietary business and corporate income
    taxes.

    Carbon Value-Added Tax (C-VAT). A Carbon tax with receipt visibility,
    which allows comparison shopping based on carbon content, even if it
    means a more expensive item with lower carbon is purchased. C-VAT would
    also replace fuel taxes. It will fund transportation costs, including
    mass transit, and research into alternative fuels (including fusion).
    This tax would not be border adjustable.

    Summary

    This plan can be summarized as a list of specific actions:

    1. Increase the standard deduction to workers making salaried income of
    $425,001 and over, shifting business filing to a separate tax on
    employers and eliminating all credits and deductions--starting at 6.5%,
    going up to 26%, in $85,000 brackets.

    2. Shift special rate taxes on capital income and gains from the income
    tax to an asset VAT. Expand the exclusion for sales to an ESOP to
    cooperatives and include sales of common and preferred stock. Mark
    option exercise and the first sale after inheritance, gift or donation
    to market.

    3. End personal filing for incomes under $425,000.

    4. Employers distribute the child tax credit with wages as an offset to
    their quarterly tax filing (ending annual filings).

    5. Employers collect and pay lower tier income taxes, starting at
    $85,000 at 6.5%, with an increase to 13% for all salary payments over
    $170,000 going up 6.5% for every $85,000-up to $340,000.

    6. Shift payment of HI, DI, SM (ACA) payroll taxes employee taxes to
    employers, remove caps on employer payroll taxes and credit them to
    workers on an equal dollar basis.

    7. Employer paid taxes could as easily be called a subtraction VAT,
    abolishing corporate income taxes. These should not be zero rated at
    the border.

    8. Expand current state/federal intergovernmental subtraction VAT to a
    full GST with limited exclusions (food would be taxed) and add a
    federal portion, which would also be collected by the states. Make
    these taxes zero rated at the border. Rate should be 19.5% and replace
    employer OASI contributions. Credit workers on an equal dollar basis.

    9. Change employee OASI of 6.5% from $18,000 to $85,000 income.

    Attachment Three--The Debt as Class Warfare, September 24, 2020

    Visibility into how the national debt, held by both the public and the
    government at the household level, sheds light on why Social Security,
    rather than payments for interest on the public debt, are a concern of
    so many sponsored advocacy institutions across the political spectrum.

    Direct household attribution exists through direct bond holdings,
    income provided by Social Security payments and secondary financial
    instruments backed with debt assets. Using the Federal Reserve Consumer
    Finance Survey and federal worker and Social Security payment and tax
    information, we have calculated who owes and who owns the national debt
    by income quintile. Federal Reserve and Bank holdings are attributed
    based on household checking and savings account sizes.

    Responsibility to repay the debt is attributed based on personal income
    tax collection. Payroll taxes create an asset for the payer, so they
    are not included in the calculation of who owes the debt. Calculations
    based on debt held when our study on the debt was published,
    distributed based on the latest data (2017) from the IRS Data Book show
    a ratio of $16.5 of debt for every dollar of income tax paid.

    This table shows a summary level distribution of income, national debt
    and debt assets in three groupings based on share of Adjusted Gross
    Income received, rather than by number of households. This answers the
    perennial question of who is in the middle class.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     The bottom 75% of taxpaying units hold few, if any, public debt
    assets in the form of Treasury Bonds or Securities or in accounts
    holding such assets. Their main national debt assets are held on their
    behalf by the Government. They are owed more debt than they owe through
    taxes.

    The next highest 20% (the middle class), hold few bonds, a third of
    bond-backed financial assets and a quarter of government held
    retirement assets.

    The top 5% (roughly 8.5% of households) own the vast majority of non-
    government retirement holdings and collect (and roll-over) most net
    interest payments. This stratum owns very little of retirement assets
    held by the government, hence their interest in controlling these
    costs. Their excess liability over assets is mostly attributable to
    internationally held debt. Roughly $4 Trillion of this debt is held by
    institutions, with the rest held by individual bond holds, including
    debt held by members of this stratum in off-shore accounts.

    Source: Settling (and Squaring) Accounts: Who Really Owes the National
    Debt? Who Owns It? available from Amazon at https://www.amazon.com/dp/
    Bo8FROFF8S.

    Attachment Four--Trade Policy

    Consumption taxes could have a big impact on workers, industry and
    consumers. Enacting an I VAT is far superior to a tariff. The more
    government costs are loaded onto an I-VAT the better.

    If the employer portion of Old Age and Survivors Insurance, as well as
    all of disability and hospital insurance are decoupled from income and
    credited equally and personal retirement accounts are not used, there
    is no reason not to load them onto an I-VAT. This tax is zero rated at
    export and fully burdens imports.

    Seen another way, to not put as much taxation into VAT as possible is
    to enact an unconstitutional export tax. Adopting an I-VAT is superior
    to its weak sister, the Destination Based Cash Flow Tax that was
    contemplated for inclusion in the TCJA. It would have run afoul of WfO
    rules on taxing corporate income. I-VAT, which taxes both labor and
    profit, does not.

    The second tax applicable to trade is a Subtraction VAT or S-VAT. This
    tax is designed to benefit the families of workers through direct
    subsidies, such as an enlarged child tax credit, or indirect subsidies
    used by employers to provide health insurance or tuition reimbursement,
    even including direct medical care and elementary school tuition. As
    such, S-VAT cannot be border adjustable. Doing so would take away
    needed family benefits. As such, it is really part of compensation.
    While we could run all compensation through the public sector.

    The S-VAT could have a huge impact on long term trade policy, probably
    much more than trade treaties, if one of the deductions from the tax is
    purchase of employer voting stock (in equal dollar amounts for each
    worker). Over a fairly short period of time, much of American industry,
    if not employee-owned outright (and there are other policies to
    accelerate this, like ESOP conversion) will give workers enough of a
    share to greatly impact wages, management hiring and compensation and
    dealing with overseas subsidiaries and the supply chain--as well as
    impacting certain legal provisions that limit the fiduciary impact of
    management decision to improving short-term profitability (at least
    that is the excuse managers give for not privileging job retention).

    Employee-owners will find it in their own interest to give their
    overseas subsidiaries and their supply chain's employees the same deal
    that they get as far as employee-ownership plus an equivalent standard
    of living. The same pay is not necessary, currency markets will adjust
    once worker standards of living rise. Attachment Three further
    discusses employee ownership.

    Over time, ownership will change the economies of the nations we trade
    with, as working in employee-owned companies will become the market
    preference and force other firms to adopt similar policies (in much the
    same way that, even without a tax benefit for purchasing stock,
    employee-owned companies that become more democratic or even more
    socialistic, will force all other employers to adopt similar measures
    to compete for the best workers and professionals).

    In the long run, trade will no longer be an issue. Internal company
    dynamics will replace the need for trade agreements as capitalists lose
    the ability to pit the interest of one nation's workers against the
    others. This approach is also the most effective way to deal with the
    advance of robotics. If the workers own the robots, wages are swapped
    for profits with the profits going where they will enhance consumption
    without such devices as a guaranteed income.

                                     ______

                        Letter Submitted by John Chidiac
    I am a proud citizen of the United States of America. I live outside
    the United States in Canada where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America because I could not find decent
    employment in the United States over 50 years ago and was not able to
    find employment despite trying from 1980 to 1990. I therefore had to
    retire in Canada because I could not afford to move back to the United
    States and pay for health insurance and expenses.

    How can the United States impose taxation on non-U.S. income and assets
    of a person who is not a resident of the United States? Didn't the
    revolution of 1776 settle the question of ``taxation without
    representation''? Has the United States Congress one as mad as King
    George in imposing taxes on tea in the colonies?

    Sure I love America. But, we never know where life will take us. I
    moved from America many years ago. Although the days sometimes go
    slowly, the years go quickly. I long ago realized that although I will
    always love America, I am living permanently abroad. I am a tax
    resident of my country of residence. I am required to organize my
    financial and retirement planning in that country. The problem I have
    is that the U.S. tax laws make it very difficult for me to live the
    same kind of life that my friends and neighbours live. You see, they
    are subject to only one tax system. As a U.S. citizen, I am subject to
    the tax system where I live and the U.S. tax system. Those systems are
    generally not compatible. Most attempts at responsible financial/
    retirement planning where I live are frustrated by the need to comply
    with U.S. tax laws. How can this be fair? How can the United States
    impose taxation on the non-U.S. income and assets of a person who is a
    tax resident of another country--with no economic connection to the
    United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?
        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                    Letter Submitted by Peter Chidiac, Ph.D.
    I am a citizen of the United States of America. I live outside the
    United States in Canada where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. I moved from America with my parents
    many years ago. I was only a teenager at that time, but although I was
    sad to leave Wisconsin, Canada became our new home and I long ago
    realized that a I am not going to relocate from here. As a tax resident
    of Canada, I am required to organize my financial and retirement
    planning here. The problem I have is that the U.S. tax laws make it
    very difficult for me to live the same kind of life that my friends and
    neighbours live. You see, they are subject to only one tax system. As a
    U.S. citizen, I am subject to the tax system where I live and the U.S.
    tax system. Those systems are generally not compatible. Most attempts
    at responsible financial/retirement planning where I live are
    frustrated by the need to comply with U.S. tax laws. How can this be
    fair? How can the United States impose taxation on the non-U.S. income
    and assets of a person who is a tax resident of another country--with
    no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes to my country
    of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally, the U.S. extraterritorial tax regime makes it difficult
    for me to save, invest, participate in pension plans and generally
    behave in a financially responsible way. This is because all of these
    essential activities are taking place in my country of residence and
    not in the United States. My retirement investments are foreign to the
    United States, but local to me. In addition, the United States imposes
    taxes on things (for example sale of principal residence) when my
    country of residence does not. Because I am required to live my life
    with the USD as my functional currency, I am subject to ``fake income''
    on nothing but changes in the exchange rate. As a tax resident of both
    the United States and my country of residence, I get the worst of both
    tax systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Sincerely,

    Peter Chidiac, Ph.D.

                                     ______

                       Letter Submitted by Marilyn Chotem
    I am a proud citizen of the United States of America. I live outside
    the United States in North Vancouver, BC Canada where I am a tax
    resident and Canadian citizen and where I am subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxed on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or live my life without interference from the
    Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States imposes taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Yours sincerely,

    Marilyn Chotem

                                     ______

                       Letter Submitted by Susan E. Clark
    I am a proud citizen of the United States of America, born in 1957 and
    raised in New Jersey. I lived and worked in the United States for at
    least half of my adult life, studied law In Washington DC and had a
    successful practise. In 1992, however, I met and fell in love with a
    man from Norway. We decided to marry and discussed where we should
    live. I received a job offer from a firm in Oslo and that made our
    decision in favour of Norway. I moved to Norway in September 1992 and
    have lived and worked here ever since. I am a permanent resident of
    Norway where I am subject to full taxation. Over the years, I have
    considered moving back ``home'' to the United States, but I have two
    Norwegian children now and they, my work, my home and my life is here.
    I write to you to explain how difficult it is to be a U.S. citizen
    abroad, especially one who like me is fully tax compliant. The
    difficulty arises because of U.S. tax laws which not only tax me, but
    unfairly penalize me for living abroad.

    Since moving to Norway, I have always filed my U.S. tax returns and am
    fully tax compliant. I have also filed FBARs with the U.S. Treasury. My
    U.S. tax return requires me to hire an accountant because of the
    complexity of the laws, including the calculation of the alternative
    minimum tax. My 2019 tax return was 64 pages long and I do not have a
    complicated tax situation, other than that I live abroad. I have been
    audited three times by the IRS for no apparent reason. The first two
    audits resulted in no additional tax or penalties, but cost me time,
    money and a lot of stress. The last audit in 2016, again cost me time
    and money and a lot of stress. Two years later, the IRS finally backed
    down and properly afforded me the benefit of their own rules on foreign
    income for bona fide residents of another country. The IRS agent in
    charge of my case this time knew nothing about international taxation
    or of the tax treaty between the United States and Norway and she
    treated me like a criminal for living abroad and ``making money''. The
    whole experience was a nightmare and one I never wish to repeat.

    Like most working people, I have tried to save for my retirement, both
    before and after moving to Norway. Little did I know when I decided to
    move to Norway, that my savings in the United States in the form of an
    IRA would be taxed by Norway as ``wealth'' and subject to increased
    taxation in the United States when I withdraw the funds on retirement
    solely because I live abroad. With respect to my savings here in
    Norway, I understand that they may be subject to draconian taxes by the
    United States. I am literally stuck between a rock and a hard place.
    But what I need to convey to this Committee is that my attempts at
    responsible financial/retirement planning where I live are frustrated
    by the need to comply with U.S. tax laws.

    How can this be fair? How can the United States impose taxation on the
    non-U.S. income and assets of a person who is a tax resident of another
    country? I am not trying to evade U.S. taxes; I do not live
    ``offshore;'' I am not a multinational corporation. I am simply a U.S.
    citizen who lives in Norway where I pay high income taxes (I am subject
    to a tax rate of 49%), taxes on my investment income and my home
    (Norway has a wealth tax), property taxes and a sales tax of 25%.

    Yet, because I am a U.S. citizen, I am also subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation. I envy my colleagues from Britain who,
    like me, live and work in Norway as Britain has residency-based
    taxation.

    I would like to make two general observations about the hearing on
    March 25, 2021.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals.

        2.  I was shocked that there no witness testified to personal
    experience with working abroad or with running a small business outside
    the USA. I respectfully suggest that subsequent hearings include such
    witnesses, and I would gladly come and speak with you if given the
    chance.

    Please understand that any and all changes to the taxation of U.S.
    corporations will have a huge impact on the U.S. taxation of U.S.
    individual citizens living outside the United States and running small
    businesses outside the United States. Individuals are not immune to the
    effects of raising the U.S. corporate income tax rate and/or doubling
    the GILTI tax. Simply because I, like many other small investors, have
    saved money in a mutual fund should not make me subject to taxes under
    the GILTI or the PFIC regimes. Even under the present tax regime, I do
    not understand why Congress cannot make an exception to rules which
    apply to corporations for individual taxpayers who are bona fide
    residents of another country. The residency test for individuals is
    used now with respect to the exclusion for foreign income, so why could
    not the same test be applied so that an individual is not taxed for
    simply having an account with a mutual fund? An individual who holds
    shares in a foreign mutual fund is not a tax evader or a criminal, but
    simply a small investor who wants the protection and experience of the
    managers of such funds rather than going it alone and purchasing
    stocks.

    The U.S. extraterritorial tax regime makes it difficult for me to save,
    invest, participate in pension plans and generally behave in a
    financially responsible way as a result of nothing more than the fact
    that I live and work in Norway. My retirement investments (save for my
    U.S. IRA) are foreign to the United States, but local to me. In
    addition, the United States impose taxes on things (for example, the
    sale of principal residence) when my country of residence does not.
    Although there is a treaty between the U.S. and Norway that should
    protect me from double taxation, there is a so-called ``savings''
    clause in the treaty that allows the United States to tax its citizens
    on income that is already subject to Norwegian tax. Because I am
    required to live my life with the USD as my functional currency, I am
    also subject to ``fake income'' on nothing but changes in the exchange
    rate. As a tax resident of both the United States and my country of
    residence, I get the worst of both tax systems.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve any of these problems. Unfortunately,
    they do not.

    The U.S. tax system as applied to its ex-patriots is extremely unjust.
    For many years, Americans abroad have been attempting to get both
    Treasury and Congress to address the issues they face. The time has
    come for the United States to abandon its extraterritorial tax regime
    and join the rest of the civilized world in adopting a system of
    residence-based taxation. I ask this Committee to allow me to live my
    life and enjoy my retirement without undue interference from the IRS or
    U.S. tax laws which penalize me simply for living abroad.

    Yours faithfully,

    Susan E. Clark

                                     ______

                     Letter Submitted by Jennifer Clayburn
    I hope you are receiving multitudes of statements that start the same
    as this one.

    I am a proud citizen of the United States of America. I live outside
    the United States in Australia where I am a tax resident, subject to
    full taxation.

    I echo all of the same sentiments in these letters, but I will get to
    my personal points quickly.

    Regarding the hearing, the title itself stated that the impact of
    International Tax Policy on American workers would be addressed.
    Instead, the hearing focused on U.S. multinational corporations. I am
    not a multinational corporation; I am an American individual citizen. I
    would like to politely request that the impact of International Tax
    Policy on American workers living abroad be considered in your reforms.

    The roots of today's current citizenship-based taxation date back to
    the Civil War when the first legislation was put in place to raise
    revenue through increased taxation of U.S.-based revenue of citizens
    living overseas. It was seen as payment in lieu of civic engagement.
    The laws continued to be expanded ever since, resulting in today's
    taxation of non-resident-citizens on their worldwide income. Despite
    how hard it can be to vote abroad and have your voice heard, I am an
    engaged member of the American community. I should not be taxed to
    prove my ties to and love of my country.

    In the 1920s, the Supreme Court's justification for upholding
    citizenship-based taxation was about inherent benefits of being a U.S.
    citizen. With these benefits never clearly stated and the fact that
    there is now a clear burden from FACTA, the discussion has since then
    revolved around Foreign Earned Income Exclusions and Credits. These
    current treaties and credits do not solve the fundamental problems of
    citizenship-based taxation. To gain a better understanding of the
    minimal impact of the FEIE on just one of the millions of Americans
    abroad's individual circumstances, take some time to read through each
    publication, complete each schedule and form, only to be shocked by the
    amount you owe the U.S. after already paying taxes to your current
    resident country. Left without confidence in your work, research and
    find a knowledgable international tax consultant that won't overcharge
    you, and pay the-still-insanely-expensive fees for their expert
    knowledge to complete your filing and back you up in the imminent
    audit.

    There is no other advanced country in the world that imposes such
    draconian extraterritorial taxation. Does the U.S. intend to be
    associated with the same values as these countries, such as Eritrea?
    Even worse, when included in their ranks the severity of taxation by
    the U.S. is incomparable--Eritrea taxes at a flat 2% rate.

    I have moved abroad to expand my children's outlook to a global view of
    world events while furthering my and my husband's careers. It is
    hypocritical of the U.S. to express concern over other countries'
    local-first hiring policies, for example in Malaysia, as it may inhibit
    FDI and the sharing of knowledge internationally, while at the same
    time treat your citizens working abroad as exports to be taxed for
    participating in that experience exchange and global economic success.
    I truly believe in global experience exchange as a way to improve
    business and government, but it comes at a higher cost to expats.

    For many years, Americans abroad have been attempting to get both
    Treasury and Congress to address these issues. There has been little
    success in large part because this way of taxation affects a minority.
    As we continue as a country to review and revise our opinions of
    history and the treatment of marginalised populations, U.S. citizens
    living abroad should be provided a platform for justice. When the State
    Department estimates that nine million U.S. Citizens live abroad, how
    can you ignore an entire population comparable in numbers to New York
    City. Even third-parties estimate minimum numbers of tax-paying expats
    at over one million, equal to allowing the San Francisco Bay to flood
    the entire population of San Jose's Silicone Valley.

    In a final thought, Myanmar is the most recent country in the world to
    reform their extraterritorial tax regime. If the U.S. is currently
    ceasing trade with Myanmar until return of the same democratic
    government that implanted the reform, it is time for the U.S. to step
    in line with the values they are trying to uphold in other countries.
    Now is the time to adopt a system of residence-based taxation.

                                     ______

                       Coalition for American Innovation

    The Coalition for American Innovation is an ad hoc coalition of U.S.
    multinational companies across numerous industries that share the
    common objective of making the United States a more desirable location
    to do business.\1\ We believe the Foreign-Derived Intangible Income
    (``FDII'') deduction is critical to promoting U.S. innovation and job
    growth, preserving U.S. competitiveness, and protecting the U.S. tax
    base.
    ---------------------------------------------------------------------------
        \1\ CAI includes Amazon, Cisco Systems, Inc., Disney, Dow Inc.,
    Intel, Lockheed Martin Corporation, Qualcomm and The Boeing Company,
    among numerous other members.

    The competitive tax rate resulting from the FDII deduction creates a
    powerful incentive to invest and hire in the U.S. for the development
    and manufacture of products and provision of services for global sales.
    The deemed tangible income return limitation ensures these are
    ---------------------------------------------------------------------------
    innovative, high value investments.

    It is vitally important that the U.S. tax code establish competitive
    conditions for U.S. (and foreign-owned) businesses to generate and
    retain the economic ownership of intellectual property (``IP'') and its
    associated tax revenues in the United States. The FDII regime achieves
    this goal while also providing an incentive for U.S. investment and
    jobs. The creation of IP represents the first step in the manufacturing
    and services life cycle, and the maturation of IP requires significant
    investment in factories, equipment, and jobs to produce the product or
    service covered by the IP.

    FDII promotes the retention and utilization of IP in the U.S. and
    further enables the U.S. to be competitive with tax regimes of our
    major trading partners (including China). In doing so, it helps the
    U.S. protect its corporate tax base, reduce previous incentives to
    source IP offshore, and encourages U.S. investment and jobs.

    We appreciate the Senate Finance Committee's interest in this extremely
    important topic on international tax policy. While there may be some
    improvements we can suggest to make the FDII operate more efficiently,
    a provision of this type is imperative for U.S. innovation and global
    competitiveness. We are available as a resource as the committee
    navigates the challenging and competitive tax landscape.

                                     ______

                       Coalition for a Prosperous America

                                   PO Box 283

                              Southwick, MA 01077

                Statement of David M. Morse, Tax Policy Director

    As the Senate Committee on Finance conducts a review of U.S.
    international tax policy about American employment and investment, the
    Coalition for a Prosperous America (CPA) would like to offer its views
    as a nonprofit, nonpartisan organization representing the interests of
    4.1 million households, including manufacturing, agricultural, and
    labor members.

    Key Points

    American domestic companies can no longer accept the tax status quo in
    light of the pressing need for American production for jobs and
    strategic industrial security:

        1.  Multinational corporate profit shifting affects domestic
    American companies by rewarding the companies who move profits and jobs
    overseas.
        2.  The Tax Cut and Jobs Act did reduce inversions and resolved the
    byzantine tax deferral system. However, profit shifting did not end
    despite the Global Intangible Low-Taxed Income (GILTI) provision. The
    Border Erosion Anti-Abuse Tax (BEAT) and the Foreign-Derived Intangible
    Income (FDII) especially failed to meet expectations.
        3.  The international tax provisions of the Tax Cuts and Jobs Act
    (TCJA) are complicated. The intermediate results have not inspired
    confidence that they will ultimately address the resulting ``tax
    disparity'' between domestic companies and their multinational
    competitors. The ``Tax Morale'' of American businesses requires a more
    straightforward and fair tax system.
        4.  Equal to the need for simplicity, efforts to reward the
    reshoring of jobs remain of paramount importance. The United States no
    longer rewards American production and has incentivized offshoring.
    Incentives are half of the solution to this problem.
        5.  American domestic businesses need penalties for offshoring of
    jobs to reverse the decades-long trend of American job flight. Loyal
    domestic production will not benefit from additional incentives, but
    they need protection from the offshoring competition that our tax
    system helped create.

      1. Overview

    This testimony incorporates CPA's economic analysis of the S&P 500
    corporate tax reporting under the TCJA and the benefits of a Sales
    Factor Apportionment solution. The TCJA did reduce the headline rate of
    corporate tax from 35 percent to 21 percent. Many businesses
    appreciated this short-term goal to bring the United States closer to
    the average global corporate tax rates. In the long-term, Congress
    needs to address the ``Race to the Bottom'' tax system. Preserving our
    confused system of international taxation retains the tax avoidance
    strategies that reward the largest multinational corporations.

    Currently, the international tax system has three problems:

          It distinguishes sharply between U.S. and foreign headquartered
    companies. The differences create imbalances between tax rules that
    apply to U.S. companies compared with foreign headquartered
    competitors. The residency distinction generates realistic fears of
    advantageous tax regimes permitting foreign buyouts and inversions.
          Meanwhile, the current tax system is unrealistic because it
    treats every subsidiary of a company independently and separately, but
    multinationals don't behave as if every subsidiary was separate.
    Attempts to prove the company did not behave properly are complex and
    costly.
          Third, the tax system still relies on a Physical Presence test,
    an outdated early 20th-century concept. Especially during the pandemic,
    the country learned how little commerce relies on a physical presence.

    Destination-Based Sales Factor Apportionment solves the three problems.
    The multinational parent and its subsidiaries are treated as a group.
    Then, the group's attributed total net profits are based on the
    percentage of sales they make to the United States. The American vs.
    Foreign headquarter distinction is eliminated. Internal transactions
    are ignored, so the sales that matter are sales outside the corporation
    group. Digital and other similar concerns no longer apply as the
    physical presence test is replaced with an economic test.

    The sales-based formula does not include capital or labor taxation to
    avoid the flight of inputs outside the United States. Tax rests solely
    on participation in the large U.S. market. Some outdated rules, such as
    Transfer Pricing and the Arm's Length Principle, would give way to a
    simpler and fairer tax system. But Congress could embrace this proper
    territorial tax, allowing all multinationals to pay U.S. taxes as
    American domestic companies do.

      2. Current Tax Disparity Reduces U.S. Industry Competitiveness

    The TCJA attempted to improve the situation by limiting U.S. taxation
    to profits linked to U.S. activities while adding several innovations
    to reduce the incentive to shift profit out of the country to low-tax
    or zero-tax jurisdictions. The United States moved from worldwide
    taxation to quasi-territorial taxation, and the effort was commendable.

    However, Congress must ameliorate the retained complexity in the tax
    code while denying the tax avoidance strategies to multinationals. The
    American government must allow U.S. domestic corporations to compete
    fairly. Currently, American multinational and domestic corporations
    fear their tax planning is not aggressive enough to reduce the tax rate
    versus their competition.

    When a domestic business faces a competitor in the American
    marketplace, they expect to compete on quality, the scale of
    production, service, etc. These inputs all have a price. But the
    ability to hire numerous expert tax professionals to implement tax
    strategies involving foreign tax havens is not a fair input. Congress
    needs to end the creation of this ``tax disparity'' between domestic
    companies and Multinational Enterprises.

      3. GILTI, BEAT, and FDII

    GILTI receives a significant amount of attention, primarily because it
    affects American headquartered corporations. But all three of the Tax
    Cut and Jobs Act's international provisions are worthy of attention.
    Domestic companies need working international tax provisions to reduce
    the tax disparity.

    Its exemptions hampered GILTI's effectiveness. Designed as a global
    minimum tax, companies can avoid GILTI liability on their tax haven
    operations using tax credits from higher-tax countries. GILTI liability
    permitted the blending of tax haven reporting with higher tax
    jurisdiction reporting. These efforts negated the effectiveness of
    combatting tax haven usage. Additionally, GILTI was abnormally generous
    on what it considered deemed routine profit returns. A 10 percent
    return on investment is an abnormally stellar year for most domestic
    companies. A reduced Qualified Business Asset Investment calculation
    could have kept in line with domestic rates of return. However, the
    incentive to increase overseas assets would have remained.

    The BEAT was too limited in scope to achieve the promised return, with
    too many detrimental effects to consider keeping. The BEAT promised to
    protect from foreign multinational corporations' profit shifting. But
    the exemptions were so vast that it was never going to raise the amount
    of money projected in 2017. With a small inversion exception, the BEAT
    does not apply to payments for the cost of goods sold. Accounting
    advice routinely recommended increasing the cost of goods sold on
    financial statements to avoid the BEAT tax included. This provision's
    response provided the clearest line of demarcation why the tax system
    could not be fixed within the currently accepted confines known as
    Transfer Pricing and the Arm's Length Principle. Congress should not be
    implying that simple reallocation of profits to different categories in
    a foreign subsidiary is a permissible use of the U.S. tax system to
    profit shift sales from American customers.

    While marketed as a benefit to all domestic companies, FDII remains
    most beneficial to multinational companies for officially locating
    their I.P. in the United States. Finding the FDII requires splitting
    regular income from excess income over a fixed return on specific
    assets. This division creates two pots of money taxed at different
    rates, and it is better to have the money in the unique FDII pot. But
    the FDII pot is only received above a 10 percent return on a
    corporation's domestic tangible assets. Most domestic companies don't
    achieve many profits in this special FDII pot effortlessly. So either
    we encourage domestic companies to reduce tangible investments in the
    United States, or we accept the FDII is mainly a subsidy for
    multinationals to land their I.P. here with no ties to increased R&D.
    CPA supports neither concept.

    Congress designed these components to work in concert with the low 21
    percent corporate tax rate, and the low corporate tax rate was the most
    effective component to reduce inversions. However, the low tax rate's
    benefits may not be sustainable because another country can offer a
    better corporate tax rate. While this may be a desirable option in some
    circles, the tax rate is a less immediate concern to domestic companies
    than the tax disparity.

      4. Tax Complexity

    Despite disagreements regarding the international tax provision, almost
    all parties accept that they are complicated. New proposals regarding
    these provisions rarely consider the detriment of retaining this
    complexity. The Department of the Treasury and the Internal Revenue
    Service have taken years to write the resulting administrative code to
    implement these aspects of TCJA. Their task was recognized as
    ``Herculean.''

    While these efforts are appreciated, the resulting complexity remains
    one of the major stumbling blocks for the law's broad acceptance by
    American business professionals. Most don't understand it. The largest
    multinational enterprises have experts that allow them to parse through
    the application. But smaller corporations cannot afford these
    employees. Moreover, the last few years reporting of Corporate tax data
    did not inspire confidence that complexity is the solution to ending
    companies' profit shifting.

    Tax Morale is the measurement of taxpayer perceptions and attitudes
    towards paying and evading taxes. Without simplification of the tax
    code, American domestic businesses will be dubious of efforts to reduce
    tax avoidance through profit shifting. Simplicity and transparency
    without sacrificing effectiveness would be incredibly beneficial for
    American tax morale.

    The U.S. has vital interests in strategic industries like chip
    manufacturing. Micron, the largest American chip manufacturing company,
    is a shining example of a company that the U.S. should incentivize to
    expand and grow in the United States. But according to Micron's recent
    2020 annual 10k provided to the U.S. Securities and Exchange
    Commission, they reported operating ``in a number of jurisdictions
    outside the United States, including Singapore, where we have tax
    incentive arrangements. These incentives expire, in whole or in part,
    at various dates through 2034 and are conditional, in part, upon
    meeting certain business operations and employment thresholds.''

    Micron is in an incredibly competitive field, and they need every
    advantage they can get. By failing to address the international tax
    system and the tax disparity, Congress has incentivized a strategic
    company to offshore production that could be conducted in the United
    States. But until Micron's foreign competitors are expected to pay
    similar tax rates on profits made selling to U.S. customers, Micron
    will worry about being at a disadvantage. Domestic corporations need to
    know American multinationals will pay an equivalent effective tax rate
    and American multinationals need to know foreign multinationals will
    similarly pay such a rate. As stated previously, a more straightforward
    tax system, such as Sales Factor Apportionment, could achieve these
    goals. But the damage has already been done, and the U.S. has immediate
    needs to regain lost production.

      5. Reshoring Tax Incentives

    In previous testimony before this committee, many multinational
    corporations' representatives embraced tax incentives to reshore
    manufacturing and good-paying jobs to the United States. In this
    regard, CPA wholeheartedly agrees. The United States must have a
    vibrant and robust manufacturing industry. Congress should consider
    tailored tax incentives to ensure products are made in America and not
    just in name. These tax incentives should be tied to U.S. inputs,
    production, and jobs created. At every juncture of production, the
    United States has lost a step over the years of neglect. Many
    production inputs are now imported, manufacturing facilities lie
    dormant or neglected, and the middle class's quality jobs are just not
    available. All tax incentives must be viewed through this lens first.
    U.S. manufacturing deserves to be able to compete fairly again.

      6. Offshoring Tax Penalties

    Many loyal American owners stayed in the United States and struggled to
    compete but refused to give up. Some of the more successful ones will
    be able to take advantage of incentives. But all American manufacturers
    need to be protected from offshoring efforts. Incentives are only half
    of the immediate solution. Currently, the U.S. tax code can reward
    offshoring. This loophole should end. But additionally, a penalty
    should be assessed for moving jobs offshore for a tax benefit.

    The United States has to invest in a better tax code for American
    companies, but this investment must partner with American companies'
    commitment to the country. The Biden campaign proposed a surcharge tax
    penalty for offshoring. CPA believes that such a penalty would protect
    American jobs.

      7. Conclusion

    Destination-Based Sales Factor Apportionment solves many of the issues
    raised in these discussions and provides a 21st-century framework for a
    21st-century economy. It could be implemented in part to replace the
    BEAT for foreign multinationals or as a whole. But it is essential to
    recognize that the system is not working, and American domestic
    companies need short and long-term solutions to allow the country to
    build up manufacturing and jobs.

                                     ______

                    Letter Submitted by James Webster Coates
    I am a citizen of the United States of America, duly registered to vote
    in the 3rd Congressional District of Pennsylvania. I live outside the
    United States, in Japan, where I am a tax resident and where I am
    subject to full taxation on my worldwide income.

    I moved to Japan in May 2001, immediately after graduating from
    college. I have lived and worked in Japan for my entire adult life, and
    am married to a Japanese citizen, with whom I have two young sons.
    While I am proud to be an American and enjoy visiting the United States
    once a year to see family and friends, I have made my life in Japan and
    this is my permanent home. This makes me an emigrant from America, just
    the way my ancestors left England and Scotland to build a new life in
    the colonies/states.

    Since my employment income is generated in Japan and denominated in
    Yen, as are all of my living expenses, I need to organize my financial
    and retirement planning in Japan. I am employed at a life insurance
    company. I own my home in Tokyo. I am trying to save and invest for my
    children's education expenses and for my own retirement. I need to have
    life insurance, medical insurance, and auto insurance. I have a defined
    contribution pension here in Japan.

    The problem I have is that the U.S. tax laws make it very difficult for
    me to live the same kind of life that my friends and neighbors live.
    You see, they are subject only to the Japanese tax system and can
    organize their finances appropriately. As a U.S. citizen, I am subject
    to the tax system here in Japan and the U.S. tax system. Those systems
    are not compatible. Most attempts at responsible financial/
    retirement planning here in Japan are frustrated by the need to comply
    with U.S. tax laws. How can this be fair? How can the United States
    impose taxation on the non-U.S. income and assets of a person who is a
    tax resident of another country--often with no economic connection to
    the United States? Not only that, but the compliance costs are
    egregious. My annual accounting fees are have frequently been higher
    than the ultimate amount of my U.S. Federal tax liability.

    Honorable Senators, are you aware of some of the practical problems
    which result from the U.S. system of citizenship-based taxation?

          Did you know that ``non-U.S. citizen spouses'' are treated
    differently than U.S. born spouses? In order to take advantage of lower
    tax rates for individuals who are ``Married Filing Jointly,'' I can
    make an irrevocable election to include the income of my ``alien''
    spouse on my return. That means that we have to track and report all of
    her income in the same way as that of a U.S. citizen. However, since
    she is a ``non-U.S. citizen spouse,'' I am limited in my ability to
    transfer assets into her name as a gift or as a part of my estate after
    my death. That is incredibly unfair.

          Have you thought about the impact of the rules requiring all
    individual taxpayers to use the U.S. dollar as their ``functional
    currency'' for tax reporting? Imagine what would happen if I bought a
    Japanese Government Bond with a face value of JPY 100,000 when the
    exchange rate was JPY 110 to the dollar. My basis in the investment is
    $909. If the bond pays 1% interest, I would receive a coupon payment of
    JPY 1,000 ($9) and pay U.S. Federal income tax on that income. But,
    what if the exchange rate is JPY 90 to the dollar when the bond
    matures? The bond would now be valued at $1,111 for U.S. tax purposes,
    and I would have to pay capital gains tax on a phantom gain of $202. In
    this situation, I am effectively barred from buying a savings bond in
    my home country.

          Did you know that the same issue applies to home ownership? But,
    it's worse. U.S. citizens who reside in the United States can often
    sell their principal residence without owing any tax on the capital
    gain. However, due to the U.S. dollar ``functional currency'' rule, we
    overseas residents are required to calculate the change in value of the
    home in U.S. dollars. The currency calculation is also applied to the
    mortgage balance, with devastating consequences if there is a
    forgiveness or extinguishment of the debt balance.

          Did you know that local pension programs might get caught up in
    onerous reporting requirements designed to apply to ``foreign trusts''?
    Did you know that there is a special excise tax on purchases of foreign
    life insurance? These things aren't ``foreign'' to me. They are
    necessities to protect my family and responsibly prepare for
    retirement.

          Do you know what happens if I were to invest in a mutual fund in
    Japan? A foreign mutual fund is categorized as a ``Passive Foreign
    Investment Company'' (PFIC), even if it is just the local version of a
    Blackrock or a PIMCO fund that is also sold in the United States. Each
    mutual fund must be treated as a PFIC and filed on a separate Form
    8621, requiring reams of computations by my expensive tax accountant.
    As a result, these mutual funds are also subject to punitive taxation
    on ``excess distributions,'' which do not apply to the equivalent U.S.-
    based financial product.

          Do you know how hard it is for us U.S. citizens to open
    financial accounts? U.S.-based financial institutions generally won't
    open accounts for us because we have no address in the United States.
    Financial institutions in our home countries often decline to do
    business with us due to the complex FATCA reporting requirements.

          Can you imagine the fear we constantly feel because of the
    excessive penalties that could be applied if we make an honest make in
    our tax compliance? For FinCEN Form 114, the Report of Foreign Bank and
    Financial Accounts (FBAR), the penalty for misfiling is the GREATER OF
    50% of the maximum balance of the account in question or $100,000. For
    Form 8938, which is similar to, but different than the FBAR, the
    penalty is $50,000 per mistake. For Form 8621 related to mutual funds,
    the penalty is $10,000 per form per year. Imagine if you reported your
    mutual fund dividends on Schedule B of the 1040 the same way U.S.
    residents do but didn't realize that you were actually supposed to
    report them as a PFIC on Form 8621. What if this happened to you for
    multiple mutual funds over a multi-year period? The penalties would be
    astronomical! Even if you are trying to be fully-compliant, you can
    easily get caught up in an issue like this.

          Now, you may ask, don't you get foreign tax credits that prevent
    double taxation? Nope. It doesn't work out so well. For example, the
    3.8% Net Investment Income Tax (the Obamacare surtax) cannot be reduced
    by foreign tax credits. Also, I can't get credit on my Japan tax return
    for taxes paid to the U.S. because I don't have any non-Japan workdays,
    so from Japan's perspective, all of my income is effectively connected
    to Japan. Logically, Japan thinks I shouldn't have any non-Japan tax
    liability, and foreign tax credits are generally not available. (By the
    way, in case you are curious, I pay taxes and fees supporting the
    healthcare system here in Japan, so I don't benefit from Obamacare or
    other programs for U.S. residents which are supported by the Net
    Investment Income Tax.)

          How about the U.S.-Japan Tax Treaty? Surely that must eliminate
    the double-taxation? After all, the full name of the treaty is the
    ``Convention between the Government of the United States of America and
    the Government of Japan for the Avoidance of Double Taxation.'' Nope.
    This is unbelievable, but the United States inserted a provision in
    Article 4 Paragraph 3 of the treaty (the so-called ``savings clause''),
    which reserves the right of the United States to tax its citizens based
    on citizenship, effectively overriding the other provisions of the
    treaty which would otherwise provide some margin of relief for U.S.
    citizens. For example, Articles 17 and 18 state that pension
    distributions are to be taxed based on residency, but that does not
    apply to U.S. citizens, so I will pay double tax once I retire and
    begin to draw a pension.

    Luckily, I am an ordinary company employee. I don't own my own
    business. If I did, there would be additional issues, such as the
    ``GILTI'' tax which was intended to apply to subsidiaries of
    multinational corporations, but also applies to the undistributed
    profits of a small business owned by an overseas U.S. citizen in their
    country of residence. Sole proprietors have similar issues with the
    application of ``self-
    employment tax'' in a way that is duplicative with local taxes in their
    country of residence.

    I do not live ``offshore.'' I do live in Japan, where I am responsible
    for paying tax on my worldwide income at rates of up to 55%. Yet,
    because I am a U.S. citizen, I am subject to the U.S. extraterritorial
    tax regime, which means the United States imposes taxation on my non-
    U.S. income even though I am already fully taxed on that income in the
    country where I reside, and do not live in the United States. There is
    no other advanced country in the world that imposes such
    extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    Please understand that any and all changes to the taxation of U.S.
    corporations will have a huge impact on the taxation of U.S. individual
    citizens living outside the United States and running small businesses
    outside the United States. Individuals are not immune to the effects of
    raising the U.S. corporate income tax rate and/or doubling the GILTI
    tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. As a tax resident of both the United States and my country of
    residence, I get the worst of both tax systems.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    The good news is that the fixes are extremely simple. I plead for you
    to take the following actions:

        1.  The definition of ``individual'' in Treasury Regulation, 26
    Section 1.1-1 should be modified to include only ``residents.'' U.S.
    citizens who are tax residents of other countries would continue to be
    liable to pay U.S. Federal Income Tax on any income which is
    effectively connected with the United States, as all non-resident
    aliens do, by using Form 1040-NR instead of Form 1040.

        2.  All FATCA and FBAR reporting requirements (both for Foreign
    Financial Institutions, and on the FBAR and Form 8938 for individual
    taxpayers) should be modified to exclude financial accounts held by
    individuals in their country of residence.

        3.  The GILTI tax should not apply to small businesses owned by
    U.S. citizens in their country of residence.

    The tax compliance industry of lawyers and accountants will hate these
    suggestions because they remove red tape which drives billions of
    dollars of business to their industry. But the reality is that by
    solving these issues for ordinary U.S. citizens who live in other
    countries, the United States would sacrifice a relatively small amount
    of tax revenue, while freeing up IRS resources to focus on other larger
    priorities.

    Thank you for reading my entire statement.

    James Webster Coates
    Tokyo, Japan

                                     ______

                  Letter Submitted by Jane Colandrea Coblence
    I am a proud citizen of the United States of America. I live outside
    the United States in France where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America 42 years ago for love (I
    married a Frenchman). Although the days sometimes go slowly, the years
    go quickly. I long ago realized that although I will always love
    America, I am living permanently abroad. My 3 children live in Europe
    and I couldn't imagine living too far away from them. I am a tax
    resident in France. I am required to organize my financial and
    retirement planning here. The problem I have is that the U.S. tax laws
    make it very difficult for me to live the same kind of life that my
    friends and neighbours live. You see, they are subject to only one tax
    system. As a U.S. citizen, I am subject to the French tax system and
    the U.S. tax system. Those systems are generally not compatible. Most
    attempts at responsible financial/retirement planning where I live are
    frustrated by the need to comply with U.S. tax laws. How can this be
    fair? How can the United States impose taxation on the non-U.S. income
    and assets of a person who is a tax resident of another country--with
    no economic connection to the United States? I have no bank account or
    assets in the U.S.!!

    I do not live ``offshore''. I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    in France.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and live my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when France does not. Because I am
    required to live my life with the USD as my functional currency, I am
    subject to ``fake income'' on nothing but changes in the exchange rate.
    As a tax resident of both the United States and France, I get the worst
    of both tax systems. What one giveth, the other taketh.

    A concrete example. I set up my company, a mergers and acquisitions
    advisory firm, in 2015. For the first 3 years of business, I did well
    and had good income and profit. The following 2 years were slow for me
    and I lost money each year. This is normal in an M&A practice, the good
    years we put aside money to cover expenses for the less good years.
    However, since my cash position was high in 2017, I had to pay almost
    15% of my CASH, which had paid French taxes, to cover the GILTI and
    transition taxes for the U.S. Government. This is not fair. As I
    retire, I was expecting the cash in my company which I would distribute
    as dividends, to supplement my income which is currently insufficient
    to cover my living expenses. These taxes have put a huge damper on my
    retirement plans.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                     Letter Submitted by Geoffrey W. Connor
    Dear Committee Members,

    I am an American citizen/Australian permanent resident who immigrated
    to Australia in August of 2019 with my Australian wife of 25 years. She
    is a dual Australian/American citizen. I am 70 years old and retired
    and she is 58 years old and working part time. I draw Social Security
    of USD$1,062 per month. My wife earns approximately AUD$25,000 per
    annum. We do not owe U.S. taxes on our combined income plus our savings
    and investments, yet we are required to file form 8938, Statement of
    Specified Foreign Financial Assets and FinCEN form 114, commonly known
    as FBAR along with our Form 1040. The cost to have these returns
    prepared and filed this year was AUD$1,127. Plus we pay to have our
    Australian taxes prepared and filed for the tax year that ends June
    30th of each year. We live on a modest income and this added expense
    stretches our budget. We feel that it is unfair of the U.S. to require
    its citizens to file returns and report income that they earn when
    living abroad (even though we owe nothing). The time and expense
    involved is unfair. We urge the committee to act now and rescind these
    unnecessary and unfair requirements. At the very least, these
    requirements should be waived for those earning below a certain income
    threshold. Thank you for your time.

    Sincerely,

    Geoffrey and Joanne Connor

                                     ______

                       Letter Submitted by Samantha Cook
    I am a citizen of the United States of America. I have studied, worked
    and lived outside the United States in Canada since I was 19, and in
    2020 moved to New Zealand with my Kiwi partner. In 2020, I will have
    the impressive task of filing taxes in three counties: Canada, New
    Zealand, and the USA, and I will be subject to full tax residency and
    taxation in Canada and New Zealand, as per their reciprocal agreements.

    I run a small business in Canada, which I continue to run from New
    Zealand (it will remain a Canadian corporation). We make video games
    and help other Canadian companies make them. Video games is one of the
    faster-growing industries, and blends the cutting edge of technology
    with arts and culture. My business is not a multinational corporation
    and while its sales income is worldwide, we pay full sales taxes where
    applicable, and payroll taxes and all other normal corporate tax in
    Canada.

    However, because I am a U.S. citizen, the U.S. tax code treats me the
    same as Apple or Google. Since I use a Quebec business structure that's
    treated as a corporation under U.S. tax law, I'm forced to fill in the
    same form 5471 that Apple must complete for each foreign subsidiary--
    translating all of my business records into U.S. dollars even though
    only a fraction of our business is in U.S. dollars. My business is
    subject to GILTI even though I have no intangible income. How can I
    compete with my neighbours who are not U.S. citizens and who have only
    one tax system to deal with? And where will I come up with money to pay
    this new tax bill? I own my company alongside three Canadian partners
    (I became Canadian a few years ago), and cannot take money out of the
    company on a whim just to satisfy a tax bill. As it is a young company
    that has yet to be particularly profitable, I pay myself only $50,000
    CAD a year--that's a little less than $40,000 USD/year. Finding the
    money to pay a big tax bill due because of my company every year will
    be next to impossible.

    In addition, because I am running a video game company, our major
    expense every year is salaries (we own no property; sell no clothes or
    groceries), so on paper, most of our value is in cash. This means we
    come perilously close every year to meeting the definition of a Passive
    Foreign Investment Corporation (PFIC), which would demand that my
    individual stake in the company be taxed as if it were a mutual fund.
    Of course, it's not a mutual fund or a PFIC: it is a living, breathing
    company with employees and products. If I were running it in the USA,
    there would be no problem at all--it would be seen as the normal
    company it is. However, because it is abroad (and only because it is
    abroad), the dragnet that is intended for larger companies tries to
    pick me and my company up every year. On a 40k annual salary, I cannot
    afford the tens of thousands of dollars--annually!--that this would
    cost me. Should my company accomplish even average success or profit, I
    will be on the hook for a tax bill I would not know how to pay. This
    thought keeps me up some nights, and a change in the U.S.'s
    international tax laws is the only recourse possible, outside of giving
    up the company, or even my U.S. citizenship, two terrible choices.

    My company was not moved to Canada to avoid U.S. laws--it is just a
    normal, everyday company that I happened to start in Canada, with other
    Canadians. It's not ``offshore,'' it's Canadian, and it and I pay high
    income taxes provincially and federally, sales tax, and all the rest of
    it.

    But because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. For
    years now, it has been exhausting to me that the U.S. tax system rules
    treat individuals living outside the United States the same way they
    treat U.S. multinationals doing business outside the United States. No
    participant at the hearing recognized how individuals are affected by
    these rules. Yet the focus of the hearing was supposed to be about
    individuals. This must change at the next opportunity.

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA I respectfully suggest that subsequent
    hearings include witnesses who have experienced running businesses
    outside the United States and/or actually living outside the United
    States. To put it another way: Subsequent hearings should deal with the
    reality on the ground and not theory driven conversations that ignore
    important stakeholders.

    Please understand that any and all changes to the taxation of U.S.
    corporations will have a huge impact on the U.S. taxation of U.S.
    individual citizens living outside the United States and running small
    businesses outside the United States. Individuals are not immune to the
    effects of raising the U.S. corporate income tax rate and/or doubling
    the GILTI tax. I implore you to also investigate the true effects on
    the PFIC policy on small businesses.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. For example, most New Zealanders open a ``Kiwisaver,'' i.e.
    New Zealand's 401k, but I should not: it invests in ``foreign'' (i.e.
    non-American) mutual funds, and the IRS taxes them. Therefore I would
    be taxed on income I wassetting aside for retirement, in a way that a
    401k would not be.

    Foreign tax rules and treaties and the Foreign Earned Income Exclusion
    do not solve these problems.

    This issue is troubling to myself and so many other Americans abroad.
    Americans abroad have been attempting to get both Treasury and Congress
    to address these issues for many years, and I hope this is the year
    that our voices will be heard, despite the fact that we are individuals
    who do not have much combined lobbying power, and have a hard time
    representing ourselves in the country of citizenship in which we do not
    live.

    Please consider abandoning or significantly changing the
    extraterritorial tax regime and join the rest of the world in adopting
    a system of residence-based taxation.

    Thank you for your time and kind attention to this important matter
    affecting your constituents.

    Sincerely yours,

    Samantha Cook

                                     ______

                        Letter Submitted by Sherry Cook
    Please add this to the comments for this Senate hearing regarding ``How
    U.S. International Tax Policy Impacts American Workers, Jobs, and
    Investment.''

    From Sherry Cook, formerly a dual U.S.-Australian citizen but now only
    an Australian citizen, having had to renounce her U.S. citizenship to
    protect her Australian retirement income:

    It is extremely unfair to have U.S./U.S. dual citizens living overseas
    taxed on their world wide income as they are not able to avail
    themselves of any U.S. services that those tax dollars pay for!! As I
    commented to my Australian accountant handling my Streamline process
    (to renounce my U.S. citizenship), the U.S. government wouldn't care
    one bit if I ran out of money in my old age and that they would ``flick
    me off like a dead fly'' if I did. I can't receive any Social Security
    income as I didn't work long enough in the U.S. and pay into this long
    enough to qualify for it. As a result, I also lost several thousand
    dollars which I had previously paid into Social Security after I
    finished high school and worked for a few years before moving to
    Australia, when I was 24, for professional employment (which I couldn't
    get at the time in the U.S.). Almost all of the U.S. tax that I found
    out I owed came as a result of my Australian retirement funds (called
    superannuation in Australia) which I contributed into during and after
    my employment as a teacher in Australia and which is considered taxable
    by the IRS under the current system. This is despite paying 15% tax on
    the earnings of these funds to the Australian tax system (which is a
    flat tax by the Australian tax system unlike the one to the IRS which
    is based on the tax bracket you are in). Additionally, the whole
    process of going through the Streamline process with an accountant was
    extremely expensive, but considerably less money than I would be paying
    long term if I had retained my U.S. citizenship, just to be able to
    call myself a U.S. citizen!

    As I was born and raised in the U.S., I still have a strong cultural
    heritage and personal history from that country which I feel as well as
    having family and friends there. It is very sad and totally unfair that
    I was forced, from a financial aspect, to renounce my citizenship, as I
    don't want my life financially adversely impacted with potentially a
    life in poverty in my old age (I am currently 70 years old) as a result
    of this totally unfair international tax policy.

                                     ______

                       Letter Submitted by Louna Coumeri
    I am a proud citizen of the United States of America. I live outside
    the United States in--UNITED KINGDOM--where I am a tax resident and
    where I am subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                      Letter Submitted by Melvin L. Cross
    Dear Senators:

    I understand the Senate Finance Committee is considering the impact of
    America's program of citizenship-based taxation on Americans who live
    and work abroad. I am an American who has lived and worked in Canada
    for over 40 years. I am proud to be an American citizen. Living in
    Canada makes me no less proud to be an American. A list of the effects
    I have experienced because of America's citizenship-based taxation
    follows. I believe the list typifies the experience of all Americans
    who live and work abroad.

          I pay PricewaterhouseCoopers approximately CA$3,000 to prepare
    my annual U.S. tax return. This is an implicit tax on my financial
    resources. In many years, I have owed no American taxes. The payment to
    PwC always has exceeded my payment to the U.S. Treasury by a wide
    margin.

          I spend many hours each year compiling records that are
    necessary if PwC is to prepare my annual U.S. tax return. This is an
    implicit tax on my time.

          I am compelled to limit my investment options. Two examples
    illustrate this point. Professional tax preparers have told me not to
    open a Canadian tax-free savings account. A TFSA is the Canadian
    counterpart of a Roth plan. Professional tax preparers also have told
    me to be wary of opening a Canadian mutual fund. They have advised that
    these accounts are toxic for Americans because the cost of extracting
    and compiling data required for a U.S. tax return easily could exceed
    any return these accounts would provide. This is another implicit tax.
    Its sole purpose is to ease the work of American tax collectors.

          Two professional preparers of Canadian tax returns have told me
    they will not prepare my annual Canadian tax return. They believe that
    innocent, trifling errors on an American tax return filed from abroad
    can attract confiscatory penalties. The degree of risk which they would
    accept by associating with someone who might incur such penalties is
    unknown to them. But large or small, it is a risk they need not accept.
    Prior to 2014, a small, local firm was preparing my annual Canadian tax
    return for less than CA$100. Beginning in 2014, when the full weight of
    the Foreign Account Tax Compliance Act (FATCA) came into effect, I have
    been paying PwC CA$1,500 Cdn to prepare my annual Canadian tax return.
    This is another implicit tax on my resources.

          I have been asked twice to act as treasurer for a Canadian
    charitable organization. In both cases, a brief conversation resulted
    in a cordial statement that the organization would look elsewhere for a
    treasurer. I explained that if I had signatory authority, FATCA
    required me to report details of the organization's bank accounts to
    the IRS and that I also was required to report their financial affairs
    to FinCEN.

          FATCA compels banks and other Canadian financial institutions to
    collect and report accounts of any clients they think might be
    Americans to the Canada Revenue Agency. The CRA relays this information
    to the IRS. Clients whose accounts are reported to the IRS receive no
    information about what is relayed to the IRS. We have no opportunity to
    check or correct errors that might occur.

          FATCA compels the CRA to identify and report to the IRS the
    financial assets of Americans who live and work in Canada. Americans in
    Canada become potential conduits through which the IRS can extract
    revenue from the Canadian economy. I object to being conscripted in
    this manner.

    Benjamin Franklin, like all America's first patriots, argued that if
    the interests of the colonists were to be represented in Parliament,
    then colonists required their own representatives in the British
    Parliament. Instead, King George III and the British Parliament
    implemented taxation without representation. I vote for Montana's
    representatives in Congress because my last American address was in
    Montana. Americans abroad cannot vote for Congressional representatives
    that represent them because Congress provides no delegation that
    represents the interests of Americans who live and work abroad.

    Citizenship-based taxation is taxation without representation. Congress
    can end this in either of two ways. It can provide a Congressional
    delegation that represents Americans who live and work abroad and that
    is apportioned in the same way representatives of each state are
    apportioned, or Congress can legislate residence-based taxation. Either
    way, an end to taxation without representation for all Americans, not
    only those who live and work in the homeland, is long overdue.

    Sincerely,

    Melvin L. Cross

                                     ______

                   Letter Submitted by Benjamin Curtis, Ph.D.
    I am a citizen of the United States of America. I live outside the
    United States in the Czech Republic where I am a tax resident and where
    I am subject to full taxation.

    I am an emigrant from the United States. In the future I may or may not
    return to live in the U.S.. Currently I am a tax resident of the Czech
    Republic. I am required to organize my financial and retirement
    planning in that country. The problem I have is that the U.S. tax laws
    make it very difficult for me to live the same kind of life that my
    friends and neighbors live, both Czechs and other expats. This is
    because they are subject to only one tax system. As a U.S. citizen, I
    am subject to the tax system where I live and the U.S. tax system.
    Those systems are generally not compatible. Most attempts at
    responsible financial/retirement planning where I live are frustrated
    by the need to comply with U.S. tax laws. How can this be fair or
    sensible? Imposing taxation on the non-U.S. income and assets of a
    person who is tax resident of another country makes so little sense
    that no other advanced democracies do it.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. Again, there is no other advanced country in the world that
    imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States the same way they treat U.S. multinationals doing
    business outside the United States. Although I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a U.S. citizen living in my
    country of second citizenship. This situation doesn't make me less
    American. But it does mean that I am subject to the laws of the country
    where I live. I am not GILTI of anything. I ask only to be able to
    carry on my small business and/or my life without interference from the
    Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because many of these essential activities are
    taking place in my country of residence and not in the United States.
    Because I am required to live my life with the USD as my functional
    currency, I am subject to ``fake income'' on nothing but changes in the
    exchange rate. As a tax resident of both the United States and the
    Czech Republic, I get the worst of both tax systems. What one giveth,
    the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Sincerely,

    Benjamin Curtis, Ph.D.

                                     ______

                         Letter Submitted by Paul Dale
    I am a proud citizen of the United States of America. I live outside
    the United States in Germany where I am a tax resident and where I am
    subject to full taxation.

    I am an ``accidental American.'' I was born in the U.S.. But I was
    removed from America (by my British parents) 4 weeks after my birth. I
    don't remember ever living in America. My only experience of America is
    from television, movies and the occasional American tourist I meet.
    Yet, (at first I couldn't believe this could be possible) I am required
    to file U.S. tax returns and pay tax on my non-U.S. income to America.
    But, it gets worse. I am also required to file complex information
    returns describing the details of my finances to America. I can't even
    understand the forms. How can this be? What is the reason for this? No
    other country does this! Of course, I am proud to be an American. Who
    wouldn't be? But, I have no idea how to comply with the rules imposed
    on me. Ever year I must use expensive consultants to prove that I owe
    nothing to the IRS, which is a waste of everybody's time and money, my
    money that would best spent helping our family, and also taxpayer
    money, who fund the IRS to process these thousands of zero revenue
    forms. I simply want to be left alone in my country of residence, and
    be treated the same as my fellow citizens, but with the overreach of
    U.S. tax law, this is not possible. I cannot save for my retirement in
    the same way as my neighbors can, or I cannot plan for my children's
    future as my neighbors can, I cannot have financial signatory rights in
    my company as my neighbors can, or have to maintain separate accounts
    to my wife (non-U.S. citizen) which my neighbors do not have to, and
    many, many, more issues caused by following two incompatible tax
    systems. But what am I supposed to do? Renounce my U.S. citizenship? I
    can't afford the U.S.$2350 renunciation fee to do so, I barely save
    enough each year ($450) for the filing to a tax consultant,. thus
    leaving me stuck in a vicious cycle. I simply don't know what to do and
    I can't deal with the stress.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not a FATCA or GILTI of anything. I ask only to be able to
    carry on my small business and/or my life without interference from the
    Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                     Letter Submitted by Derek Sean Dalton
    I am a proud citizen of the United States of America. I live outside
    the United States in the city of Derby in the United Kingdom, where I
    am a tax resident and where I am subject to full taxation.

    I am an emigrant from America. My family--my father, and my uncles, and
    my grandfather, all served in branches of the U.S. military. I thought
    once I would follow in their footsteps, but we never know where life
    will take us.

    I moved from America about a dozen years ago; although the days
    sometimes go slowly, the years go quickly. I never thought I'd be here
    that long when I moved in 2009, but in the past decade I've established
    a life here and married another emigrant, a wonderful French woman. I
    long ago realized that although I will always love America, I am living
    permanently abroad; if I leave the UK, I am more likely to relocate to
    France to be closer to my wife's family than to return to the U.S..
    From our military roots, my family is spread out all across the U.S. in
    any event.

    I am a tax resident of the United Kingdom. I am required to organize my
    financial and retirement planning in that country. The problem I have
    is that the U.S. tax laws make it very difficult for me to live the
    same kind of life that my friends and neighbours live. You see, they
    are subject to only one tax system. As a U.S. citizen, I am subject to
    the tax system where I live and the U.S. tax system. Those systems are
    generally not compatible. Most attempts at responsible financial/
    retirement planning where I live are frustrated by the need to comply
    with U.S. tax laws. How can this be fair? How can the United States
    impose taxation on the non-U.S. income and assets of a person who is a
    tax resident of another country--with no economic connection to the
    United States?

    It is particularly onerous to plan my retirement as an expat, as many
    UK long-term savings accounts (like the Lifetime Individual Savings
    Account/LISA or Self-
    Invested Pension PLAN/SIPP) aren't covered by our dual taxation treaty.
    This means that investing in any sort of index fund to help secure a
    comfortable retirement is almost impossible, either due to the PFIC
    reporting burden or the fact that most investment firms won't even
    accept me as a customer because of my U.S. citizenship.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes: I earn a solidly middle-class income by both U.S.
    and UK standards; but in the UK I'm subject to a top marginal tax rate
    of 42% plus VAT of 20% on most purchases, while I'd pay only 22% in the
    U.S.. And to ensure I don't fall foul of complex tax reporting (and any
    nuanced changes in tax law), I pay approximately $2000 per year to file
    with the IRS (I have never owed any tax since moving away, but still
    have to file each year) and Treasury (having to declare details of all
    accounts I own, on penalty of forfeiture). This legislation is designed
    to prevent crime, but it has ensnared completely ordinary people,
    making their lives more difficult needlessly.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced actually living outside the United States. To put it
    another way: Subsequent hearings should deal with the reality on the
    ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a dual-national living in my
    country of second citizenship. It doesn't make me less American. But,
    it does mean that I am subject to the laws of the country where I live.
    I am not GILTI of anything. I ask only to be able to carry on my life
    without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Respectfully,

    Derek Sean Dalton

                                     ______

                   Letter Submitted by Nicholas Ryan Daniels
    I am a citizen of the United States of America. I live outside the
    United States in the Czech Republic where I am a tax resident and where
    I am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1. The hearing focused on U.S. multinational corporations. But here
    is the reality: U.S. tax rules treat individuals living outside the
    United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2. I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or live my life without interference from the
    Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States imposes taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    It has come to the point where I must now choose to stay American and
    be penalized for living in the Czech Republic or renounce my
    citizenship and risk never seeing my American family again.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                       Letter Submitted by Andrew D'Arcy
    I was born outside Ireland, and worked most of my life outside the
    United States. I paid taxes in different countries where I worked.
    That, would now fall under OEDC guidelines, as most international tax
    treaties seemed to be based on their template. The failure of the
    United States to adhere to those same guidelines in its interpretation
    of the same tax treaties, puts the American Worker at a disadvantage to
    all other workers, when working overseas.

    While working overseas, most people follow wise advise; ``when in Rome,
    do as the Romans do'' and pay there taxes to the democratically elected
    government of the jurisdiction that takes responsibility for their
    immediate well-being. If they don't like that, they are free to move.
    There is little information given about paying tribute to an empire who
    are overlording the system while providing no benefits. Indeed in
    recent years the USA has been effectively banishing people from the
    banking systems and undermining the tax authorities of these
    democratically elected governments. This is confusing.

    The idea of the U.S. having the right to tax people with no
    representation, and no state that is part of the United States is
    recent and bad. It is a reversal of the idea that propelled the United
    States into existence, born of data base capabilities and greed. No
    wonder efforts have been made to keep it a secret.

    When in Ireland, I used the Irish tax website www.revenue.ie there
    reading the U.S.-Ireland tax treaty. Many years later I read the exact
    same treaty on the IRS website, only to find it modified by a
    ``Technical Explanation''. The meaning of the treaty is different. I
    had been duped.

    Tax advisers in democratic countries will not have read this,
    ``Technical Explanation''. The American Worker will receive bad tax
    advice. So too will the workers employer, and the American Worker will
    be left paying fines that are not related to his income, as the Empire
    is not constrained by constitution or democratic niceties.

    It would benefit the American Worker and his advisors if the IRS
    advised agencies such as HMRC, SAT, CRA and Revenue, Irish Tax and
    Customs to publish ``Technical Explanation'' along side the U.S. tax
    treaty. It would save lives and livelihoods. It is not a lot to ask.
    Please get this done, soon.

    If the IRS cannot co-operate with their OEDC counterparts, and need
    ``Technical Explanations'' hidden. The empire will gain in fines a
    small measure of what everybody will lose in economic well-being.

    I have seen too many U.S. Workers put in the hospital, have their
    diabetes flared-up, and their careers ruined because of bad advice and
    a callous IRS, to remain ignorant of the dangers. Many U.S. workers
    will not follow U.S. manufactured goods overseas for warranty work,
    because they know the dangers. This harms U.S. Manufacturing.

    Thank you for your time.

                                     ______

                       Letter Submitted by Maja Debeljak
    I was born outside the United States. I became a naturalized American
    citizen after marrying my husband, who is an American citizen. I lived
    in the United States for five years. Now my and my husband live in
    Sweden where both of us are tax residents and where we are subject to
    full taxation. My husband and I are struggling to find a bank or
    financial institution due to the FATCA. It is almost impossible to
    build economic security for the future because of an unfair
    international tax policy. We have two small children who are also
    negatively affected since we are struggling to open a savings account
    for them due to the legal restrictions. It is very sad and totally
    unfair that our finances are adversely impacted with potentially a life
    in poverty as a result of this totally unfair international tax policy.

    It is extremely unfair to have U.S./U.S. dual citizens living overseas
    taxed on their worldwide income as they are not able to avail
    themselves of any U.S. services that those tax dollars pay for! I
    cannot receive any Social Security income as I did not work long enough
    in the U.S. and pay into this long enough to qualify for it.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes.Yet, because I am a U.S. citizen, I am subject to the
    U.S. extraterritorial tax regime, which means the United States imposed
    taxation on my non-U.S. income even though I was and am fully taxable
    on that income, in the country where I reside. This was true even
    though I did not live in the United States. There is no other advanced
    country in the world that imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. I am subject to the laws of the
    country where I live. I am not GILTI of anything. I ask only to be able
    to carry on my life without interference from the Internal Revenue Code
    of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems.

    And please don't believe that foreign tax credit rules and/or the
    Foreign Earned Income Exclusion solve these problems. They don't!

    American extraterritorial taxation is extremely unjust. For many years,
    Americans abroad have been attempting to get both Treasury and Congress
    to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you for your time.

                                     ______

                   Letter Submitted by Anthony James DeGraff
    I am a proud citizen of the United States of America. I live outside
    the United States in Paraguay where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay income
    taxes. I also pay additional kinds of taxes (example VAT) to my country
    of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second residency. It doesn't make me less American. But,
    it does mean that I am subject to the laws of the country where I live.
    I am not GILTI of anything. I ask only to be able to carry on my small
    business and/or my life without interference from the Internal Revenue
    Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States imposes taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both the Treasury and Congress to address these
    issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                                Democrats Abroad

                                  PO Box 15130

                              Washington, DC 20003

                        https://www.democratsabroad.org/

    U.S. Senate
    Committee on Finance
    Dirksen Senate Office Building
    Washington, DC 20510-6200
                                                         March 31, 2021

    Democrats Abroad is pleased to respond to the Committee's invitation to
    comment on U.S. international tax policy as it impacts Americans
    living, work, saving and investing abroad. Americans living abroad
    manage U.S. businesses and other enterprises, promote U.S. interests,
    and serve as unofficial ambassadors of American culture and values. We
    thank Chairman Wyden and Ranking Member Crapo for holding this
    important full committee hearing and hope that the voices of everyday
    working-class Americans living abroad may resonate and be remembered in
    crafting future tax reform.

    In the development of international tax policy, too often the community
    of Americans living abroad suffers from the grave misperception that
    they are tax cheats and money launderers. The body of tax policy
    resulting from this stubborn, apocryphal stereotype includes provisions
    that: double tax many forms of income, including those of low-income,
    elderly and disabled Americans abroad; create material barriers to
    banking, saving and investing; and, through their inordinate
    complexity, force ordinary, middle class Americans abroad to engage
    expensive tax return preparers able to contend with the convergence of
    two (and sometimes more) tax jurisdictions.

    A large number of individual tax code changes would be required to
    address the many forms of discrimination against Americans abroad that
    are inherent in the Internal Revenue Code (IRC). A switch from the
    current system of Citizenship Based Taxation to Residency Based
    Taxation would sweep away most of these tax code injustices with
    minimal effort required by Congress. Legislative approaches and
    proposals for introducing Residency Based Taxation discussed with
    members of Congress in detail in recent years can be made revenue
    neutral to the federal government and can be protected with robust
    provisions for preventing abuse of offshore residence for the purpose
    of tax avoidance.\1\
    ---------------------------------------------------------------------------
        \1\ https://www.americansabroad.org/media/files/files/dc1e1c4e/
    DEG_short_memo_on_RBT_
    proposal_11.06.2017.pdf.

    As evidenced from our myriad in-person meetings over many years, U.S.
    lawmakers and regulators, in general, lack an adequate understanding of
    the Americans abroad community and the personal and financial harm that
    discriminatory U.S. tax policy causes for individuals who live and work
    outside the country. We join our colleague organizations advocating on
    behalf of Americans abroad in asking the Senate Committee on Finance to
    conduct hearings on the taxation of Americans living abroad and the
    implications of a switch to Residency Based Taxation. We encourage you
    to invite testimony from scholars, economists, regulators, employers,
    industrialists, investors, agencies and officials with research and
    expertise on the Americans abroad community, their families, their work
    and the contribution they make to the U.S. economy, industry, foreign
    relations, incoming investment and cultural exchange.

    Understanding Americans Abroad

    Research published in 2019 at the behest of Congress and Congressional
    committee staff demonstrates that the vast majority of the estimated 9
    million Americans living outside the U.S. are not a lot different from
    Americans living in communities across the country when it comes to
    age, marital status, employment and household income. They are
    ordinary, middle class Americans who left the U.S. for a marriage/
    relationship (32%) or study/adventure (24%). Almost one in four (24.5%)
    moved abroad for work. Household income data confirms they are not
    wealthy ``fat cats'' and high rollers living overseas to game the
    international tax system. In fact, most Americans abroad live in
    countries with a higher overall tax burden than the U.S.\2\
    ---------------------------------------------------------------------------
        \2\ ``Tax Filing From Abroad: Research on Non-Resident Americans
    and U.S. Taxation'', March 2019.https://democratsabroad.atlassian.net/
    wiki/download/attachments/4257416635/Tax%20
    filing%20from%20abroad%20-%202019%20Research%20on%20Non-
    Residents%20and%20US%20
    Taxation.pdf?api=v2.

    Americans abroad face taxation in both the jurisdiction where they live
    and in the U.S. The U.S. is essentially alone in taxing non-resident
    citizens on their worldwide income, putting Americans abroad seeking
    jobs and starting businesses at a competitive disadvantage.

    U.S. Tax Code Discrimination

    Although the Foreign Earned Income Exclusion ensures that a large
    amount of ordinary income is not subjected to U.S. taxation, many types
    of income are left out of the exclusion and so are taxed both by the
    U.S. and the country where the income is generated. The Foreign Tax
    Credit often does not zero out taxes owed to the U.S. Several types of
    retirement/investment income are subjected to highly punitive Passive
    Foreign Investment Company (PFIC) tax treatment. The preparation of
    PFIC returns is so complex that advice is known to run into the
    thousands of dollars. The retirement and investment instruments
    Americans abroad choose in the countries where they live are not, after
    all, ``foreign'' to them and many are mandated by statute. PFIC
    treatment is, therefore, a great injustice to Americans living abroad.

    Types of income subjected to double or punitive tax treatment include,
    amongst others:

        3  Distributions from pensions and 401k-style retirement plans.
        3  Dividends, interest and all investment income.
        3  Foreign retirement, education and other savings plans.
        3  Capital gains.
        3  Non-qualified non-U.S. pension plans.
        3  Social welfare payments (aged, indigent, disability,
    unemployment, childcare, parental leave) from foreign governments.
        3  Bequests to surviving foreign spouses.

    U.S. Tax and Financial Account Reporting Compliance

    U.S. taxpayers declare income earned abroad on IRS forms designed to
    capture detailed information about the source of the earnings,
    especially investment income. Preparing and filing these forms is
    stunning in its complexity. 2019 research shows 55% of non-resident
    filers require the assistance of a specialist tax return preparer
    experienced in dealing with the tax issues of non-resident Americans.
    These specialist services cost them more than twice what Americans
    based in the U.S. pay for tax filing services.\3\ For non-resident
    taxpayers, preparing and filing the forms reporting income earned
    abroad is inordinately costly, confusing and frightening, even when no
    tax is due.
    ---------------------------------------------------------------------------
        \3\ ``Tax Filing From Abroad: Research on Non-Resident Americans
    and U.S. Taxation'', March 2019.

    IRS outreach to Americans abroad about tax compliance has been woefully
    inadequate for many years. As a result, many Americans abroad--
    including officials in U.S. embassies and consulates--are ignorant,
    misinformed or confused about U.S. tax filing and reporting rules and
    obligations. IRS helplines are expensive and inconvenient to call and
    are manned by agents without an adequate understanding of the issues
    particular to non-resident filers. Though some of the free online
    systems available from IRS Free File partners include Americans abroad
    in their eligibility criteria, they do not include the full complement
    of forms needed by non-resident filers. The IRS's Volunteer Income Tax
    Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs
    offering free basic tax return preparation to qualified individuals is
    also not available to Americans abroad. In summary, Americans abroad do
    not have easily accessible advice and support from the IRS to fulfil
    ---------------------------------------------------------------------------
    their filing obligations accurately and in a timely manner.

    The burden of tax filing under Citizenship Based Taxation is compounded
    by the foreign financial account reporting requirements that support
    its enforcement. The Foreign Account Tax Compliance Act (FATCA) fully
    implemented double-disclosure foreign account and financial asset
    reporting in 2014. Since then, Americans abroad have reported impaired
    access to even ordinary financial products and services where they
    live.\4\ They are ``locked out'' by banks choosing not to service U.S.
    Persons rather than comply with FATCA; this seriously restricts their
    ability to pay their bills, take out home mortgages and save for the
    future.
    ---------------------------------------------------------------------------
        \4\ ``FATCA: Affecting Everyday Americans Every Day'', September
    2014. https://democratsabroad.atlassian.net/wiki/download/attachments/
    1986232508/Democrats%20Abroad
    %202014%20FATCA%20Research%20Report.pdf?api=v2.

    Failure to file the Report of Foreign Bank and Financial Accounts
    (FBAR) (the mandatory, electronic reporting of foreign bank and other
    financial accounts impacting those with at least $10,000 in aggregate
    in foreign financial accounts) carries heavy penalties. FBAR compliance
    penalties are far out of proportion to the violation when the taxpayer
    lapse is attributable to issues like ignorance born of IRS neglect,
    language barriers or lack of ability to use or to access electronic
    ---------------------------------------------------------------------------
    devices for filing.

    Although individuals who move abroad are on their own in dealing with
    U.S. tax complexities, companies that hire Americans to fill jobs in
    other countries often offer ``tax equalization'' to their American
    employees, i.e. support to ensure that they do not pay more in U.S. tax
    than they would if they were still resident in the U.S. Tax
    equalization, along with support to meet the cost of tax preparation
    services, makes Americans more expensive to hire and maintain abroad
    than third country nationals, and thus less competitive. Further,
    American companies risk being at a competitive disadvantage vis-a-vis
    their foreign competitors, when their U.S. staff is less skilled in the
    ways of the global marketplace than their foreign counterparts.

    In addition, U.S. financial account reporting and compliance
    requirements make Americans abroad unattractive as business partners to
    those averse to sending their business's financial information to the
    U.S. government.

    The Repatriation Tax and GILTI Tax in the 2017 Tax Cuts and Jobs Act
    (TCJA) have caused an enormous crisis for Americans abroad who own
    small to medium size businesses. The TCJA enacted a system of
    ``territorial taxation for corporations'' that provides enormous tax
    relief to U.S. corporations that own companies registered abroad. They
    can now repatriate profits at a deeply discounted rate with lots of
    offsets that ensure little to no tax is due. The impact on U.S.
    citizens abroad that own small to medium sized companies abroad,
    however, has been devastating. Owners of small to medium sized
    businesses without access to employer-provided retirement saving
    schemes often retain profits in their businesses to save for
    retirement. The TCJA's Repatriation Tax provisions require them to show
    these unrecognized company profits on their personal tax filings and
    provides them with none of the offsets or credits available to U.S.
    corporations that own companies abroad. Repatriation taxes will
    devastate their retirement savings. The TCJA's GILTI Taxes on all
    future earnings--earnings already taxed in the country where the
    business is registered--must also be declared on the owner's personal
    tax filing, again without the offsets and credits afforded to U.S.
    corporations that own companies abroad. The GILTI Taxes will force many
    to close their small to medium size businesses after years of
    investment and effort, or to undergo costly corporate re-structuring.

    Conclusion

    Congress enacts laws and regulations without considering the impact on
    Americans abroad. These laws have grave, unintended consequences for
    ordinary, non-resident Americans. Given the harm they suffer, it is not
    difficult to understand why Americans abroad have come to believe they
    are being punished for moving away from the U.S. They are proud of
    their U.S. citizenship and deeply resent the presumption that they are
    tax cheats and money launderers. They need Congress to understand that
    filing from abroad is extremely costly and stunning in its complexity.
    They need Congress to understand that the IRC is highly punitive to
    ordinary American families living middle class lives abroad and is,
    therefore, unjust.

    Not since the Carter Administration has there been a hearing in the
    U.S. Congress on Americans living abroad and the range of serious
    personal and financial problems U.S. taxation causes for them, their
    families, their businesses and the U.S. and non-U.S. entities they do
    business with. Americans abroad believe it is past time that their
    issues be heard, documented in the public record, and addressed by the
    government they help elect.

    Thank you for your interest in these matters. Please contact Carmelan
    Polce of our Taxation Task Force (+61 404 767 088 or
    carmelan@democratsabroad.org) or the undersigned with any questions
    about the information and recommendations provided herein.

    Sincerely,

    Julia Bryan
    Global Chair
    +1 (843) 628-2280
    chair@democratsabroad.org

    CC: The Honorable Nancy Pelosi      The Honorable Charles Schumer
        Speaker of the House            Majority Leader
        U.S. House of Representatives   United States Senate

        The Honorable Kevin McCarthy    The Honorable Mitch McConnell
        Minority Leader                 Minority Leader
        U.S. House of Representatives   United States Senate
        The Honorable Ron Wyden         The Honorable Mike Crapo
        Chairman                        Ranking Member
        United States Senate            United States Senate
        Committee of Finance            Committee of Finance

        The Honorable Richard E. Neal   The Honorable Kevin Brady
        Chairman                        Ranking Member
        U.S. House of Representatives   U.S. House of Representatives
        Committee on Ways and Means     Committee on Ways and Means

        The Honorable Carolyn Maloney   The Honorable Dina Titus
        Americans Abroad Caucus         Americans Abroad Caucus

                                     ______

                       Letter Submitted by Robert Dennis
    Dear Esteemed Senators and Congresspersons,

    My name is Robert Dennis. I am writing to urge most respectfully that
    the Senate Finance Committee hold hearings to review and consider the
    matter of the taxation of U.S. citizens residing abroad.

    As you are all no doubt well aware, Americans are the only citizens of
    the developed world who are called upon to pay taxes both where they
    live as well as where they do not, or no longer live.

    As residents of another country, we do not depreciate the
    infrastructure of our homeland.

    We do not call upon its resources (if Turkey attacks Greece, It'll be
    the Hellenic Air Force coming to our aid).

    We are not protected or served by the employees of its federal
    agencies.

    But we are required to pay for them all the same.

    My wife and I have been living in Greece for the past 3 years. I love
    America and was deeply reluctant to give up my life in New York City,
    where I lived since 1977. However, practicalities demanded that I first
    consider, and then undertake, just such a move.

    After undergoing several surgeries within 15 months to address various
    medical concerns (one of the ``rewards'' of getting older, I suppose)
    it became clear that aging in America might be too expensive for me.

    The financial impact of the accumulated co-payments required for the
    procedures was deeply burdensome and required every ounce of income I
    had gained in the years leading up to them.

    I came though the experiences okay physically, but the fear of what
    would happen to my finances if the problems had been even more serious
    impelled me to find somewhere else to go.

    And now, I'm there. A lovely place to be sure, but it isn't ``home''--
    or not my real home anyway.

    My wife and I are subject to taxation locally of course, and require
    the services of a local accountant to ensure that they are properly
    prepared, filed and paid.

    The additional taxes levied by the USA, where we no longer reside, also
    require us to pay an accountant for their proper preparation and
    filing--even when we owe no tax to the IRS.

    And when no payment is due from us, even a small error or oversight in
    our filing could find us liable for severe penalties.

    No other country (except, I believe, Eritrea) treats its citizens who
    reside abroad so excessively.

    We like it here. It's nice. But it's a life without Baseball or Bagels,
    Brooklyn or Broadway.

    We should not be compelled to bear the same tax burdens and liabilities
    as those who have access to the services they pay for (as well as that
    bouquet of beautiful ``B-'' items).

    I respectfully ask your consideration and determination that the tax
    status of those like us, living outside of American soil, is not on par
    with those who reside upon it.

    Faithfully yours,

    Robert Dennis

                                     ______

                       Letter Submitted by Susan De Paul
    I am a proud citizen of the United States of America. I live outside
    the United States in Switzerland where I am a tax resident and where I
    am subject to full taxation.

    I am an emigrant from America. I am proud to be an American, but one
    never knows where life will take us. I moved from America many years
    ago. I long ago realized that although I will always love America, I am
    living permanently abroad in a mixed-nationality family, not all of
    whose members have U.S. citizenship. I am a tax resident of my country
    of residence and am required to organize my financial and retirement
    planning in that country. The problem I have is that the U.S. tax laws
    make it difficult for me to live the same kind of life that my friends
    and neighbors live. My friends (in both America and in Switzerland) are
    subject to only one tax system. As a U.S. citizen, I am subject to the
    tax system where I live and the U.S. tax system. These systems are
    generally not compatible. Most attempts at responsible financial/
    retirement planning where I live are frustrated by the need to comply
    with U.S. tax laws, which prevent me from investing where I live, and
    provisions such as the Know-Your-Customer rule of the Patriot Act,
    which prevent me from investing with U.S. banks (since I do not have an
    address there). How can this be fair? How can the United States impose
    taxation on the non-U.S. income and assets of a person who is a tax
    resident of another country--with no economic connection to the United
    States? I do not have a U.S. credit rating and do not even meet the
    requirements to track the status of my tax return on the IRS website
    since I do not have a U.S. source of financial debt (mortgage, car
    loan, or U.S.-based credit card).

    I do not live ``offshore.'' I live in a country where I pay income
    taxes. I also pay additional kinds of taxes that have no U.S.
    equivalent to my country of residence.

    However, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and I neither live in nor earn
    income from the United States. There is no other advanced country in
    the world that imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25.

        1.  The hearing focused on U.S. multinational corporations.
    However, here is the reality: U.S. tax rules treat individuals living
    outside the United States the same way they treat U.S. multinationals
    doing business outside the United States. Although, I am a flesh-and-
    blood individual person with a middle-class income, not a single
    participant recognized how individuals are affected by these rules
    despite the fact that the focus of the hearing was supposed to be about
    individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground.

    I am not a ``mini-multinational'' corporation. I am a ``dual-national''
    wage earner living in my country of second citizenship. It doesn't make
    me less American. It does mean that I am subject to the laws of the
    country where I live. I am not GILTI of anything. I ask only to be able
    to live my life without interference from the Internal Revenue Code of
    the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States,
    especially those running small businesses outside the United States.
    Individuals are not immune to the effects of raising the U.S. corporate
    income tax rate and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for people like me to
    save, invest, participate in pension plans and generally behave in a
    financially responsible way. This is because all of these essential
    activities are taking place in my country of residence and not in the
    United States. My retirement investments are foreign to the United
    States but local to me. In addition, the United States impose taxes on
    things (for example, sale of principal residence) when my country of
    residence does not. Because I am required to live my life with the USD
    as my functional currency, I am subject to taxation of ``fake income''
    due to nothing but changes in the exchange rate (and sometimes
    corresponding to a loss rather than a gain in my local currency). As a
    tax resident of both the United States and my country of residence, I
    get the worst of both tax systems. What one giveth, the other taketh.
    Sometimes both systems take.

    Please do not believe that foreign tax rules and/or the Foreign Earned
    Income Exclusion solve these problems. They do not! The Foreign Earned
    Income Exclusion is a help for many but does not cover unemployment
    pay, which is subject to full U.S. taxation (because it is considered
    ``unearned''). Despite the FEIE and the foreign tax credits, I am
    doubly taxed on my employer's contribution to a mandatory retirement
    plan (similar to a 401(k) except that it is required by Swiss law). My
    employer's contributions and the (unrealized) growth in the plan are
    considered ``unearned'' income to be declared each year, and since the
    Swiss government only will tax these contributions upon retirement, I
    cannot offset this annual pseudo-income with foreign tax credits. Thus,
    I am doubly taxed on this income: by the U.S. as it is paid in and by
    the Swiss as it is paid out. This is in contrast to ordinary Swiss (or
    to Americans with 401(k) plans) who can benefit from tax-favorable
    treatment.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues
    but sadly have received little sympathy or understanding.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation!

                                     ______

                        Letter Submitted by David Depman
    I am a proud citizen of the United States of America. I live outside
    the United States in Prague, Czechia. am a tax resident here and I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America 20 years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                       Letter Submitted by Susan De Witte
    To the Members of the Committee,

    My U.S. citizenship used to be part of my DNA. I live outside the
    United States in Belgium, where I am a tax resident and where I am
    subject to full taxation. As a result of U.S. tax policies and FATCA I
    was forced to renounce my U.S. citizenship. I am writing in the hopes
    that in a small way, my experience will help with change--changes that
    will give American citizens the freedom to leave the United States and
    live a prosperous life. To put it simply: The United States must stop
    exporting its system of extraterritorial taxation and regulation to
    people who live in other countries.

    When I moved abroad I learned a lot. I learned that other countries
    have well-developed tax systems that require payment of a wide range of
    taxes, which in turn are used to provide services. In my years of
    living in Belgium I never once placed a burden on the U.S.. Any and all
    services I have used are provided by the Belgian government. My Belgian
    husband has been our sole source of income, still we pay a lot of tax.
    If we were living in the U.S. our tax income tax bracket would be 12%,
    but here it's 45%--that's just income tax, we have many other taxes we
    pay here that do not exist in the U.S.. I find it highly insulting that
    we should be classified as suspect tax cheats/criminals when
    percentage-wise our family pays more than some of the wealthiest U.S.
    residents. We are not ``offshoring'' anything--our bank is local, it is
    just around the corner from where we live. We don't have any secret
    investments or hidden wealth either, we are average law-abiding tax-
    paying people!

    When I first moved here I had no intention of renouncing my U.S.
    citizenship--I was a very proud American. My mother's family dated back
    to before the revolutionary war and my paternal grandparents had
    emigrated to the U.S. from the Austro-Hungarian empire during the
    Industrial Revolution. The United States meant a chance to pursue their
    ``American Dream''.

    My parents were in their 40's when I was born. My early years were
    filled with the civil rights movement, the equal rights amendment
    campaign and the Vietnam war. As a young girl my father took me to the
    bank to open my first savings account, I would learn later that at that
    time my mother wasn't allowed to open that account. My mom couldn't
    have an account or credit in her own name--a discrimination that many
    women of her age would later face when they were widowed or divorced,
    as they had no financial or credit history in their own name. I still
    remember the day my mom was able to legally open her own account and
    get a small credit card in her name. She made a point of opening
    another small savings account for me at the same time.

    I had to grow up fast; while my classmates were giggling over boys and
    debating fashion, I was a caring for my terminally ill parents and
    elder brother. My ``sweet 16'' was spent attending a funeral. I never
    received any social security child benefit during those years or after
    I was orphaned. I went to work doing whatever I could to get by while
    finishing my education. My main area of study was in science and
    mathematics, which at that time was still very much considered a male
    field. I graduated with a 4.98/5 GPA--it would have been a perfect 5 if
    it hadn't been for my absence for a few hours attending funerals (I did
    attend class straight after the funerals).

    I still remember my first ``proper'' job interview where I was asked if
    I was planning on getting married, did I have children, did I plan on
    having children etc. The employer was of the old school thought that
    women shouldn't be taking ``men's jobs'', but if legally he had to
    employ women they were not equal to the male employees. My base salary
    was $10,000/year but my male co-workers received $15,000/year. The
    message was clear: be grateful for the privilege of having a job.

    In my spare time I carried on my mom's volunteer work with people with
    special needs, also assisting with programs to help people with
    literacy and numeracy difficulties. She had always stressed the
    importance that we should all do our part to help others when and where
    we can.

    I am telling you this because I'm proud that I helped change the
    attitude towards women. It wasn't easy but through hard work and effort
    I proved we were just as capable as men and deserved respect. Change
    was happening even if at times it seemed at a snail's pace.

    When my Belgian husband and I married we had made plans for the future.
    We had a young son who was born in the U.S., and wanted at least one
    more child. Originally I was going to be temporarily a stay-at-home
    mom, helping our son adjust to his new life, attending Dutch classes to
    better integrate here and eventually help me either get a job or start
    a small business. It wasn't long after that our son was joined by two
    sisters. What we didn't factor in was that they would all be on the
    autism spectrum. Thankfully they weren't on the severe end of the
    spectrum but it still meant a delay in our plans for my return to work
    as they needed me at home.

    We found a small fixer upper home close to the schools and transport
    links, the mortgage was affordable for our one income family. While we
    faced our share of obstacles, the future was looking brighter for our
    family. During this time I ran a free online support group for parents
    and caregivers of children with autism and other special needs. We
    discussed the issues our children faced from early years to adulthood.

    Our son is more severely affected by his autism but not to the degree
    that he is disabled. He's intellectually capable but has physical
    problems so heavy labor work is off the cards for him. The story was
    the same for other young people like him that were capable of doing
    more but having no opportunity to show their potential. When they think
    of autism, most people imagine either the child spinning a plate while
    sitting on the floor seemingly oblivious to the world around them, or a
    super genius making complex calculations in their head. People have
    trouble understanding that there is a whole world in between those two
    extremes because the fact is, it is a spectrum disorder. Outside of a
    few government jobs and sheltered work programs that require heavy
    physical labor there was virtually nothing out there for people like my
    son. Often they are offered unpaid/volunteer work where they do all the
    duties of someone that would normally be paid, in order to gain
    experience. But in the end few end up with a paid job. Autism doesn't
    magically go away upon reaching adulthood and there is little
    opportunity to become as independent as possible. We parents know we
    will not be around forever so it is up to us to try to provide safety
    nets for our children.

    This gave me the idea that once I wasn't needed to be home for the kids
    anymore as they became more independent, we might be able to open a
    small family run business to employ people like our son. I started
    researching the type of business, the requirements needed, what
    financial aid through the EU and Belgium might be available, suitable
    properties etc. We might not have been able to employ hundreds, but at
    least we may have been able to help some gain much needed opportunity.
    It may even serve as an example for others.

    My focus was on my family and developing our future business plans, so
    I quit paying as much attention to the U.S.. We knew I was subject to
    U.S. citizenship based taxation, but I didn't have a paid job (despite
    what some may think caring for three special needs kids is a full-time
    job) so that was not an immediate concern. I had yet to gain Belgian
    citizenship. We were one of many families that were making ends meet,
    the only thing of monetary value we had was a small mortgaged family
    home.

    When the financial crisis hit in 2008, we weren't hit as hard as some
    of our friends. The home we had bought was within our means and the
    mortgage was through our local bank with a fixed monthly payment. My
    husband had tenure so his job was secure but his employer announced
    that there would be no pay raises or bonuses for the foreseeable
    future. We would just have to tighten our belts a bit more but my
    husband's monthly salary of =2,200 was sufficient for our family of
    five.

    It wasn't long after that we suffered a terrible setback: a freak storm
    damaged the roof of our house and flooded the downstairs. The work we
    had put into making a comfortable home was largely undone. An error on
    the insurance meant that we were not covered for the damage. My husband
    called our bank to see if we could get a home improvement loan and was
    told we could get one and for the amount needed to do the necessary
    repairs. They would prepare the paperwork, it would take a couple of
    days but then all we had to do is come on in and sign it; we were good
    clients and not a credit risk. We weren't thrilled with the taking on
    extra debt but had little choice if we were to make our house a livable
    home again.

    The day came to finalize the paperwork. We went to our local bank to
    sign only to be told the loan was no longer available. We thought it
    must have been due to the financial crisis. While we were there I was
    asked to fill out a form 8938 for the IRS. I had no idea what FATCA was
    or the pain and stress it would bring to our family. We patched our
    roof with duct tape as best we could and started gutting the
    downstairs, we were just going to have to buy things a little at a time
    as we could afford it. I didn't have the time or energy to focus on
    anything but trying to make our home livable again and caring for my
    young children.

    When our son's savings account was closed I started looking into what
    was going on. While visiting expat message boards I found that many
    people with U.S. citizenship were finding their bank accounts closed,
    mortgages cancelled, personal and business loans denied and FATCA was
    the reason behind it all. I kept researching and found out about a new
    class of U.S. citizen, the Accidental American. Some people well into
    their retirement years were suddenly having their accounts frozen and
    being presented with tax bills that more than ate up their pension
    savings. It wasn't actual tax they owed but mostly fines and penalties.
    Many never had a social security number, now they were told they had to
    get one but had no idea how. Their U.S. citizenship was a technicality:
    born in the U.S. to foreign national parents or outside the U.S. to a
    U.S. parent within a specified amount of time. I live in Belgium but
    the closest embassy that handles social security matters is in the
    Republic of Ireland. As for those whose birth was registered by their
    U.S. parent abroad, they have to deal with the Department of State in
    Washington DC. The U.S. requires payment in the form of money order or
    check--two obsolete forms of payment here, most transactions are
    digital as we move further into a cashless society.

    We only were able to keep our basic bank account because it was
    originally my husband's childhood account, our mortgage was more than
    half paid so grudgingly we were allowed to keep that but anything more
    was a NO because no matter what we did together, I would be somehow
    attached. My husband couldn't even open a private pension fund meant to
    supplement his government pension (social security) as long as I
    remained a U.S. citizen.

    FATCA would put intense pressure on us, our only hope would be a fix by
    the U.S. government or to renounce my U.S. citizenship. It became clear
    that the U.S. had no intention of fixing the ``unintended consequences
    of FATCA''. Out of hope I decided it was time to renounce. Imagine my
    shock when I finally became a citizen of Belgium and looked into
    renouncing my U.S. citizenship, to be told that I would have to pay
    $2,350 for what had been a free service when I moved here. We couldn't
    afford it, that was our monthly income and with the repairs we needed
    to do we had no money to spare. I called the embassy to see if there
    was any way there could be a reduction to the fee, wrote the Department
    of State but was told there was nothing they could do to help; we would
    have to pay the full amount. We were trapped by a piece of legislation
    meant for wealthy people avoiding U.S. tax and criminal organizations.

    Unable to afford the renunciations, our dream of a small family
    business died. We wouldn't be able to help people like our son. As I
    mentioned before we are law-abiding so when our son--who hadn't lived
    in the U.S. from the time he was a young child--came of age to register
    with the U.S. Selective Service, we made an appointment with the U.S.
    Embassy here. He couldn't do it online and I was not about to allow him
    to send sensitive documents through the mail.

    His appointment was March 22, 2016 early in the morning. His father and
    he left to take the train to Brussels, we live on the other side of the
    country. I got the girls off to school and turned on the TV for some
    background noise as I started my day. I heard the blare of ``Breaking
    News Terrorist Attack in Brussels'' Not since 9/11 had I been this
    absolutely terrified--I remember everything from 9/11: I had been
    online with some friends before they left for work, and it end up being
    the day that they were cruelly ripped from this world. Now here my
    husband and son were potentially in danger and just like on 9/11 I
    could only watch in horror, feeling helpless. The embassy went on
    lockdown, they didn't even bother trying to warn my husband and son not
    to continue on to Brussels. They had the contact details--a simple text
    or call would have allowed them to return to the safety of their home.
    From early morning into the late evening they wandered around Brussels
    in the cold and wet, no way home or place to take shelter. They only
    had enough money to buy a small snack and drink--with three days to
    payday our bank account was virtually empty. So please do not feed me
    the line that the U.S. practice of citizenship-based taxation is
    justified because of the services they provide especially in times like
    this--my husband and son were left to fend for themselves. They could
    have died that day and the only thing the U.S. would have cared about
    was how much tax revenue they would be able to collect on my
    inheritance and widow's pension (provided by the Belgian government
    with zero coming from the U.S. coffers). That was the day my son quit
    being a ``proud American''; he came home and said he wanted to renounce
    his U.S. citizenship.

    Today I use a wheelchair and rely on my family for things I once did
    with ease. I will never run a half marathon for charity again. We
    learned I have a chronic illness that will cut my life short but not
    before the indignity of losing my independence. It started with a few
    tremors/spasms, a bit of clumsiness. Today I live in constant pain. My
    doctor asked why I didn't collect the assistance I was entitled to here
    to help ease the burden my care places upon our family. I had to
    explain the U.S. citizenship-based taxation, FATCA, GILTI and the cost
    to renounce. As someone trapped with U.S. citizenship and subject to
    the very things my maternal ancestors fought against in the
    Revolutionary war, I could not ethically or morally justify taking
    assistance from the tax coffers of Belgium only to hand it over to the
    U.S. government, who contributed nothing. The insult to injury is that
    the benefit is based on our family income so not taxed here but the
    U.S. would tax it as unearned income. Like many things this is not
    covered in the tax treaty.

    On September 11, 2019 with help from friends and family I was finally
    able to renounce my U.S. citizenship. My husband always takes 9/11 off
    from work because even though it's going on 20 years he knows it is a
    hard day to get through for me. It was the only day available for me so
    I was determined to have the strength to make it through. Now it's a
    day that marks not only the murder of my friends but the death of my
    U.S. citizenship. We don't live close to Brussels and the long drive
    was physically stressful, but the experience was emotionally even more
    painful. At my first appointment I had my citizenship questioned
    because one of the things was destroyed when our house flooded was my
    U.S. passport. Since we didn't travel to the U.S. I had no need to
    replace it, we couldn't afford the cost much less travel to the U.S.. I
    had my Belgian passport and identity card showing the U.S. as my place
    of birth--that alone should have sufficed. But the person behind the
    counter made a point of trying to humiliate me. Nobody would really
    want to give up citizenship to the ``greatest country in the world''.
    By the end of my interview I was in such physical and emotional pain
    that I asked her what sane person would travel across the country to
    eventually pay what amounts to extortion if they didn't need to do so.

    On my second appointment I took along a copy of my immigration record
    as further proof. Can you guess who was the person behind the counter?
    Same person. This time not only was my citizenship questioned, but upon
    reviewing my exit tax forms they refused to believe I had no income,
    savings or anything of value. Everything we have here has been paid for
    by my husband and is his, he is not and has never been a U.S. citizen.
    They huffed off and I was returned to the waiting room, where the TV
    screens showed the towers coming down and a moment of silence was
    announced. I am not one for public displays of emotion, even when I
    attended my mom's funeral on my birthday I did not cry. But the memory
    of the loss of loved ones, the fact I was being forced to renounce
    citizenship to a country I once took pride in, the treatment I was
    subjected to in the first and now this final appointment I broke down
    and started crying and shaking. Shortly after that we paid the fee and
    a gentleman finished up the paperwork, it was the first show of
    compassion I was shown during the whole process. Even as I write this I
    still feel the pain, as if something was torn from me that day. The
    closest I can compare it to is when I miscarried a child in my second
    trimester, a feeling of emptiness and loss.

    Elise Bean referred to people like me and my son as ``insignificant''
    at the FATCA hearing in 2017, it was my last hope a fix for the pain
    and suffering needlessly inflicted upon once proud Americans and those
    classified as Accidental Americans because we don't live in the U.S..
    The treatment of Accidental Americans is doubly damning. Other than an
    accident of birth they have no ties to the U.S., some don't even speak
    English, but still their lives are destroyed. Watching the hearing all
    I could see was contempt from her, she did her best Marie Antoinette
    impression when she said ``We have more people wanting to come to the
    United States than those that leave. They can renounce...'' Over and
    over the message became clear--anyone that was a U.S. citizen living
    outside the U.S. should be suspect and most likely guilty of something.

    Elizabeth Warren zealously continues in her pursuit of anything
    ``foreign'' while refusing to realize that just because someone lives
    outside the U.S., that doesn't mean they don't pay taxes where they
    live, nor is their local bank an ``offshore'' bank. The majority of the
    millions of U.S. citizens outside the U.S. are just everyday people
    doing their best to live their lives. I wish I could give you exact
    numbers but the U.S. census doesn't include us, while in our resident
    countries only one citizenship is usually counted. So if you are a dual
    citizen, your U.S. citizenship is ignored.

    The March 25, 2021 hearing had some major flaws:

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States the same way they treat U.S. multinationals doing
    business outside the United States. Although I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or an individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experience running businesses outside the United States and/or
    witnesses actually living outside the United States. To simplify this,
    get your heads out of the clouds and look at the reality harming real
    people. Despite having the same rights and freedoms as any other
    national in our home countries and in the U.S., we have been downgraded
    to third class. Though innocent of any wrong doing our U.S. citizenship
    has been sentenced to death, but not before we pay the executioner an
    extortionate amount of money.

        3.  As a general principle: Please understand that any and all
    changes to the taxation of U.S. corporations will have a huge impact on
    the U.S. taxation of U.S. individual citizens living outside the United
    States and running small businesses outside the United States.
    Individuals are not immune to the effects of raising the U.S. corporate
    income tax rate and/or doubling the GILTI tax.

        4.  More generally (whether or not one is a small business owner),
    the U.S. extraterritorial tax regime makes it difficult to save,
    invest, participate in pension plans and generally behave in a
    financially responsible way. This is because all of these essential
    activities are taking place in our country of residence and not in the
    United States. What is foreign to the U.S. is local for me. In
    addition, the United States impose taxes on benefits (like disability
    and unemployment benefits) when my country of residence does not. I am
    required to live my life with the USD as my functional currency, I am
    subject to ``fake income'' on nothing but changes in the exchange rate.
    As a tax resident of both the United States and my country of
    residence, I get the worst of both tax systems. What one giveth, the
    other taketh.

        5.  And please don't believe that foreign tax credit rules and/or
    the Foreign Earned Income Exclusion solve these problems. They don't!

        6.  American extraterritorial taxation is extremely unjust. For
    many years, Americans abroad have been attempting to get both Treasury
    and Congress to address these issues. The time has come for the United
    States to abandon its extraterritorial tax regime and join the rest of
    the world in adopting a system of residence-based taxation.

    I don't know if anyone will read this or if they will care but I can
    only hope it will be read, and someone will have compassion and
    understand I am speaking from my heart--it is past time the U.S. end a
    reign of terror. U.S. citizens that are women have seen the clock
    turned back to a time when they cannot enjoy the rights and freedoms
    generations of women fought hard to obtain. We are dual nationals not
    multinationals, ordinary people wanting to lead our everyday lives in
    peace. We want to be proud of our American heritage but it's hard to
    have pride when the U.S. continues to punish us and our non-U.S.
    partners/spouses and children just because our home is not in the U.S.
    I may not be a U.S. citizen anymore but I still care about the people
    who were my fellow Americans, it's too late for me but not for them. Do
    the right thing! To quote Sarah Grimke ``All I ask of our brethren is
    that they take their feet off our necks.''

    Sincerely,

    Susan De Witte

                                     ______

                       Letter Submitted by Cristiana Dias
    My name is Cristiana Dias, and I am a 24 year old, American-born woman.
    I have been living in France since I finished high school in 2014 in my
    home-state of New York.

    My decision to leave the United States to pursue a life in France at
    the age of 18 was one that was taken lightly by neither I nor my
    parents. My dream to live in France came after a trip to Paris when I
    was 12 years old. Having traveled quite a bit, with my mother working
    in the travel industry, I can't quite put my finger on what exactly
    Paris did to make me choose it as a city for my future, but I know
    that, in France, I felt as if time slowed down; that time a long,
    peaceful lunch was something that was valued in daily life; that a
    decent, minimum amount of paid vacation days was a standard that I
    could aspire to have; that affordable and accessible healthcare and
    tuition costs would never be a worry for me; the list goes on.
    Throughout my high school years, I would attend 3 hours of French
    language classes in Manhattan, commuting a total of 4 hours every
    Saturday, to obtain the required level of French proficiency to attend
    university in France. In leaving the USA after high school, my goals
    were clear--I was aiming to jump directly into a career in Law at the
    onset of my undergraduate education, at the yearly price of what a
    textbook would have cost me in an American higher learning institution,
    in order to establish a basis to then find a career and settle in the
    country that had called out to me a few years before.

    Ever since 2014, and every day when I wake up here in France, I know
    that I made the right decision. I do not doubt my thought process,
    because I have found true joy in a country that is not my birthplace.
    However, I am 24 years old, and, after starting my first full-time job
    this past September, I have recently began to research what kind of
    accounts I can open here in France. My French friends around me speak
    of ``PEAs'' or ``assurance vies'' or many other types of lucrative
    savings accounts. Me? I can't speak of such accounts, because, just
    over a month ago, I became familiar with the only aspect of my future
    objectives that I hadn't factored into my planning: long-term savings
    plans.

    After a few weeks of investigation, after reaching out to numerous
    emigrants, like myself, across sites such as Facebook, after attending
    International Tax Seminars on Zoom, and making appointments at multiple
    French banks, I still have no solution that is adequate enough for my
    situation. I find it extremely difficult to understand how the United
    States could be so gracious to allow its emigrants the Foreign Earned
    Income Exclusion, and yet a similar, maximum cut-off point, can not be
    arranged for foreign savings/investment accounts. As a 24 year old, I
    hope to one day reach retirement and not have to worry, the same way I
    didn't have to worry at the beginning of my adulthood about meeting my
    basic needs. In order to do so, my only current options are to have a
    U.S.-based retirement fund, which, aside from being capped at a certain
    yearly contribution amount, would also require me to jump through many
    unnecessary hoops, like converting currencies as just an example. The
    only other option is to open a regular savings account here, collecting
    nominal interest until I reach retirement.

    I would love for the U.S. Senate to understand that although citizen-
    based taxation is probably beneficial to the U.S. country as a whole,
    the administrative issues and burdens that U.S. persons have to face
    when deciding to leave the U.S. make us feel like we do not matter to
    our country. It is unfair that we, as U.S. persons, have a very limited
    range of options when it comes to banking, simply because of our
    affiliation to a country that we no longer live nor work in. I should
    be allowed to have the opportunity to set-up a long-term savings plan
    for myself, and benefit from attractive interest rates that every other
    French tax-resident can benefit from. I should be allowed to grow my
    money for a future home purchase, for my future children's education,
    for my own peaceful retirement.

    What I do hope is that you all can make a difference for those
    Americans who want to do the right thing towards their birthplace, like
    myself, or to their affiliation with the U.S., without having to opt
    for the last resort, being to renounce any link to the United States.
    My hope is that there can be some sort of compromise that would allow
    those who fall under the Foreign Income Exclusion to also be able to
    benefit from long-term savings accounts abroad that are available to
    people who share their same tax residence country. My hope is that
    there can be a solution that can help us everyday people; teachers,
    nurses, fitness instructors, save money for our future in a proper
    manner.

                                     ______

                      Letter Submitted by Natalie Diffloth
    In 2003 I moved from the United States to Germany in order to be with
    my partner. I am now permanently living abroad. Although I live outside
    the United States, I remain a proud citizen of the United States.

    In Germany, I am a tax resident and am subject to full taxation. As
    such, I am required to organize all of my financial and retirement
    planning according to German law. This includes having to submit taxes
    in TWO countries and pay for TWO different (expensive!) tax accountants
    every year, one German and one U.S.-based. This remains the case, even
    though my annual worldwide income has consistently remained under
    $30,000 USD per year during the last 15 years.

    Whereas my friends and neighbors here are subject to only one tax
    system, as a U.S. citizen, I am subject to two: the tax system in
    Germany, where I live, in addition to the one in the U.S., where I do
    not. These systems are generally not compatible. From my perspective,
    this is quite an unfair burden.

    Because I am a U.S. citizen, the United States imposes taxation on my
    non-U.S. income even though (a) I do not live in the United States and
    (b) I am a fully taxable on that income in the country where I reside.
    There is no other advanced country that imposes such extraterritorial
    taxation on individuals.

    I would like to make two comments regarding the hearing on March 25,
    2021.

        1.  The March 25th hearing focused on U.S. multinational
    corporations, not on individuals. But the reality is that U.S. tax laws
    treat individuals living outside the United States in the same way they
    treat U.S. multinationals doing business outside the United States. No
    one at the meeting addressed how individuals are affected by these
    rules. At the same time, the focus of the hearing was supposed to be
    about individuals. How did this happen?

        2.  I was surprised that no witnesses were called who had actual
    experience running businesses outside the United States and/or who
    actually lived outside the U.S. Subsequent hearings should deal with
    the reality on the ground and not abstractions.

    I am not a ``mini-multinational'' I am a ``dual-national''--one who is
    living in my country of second citizenship. This doesn't make me less
    American. But it does mean that I am subject to the laws of the country
    where I live.

    As a general point, it is important to understand that any and all
    changes to the taxation of U.S. corporations will have a very major
    impact on the U.S. taxation of U.S. individual citizens living outside
    the United. Individuals are not immune to the effects of raising the
    U.S. corporate income tax rate and/or the doubling of the GILTI tax.

    Regardless of whether or not one is a small business owner, the U.S.
    extraterritorial tax regime makes it difficult for people like me to
    save, invest, participate in pension plans and generally behave in a
    financially responsible way. This is because for me, these essential
    activities are taking place in my country of residence and not in the
    United States.

    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on assets (for
    example, the sale of principal residence) when my country of residence
    does not. I have no choice in the matter.

    In addition, because I am required to live my life with the United
    States Dollar (USD) as my functional currency, I am subject to ``fake
    income'' as a result of nothing other than changes in the Euro-Dollar
    exchange rate. As a tax resident of both the United States and my
    country of residence, I get the worst of both tax systems.

    Foreign tax rules and/or the Foreign Earned Income Exclusion do not
    solve these problems.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you for your attention. I hope that the committee will take these
    matters into consideration.

    Sincerely,

    Natalie Diffloth

                                     ______

                    Letter Submitted by Claire Marie Dooley
    I am a proud citizen of the United States of America. I paid my own way
    through my undergraduate and graduate university education, and have
    been an honest hardworking and tax-paying citizen ever since I was a
    teenager.

    In 2020, due to my Danish husband's job, I moved to Denmark, where I am
    now a tax resident. I am working full-time at a demanding corporate job
    and I am subject to full taxation. Due to my personal circumstances, I
    am temporarily living outside the United States, gaining invaluable
    work experience at a global multinational organization, and getting to
    know my husband's family, childhood friends, and culture.

    When I first moved abroad I learned a lot. I learned that other
    countries have well developed tax systems that require payment of a
    wide range of taxes. I can tell you that I pay a lot of taxes here in
    Denmark. It is very hard not to see the way the U.S. tax system treats
    my non-U.S. income and assets as unfair. The fact that I am currently
    living abroad does not mean that I don't have to plan for retirement.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground. The
    reality that I live and breathe every day!

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship, and the homeland of my husband. It
    doesn't make me less American. But, it does mean that I am subject to
    the laws of the country where I live. I ask only to be able to carry on
    my career and my life and be able to make a livable income.

    Broadly speaking, I have learned since moving abroad that the U.S.
    extraterritorial tax regime makes it extremely difficult for me to
    save, invest, participate in pension plans and generally behave in a
    financially responsible way. This is because all of these essential
    activities are taking place in my country of residence and not in the
    United States. My retirement investments are foreign to the United
    States, but local to me. In addition, the United States impose taxes on
    things (for example sale of principal residence) when my country of
    residence does not. Because I am required to live my life with the USD
    as my functional currency, I am subject to ``fake income'' on nothing
    but changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    Please don't believe that foreign tax rules and/or the Foreign Earned
    Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                      Letter Submitted by Karen J. Downing
    I am a proud citizen of the United States of America. I live outside
    the United States in the United Kingdom where I am a tax resident and
    where I am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am an American citizen living,
    working and fully tax compliant in a country other than the United
    States. It doesn't make me less American. But, it does mean that I am
    subject to the laws of the country where I live. I am not GILTI of
    anything. I ask only to be able to carry on my small business and/or my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    It is extremely complicated, and often expensive to file from abroad.
    Many of the tax programs will not accept a foreign address or telephone
    number. It is not even possible to open an online account with the IRS
    in order to see transcripts with a foreign address.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you for your attention.

    Karen J. Downing

                                     ______

                    Letter Submitted by Christine Dymkowski
    I used to be happy to be a citizen of the United States of America, but
    my U.S. citizenship has become my biggest burden. Since 1976, I have
    lived outside the United States in the United Kingdom, where I am a tax
    resident and subject to full taxation.

    I am an emigrant from America because I fell in love with someone
    British. I long ago realized that, although I will always feel
    American, I am living abroad permanently. As a tax resident of the UK,
    I have to organize my financial and retirement planning here. However,
    U.S. tax laws make it very difficult for me to live the same kind of
    life that my friends and neighbours live: they are subject to only one
    tax system, whereas I, as a U.S. citizen, am subject to both the U.S.
    and the UK tax systems, which are not compatible. Most attempts at
    responsible financial and retirement planning where I live are
    frustrated by the need to comply with U.S. tax laws. This is clearly
    unfair. My income derives entirely from my previous salary and now my
    pension from the British university in which I worked and on which I
    have paid British taxes (which are higher than the U.S. tax rate). How
    can the United States justify imposing taxation on the non-U.S. income
    and investments of a person who is a tax resident of another country
    and who has not had a financial or economic connection to the United
    States for 45 years?

    I do not live ``offshore.'' I live in a country where I pay very high
    income taxes, and I also pay additional taxes, like VAT of 20%, to my
    country of residence. My American citizenship means I am also subject
    to the U.S. extraterritorial tax regime, even though the UK fully taxes
    my UK income and I do not live in the United States. There is no other
    advanced country in the world that imposes such extraterritorial
    taxation, and it very disheartening that, even though American
    emigrants and emigrant organizations have for many years written to and
    met with Congressional lawmakers about the problems that citizenship-
    based taxation causes us, no one listens. When we write about the
    difficulties we face, our representatives in Congress send back replies
    that have no relation to our points and complaints.

    The hearing on March 25th follows this pattern. I would like to make
    two general observations about it:

    1. The hearing focused on U.S. multinational corporations. But here is
    the reality: U.S. tax rules treat individuals living outside the United
    States in the same way they treat U.S. multinationals doing business
    outside the United States. Although we are flesh and blood people, not
    a single participant recognized how these rules affect individuals,
    even though the focus of the hearing was supposed to be about
    individuals. How did this happen?

    2. Most tellingly, there was not one witness who had personal
    experience with a company or an individual running a business with
    interests outside the USA. Although this is ridiculous, I'm sorry to
    say it is not surprising, given past experience of lawmakers ignoring
    the effects of their laws on American emigrants who are subject to
    them. I respectfully suggest that subsequent hearings include witnesses
    who have the experience of running businesses outside the United States
    and/or of actually living outside the United States. To put it another
    way: Subsequent hearings should deal with the reality on the ground and
    not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national,'' living in
    my country of second citizenship. It doesn't make me less American, but
    it does mean that I am subject to the laws of the country where I live.
    I am not GILTI of anything. I ask only to be able to live my life
    without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally, although I am not a small business owner, the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    Although my retirement investments are foreign to the United States,
    they are local to me. I planned responsibly for my old age: I invested
    savings from my fully-taxed British salary in a government-recommended
    stocks and shares Individual Savings Account (ISA). As I am not a high
    net worth individual, I did not seek any specialist financial advice
    before doing so and consequently did not know that the U.S. would
    regard the mutual funds held in the ISA as PFICs and tax them in what
    is essentially a confiscatory way--U.S. tax will take not just the
    gains, but the principal. In addition, because I am required to live my
    life with the USD as my functional currency, I am subject to ``fake
    income'' on nothing but changes in the exchange rate: investments that
    actually lose money in real (pound sterling) terms may show phantom
    gains as a result of fluctuating exchange rates. Additionally, the
    United States imposes taxes on things when my country of residence does
    not. As a tax resident of both the United States and my country of
    residence, I get the worst of both tax systems. How can this be called
    fair? I can't imagine the U.S. would take kindly to a foreign country
    taxing U.S. residents earning U.S. dollars and paying U.S. tax.

    And please don't claim that foreign tax rules and/or the Foreign Earned
    Income Exclusion solve these problems. They do not. I have a
    substantial ``tax credit'' from the U.S. because I pay higher taxes in
    the UK on my income than I would in the U.S., but the IRS does not
    apply this tax credit to, for example, interest paid on my UK savings
    accounts.

    Please also note that IRS rules for Americans who live overseas are
    extremely complex, requiring professional preparers to do our returns.
    I just filed my 2020 return, on which I owed $10.00 (10 dollars).
    Because I have to account for all my investments, the return was about
    150 pages long and cost 1,854 (about $2,500) to prepare,
    which is about 7% of my U.S. taxable income.

    As I get older, it is getting harder for me to cope with the required
    paperwork and records and the online FBAR form. I sometimes don't
    switch money out of a savings account to get better interest elsewhere
    because I'm afraid I won't keep track, and the IRS imposes draconian
    penalties on even non-wilful mistakes on the FBAR.

    This situation is extremely unjust. For many years, both individual
    Americans and American organizations abroad have been attempting to get
    both Treasury and Congress to address these issues. The time has come
    for the United States to abandon its extraterritorial tax regime and
    join the rest of the world in adopting a system of residence-based
    taxation.

    I very much hope to remain a U.S. citizen until I die: my American-ness
    is part of my identity. However, if the U.S. fails to abandon its
    cavalier disregard of the well-being of its citizens who live overseas,
    that hope is a forlorn one. I will have to expatriate to live my old
    age in peace.

                                     ______

                      Letter Submitted by Abraham Ekstein
    I am a proud citizen of the United States of America. I live outside
    the United States in Canada where I am a tax resident and where I am
    subject to full taxation.

    I run a small accounting practice in the country where I live.
    Obviously, my business is not a multinational corporation and all of
    its income is domestic to the country where I live. However, because I
    am a U.S. citizen, the U.S. tax code treats me the same as Apple or
    Google.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example GST)
    to my country of residence. Yet, because I am a U.S. citizen, I am
    subject to the U.S. extraterritorial tax regime, which means the United
    States imposes taxation on my non-U.S. income even though I am a fully
    taxable on that income in the country where I reside, and do not live
    in the United States. There is no other advanced country in the world
    that imposes such extraterritorial taxation.

    I am required to fill out complex forms that are beyond regular
    expertise of regular U.S. tax preparers and have to do that for the
    following reasons:

          Owning a CAD mutual fund inside a registered plan (similar to a
    529 plan) causes me to file a 8621 for PFIC
          Having a corporation requires a 5471 with all the complexities
    inherent in it,
          FBAR and other similar forms

    In effect, If I use a local business structure that's treated as a
    corporation under U.S. tax law, then I'm forced to fill in the same
    form 5471 as Apple must complete for each foreign subsidiary--
    translating all of my business records into U.S. dollars even though I
    do no business in that currency. My business is subject to GILTI even
    though I have no intangible income.

    Furthermore, most CAD corporation are considered as per-se corporation
    under U.S. tax code and therefore I don't even have the option to treat
    it as a DRE using a ``check the box'' election which would have made a
    bit simpler, therefore my only option is to use the 5471 to declare all
    my corporate income and assets with all cumbersome calculations that
    come with it.

    How can I compete with my neighbours who are not U.S. citizens and who
    have only one tax system to deal with?

    I am a CPA in Canada, on my way to earning my U.S. title using
    equivalence, yet I am paying close to $2,000.00 to prepare my U.S.
    taxes for a very straightforward and simple tax situation, made
    artificially complex just by the mere fact that I am a U.S. citizen.
    Needless to say, I am unable to use or recommend any of the regular
    financial planning techniques available to all other American citizens
    and CAD citizens (corporate holdings, trusts, estate planning etc) for
    the simple reason that whatever is legal or advisable in one
    jurisdiction is not good in the other. In other words, there will
    always be double tax situation or at least, triple filing requirement
    situation.

    If the IRC is complex enough for U.S. residents, imagine how it is for
    non-residents who by virtue of their decision to live outside the USA
    end up having to navigate the complexities of two tax codes, PLUS
    having to find a way to reconcile the two.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud. Regular middle class U.S. citizens should not
    be deprived of a voice just because they can't afford to spend time in
    Washington!

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! Neither does
    the tax treaty, an outdated and huge technical beast which doesn't keep
    up with time.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                     Letter Submitted by Ashley Lynn Ellis
    I am a proud citizen of the United States of America. I live outside
    the United States in Mexico where I am a tax resident. I live abroad
    permanently with my husband and children.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Long ago
    realized that although I will always love America, I am living
    permanently abroad. I have no plans of returning to the U.S. because my
    husband and children are here in Mexico. Our home is in Mexico. I also
    have no plans of renouncing my U.S. citizenship because I am proud to
    be an American and my dad and siblings live in the U.S. and I visit
    them whenever possible. I should be allowed to be a U.S. citizen who
    lives abroad. I am a tax resident of my country of residence. I am
    required to organize my financial and retirement planning in Mexico.
    The problem I have is that the U.S. tax laws make it very difficult for
    me to live the same kind of life that my friends, husband and neighbors
    live. You see, they are subject to only one tax system. As a U.S.
    citizen, I am subject to the tax system where I live AND the U.S. tax
    system. Two tax systems. Those systems are generally not compatible.
    Most attempts at responsible financial/retirement planning where I live
    are frustrated by the need to comply with U.S. tax laws. How can this
    be fair? How can the United States impose taxation on the non-U.S.
    income and assets of a person who is a tax resident of another country?
    Why am I unable to have a life insurance savings account or investment
    account in the country I live in because of U.S. tax code and FATCA?
    Why is a foreign family life insurance policy not treated the same as a
    U.S. based insurance? Why can't my husband include me on his business
    account because of FATCA and FBAR reporting? Why am I not allowed to
    live a normal life because I live abroad as a U.S. citizen? Why are you
    not aware of these issues?

    I live in a city with many expats, many from Canada, Italy, Russia,
    etc. none of them have the same financial stress from their home
    countries that I face as an American abroad. They open businesses,
    invest, adapt to Mexico . . . you know, they live their lives like
    regular people do. Their countries do not harass them to file taxes or
    share their foreign bank account information with them, or possibly
    face life shattering fines for non-compliance. Most of these other
    expats look at me in disbelief when I tell them about how I have to
    file Us taxes, cannot invest anywhere, and report foreign bank accounts
    to the U.S. when I don't even live there. They think it's a joke or
    that I'm misinformed. Only the other U.S. expats know that it's true.
    However, the other U.S. expats where I live either are U.S. retirees
    living off their life long savings and investments from the States, or
    they are long term ``tourists'' who do not live here full-time. Many
    are not ``young'' expats like me who are living their working years
    abroad and raising their children abroad. This is my life you are
    ruining with your un-American tax codes. This is my children's life you
    are ruining. I cannot invest anywhere and I literally don't sleep at
    night thinking about how my children will have to deal with this same
    terrible policy one day. The current citizen based taxation policy is
    incredibly un-American. It breaks my heart to think that if my children
    want a job like their dad one day, they will have to renounce their
    U.S. citizenship in order to be allowed to run a business and invest
    freely. Isn't the United States supposed to be the world beacon of
    freedom?

    How would you feel if you could not save for retirement?

    How would you feel knowing your children will also bear this burden?

    How would you feel if you were told the U.S. represents ``freedom'' yet
    you are not allowed to be free?

    I do not live ``offshore.'' I am not a corporation. I am an average,
    middle-class person!

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial Taxation. It's un-American!

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a not a U.S. resident. It
    doesn't make me less American. But, it does mean that I am subject to
    the laws of the country where I live. I am not GILTI of anything. I ask
    only to be able to carry on my small business and/or my life without
    interference from the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh. The U.S. extraterritorial
    tax code is un-
    American.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! I cannot
    invest anywhere and have ZERO retirement savings plan since I'm not
    allowed to thanks to the USA.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.
    We are ignored every single time.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America and pay attention to U.S.
    citizens abroad! Expat lives matter!

                                     ______

                       Letter Submitted by Conchita Ellis
    I am a citizen of the United States of America, living outside the
    United States in Canada where I am a tax resident and where I am
    subject to full Canadian taxation.

    I was born and reared in the Panama Canal Zone in a proud, staunchly
    American family until my father's retirement when we moved to the
    United States. In 1966 I emigrated to Canada to marry a Canadian. After
    53 happy years of marriage, living permanently in Canada, I am retired.
    My husband and I have never owned a business, nor are we independently
    wealthy. I am not entitled to U.S. Social Security nor any benefits
    from the United States as I only worked for 19 quarters before
    emigrating to Canada. I own no residences, businesses, nor hold any
    source of income from the United States. Yet to file my U.S. taxes each
    year I now pay $2,350 to have them prepared and filed! Meanwhile, it
    costs me $25 to personally prepare and file my Canadian taxes.

    The United States Internal Revenue Service (IRS) is currently
    penalizing me a total of $40,000 plus interest, because I had a legal,
    Canadian Tax-Free Savings Account (TFSA). This TFSA is a legitimate,
    Canadian government regulated savings account.

    Yet because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means that the United States is
    imposing taxation on my non-U.S. income even though I am fully
    accountable in Canada where I reside, which is not the United States!
    There is no other advanced country in the world that imposes such
    extraterritorial taxation!

    This dual taxation has imposed a financial hardship each year on our
    family at tax time. I have had to penalize myself by cancelling my
    small tax-free savings account, by paying an accountant every year with
    U.S. tax knowledge to prepare and file my U.S. tax returns, and now by
    engaging a U.S. law firm to intercede with the IRS to hopefully reverse
    their unfair $40,000 penalty!

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship, which is Canada. This doesn't make me
    less American. But it does mean that I am subject to the laws of
    Canada, where I live. I am not GUILTY of anything. I ask only to be
    able to carry on my life without interference and financial hardship
    from the Internal Revenue Service of the United States.

    More generally, the U.S. extraterritorial tax regime makes it difficult
    for me to save, invest, and generally behave in a financially
    responsible way, especially now with this huge, unfair, and currently
    un-resolved penalty! This is because all of these essential activities
    are taking place in Canada and not in the United States. My retirement
    investments are foreign to the United States, but local to me. In
    addition, the United States impose taxes on things (for example sale of
    a principal residence, or ownership of a TFSA) where Canada does not.
    Because I am required to live my life with the USD as my functional
    currency, I am subject to ``fake income'' on nothing but changes in the
    exchange rate. As a tax resident of both the United States and Canada,
    I get the worst of both tax systems. What one giveth, the other taketh.

    I do not live ``offshore'' and hide money. I am a law-abiding citizen
    of the United States of America, living in Canada; and I feel I am
    being penalized by the U.S. government in their pursuit of illegally
    hidden incomes. I am sure there are thousands of law-abiding citizens,
    like me, who are being caught in this terrible, costly dragnet which is
    creating fear, anxiety, and financial hardship. This is extremely
    unjust. Where are our rights? For many years, Americans abroad have
    been attempting to get both Treasury and Congress to address these
    issues. We lack even the simple right of approval and agreement to the
    disclosure of our personal business, like normal citizens while
    residing in a foreign country. In effect, does that make us 2nd-class
    American citizens because we live abroad?

    I am retired, and every bit of income saved was done by hard work and
    honest employment! How can my country do this to me? Why am I being
    treated as though I were a criminal? I have been threatened with liens
    on my home, garnishment of my retirement income, and cancellation of my
    passport!

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                         Letter Submitted by J. Emmons
    I am a proud citizen of the United States of America. I live outside
    the United States in Spain where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. I long ago realized that although I will
    always love America, I am living permanently abroad. I am a tax
    resident of my country of residence. I am required to organize my
    financial and retirement planning in that country. The problem I have
    is that the U.S. tax laws make it very difficult for me to live the
    same kind of life that my friends and neighbors live. As a U.S.
    citizen, I am subject to the tax system where I live and the U.S. tax
    system. Those systems are generally not compatible. Most attempts at
    responsible financial/retirement planning where I live are frustrated
    by the need to comply with U.S. tax laws. How can this be fair? How can
    the United States impose taxation on the non-U.S. income and assets of
    a person who is a tax resident of another country--with no economic
    connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. I respectfully suggest that subsequent
    hearings include witnesses who have experienced running businesses
    outside the United States and/or actually living outside the United
    States. To put it another way: Subsequent hearings should deal with the
    reality on the ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a private U.S. citizen living
    in another country. It doesn't make me less American. But, it does mean
    that I am subject to the laws of the country where I live. I ask only
    to be able to carry on with my life without interference from the
    Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you for your time.

                                     ______

                   Letter Submitted by Carolyn Engel-Gautier
    I am a proud citizen of the United States of America. I live outside
    the United States in France where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                   Letter Submitted by Renee Erdman-den Hond
    To the members of the Senate Finance Committee

    I am a Dutch citizen living in the Netherlands where I am a tax
    resident and where I am subject to full taxation. I am also an
    ``Accidental American''.

    My father was a Dutch Navy officer and was sent to Camp Lejeune ,
    Jacksonville, North Carolina, in 1943 to be trained as a Marine. He
    married my Dutch mother in Curacao, Dutch West Indies, in 1943 and she
    accompanied him to Camp Lejeune, where I was born in January 1945. I
    got my parents' nationality.

    My father was sent to the Dutch East Indies in the fall of 1945 to join
    the war effort in the East and the family left the USA. In 1949 the
    family settled in the Netherlands, where I grew up and still live. When
    I was 18, I got my own Dutch passport.

    I returned to the USA on a few occasions on holiday, I always applied
    for a visa and after completing many forms, I always received one. I
    never claimed to be a special case. Never did any consular diplomat
    inform me that I was in fact an American by birth and didn't need a
    visa.

    In short: there was never any reason for me to think I might be an
    American, let alone would have to pay taxes in the USA. Time has come
    for the USA to reconcider the law that automatically makes every person
    born in the USA an American person.

    Accidental Americans want to be delivered from being a person they
    never knew they were and they don't want to be. Get us out of this
    kafkaesque situation. This law and your extraterritorial tax regime are
    an extremely serious problem for the financial situation of Accidental
    Americans. Please realize this. A person's financial situation
    shouldn't be influenced by the place where he was born.

    Residence-based taxation is the accepted system all over the world: you
    pay for services you get.

    Please fix this mess and all Accidental Americans will forever be
    grateful to you and bless the United States!

    Sincerely,

    Renee Erdman-den Hond

                                     ______

                       Letter Submitted by Mahan Esfahani
    I am a citizen of the United States of America. I live outside the
    United States in the Czech Republic where I am a tax resident and where
    I am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or live my life without interference from the
    Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States imposes taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    It has come to the point where I must now choose to stay American and
    be penalized for living in the Czech Republic or renounce my
    citizenship and risk never seeing my American family again.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                       Letter Submitted by Gail P. Evans

    April 6, 2021

    U.S. Senate
    Committee on Finance
    Dirksen Senate Office Bldg.
    Washington, DC 20510-6200

    To the Senate Committee on Finance:

    Thank you for the opportunity to submit this statement for the record
    of your recent hearing on in the impact of U.S. international tax
    policy on American workers, jobs and investment. I understand that the
    March 25, 2021, hearing did not touch on the impact of U.S. tax policy
    on citizens actually living abroad, whose lives are directly, and often
    negatively, impacted by resulting U.S. tax laws.

    As a Virginia voter who has lived and worked in Belgium for more than
    23 years now, I would like to share my observations with you regarding
    (1) U.S. individual income taxation, (2) foreign financial account
    reporting, and (3) investing in general. Related filing processes are
    onerous, expensive and disproportionate to tax revenues raised from
    citizens like me who live abroad. Policies meant to punish ``fat cats''
    have the unintended consequence of making it difficult for average
    citizens living abroad to invest like their U.S. resident peers and to
    save for their retirement.

    I urge the Committee to listen to our voices when considering any
    further changes to U.S. international tax law.

    1. INDIVIDUAL INCOME TAX

    Tax-avoidance is not the goal of Americans living overseas. The U.S.
    and Eritrea are the only nations in the world that impose taxes based
    on citizenship rather than on residency. I have no problem with paying
    income taxes. If I did, I would not have chosen to continue working in
    Belgium for 23 years. Here, the top income tax rate is 50% and it kicks
    in at roughly $47,000. I do not mind--it is a price I am happy to pay
    to live in a country that values excellent health care and education
    for everyone. What I do mind is the amount of time, frustration and--
    now--expense involved each year preparing my U.S. filing while owing
    relatively little in taxes in the U.S.

    Complexity. Each year, I spend multiple weekends over the course of
    several months completing my U.S. tax filing. Like many American
    taxpayers living in the U.S., I am employed full-time and have
    investment income. Yet my 2019 tax filing was 55 pages long. My return
    includes 11 different forms; 18 pages alone relate to my foreign tax
    credit. Another 15 pages result from other reporting related to the
    practicalities of living overseas. With foreign tax credit
    computations, spreadsheets tracking unused credit carry-forwards and
    carry-backs, and brand name tax software that is completely inadequate
    for expat filers, the process is excessively complicated.

    Time and preparation fees spent are disproportionate to taxes owed. I
    originally moved to Belgium as a U.S. tax advisor, so know more than
    the average taxpayer about filing requirements. U.S. tax law has
    changed a lot since I stopped consulting in 2004. I have continued to
    prepare my own filings, but affordable software available to non-
    practitioners is inadequate for non-resident returns. For the first
    time, this year I have agreed to pay nearly $1,000 to a U.S. tax
    advisor to prepare my taxes (1) to save myself from frustrating
    software and (2) to give me peace of mind that I am still completing my
    returns properly. Nonetheless, I will still spend multiple weekends
    compiling information for my advisor to compute my tax liability. Most
    of what I owe will be offset thanks to the foreign-earned income
    exclusion, credits for taxes paid in Belgium, and a tax treaty between
    the two countries. However, if the U.S. based taxation on residency
    rather than citizenship, millions of Americans working abroad could
    save time and money each year, in addition to avoiding double taxation
    for those who live in countries without tax treaties.

    Scarcity of foreign tax expertise. Aside from the time and cost, it is
    not easy to find an affordable U.S. tax advisor who knows what they are
    doing in this space. In 2019, an American friend who also lives in
    Belgium overpaid more than $3,000 in taxes because her U.S. tax advisor
    did not understand how foreign tax credits work. Fortunately, she
    mentioned her surprise at the high tax bill to me. I told her what her
    advisor missed and she was able claim a refund. Had she not mentioned
    this to me, it is likely she would have never seen that money again.

    2. FOREIGN FINANCIAL ACCOUNT REPORTING

    Threshold for reporting foreign accounts is low and does not reflect a
    globally mobile workforce. It is critical that the Department of the
    Treasury do something to eliminate the disproportionate burden that the
    Report of Foreign Bank and Financial Accounts (FBAR) puts on U.S.
    citizens who happen to live and work abroad. The threshold for filing
    an FBAR is low. At $10,000 in aggregate maximum value of all foreign
    accounts, the floor has not been adjusted since the form was first
    published in 1970--nearly $70,000 in today's dollars. People who live
    their lives overseas will have numerous ``foreign'' accounts to report:
    current, savings, employer pensions, personal pensions, mortgage
    insurance and life insurance; even more if they have signature
    authority over accounts held with or for other family members. The
    average American abroad isn't trying to hide assets, but merely
    establishing the accounts that support their local, every-day needs.

    Time required to prepare the FBAR is excessive. The Paperwork Reduction
    Act notice estimates 30-90 minutes to prepare an FBAR. Based on my own
    experience and that of American friends abroad, the time just to
    collect this information each year takes several hours. This is in part
    because banks do not always provide information in a way that makes it
    easy to pick out the highest balance for reporting. In addition,
    following the 2008 financial crisis, individuals pay more attention to
    spreading savings across many accounts to reduce their risk of loss.
    More accounts increase the burden of preparing the FBAR. One
    acquaintance is contemplating giving up his U.S. citizenship to avoid
    both the stress created by the FBAR filing requirement and potential
    penalties for getting it wrong. Renouncing citizenship seems to me to
    be the ultimate penalty. Simply exempting accounts located in one's
    country of residence from reporting would save significant amounts of
    time and stress for all Americans living abroad.

    Time required to file the form is underestimated. The Paperwork
    Reduction Act notice estimates that it takes five minutes to file the
    form. This is incredibly understated. The uploads rarely work with the
    recent (yet archaic) PDF filing system. Prior to electronic FBAR filing
    requirement, one could simply update the financial figures in the prior
    year's PDF file. This is not necessarily the case with electronic
    filing. In 2020, I spent 70 minutes just to get the upload to work,
    never mind collecting my account information. In the end, I had to
    retype the form from scratch the before my submission would go through.

    Information security. I have grave concerns about providing the level
    of account information required on the FBAR. The risk is too high that
    that the filing can be hacked and my financial assets compromised. Can
    Treasury confirm that filers' details have not already been hacked?

    Duplication of effort. For several years now, U.S. taxpayers are
    required to provide essentially the same information under FATCA on
    Form 8938, which is filed with Form 1040, as on the FBAR. Although
    FINCEN and the IRS are both branches of Treasury, there seems to be no
    coordination between these two agencies in terms of collecting and
    sharing information. It is unreasonable to expect citizens to provide
    essentially the same information to the same department in two
    different formats.

    More modern ways to catch tax cheats and money launderers. Rather than
    improve the existing process, Treasury should reexamine the bigger
    picture. How many financial crimes does FINCEN identify or prevent as a
    result of FBAR filings from the average American living aboard files
    versus other, more modern means of fraud detection? It is probably a
    safe bet that any Americans abroad who are trying to shelter assets are
    not reporting those assets on an FBAR. If the Treasury's goal is to
    play ``gotcha'' when they do catch someone who has not reported income
    from their non-U.S. assets, it is a very high price for the average,
    law-abiding citizen to pay in terms of time and stress. In Belgium, I
    must report my foreign financial assets to the Central Bank as a one-
    time event--not the balances or income, just the fact that the accounts
    exist. In my case, that means I must report my U.S.-based assets. Then,
    if I were to open or close an account, I would simply inform the
    Central Bank as a one-time event. Note that this requirement is
    residency-based. Belgian citizens living outside of Belgium are not
    subject to the same reporting requirement because non-resident citizens
    are simply not subject to income tax either.

    3. INVESTING IN GENERAL

    FATCA makes it difficult for American abroad to bank and invest. The
    IRS's Financial Account Tax Compliance Act (FATCA) makes it very
    difficult for U.S. citizens living overseas to even open bank or
    investments accounts with their local financial institutions. Most
    banks and investment institutions want nothing to do with U.S. citizens
    because they do not want to deal with the reporting obligations.
    Ironically, the rules also create obstacles to investing transparently
    via U.S. brokerage accounts, as U.S. brokers become unwilling to open
    accounts for U.S. citizens who no longer have a U.S. address. As a
    result, one unintended and punitive consequence of FATCA is that
    Americans abroad are denied the tools to properly invest for their
    retirement.

    CONCLUSION

    Contrary to the way we are portrayed in popular media, Americans living
    abroad are not the rich 1%, lounging on yachts and actively dodging
    taxes. We are the 99%, law-abiding citizens whose lives happen to have
    taken us abroad for work, love, service, or education.

    As Congress thinks through any changes to the U.S. tax code or foreign
    financial reporting, it is critical that it considers the impact and
    unintended consequences on the nearly nine million ordinary citizens
    who live abroad. I urge the Committee to hold a hearing to understand
    the practical implications of U.S. international tax policy on citizens
    living abroad like me.

    Sincerely,

    Gail P. Evans
    Voting in Virginia (11th Congressional District)

                                     ______

                       Letter Submitted by Michael Ferris
    I am a proud citizen of the United States of America. I live outside
    the United States in Japan where I am a tax resident and where I am
    subject to full taxation.

    I run a small business in the country where I live. My business is not
    a multinational corporation and all of its income is domestic to the
    country where I live. However, because I am a U.S. citizen, the U.S.
    tax code treats me the same as Apple or Google. If I use a local
    business structure that's treated as a corporation under U.S. tax law,
    then I'm forced to fill in the same form 5471 as Apple must complete
    for each foreign subsidiary--translating all of my business records
    into U.S. dollars even though I do no business in that currency. My
    business is subject to GILTI even though I have no intangible income.
    How can I compete with my neighbours who are not U.S. citizens and who
    have only one tax system to deal with?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

    1. The hearing focused on U.S. multinational corporations. But here is
    the reality: U.S. tax rules treat individuals living outside the United
    States, the same way they treat U.S. multinationals doing business
    outside the United States. Although, I am a flesh and blood individual
    person, not a single participant recognized how individuals are
    affected by these rules. Yet, the focus of the hearing was supposed to
    be about individuals. How did this happen?

    2. I was shocked that there was no witness who had personal experience
    with a company or individual running a business with interests outside
    the USA. Not a single one! This is crazy. I respectfully suggest that
    subsequent hearings include witnesses who have experienced running
    businesses outside the United States and/or actually living outside the
    United States. To put it another way: Subsequent hearings should deal
    with the reality on the ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                      Letter Submitted by Spyros Filiotis
    I am a proud citizen of the United States of America. I live outside
    the United States in Greece where I am a tax resident and where I am
    subject to full taxation and a myriad of other Greek financial
    regulations.

    I run a business in the country where I live. My business is not a
    multinational corporation and all of its income is domestic to the
    country where I live. However, because I am a U.S. citizen, the U.S.
    tax code treats me the same as Apple or Google. If I use a local
    business structure that's treated as a corporation under U.S. tax law,
    then I'm forced to fill in the same form 5471 as Apple must complete
    for each foreign subsidiary--translating all of my business records
    into U.S. dollars even though I do no business in that currency. My
    business is subject to GILTI even though I have no intangible income.
    How can I compete with my neighbours who are not U.S. citizens and who
    have only one tax system to deal with?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes (over 50%!). I also pay additional kinds of taxes
    (example VAT) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

    1. The hearing focused on U.S. multinational corporations. But here is
    the reality: U.S. tax rules treat individuals living outside the United
    States, the same way they treat U.S. multinationals doing business
    outside the United States. Although, I am a flesh and blood individual
    person, not a single participant in the hearing recognized how
    individuals are affected by these rules. Yet, the focus of the hearing
    was supposed to be about individuals. How did this happen?

    2. I was shocked that there was no witness who had personal experience
    with a company or individual running a business with interests outside
    the USA. Not a single one! This is crazy. I respectfully suggest that
    subsequent hearings include witnesses who have experienced running
    businesses outside the United States and/or actually living outside the
    United States. To put it another way: Subsequent hearings should deal
    with the reality on the ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. I am representing America culture and
    growing American soft power abroad. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    business and life without interference from the Internal Revenue Code
    of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running businesses outside the United States. Individuals are not
    immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it basically impossible for me to
    save, invest, participate in pension plans and generally behave in a
    financially responsible way. This is because all of these essential
    activities are taking place in my country of residence and not in the
    United States. My retirement investments are foreign to the United
    States, but local to me. In addition, the United States impose taxes on
    things (for example sale of principal residence) when my country of
    residence does not. Because I am required to live my life with the USD
    as my functional currency, I am subject to ``fake income'' on nothing
    but changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

         Financial Accountability and Corporate Transparency Coalition

                          1225 Eye St., NW, Suite 600

                              Washington, DC 20005

                               +1 (202) 827-6401

                                 @FACTCoalition

                            www.thefactcoalition.org

                                                          April 2, 2021

    The Honorable Ron Wyden             The Honorable Mike Crapo
    Chairman                            Ranking Member
    U.S. Senate                         U.S. Senate
    Committee on Finance                Committee on Finance
    Washington, DC 20510                Washington, DC 20510

    RE: March 25 Virtual Hearing titled ``How U.S. International Tax Policy
    Impacts American Workers, Jobs, and Investment''

    Dear Chairman Wyden and Ranking Member Crapo,

    On behalf of the Financial Accountability and Corporate Transparency
    (FACT) Coalition, we appreciate the opportunity to comment on your
    hearing titled, ``How U.S. International Tax Policy Impacts American
    Workers, Jobs, and Investment.'' The FACT Coalition is a non-partisan
    alliance of more than 100 state, national, and international
    organizations promoting policies to build a fair and transparent global
    tax system that limits abusive tax avoidance and to curb the harmful
    impacts of corrupt financial practices.\1\
    ---------------------------------------------------------------------------
        \1\ A full list of FACT members is available at http://
    thefactcoalition.org/about/coalition-members-and-supporters/.

    For years, the FACT Coalition has warned of the real U.S. economic harm
    perpetuated by a global race to the bottom on taxes. As it stands, the
    status quo of the U.S. international tax framework undermines the
    competitiveness of the American worker, incentivizes the offshoring of
    U.S. jobs and profits, and detracts from deeper business investment in
    ---------------------------------------------------------------------------
    the United States.

    To address these problems, we urge the Committee and its members to
    consider corporate tax transparency measures and specific international
    tax reforms, both at the domestic and global level, as central tools in
    curbing the worst of multinational corporate tax avoidance and its
    adverse impacts on the U.S. economy.

    We endorse recommendations in testimony by Treasury Deputy Assistant
    Secretary Kim Clausing and Chye-Ching Huang, executive director of
    NYU's Tax Law Center to reform the Global Intangible Low-Taxed Income
    (GILTI) tax, overhaul the Base Erosion and Anti-Abuse Tax (BEAT), and
    consider elimination of the Foreign Derived Intangible Income
    (FDII).\2\ These recommendations have broadly been reflected in the
    Biden Administration's American Jobs Act plan, announced on March 31,
    and we hope Congress will work with the Administration to bring it to
    fruition.\3\ We likewise request that Committee members consider
    legislation requiring multinational corporations to report key
    financial information--e.g., revenue, assets, employees, taxes assessed
    and paid--publicly on a country-by-country basis, as an accountability
    mechanism to ensure corporations are paying their fair share of taxes.
    ---------------------------------------------------------------------------
        \2\ Senate Finance Committee hearing, March 25, 2021, https://
    www.finance.senate.gov/hearings/how-us-international-tax-policy-
    impacts-american-workers-jobs-and-investment.
        \3\ White House, ''FACT Sheet: The American Jobs Plan,'' March 31,
    2021, https://www.whitehouse.gov/briefing-room/statements-releases/
    2021/03/31/fact-sheet-the-american-jobs-plan/.
    ---------------------------------------------------------------------------

    The Problem of U.S. Multinational Tax Avoidance

    Profit shifting by U.S. multinational corporations costs the United
    States, by one estimate, at least $77 billion a year in lost tax
    revenue.\4\ These are much needed resources that should be funding
    critical public investments in healthcare, education, infrastructure,
    and other priorities.
    ---------------------------------------------------------------------------
        \4\ Kim Clausing, ``Five Lessons on Profit Shifting from the U.S.
    Country-by-Country Data,'' Tax Notes, November 24, 2021, https://
    papers.ssrn.com/sol3/papers.cfm?abstract_id=3736287.

    Multinational corporations in the United States and elsewhere have long
    used provisions in the global tax system to shift profits and avoid
    paying taxes that they would otherwise be required to pay. IRS
    aggregate data show that U.S. multinationals booked 41 percent of their
    foreign profits in just 10 tax havens.\5\ Further, a 2018 report by the
    Institute for Taxation and Economic Policy showed 90 of the Fortune 500
    paid nothing in tax; another 50 paying between 0-5 percent.\6\
    ---------------------------------------------------------------------------
        \5\ Internal Revenue Service, ``Table 1A: Country-by-Country Report
    (Form 8975): Tax Jurisdiction Information (Schedule A: Part I) by Major
    Geographic Region and Selected Tax Jurisdiction, Tax Year 2017,''
    https://bit.ly/3dEQfmi.
        \6\ Matthew Gardner, Lorena Roque, Steve Wamhoff, ``Corporate Tax
    Avoidance in the First Year of the Trump Tax Law,'' Institute on
    Taxation and Economic Policy, December 16, 2019, https://itep.org/
    corporate-tax-avoidance-in-the-first-year-of-the-trump-tax-law/.

    It is counterproductive to the goals of a fair and growing economy to
    allow U.S. companies to pay a lower tax rate abroad than they pay in
    the United States. Changing the status quo and closing these loopholes
    will improve the competitiveness of the American worker and make it
    more appealing for companies to reinvest in here in America.

    Recommendation 1: Increase Transparency into Corporate Tax Practices

    Any meaningful effort to combat U.S. multinational tax avoidance must
    shine a greater light on corporate tax practices. We recommend that
    members of the Committee consider legislation such as the Disclosure of
    Tax Havens and Offshoring Act \7\ to require corporations to engage in
    public country-by-country reporting (PCbCR) of key financial data--
    e.g., revenue, assets, employees, taxes assessed and paid. Such reform
    would greatly inform the U.S. debate on how to make U.S. international
    tax policy work for all Americans and, in the future, help policymakers
    monitor the effect of reforms and any tax avoidance strategies
    multinational companies may employ in the future.
    ---------------------------------------------------------------------------
        \7\ https://www.congress.gov/bill/116th-congress/senate-bill/1609.

    While some of this data is already reported to the IRS under an OECD
    agreement, public disclosure of this data would allow investors,
    oversight bodies, U.S. Congress, and civil society watchdogs to
    ---------------------------------------------------------------------------
    identify and address corporate profit-shifting strategies.

    Last year, prior to joining the Administration, DAS Clausing published
    research that relied on country-by-country data released by the OECD--
    aggregated across companies--to demonstrate the scale of the U.S.
    multinational corporate tax avoidance problem. While aggregated data is
    helpful, company-level disclosures would illuminate much more: DAS
    Clausing noted, ``Only very limited company-specific information is
    available, and there is a strong case for the public release of these
    data'' to benefit ``potential customers, investors, and employees, as
    well as community members.''\8\
    ---------------------------------------------------------------------------
        \8\ Kim Clausing, ``Five Lessons on Profit Shifting from the US
    Country-by-Country Data,'' November 24 2020, Abstract, also p. 15,
    https://papers.ssrn.com/sol3/papers.cfm?abstract_id=
    3736287.

    There is strong evidence that public reporting has a powerful deterrent
    effect.\9\ Reports show that PCbCR requirements on Europe's banking
    industry have reduced the use of profit shifting to tax havens and
    increased the effective tax rate of covered banks by several percentage
    points.\10\ Increasing tax transparency through public disclosure could
    even force large corporations to clean up the most questionable tax
    practices.
    ---------------------------------------------------------------------------
        \9\ ``What do we know about the effects of country-by-country
    reporting?'', UNC Tax Center, https://tax.unc.edu/index.php/county-by-
    county-translational-research/.
        \10\ Michael Overesch and Hubertus Wolff, ``Financial Transparency
    to the Rescue: Effects of Country-by-Country Reporting in the EU
    Banking Sector on Tax Avoidance'', February 8, 2019, http://bit.ly/
    Overesch2019. See also Felix Hugger, ``The Impact of Country-by-Coutry
    Reporting on Tax Avoidance,'' May 2020, https://www.ifo.de/DocDL/wp-
    2019-304-hugger-corporate-tax-avoidance.pdf.

    Legislators and regulators in other important capital markets are
    seriously considering new PCbCR requirements. The European Union is
    currently close to finalizing mandatory PCbCR requirements for all EU-
    listed companies after a strong push from the European Parliament. The
    Global Reporting Initiative, an ``international independent standards
    organization that helps businesses, governments and other organizations
    understand and communicate their impacts'', also recently introduced
    the first global standard on tax transparency. Since GRI finalized its
    standard, Vodafone, Royal Dutch Shell, Spanish oil multinational
    Repsol, and Danish energy company Orsted have issued PCbCR information,
    leading The Wall Street Journal to hail ``the Beginning of the End of
    Tax Secrecy.''\11\ Investors, financial analysts, small business
    organizations, and civil society groups further endorse public country-
    by-country reporting.\12\
    ---------------------------------------------------------------------------
        \11\ https://www.wsj.com/articles/the-beginning-of-the-end-of-tax-
    secrecy-11576837708.
        \12\ For a full list of corporations, small business organizations,
    and investors who have endorsed public country-by-country reporting,
    see here: https://thefactcoalition.org/fact-sheet-endorsements-for-
    country-by-country-reporting.
    ---------------------------------------------------------------------------

    Recommendation 2: Close Loopholes in the U.S. International Tax System

    It is apparent that there must be real reform to the U.S. framework to
    ensure corporations pay their fair share of taxes. Chief among our
    recommendations would be (1) equalizing the GILTI rate with the
    domestic corporate tax rate and applying it on a per-country basis, (2)
    amending the Base Erosion and Anti-Abuse (BEAT) tax to increase covered
    activity and narrow exemptions, and (3) repealing the provision on
    Foreign Derived Intangible Income (FDII).

    The Committee should consider legislation, like the No Tax Breaks for
    Outsourcing Act (S. 714),\13\ that would implement several of these
    recommendations. The No Tax Breaks for Outsourcing Act would equalize
    the GILTI foreign tax rate with the domestic U.S. tax rate, apply the
    GILTI on a per-country-basis, and eliminate the deduction based on
    tangible assets held offshore. It likewise would repeal the FDII, a
    deduction under TCJA that effectively favors companies that minimize
    their U.S. assets, also increasing corporate incentives to move real
    assets offshore.
    ---------------------------------------------------------------------------
        \13\ https://www.congress.gov/bill/117th-congress/senate-bill/714/
    cosponsors?r=12&s=1.
    ---------------------------------------------------------------------------

    Reform the GILTI Tax

    Changes to U.S. international tax law instituted through the Tax Cuts
    and Jobs Act have not only incentivized corporations to shift profits
    to low tax jurisdictions: they have also offered incentives for
    corporations to move real jobs and operations offshore. The law
    guarantees that U.S. multinational corporations will pay at most one-
    half the domestic rate in federal taxes on their offshore earnings,
    with many companies paying little or nothing in federal taxes on these
    earnings. Under the Global Intangible Low-Taxed Income (GILTI) rate,
    this means that a U.S. multinational company will pay a much lower tax
    rate if it invests in Ireland than if it invests in Indiana.

    The system further incentivizes moving tangible assets--factories,
    machinery, stores, and the jobs that go with them--offshore. A
    corporation only pays taxes on the residual foreign profits exceeding
    the amount equal to the 10 percent value of its tangible assets
    invested offshore. That means that the bigger the value of tangible
    assets, the more a company's profits are offset to minimize their tax
    liability.

    Taking this next step--to equalize the corporate tax rate on profits
    booked domestically or abroad--is the best way to remove incentives for
    offshoring and tax avoidance.

    Overhaul the BEAT

    A March 2021 report by the Joint Committee on Taxation demonstrated
    that the BEAT has had no tangible impact on U.S. multinational
    corporate tax avoidance practices.\14\ In the definition of
    ``applicable taxpayer'' under Section 59A(e), Congress should pass
    legislation to lower the gross receipts exemption level from $500
    million to $100 million to make more companies subject to the BEAT tax.
    Congress should amend Section 59A(e)(C) so that all base erosion
    payments are taken into account, while removing the arbitrary exemption
    of less than 3 percent of deductible payments that has incentivized
    aggressive tax strategies.
    ---------------------------------------------------------------------------
        \14\ Joint Committee on Taxation, ``U.S. International Tax Policy:
    Overview and Analysis,'' JCX-16-21, March 2021, https://www.jct.gov/
    publications/2021/jcx-16-21/.
    ---------------------------------------------------------------------------

    Repeal FDII

    The FDII deduction under TCJA also increases corporate incentives to
    move real assets offshore. Functionally, the tax preference rewards
    companies that reduce their U.S. assets. It also creates a new loophole
    to move corporate intellectual property to the United States to dodge
    taxes around the world, undermining the tax base of our allies and
    contributing to a global race to the bottom on corporate taxation. In
    addition, FDII may violate the World Trade Organization's rule against
    export subsidies and risks trade retaliation. The Joint Committee on
    Taxation estimates that repealing FDII would increase U.S. tax revenue
    by nearly $127 billion over 10 years.

     Recommendation 3: Work with the OECD to Establish a Global Minimum Tax

    The Biden Administration, under Treasury Secretary Janet Yellen, has
    committed to re-engaging in the OECD negotiations to combat
    multinational tax avoidance. The existing political momentum behind
    Pillar Two will be exceedingly difficult to replicate in the future. It
    is therefore imperative to seize the moment and avoid setting a low
    minimum rate that will drag down corporate taxation far into the
    future.

    The U.S. should strengthen existing OECD and international safeguards
    against offshore corporate tax avoidance by working with allies to
    institute a strong, global corporate minimum tax that is no less than
    the U.S. domestic corporate tax rate, does not exempt routine profits,
    and is applied on a per-country basis, rather than as a global average.
    The existing political momentum behind Pillar Two will be exceedingly
    difficult to replicate in the future. Signals from the Biden
    Administration and U.S. Congress would have a strong impact on these
    negotiations. It is therefore imperative to seize the moment and avoid
    setting a low minimum rate that will drag down corporate taxation far
    into the future.

    Conclusion

    It is more important than ever that the U.S. combat multinational tax
    avoidance to make our tax system fairer, raise critically needed
    revenue, and encourage job creation here in America.

    We appreciate the Committee's interest in this important issue. Should
    you have any questions, please feel free to contact Erica Hanichak at
    ehanichak@
    thefactcoalition.org.

    Sincerely,

    Ian Gary
    Executive Director
    Erica Hanichak
    Government Affairs Director

                                     ______

                      Letter Submitted by Stephanie Flores
    I was born in and am a citizen of the United States of America. I live
    in New Zealand, where I am a dual citizen, tax resident and where I am
    subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (for example,
    goods and services tax) to New Zealand.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation. Each year, this creates endless filing
    requirements from IRS and invoices from my tax accountants to navigate
    two systems.

    In addition to the constant filing requirements (and money paid to
    accountants who understand U.S. tax law), I am penalised and prevented
    from making small investments. The current system penalises those of us
    who are not rich and who want to make smaller investments. Recently, I
    had to forgo an opportunity to take on some consulting work with the
    local government where I reside. After speaking with my tax accountant
    (and getting another quote), I'd not only have more forms to file, but
    would also have to pay self-employment tax and quarterly estimated
    payments. Overall, the first $4k of my post-tax earnings would go to
    accountants for fees.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. Consider the following, while my income is less than
    USD$70,000 with two children:

          I have paid close to NZD$20,000 to various accountants the past
    7 years I have lived in New Zealand to fulfil my filing obligations to
    the U.S.
          Generally, the child tax credit that I receive goes directly to
    the accountants' invoices (and 2019 U.S. tax return is still being
    processed, so no refund to pay the accountants with. I had to use my
    savings this year to pay the accountants).
          I have closed my New Zealand employer pension account due to
    filing requirements and forms costing more than the account was
    earning. I unenrolled from my employer-sponsored benefits because they
    increased IRS filing requirements to the extent that it wasn't worth
    participating.
          New Zealand law does not allow me to close my New Zealand
    government pension, so I am stuck with it and all of its filing
    requirements to the U.S. each year. The IRS treats it as a foreign
    trust and not a foreign pension, which has caused additional problems.
          I am penalised severely for starting a small business, so I have
    foregone opportunities to use my skills in my community to earn a
    better living.
          I cannot make small investments without being penalised with
    forms and filing requirements that only expensive accountants
    understand.
          I'm fearing for the U.S. tax laws and requirements that my
    children will have to deal with when they earn their first paychecks in
    their teens.

    This is because all of these essential activities are taking place in
    my country of residence and not in the United States. My retirement
    investment account is foreign to the United States, but local to me. In
    addition, the United States impose taxes on things (for example sale of
    principal residence) when my country of residence does not. Because I
    am required to live my life with the USD as my functional currency, I
    am subject to ``fake income'' on nothing but changes in the exchange
    rate. As a tax resident of both the United States and my country of
    residence, I get the worst of both tax systems. What one giveth, the
    other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! If I started
    a small business, I'd be subject to not only several new forms, but I'd
    have to pay the U.S. a payroll tax AND pay a similar tax here in my
    home country (known as ACC).

    This is extremely unjust, especially for those in lower and middle
    incomes (well under $100k with children). For many years, Americans
    abroad have been attempting to get both Treasury and Congress to
    address these issues.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a dual citizen living in New
    Zealand, with two children who are also dual citizens. It doesn't make
    us less American. But, it does mean that I am subject to the laws of
    the country where I live. I ask only to be able to carry on my small
    business and/or my life without interference from the Internal Revenue
    Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                  Letter Submitted by Christopher A. Foroglou
    I am a proud citizen of the United States of America. I live outside
    the United States in Canada where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of Canada and am required to organize my
    financial and retirement planning here.

    The problem is that U.S. tax laws make it very difficult for me to live
    the same kind of life that my friends and neighbours live. You see,
    they are subject to only one tax system. As a U.S. citizen, I am
    subject to both the Canadian and U.S. tax systems, which are generally
    not compatible. Most attempts at responsible financial/retirement
    planning where I live are frustrated by the need to comply with U.S.
    tax laws. How can this be fair? How can the United States impose
    taxation on the non-U.S. income and assets of a person who is a tax
    resident of another country--with no economic connection to the United
    States?

    I do not live ``offshore.'' I do live in Canada, where I pay very high
    income taxes. I also pay the Goods & Services taxes at both the federal
    and provincial levels.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in Canada. There is no other advanced country in the world that
    imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States in the same way that they treat U.S. multinationals
    doing business outside the United States. I am a flesh and blood
    individual person, working for asalary for most of my career. Now I am
    self-employed as an IT consultant. (I have investigated incorporating
    my business but decided against it because of the extremely complex IRS
    reporting and taxation rules.)

           Not a single participant recognized how individuals are affected
    by these rules. Yet, the focus of the hearing was supposed to be about
    individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! I respectfully suggest
    that subsequent hearings include witnesses who have experienced working
    as employees and as businesses owners, outside the United States. To
    put it another way: Subsequent hearings should deal with the reality on
    the ground and not theories.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States; Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when Canada does not. Because I am
    required to live my life with the USD as my functional currency, I am
    subject to ``fake income'' on nothing but changes in the exchange rate.
    As a tax resident of both the United States and my country of
    residence, I get the worst of both tax systems. What one giveth, the
    other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

    Sincerely,
    Christopher A. Foroglou

                                     ______

                      Letter Submitted by Benjamin Fortune
    I am a U.S. citizen and have family all across the country. I live most
    of the year in Australia, which I also view as my home, looking after
    my mother and younger sister. I am a dual American-Australian citizen.
    For tax purposes, my business is headquartered out of Western
    Australia.

    I will always have a love for the USA; depending on how circumstances
    change I may even see myself returning at some point. However, year
    after year, as a result of U.S. tax policies and FATCA, I feel I am
    being slowly forced toward renouncing my U.S. citizenship.

    Although I may face no longer being an official U.S. citizen, I would
    always regard myself as an American. I am writing in the hopes that my
    experience can facilitate change that will grant freedom to all
    American citizens living abroad. The United States Government must stop
    imposing a system of extraterritorial taxation and regulation on
    citizens living in other countries.

    I pay significant taxes living here in Australia: to support the
    services and facilities in the country for which I actively live and
    work. I do not live ``offshore'' and I am not attempting to ``hide'' my
    earnings. And yet, because I am a U.S. citizen, I am subject to the
    U.S. extraterritorial taxes. This means the United States is imposing
    taxation on my non-U.S. income even though I do not live in the U.S.
    and that income is fully taxed in the country where I reside. There is
    no other advanced country in the world that imposes such
    extraterritorial taxation.

    Moreso than this, however, is the threat to my Australian retirement
    and assets. Portions of my income are automatically redirected into a
    national retirement program known as ``Superannuation''. However, for
    U.S. tax purposes, I've been told that:

    ``The IRS does not consider Australian Superannuations as social
    security or a qualifying tax-deductible fund like a 401K, but instead
    as part of your income even though you will not be able to access your
    super until you are retirement age.''

    For my average year's income, I feel forced to pay thousands of dollars
    to multi-national tax specialists to have my taxes done, to ensure they
    are being managed correctly. Generally, I don't even owe the U.S. any
    tax, due to certain tax treaties and given how much higher Australian
    taxes are. However, when I do owe tax, it's the worst of both worlds:
    I've been taxed heavily for living in Australia, and when I do owe the
    U.S., it is because they did not recognise any Australian tax
    exemptions.

    Constantly trying to work between two very different tax systems,
    hemorrhaging potentially thousands every year to have my taxes done
    properly, total uncertainty around my retirement and assets. These
    things have pushed me to the point where it feels like my only option
    is to renounce my U.S. citizenship. Not to try and ``hide'' or
    ``avoid'' paying tax (which I already do in spades), but because this
    extraterritorial taxation places undue burden on every financial
    decision I make, simply because I'm a U.S. citizen living and working
    abroad.

    I would like to raise two general observations that other's have
    brought forward regarding the hearing on March 25th:

    1.  The hearing focused on U.S. multinational corporations. But here is
    the reality: U.S. tax rules treat individuals living outside the United
    States, the same way they treat U.S. multinationals doing business
    outside the United States. Although, I am a citizen of the United
    States, there wasn't a single participant who recognized how
    individuals are affected by these rules. Yet, the focus of the hearing
    was supposed to be about individuals. How did this happen?

    2.  I was shocked that there was no witness who had personal experience
    with a company or individual running a business with interests outside
    the USA. Not one! This is crazy. I respectfully suggest that subsequent
    hearings include witnesses who have experienced running businesses
    outside the United States and/or actually living outside the United
    States.

    I am not a ``multinational corporation'' nor am I a ``mini-
    multinational''--I am a ``dual-national American citizen'' just trying
    to live my life in my country of second citizenship. I am American;
    however, I am also subject to the laws of the country where I live. I
    only ask that Americans abroad are granted the right to be able to
    carry on small business and/or their lives without these undo burdens
    imposed by the IRS.

    The current U.S. extraterritorial tax regime:

          Adds excessive burdens to U.S. citizens living abroad regarding
    their savings, retirement, assets, and investments.
          Does not work cohesively with any foreign tax system (e.g., does
    not recognise Australian Superfunds, Australian tax exemptions, etc).
          Treats my ``local'' Australian income and assets as ``foreign''
    to the U.S.
          Can tax citizens based on ``fake income'' which is a consequence
    of ever-
    changing exchange rates (which affect all aspects of my tax reporting).
          Supposes tax credits and income exclusions can somehow solve the
    above problems, when it's clear they're intertwined with the concept of
    extraterritorial taxation.

    This system is fundamentally unjust. For the sake of all citizens
    abroad, The United States needs to abandon extraterritorial taxation
    and adopt a system of residence-based taxation, like the rest of the
    world. Thank you.

                                     ______

                 Letter Submitted by Michael Patrick Fountandez
    I am a proud citizen of the United States of America. I live outside
    the United States in Australia where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America, but still love the country of my birth.
    I moved from America many years ago; although the days sometimes go
    slowly, the years go quickly. I long ago realized that although I will
    always love America, I am living permanently abroad. I am a tax
    resident of Australia. As such, I am required to organize my financial
    and retirement planning in that country. The problem I have is that the
    U.S. tax laws make it very difficult for me to live the same kind of
    life that my friends and neighbours live. You see, they are subject to
    only one tax system. As a U.S. citizen, I am subject to the tax system
    where I live and the U.S. tax system. Those systems are generally not
    compatible. Most attempts at responsible financial/retirement planning
    where I live are frustrated by the need to comply with U.S. tax laws.
    How can this be fair? How can the United States impose taxation on the
    non-U.S. income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States?

    I do not live ``offshore''. I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes, such as GST,
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxable on that
    income in the country where I reside. There is no other advanced
    country in the world that imposes such extraterritorial taxation.

    For the past 8 years, I have earned my living exclusively abroad; I
    have established a life in Australia, married, had a child, and am well
    established in my career. Due to the particularities of the Australian
    and U.S. tax calendars, however, I find that every 6 months it's tax
    time yet again. Due to the complexity of the U.S. tax system, I must
    either spend thousands of dollars to employ tax preparers or dozens of
    hours of time in preparing my taxes myself. While this may seem to be a
    modest investment, it is something that weighs increasingly heavily as
    the years have passed. The stress of tax preparation, the cost, and the
    uncertainty are completely unnecessary; no other advanced nation in the
    globe collects taxes from individuals who have no local income. The
    total amount of money contributed by me to the U.S. Treasury as a
    result of this requirement: less than $5,000. I have, however, spent
    dozens of hours across more than 8 years on the phone with the IRS; I
    suspect the time I spent has cost the government about \1/3\ of my
    total tax contribution to date!

    I would like to make two general observations about the hearing on
    March 25th.

    1. The hearing focused on U.S. multinational corporations. But here is
    the reality: U.S. tax rules treat individuals living outside the United
    States the same way they treat U.S. multinationals doing business
    outside the United States. Although I am an individual, not a single
    participant recognized how individuals are affected by these rules. Yet
    the focus of the hearing was supposed to be about individuals. How did
    this happen?

    2. I was shocked that there was no witness who had personal experience
    with a company or individual running a business with interests outside
    the USA. I respectfully suggest that subsequent hearings include
    witnesses who have experience running businesses outside the United
    States and/or actually living outside the United States.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American. But
    it does mean that I am subject to the laws of the country where I live.
    I am not GILTI of anything. I ask only to be able to carry on my life
    without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States imposes taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both the Treasury and Congress to address these
    issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                    Letter Submitted by Jason Michael Frick
    I am a proud citizen of the United States of America. However, I live
    outside the United States in New Zealand where I am a tax resident and
    subject to full taxation.

    I moved from Gresham, Oregon to New Zealand in 2008 as a teenager to
    attend university. I since fell in love and built a life here. However,
    I try to keep involved with the U.S. as much as possible. After all,
    it's where my family lives and it's where I grew up. I am a member of
    my Democrats Abroad Chapter, and in the 2020 election cycle, I was the
    second most active phone banker in New Zealand. I helped several
    hundred Americans living overseas to get registered and to vote in the
    last election. I'm really proud of this.

    Nevertheless, I am most likely going to reside in New Zealand for the
    rest of my life. This means that, as a tax resident of New Zealand, I
    am required to organise my financial and retirement planning around the
    New Zealand tax system.

    The problem I have is that the U.S. tax laws make it very difficult for
    me to live the same kind of life that my friends and neighbours live.
    You see, they are subject to only one tax system. As a U.S. citizen, I
    am subject to the tax system where I live and the U.S. tax system.
    These systems are not compatible at all.

    The U.S. extraterritorial tax regime makes it impossible for me to
    save, invest, participate in pension plans and generally behave in a
    financially responsible way. This is because all of these essential
    activities are taking place in what the U.S. tax code considers to be
    ``a foreign country''. While my retirement investments are foreign to
    the United States, they are local to me. All of the retirement planning
    programmes created by the New Zealand government are frustrated by the
    need to comply with U.S. tax laws. The U.S. tax code effectively
    undermines the New Zealand's ability to determine social policy for a
    not insignificant subset of its citizens.

    In addition, the United States impose taxes on things (for example sale
    of principal residence) when New Zealand does not. Also, because I am
    required to live my life with the USD as my functional currency, I am
    subject to ``fake income'' on nothing but changes in the exchange rate.
    As a tax resident of both the United States and New Zealand, I get the
    worst of both tax systems. What one giveth, the other taketh.

    I am effectively prohibited from saving for retirement because I'm
    caught between two incompatible tax systems. How can this be fair? How
    can the United States impose taxation on the non-U.S. income and assets
    of a person who is a tax resident of another country--with no economic
    connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay
    comparable taxes to what I would pay if I lived in the United States.
    There is no other advanced country in the world that imposes such
    extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United.
    Individuals are not immune to the effects of raising the U.S. corporate
    income tax rate and/or doubling the GILTI tax. This has stopped me from
    starting a business here in New Zealand where I live.

    And please don't believe that foreign tax credits and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.
    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Nga mihi nui, Jason Frick

                                     ______

                     Letter Submitted by Dr. Kayla Friedman
    I am a proud citizen of the United States of America. I live outside
    the United States in the United Kingdom where I am a tax resident and
    where I am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I love my job, but please let me be clear- I make a modest salary. I am
    a single parent household. I am just a normal person with a lower
    middle-class sort of income. I do not live ``offshore.'' I do live in a
    country where I pay very high income taxes. I also pay additional kinds
    of taxes (example VAT and National Insurance) to my country of
    residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and the United Kingdom, I get the worst of both tax systems.
    What one giveth, the other taketh.

    This is compounded now because I have a family. My daughter, who is
    also an American citizen, is penalized due to the lack of my ability to
    properly invest for her future like other local parents, or even other
    American parents living in America due to the tax system. This is
    clearly unjust and puts not just mine, but her future at a
    disadvantage.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

    Statement of Fabio B. Gaertner, University of Wisconsin-Madison,\1\ and
              Jeffrey L. Hoopes, University of North Carolina \2\
    ---------------------------------------------------------------------------
        \1\ Fabio B. Gaertner, University of Wisconsin-Madison, 3102
    Grainger Hall, 975 University Avenue, Madison, WI 53706. Professor
    Gaertner can be reached at fabio.gaertner@wisc.edu.
        \2\ Jeffrey L. Hoopes, University of North Carolina, McColl
    Building, Room 4005, Campus Box 3490, 300 Kenan Center Drive, Chapel
    Hill, NC 27599-3490. Professor Hoopes can be reached at hoopes@unc.edu.
    ---------------------------------------------------------------------------

                   Financial Accounting Income Should Not Be
                        Included as Part of the Tax Base

    Recently proposed tax policies have financial accounting income (GAAP
    income, or book income) serve as part of the tax base. These proposals
    range from a flat tax on book income for corporations above a certain
    size,\3\ to using book income as part of a minimum tax for corporations
    above a certain size.\4\
    ---------------------------------------------------------------------------
        \3\ See https://elizabethwarren.com/plans/real-corporate-profits.
        \4\ See https://joebiden.com/two-tax-policies.

    We oppose including financial accounting income in the tax base. Our
    opposition stems from (a) the academic literature in accounting, which
    identifies clear negative effects associated with taxing financial
    accounting income; and (b) additional negative effects, though not yet
    empirically tested, which seem highly plausible given what we do know
    ---------------------------------------------------------------------------
    about incentives faced by corporations.

    In short, including financial accounting income in the tax base will
    result in worse financial information for investors and less efficient
    tax collection, economically disadvantage companies based in the United
    States, politicize accounting standards, and require highly complex
    implementation, which may undermine the intention of current proposals.
    These arguments can be further understood below.

     1. Reduced information to investors and less efficient tax collection.

        a.  Financial accounting income and taxable income serve distinct
    audiences, and as such, different purposes. The goal of financial
    accounting rules is to communicate useful financial information to
    investors. The objective of tax rules is to raise revenue and establish
    economic incentives deemed desirable by the political process (Hanlon
    and Shevlin 2005; McGill and Outslay 2002; McClelland and Mills 2007).

        b.  Combining audiences decreases the effectiveness of both
    financial reporting and tax collection. That is because rules that
    improve the usefulness of financial reporting are often at odds with
    the collection of revenue, and vice versa. For example, fair value
    accounting is designed to give investors the most up-to-date picture of
    a company's assets. It does so by re-valuing certain assets according
    to their market value. When market value increases, this re-
    valuation results in an increase to financial accounting income. This
    income increase, however, is an unrealized gain. Taxing unrealized
    gains results in poor tax collection practices since such gains do not
    produce cash, and companies may be liable to pay taxes without the
    liquid assets necessary to do so.

        c.  Financial reporting would suffer as well. Financial accounting
    requires firms to make numerous assumptions about the future (e.g.,
    what is the useful life of an asset, what portion of receivables will
    be uncollectable). Because the future is uncertain, there is often a
    range of reasonable assumptions that could be made in the financial
    reporting process. Taxing financial accounting income introduces a
    downward bias in reporting, as accountants would be incentivized to use
    whatever estimates in the range that result in the lowest income,
    rather than using the estimates they think are best. This would result
    in less information, or lower quality information, being available to
    investors.

        d.  Further, when book income was previously used in forming the
    tax base, companies made accounting choices that altered the
    communication of financial information and deteriorated the financial
    information available to investors (Gramlich 1991; Dhaliwal and Wang
    1992; Boynton et al. 1992; Manzon 1992).

        e.  Some have argued that conforming book and tax would improve the
    quality of accounting earnings. However, the empirical evidence so far
    shows that accounting choices that do not represent economic realty
    (i.e., earnings management) are more likely to happen in high-
    conformity regimes (Blaylock et al. 2015; Guenther et al. 1997).
    Earnings management makes it more difficult for investors to understand
    which corporations to invest in, including investors at pension funds,
    retirement accounts, and nonprofit endowments. That is, conforming
    financial accounting and tax rules result in financial accounting
    earnings that convey less information to financial markets (Hanlon et
    al. 2005). This loss of information weakens equity capital markets in
    the U.S. (Blaylock et al. 2017).

        f.  Conforming financial accounting and tax rules incentivizes
    firms to use more non-GAAP earnings (also called pro-forma or street
    earnings). These alternative disclosures will likely circumvent the
    original motivation for including financial accounting earnings in the
    tax base, as companies can manage financial income downwards while
    inflating non-GAAP earnings. Companies would be able to use non-GAAP
    earnings as a substitute for the higher, taxed earnings, because
    financial markets value non-GAAP earnings (Bradshaw and Sloan 2002). A
    proliferation of non-GAAP earnings would decrease the role of the FASB
    in guiding financial reporting, making the financial accounting system
    less useful and investors less safe.

     2. Economic disadvantages for U.S.-based companies.

        a.  One major reason tax payments are much lower than one would
    expect given financial accounting income is the tax treatment of net
    operating losses (Christensen et al. 2021). These provisions, which
    allow companies to offset prior losses against future income, are a
    major fiscal tool used in helping companies weather economic downturns
    (which is why, for example, they played a role in the bipartisan CARES
    Act). Net operating losses are generally universally allowed in other
    countries, and limiting their effectiveness by taxing financial
    accounting income would put U.S. firms at a competitive disadvantage.

        b.  Not all firms that operate in the U.S. are U.S.-domiciled, and
    not all subsidiaries of U.S. parent firms operate in the U.S. If only
    U.S. parents are subject to this tax, then U.S. firms will have an
    added incentive to expatriate.

     3. Politicizing of accounting standards.

    Including financial accounting income in the tax base would increase
    the incentives for Congress to interfere with the FASB as an
    independent accounting standards setter. While government does oversee
    the FASB through the SEC, the SEC has mostly allowed the FASB to work
    independently (with a few notable exceptions (Zeff 2005)), shielding
    financial reporting from political considerations. A politicized FASB
    would almost certainly produce lower-quality financial accounting
    standards, damaging the integrity of accounting information and U.S.
    capital markets.

     4. Complex implementation, which stands to threaten the original
                        intent of the change.

    One purported advantage of including financial accounting income in the
    tax base would be its imagined simplicity. However, implementing such a
    tax would not be straightforward. Addressing the complications would
    likely create unintended consequences.

        a.  One specific reason firms report low taxable income combined
    with high accounting income is the availability of target economic
    incentives set forth by Congress (e.g., the R&D Tax Credit). Taxing
    financial accounting income would reduce the effectiveness of these
    economic incentives, including potential future incentives being
    considered to help fight climate change or bolster domestic
    manufacturing, etc. Once Congress starts adjusting the financial
    accounting values that would be taxed for items such as the R&D Tax
    Credit or NOLs, they will fall subject to exactly the type of political
    incentives that some believe have challenged the Internal Revenue Code,
    adjusting based on the preferences of political interests and not based
    on the best way to collect revenue.

        b.  The consolidated corporation that files a Form 10-K with the
    SEC and the consolidated corporation that files a Form 1120 with the
    IRS are not the same legal entity. Tax and financial accounting
    consolidation rules are different, and determining what entity to tax
    is not trivial. Proposals that tax financial accounting income would
    require rules for addressing these differences and have potential
    unintended consequences on business organization.

        c.  Not all corporations, or even all large corporations, prepare
    GAAP-audited financial statements (Lisowsky and Minnis 2020).
    Determining what value to tax for non-GAAP users is a complex endeavor.
    If only public firms are subject to a financial accounting income tax,
    this will disincentive firms from going public in the U.S., locking out
    retail investors and workers with retirement savings from investing in
    companies that will opt to not go public because doing so would impose
    a large, new tax on them.

    The vast majority of large corporations are already required to
    reconcile their financial and taxable incomes for the IRS (see Form M-
    3). Only a very small portion of these differences are thought to come
    from nefarious activity (Gaertner et al. 2016). Rather, these
    differences stem from differences in tax law, as purposefully written
    by Congress and financial accounting standards, as purposefully
    promulgated by the FASB. If Congress deems the tax law to be deficient
    in any case, Congress should revise the tax code to resolve the
    perceived problem directly.

    Given the significant potential for unintended disturbances in
    financial reporting and financial markets, we oppose including
    financial accounting income in the tax base.

    Sincerely,

    Fabio B. Gaertner, University of Wisconsin-Madison

    Jeffrey L. Hoopes, University of North Carolina at Chapel Hill

    References

    Blaylock, B., F. B. Gaertner, and T. Shevlin. 2017. Book-tax conformity
                and capital structure. Review of Accounting Studies 22 (2):
                903-932.

    Blaylock, B., F. Gaertner, and T. Shevlin. 2015. The association
                between book-tax conformity and earnings management. Review
                of Accounting Studies 20 (1): 141-172.

    Boynton, C., P. Dobbins, and G. Plesko. 1992. Earnings Management and
                the Corporate Alternative Minimum Tax. Journal of
                Accounting Research 30: 131-153.

    Bradshaw, M. T., and R. G. Sloan. 2002. GAAP versus The Street: An
                Empirical Assessment of Two Alternative Definitions of
                Earnings. Journal of Accounting Research 40 (1): 41-66.

    Christensen, D. M., D. G. Kenchington, and R. Laux. 2021. How Do Most
                Low ETR Firms Avoid Paying Taxes? Review of Accounting
                Studies Forthcoming.

    Dhaliwal, D., and S. Wang. 1992. The effect of book income adjustment
                in the 1986 alternative minimum tax on corporate financial
                reporting. Journal of Accounting and Economics 15 (1): 7-
                26.

    Gaertner, F. B., S. K. Laplante, and D. Lynch. 2016. Trends in the
                Sources of Permanent and Temporary Book-Tax Differences
                During the Schedule M-3 Era. National Tax Journal 69 (4):
                785-808.

    Gramlich, J. D. 1991. The Effect of the Alternative Minimum Tax Book
                Income Adjustment on Accrual Decisions. Journal of the
                American Taxation Association 13 (1): 36.

    Guenther, D. A., E. L. Maydew, and S. E. Nutter. 1997. Financial
                reporting, tax costs, and book-tax conformity. Journal of
                Accounting and Economics 23 (3): 225-248.

    Hanlon, M., Laplante Stacie Kelley, and T. Shevlin. 2005. Evidence for
                the Possible Information Loss of Conforming Book Income and
                Taxable Income. Journal of Law and Economics 48 (2): 407-
                442.

    Hanlon, M., and T. Shevlin. 2005. Book-tax conformity for corporate
                income: An introduction to the issues. In Tax Policy and
                the Economy, Volume 19, 101-134. MIT Press.

    Lisowsky, P., and M. Minnis. 2020. The Silent Majority: Private U.S.
                Firms and Financial Reporting Choices. Journal of
                Accounting Research 58 (3): 547-588.

    Manzon, G. B. 1992. Earnings Management of Firms Subject to the
                Alternative Minimum Tax. The Journal of the American
                Taxation Association 14 (2): 88.

    McClelland, J., and L. F. Mills. 2007. Weighing Benefits and Risks of
                Taxing Book Income. Tax Notes 115 (7).

    McGill, G. A., and E. Outslay. 2002. Did Enron Pay Taxes?: Using
                Accounting Information to Decipher Tax Status. Tax Notes 96
                (8).

    Zeff, S. A. 2005. The Evolution of U.S. GAAP: The Political Forces
                Behind Professional Standards. The CPA Journal 75 (2): 18-
                29.

    Biographies of Authors

    Fabio B. Gaertner is an Associate Professor at the University of
    Wisconsin-Madison. He received a Ph.D. in Management from the
    University of Arizona, with an emphasis in accounting. Fabio teaches
    financial and managerial accounting to MBA and undergraduate students.
    His research examines the effect of economic incentives on corporate
    tax outcomes, as well as the economic impacts of tax reform.

    Jeffrey L. Hoopes is an Associate Professor at the University of North
    Carolina and the research director of the UNC Tax Center. Jeff received
    his Ph.D. in Business Administration from the University of Michigan.
    He is a CPA in the State of Colorado. Jeff teaches Taxes and Business
    Strategy and Accounting and Public Policy to graduate and undergraduate
    students. His research examines issues at the intersection of
    accounting, public economics and finance.

                                     ______

                  Letter Submitted by Margaret Ellen Gallagher
    I am a citizen of the United States of America. I live outside the
    United States in Peru where I am a tax resident and where I am subject
    to full taxation.

    I run a small business in the country where I live. My business is not
    a multinational corporation and all of its income is domestic to the
    country where I live. I must charge prices relative to the middle-to-
    low income country that I reside in, which operates at a much lower
    standard of cost of living than in the United States. This means I
    typically charge one half or one third of the price as compared to the
    United States. Simply put, I as a citizen abroad, I am not making the
    equivalent of U.S. income, nor is my small business.

    However, because I am a U.S. citizen, the U.S. tax code treats me the
    same as a large multinational company like Apple or Google.

    I use a local business structure that's treated as a corporation under
    U.S. tax law, and I am forced to fill in the same form 5471 as Apple
    must complete for each foreign subsidiary--translating all of my
    business records into U.S. dollars even though I do no business in that
    currency. My business is subject to GILTI even though I have no
    intangible income

    For me, personally, the form 5471 is not something I, nor my resident
    country (Peru) accountant can contend with, therefore I must pay a U.S.
    based tax accountant to comply with the regulations each year.
    Irrespective that I earn (and live) in a Peruvian economic standard (an
    amount equivalent to roughly $250 USD is a standard monthly wage here),
    I must pay the tax accountants I work with based on the U.S. pricing
    standards. This is money that I could use to support myself and my
    business here for months, but it is spent to simply comply with U.S.
    tax laws.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income and business taxes. I also pay additional kinds of taxes
    (example VAT) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States.

    I have friends and acquaintances from around the world that live and
    operate businesses here in Peru. They are shocked when I tell them
    about the tax burden that the U.S. applies to me and my business. There
    is no other advanced country in the world that imposes such
    extraterritorial taxation.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    Please understand that any and all changes to the taxation of U.S.
    corporations will have a huge impact on the U.S. taxation of U.S.
    individual citizens living outside the United States and running small
    businesses outside the United States. Individuals are not immune to the
    effects of raising the U.S. corporate income tax rate and/or doubling
    the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    Also I am living in a country that is far less wealthy, in terms of
    U.S. Dollars and finances, than that of the United States, and at
    present, NO allowances to taxation are made based on size or income of
    the business.

    In addition, the United States impose taxes on things (for example sale
    of principal residence) when my country of residence does not. Because
    I am required to live my life with the USD as my functional currency, I
    am subject to ``fake income'' on nothing but changes in the exchange
    rate. As a tax resident of both the United States and my country of
    residence, I get the worst of both tax systems. What one giveth, the
    other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! Individuals
    who live and work abroad are not just vessels of large corporate
    entities. We are small business owners and run the gamut of wealth and
    income levels, and our ability to comply within this tax system, one
    which punishes us for being small local entrepreneurs, varied greatly.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    I urge you to take this seriously and take into consideration the
    millions of U.S. residents that this affects each and every year. I
    know of others that have renounced their U.S. citizenship in order to
    be released from this onerous tax burden. Due to the fact that my
    income is so low in U.S. terms, I too have considered this option. It
    doesn't seem right that I, or anyone, would need to take such a drastic
    action only for this reason, but sadly it is true.

    Please take this time to take action now, and make changes that could
    impact and improve the very real lives of your very real fellow U.S.
    citizens that live abroad.

    Thank you for your time and attention in this matter.

                                     ______

                       Letter Submitted by Domingo Garcia
    I am a proud citizen of the United States of America. I live outside
    the United States, in Spain, where I am a tax resident and where I am
    subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (for example,
    21% VAT) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and I do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States the same way that they treat U.S. multinationals
    doing business outside the United States. Although, I am a flesh and
    blood individual person, not a single participant recognized how
    individuals are affected by these rules. Yet, the focus of the hearing
    was supposed to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or an individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    are actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground, and not
    with the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American. But
    it does mean that I am subject to the laws of the country where I live.
    I am not GILTI of anything. I only ask to be allowed to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Any and all changes to the taxation of U.S.
    corporations will have a huge impact on the U.S. taxation of U.S.
    individual citizens living overseas and running small businesses
    outside the United States. Individuals are NOT immune to the effects of
    raising the U.S. corporate income tax rate and/or of doubling the GILTI
    tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh away.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both the Treasury and Congress to address these
    issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you, and God bless the United States of America!

    Domingo Garcia

                                     ______

                      Letter Submitted by Sarkis Garjarian
    As a U.S. citizen working and living abroad, I feel enormous distress
    and anxiety by the U.S. extraterritorial taxation/financial
    requirements including the Foreign Account Tax Compliance Act (FATCA),
    the Report of Foreign Bank and Financial Accounts (FBAR), etc.

    I am not a corporation. I am an ordinary citizen, who works and pays
    taxes in the United Kingdom.

    The above-mentioned policies to me are extremely stressful and
    difficult to understand.

    I strongly urge lawmakers to abandon all extraterritorial tax/financial
    requirements and to pass laws that work well for U.S. citizens who work
    and live abroad.

                                     ______

                      Letter Submitted by Laurie Garrison
    I am a proud citizen of the United States of America. I live outside
    the United States in the United Kingdom where I am a tax resident and
    where I am subject to full taxation.

    I run a small business in the country where I live. My business is not
    a multinational corporation and all of its income is domestic to the
    country where I live. However, because I am a U.S. citizen, the U.S.
    tax code treats me the same as Apple or Google. If I use a local
    business structure that's treated as a corporation under U.S. tax law,
    then I'm forced to fill in the same form 5471 as Apple must complete
    for each foreign subsidiary--translating all of my business records
    into U.S. dollars even though I do no business in that currency. My
    business is subject to GILTI even though I have no intangible income.
    How can I compete with my neighbours who are not U.S. citizens and who
    have only one tax system to deal with?

    My tiny, one-person freelancing business does not make a profit, but I
    still find myself spending up to $1,100 per year to fill in the 5471
    form and the GILTI form. The GILTI form alone cost me $350 last year--
    simply for an accountant to fill in a few zeros and submit it. I have
    no problem doing my own company tax return in the UK and pay nothing
    for that, but the U.S. system requires so much complex reporting that I
    have never been able to do the 5471 myself. Now the GILTI form just
    exacerbates the problem. If I had had any idea how having a company
    would complicate my tax affairs, I would probably never have started
    one.

    In addition, since I work in consultancy, there should be a number of
    business opportunities available to me that might involve company co-
    ownership or account signatory responsibility. I don't dare pursue
    these opportunities because of the cost and complexity of the IRS's
    reporting requirements.

    Furthermore, I live in a development with a management company owned by
    residents. Again, I don't dare take up company ownership with my
    neighbors because of the cost and complexity of the IRS's reporting
    requirements. I therefore have to live with not having a full legal
    right to have a say in how the development is managed as I would do if
    I were an owner of the company.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                       Letter Submitted by Benedict Garry
    I am a proud citizen of the United States of America. I live outside
    the United States in Canada where I am a tax resident and where I am
    subject to full taxation.

    I run a small business in the country where I live. My business is not
    a multinational corporation and all of its income is domestic to the
    country where I live. However, because I am a U.S. citizen, the U.S.
    tax code treats me the same as Apple or Google. If I use a local
    business structure that's treated as a corporation under U.S. tax law,
    then I'm forced to fill in the same form 5471 as Apple must complete
    for each foreign subsidiary--translating all of my business records
    into U.S. dollars even though I do no business in that currency. My
    business is subject to GILTI even though I have no intangible income.
    How can I compete with my neighbours who are not U.S. citizens and who
    have only one tax system to deal with?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  Please treat small business run by U.S. citizens overseas who
    have small corporation structure differently than huge multinationals.

        2.  I have a family with one child and if higher taxes on U.S.
    citizens overseas are imposed it will cause significant hardship and
    hurt Americans overseas with small business.

        3.  There should be small business overseas threshold of under
    $U.S. 400K where gigantic additional U.S. taxes aren't imposed as I'm
    already paying huge Canadian taxes.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    Please have a separate small business threshold where massive new U.S.
    taxes aren't imposed on my small business which is being taxed
    maximally by Canada.

    Sincerely

    Benedict Garry
    Elise Garry--my 4 year old daughter
    Small business owner overseas

                                     ______

                      Letter Submitted by Matthew Geaghan
    I am a proud permanent resident of the United States of America. Having
    lived here for several years, I have established friendships,
    community, personal and professional networks, property ownership--a
    great life in the United States. I have a father, a brother, aunts,
    uncles, and cousins--my family, here in the United States.

    However, my mother lives in Ireland. She is at a time in her life now
    where she needs support. My brother and I are her only children, and it
    is time for one of us to be with her as she looks after her ninety-six-
    year-old father (my grandfather), and her brother who has recently had
    a heart attack. She has her own home to manage, as well as her job,
    which now requires technical acumen to accommodate working from home in
    the wake of the pandemic. She needs her son's help.

    It is my wish, and indeed my duty, to put on hold my life in the United
    States for a period, so that I can be with my mother in Ireland.
    Achieving this reasonable call to support my family is currently a
    cause of much stress and uncertainty, given the challenge of being a
    U.S. tax person seeking to live productively overseas.

    I have no intention of avoiding or evading taxes. However, the current
    U.S. extraterritorial tax regime treats any U.S. person building a life
    overseas under the same terms as those engaging in criminal activity.

    Ireland has a well-developed tax system that requires payment of a wide
    range of taxes. Personal income taxation in Ireland is some of the
    highest in the world. I can also tell you that the U.S. tax system
    treats my non-U.S. income and assets very unfairly. The fact that I am
    temporarily living abroad doesn't mean that I don't have to plan for
    retirement.

    I do not plan to live ``offshore.'' I plan to live in a country where I
    will pay very high income taxes. I will also pay additional kinds of
    taxes (example VAT) to my country of residence. Yet, because I am a
    U.S. citizen, the United States imposes taxation on my non-U.S. income
    even though I am a fully taxable on that income, in the country where I
    reside, and do not live in the United States. There is no other
    advanced country in the world that imposes such extraterritorial
    taxation.

    My options:

          Abandon my U.S. permanent residency. I will have to give up
    everything I have built here in the United States, and no longer be
    able to continue my life in the U.S., apply for bank loans, work in the
    country where I have invested so much time and effort to develop my
    profession and career. The exit tax on top of this will make for a
    brutally expensive event, undoing everything I have created during my
    time in the U.S.

          Apply for U.S. Citizenship. This will allow me to retain my
    interests and my place as an American. But what if my time overseas
    turns into something more permanent, where I am not in a position to
    leave my mother and return to the U.S.? I will forever be a second-
    class citizen in my new home country, shunned by banks, burdened with
    costly filing requirements to the U.S. every year, and a cause of
    future difficulties to any future spouse or children that I wish to
    have.

    I would like to make two general observations about the hearing on
    March 25th.

        1. The hearing focused on U.S. multinational corporations. But here
    is the reality: U.S. tax rules treat individuals living outside the
    United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2. I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to review its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation for those who qualify. I call to your
    attention Congressman Holding's ``Tax Fairness For Americans Abroad Act
    of 2018 (H.R. 7358),'' as described here: https://
    www.americansabroad.org/tax-fairness-act-rbt/

    There needs to be an assessment on Americans who are bona fide
    residents of a foreign country, such that they can continue to be part
    of life in the United States, to contribute to the nation through
    business and investments, yet not be crippled in their efforts to build
    a life for themselves and their family in their local home.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Lindsay Gelb
    I am a proud citizen of the United States of America. I live outside
    the United States in Australia where I am a tax resident and where I am
    subject to full taxation, quite high taxation in fact.

    I am an emigrant from America. Sure I love America but, we never know
    where life will take us. I moved from America close to 8 years ago for
    love to live with my partner who is Australian. I have realized that
    although I will always love America, I am living permanently abroad and
    need to make decisions as this is where I will remain for the rest of
    my life. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country since
    this is where I plan to retire with my family. The problem I have is
    that the U.S. tax laws make it very difficult for me to live the same
    kind of life that my friends and neighbours live. You see, they are
    subject to only one tax system. As a U.S. citizen, I am subject to the
    tax system where I live and the U.S. tax system. Those systems are
    generally not compatible. Most attempts at responsible financial/
    retirement planning where I live are frustrated by the need to comply
    with U.S. tax laws. How can this be fair? How can the United States
    impose taxation on the non-U.S. income and assets of a person who is a
    tax resident of another country--with no economic connection to the
    United States? I left the U.S. when I was very young, I made most of my
    income in my country of residence and intend to spend it here as well I
    have 0 economic ties to the U.S. yet because of U.S. tax law that taxes
    non resident citizens I am forced to deal with and consider U.S. tax
    law constantly. I can't invest normally for my retirement, obtain a
    mortgage or many other things people consider normal financial
    planning. The complexity and stress of it has affected my health. I
    have to consider many aspects of U.S. tax law that my friends and
    family located within the U.S. never have to deal with. It seems
    grossly unjust to subject citizens living abroad to such a harsh
    reality for no other reason than they chose to live elsewhere. I live
    in fear that I will do or report something wrong despite my best
    efforts to do the right thing and be penalised harshly since anything
    foreign is treated very punatively by U.S. tax law, yet I have no
    choice since I live in a foreign country. I like to think that if
    people truly understood the difficulties and stressors that U.S. expats
    face no country would wish to treat its citizens this way (in fact none
    do except the U.S. and Eritrea!). I hope that by sharing this it will
    bring light to the issues we face as U.S. citizens living abroad in the
    hope that things can change. I have thought at times about giving up my
    U.S. citizenship just to avoid the heartache and stress of it all, even
    though I have never owed any tax--that is how stressful compliance can
    be--not to mention expensive! I will pay by necessity possibly 10 times
    as much as my domestic friends and family to organise my U.S. tax
    affairs, I need to consult lawyers and experts in both countries just
    to make sense of it all and ensure that I am not running afoul of some
    law in either country--it's utterly exhausting and grossly unfair. I
    find it very sad that so many people feel compelled to give up their
    citizenship to the country they love and were raised in just to live a
    normal life abroad.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes such as
    Medicare levies, GST etc to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation. In quite a number of cases I am also
    subject to double taxation on income that may not be recognised by a
    treaty, so my ability to adequately save for retirement via tax
    advantaged saving which all advanced countries allow their residents to
    do is impacted. I am penalised for this while my foreign resident non-
    U.S. friends and U.S. resident friends and family are not--how is this
    fair? Really I am not treated equally under U.S. tax law.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant in the hearing recognized
    how individuals are affected by these rules. Yet, the focus of the
    hearing was supposed to be about individuals. How did this happen?

        2.  I was shocked that there was no witnesses who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experience running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud and if the U.S. continues to insist on taxing
    based on citizenship (which I hope they do not) then hearings need to
    consider how domestic laws will impact those abroad. Many people have
    been caught out because of the simple fact that impact to the
    individual is just not considered.

    I am not a ``mini-multinational''. I am a soon to be ``dual-national''
    living in my country of second citizenship. It doesn't make me less
    American. But, it does mean that I am subject to the laws of the
    country where I live. I am not GILTI of anything. I ask only to be able
    to carry on my my life without interference from the Internal Revenue
    Code of the United States considering I have no financial or economic
    ties to the U.S..

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency (despite NEVER interacting with USD at all), I am
    subject to ``fake income'' on nothing but changes in the exchange rate
    so can potentially owe tax to the U.S. on money that I have not
    actually made--how is this fair? Corporations can choose other currency
    as their functional currency but individuals cannot--again how is this
    fair? As a tax resident of both the United States and my country of
    residence, I get the worst of both tax systems. What one giveth, the
    other taketh. I have no problem paying my fair share of taxes (I
    believe in taxes as long as they are fair!) and if I lived in the U.S.
    would pay them quite happily but I live in and derive all benefits from
    another country. I quite happily pay tax to my country of residence and
    just wish to live a normal life without having to consider U.S. tax law
    when I am not a resident of the U.S.!

    Please don't believe that foreign tax rules and/or the Foreign Earned
    Income Exclusion solve these problems. They don't! Instead of trying to
    apply myriad of increasing complex rules to eliminate double taxation
    why not just eliminate tax based on citizenship? Even my children who
    have no choice whatsoever in their inheritance of U.S. citizenship and
    who will likely never live or spend any significant amount of time in
    the U.S. will also be subject to U.S. tax and have to file taxes their
    entire lives despite being born a citizen of another country. They
    would have to spend thousands of dollars to renounce their citizenship
    to avoid this. This sounds completely insane doesn't it?

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.
    We may be small in number comparatively but that doesn't mean we should
    be ignored or discounted or brushed aside, if something is wrong it is
    wrong and should be dealt with. In fact it can be easily dealt with--
    move to a residency based system of taxation.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                      Letter Submitted by Michael Geppelt
    I am a United States Citizen, born and raised in north-east Oklahoma,
    but have lived for the past 10 years in Hamburg Germany, where I am
    subject to full taxation like any other German resident or citizen. But
    I along with the estimated 9 million U.S. Citizens living outside the
    United States are subject to a different set of rules--a different set
    of tax codes--that all other U.S. Citizens are not subject to simply
    because we do not reside inside the United States. And these rules are
    making it hard to live a normal life.

    Citizen Based Taxation

    The United States of America and Eritrea, a small African country on
    the Red Sea, are the only two countries in the world that tax based on
    citizenship and not residency. What this means is that I, along with
    the estimated 9 million U.S. Citizens abroad, are subject to both U.S.
    taxes and the taxes of the countries where we reside. We are, in short,
    taxed twice.

    The IRS does offer the possibility of a ``tax credit'' based on the
    local taxes paid. For myself, and the large majority of Americans
    abroad, this means we owe no taxes as we reside in countries with a
    marginal tax rate higher than the United States. In the end, normal
    citizens are having to jump through hoops and pay high fees to tax
    professionals to prove to the United Sates Government that we owe no
    taxes; we are creating more paperwork and consuming resources of an
    already strapped IRS, while at the same time generating no revenue for
    the U.S. government.

    I personally have not lived in the United States in 10 years. However,
    I received both COVID stimulus payments, and, according to the IRS'
    website, am eligible for the third payment. Till this day I am as
    confused as the day I first saw the money in my account; why have I
    received U.S. stimulus payments, as someone who, while obligated, pays
    no taxes, and is eligible for social benefits in my country of
    residency. With 9 million Americans abroad, that creates a potentially
    large amount of money leaving the United States, which is not
    benefiting Mr. and Mrs. U.S. Tax Payer, the U.S. Government or U.S.
    Economy.

    While on the note of benefit, it must also be pointed out that social
    payouts like unemployment and disability are subject to U.S. Taxes, as
    they are seen as income by the U.S. Treasury, but do not fall under the
    IRS' ``tax credit'' as they are not taxed in the country of residency.
    This is just one example of how the U.S. Tax code is not benefiting the
    least fortunate U.S. Citizens, but there are of course many more
    examples and issues plaguing U.S. Expats, most of which have already
    been presented to a Congressional Committee.

    Foreign Account Tax Compliance Act (FATCA)

    The Foreign Account Tax Compliance Act (FATCA) was introduced to
    prevent individuals from dodging their tax obligations by placing money
    abroad. It did this by requiring foreign banks to report on accounts
    owned by U.S. Citizens at threat of high withholding on U.S. based
    revenue. As a result, these non-U.S. Banks instead of complying with
    the reporting requirements decided not to take on the additional
    administrative burden and instead started closing the accounts of U.S.
    Citizens and preventing new accounts from being opened. Speaking for
    myself, I am not able to open a savings account, my retirement account
    (equivalent of a 401k) has been dissolved, and looking for a mortgage I
    am not able to obtain a competitive rate but instead a rate worthy of
    someone with a very poor credit history, which is not me as I have
    worked hard to have a good credit score. And I am not the only one
    facing this issue--millions of Americans abroad have similar hardships.
    This is evident in the rate of individuals giving up their U.S.
    Citizenship, which has skyrocketed since the introduction of FATCA in
    2010. These people do not want to give up their U.S. Citizenship, but
    being put in the position that they are in with no other option, they
    are doing what they have to do to live normal lives.

    An exemption should be created allowing banks to forgo reporting on the
    account of U.S. Citizens that have legal residency in the country of
    their accounts. The exemptions would still allow FATCA to work as
    intended without destroying the lives of normal U.S. citizens living
    abroad.

    Conclusion

    Americans abroad are being treated unfairly by a tax code that singles
    them out simply because they have made the decision to not live in the
    United States. In addition, Americans abroad are suffering the
    consequences of U.S. tax policy abroad. Action must be taken to
    alleviate or eliminate these unnecessary burdens so that normal
    citizens can live normal lives, and have access to the financial
    products and services that the citizens of their local countries, and
    U.S. Citizens residing in the United States, have no problem accessing.

                                     ______

                       Letter Submitted by Malek Ghantous
    I am a proud citizen of the United States of America. I was born there
    and left as a child for Australia where I have gone to school, studied
    at university and worked. Over 6 years ago I moved to France where I
    now live and work; I am a tax resident here and am subject to full
    taxation. I have never worked in the United states.

    I live in a country where I already pay very high income taxes, as well
    as a high Value Added Tax, and other taxes. But because I am a U.S.
    citizen, I am subject to the U.S. extraterritorial tax regime, which
    means the United States imposes taxation on my non-U.S. income even
    though I am fully taxable on that income in the country where I reside.

    I have learned that I am required to file U.S. tax returns and pay tax
    on my non-U.S. income to America. I am also required to file complex
    information returns describing the details of my finances to the U.S..
    With no Americans in my family to guide me, I have tried to learn
    enough to comply with U.S. tax law, but the completely unfamiliar tax
    system and terminology, the astonishing complexity of the
    extraterritorial tax laws, the huge expense of hiring a tax
    professional capable of dealing with them, and the brutally punitive
    penalties for even innocent mistakes have left me at my wit's end. In
    addition to these problems, the laws themselves are extremely
    discriminatory, effectively imposing requirements and penalties on
    overseas Americans that are not imposed on Americans living within the
    United States.

    No other country does this to its citizens, regardless of where they
    live.

    There appear to be only two solutions: move back to the U.S.
    permanently, or renounce my U.S. citizenship. The former is clearly in
    contradiction to the Liberty that the United States is supposed to be a
    staunch defender of, and the second would not only feel like a
    repudiation of the country where I forged my earliest memories, and
    which I have always loved and proudly felt a part of, but would
    prejudice me for life from ever being able to live in the U.S. again,
    should the occasion present itself--a prejudice which does not even
    apply to those who have never held U.S. citizenship. Even if I were to
    opt for this latter solution, which I am loathe to do, the U.S.$2350
    renunciation fee--roughly what I earn in a month--is at least an order
    of magnitude higher than what other countries would ask, and itself
    feels like a punishment for something which I had no say in.

    Meanwhile, as I struggle to make sense of what is going on, I am unable
    to make the sensible financial decisions that will impact my future, my
    eventual retirement, and those of my non-American spouse. Any savings,
    future investments, retirement fund, property purchase or small
    business I might start will be disadvantaged or, as has happened to
    some unfortunate U.S. citizens living outside the U.S., lost entirely.
    Some of those, such as retirement funds, are requirements of local law
    and are incompatible with U.S. law, which often treats them as
    voluntary overseas investments, divorcing them from their purpose.
    Others, such as property transaction rules, apply equivalent taxes to
    the U.S. in such a way that double taxation by the U.S. cannot be
    avoided.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and the Foreign Earned
    Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                       Letter Submitted by Darcey Gillie
    I am the child of a manual worker and a store cashier, leaving America
    over 20 years ago to study in the UK. I fell in love, married and have
    made my home here ever since with my spouse. My career here in the UK
    been devoted to helping people as a university teacher, secondary
    school teacher, and as a guidance counsellor; I volunteer in
    conservation and social care. I am living the American dream made
    available to me through Pell Grants and Sallie Mae loans. Before I even
    knew about my IRS compliance obligations, I paid off (in fact, I
    believe I over paid by 17 dollars) the student loans I incurred to pay
    for my UK studies. As soon as I discovered my tax compliance
    obligations (no one tells you), I immediately (at eyewatering expense
    for a guidance counselor) engaged a tax professional to help me through
    the streamlined filing process to ``get compliant.''

    The Americans I know of abroad are university workers, hospice
    administrators, stay at home moms, English teachers, law enforcement
    officers, and health care professionals. We are not the super wealthy.
    We may be comfortable, we may be struggling--we all need to think about
    the next pay check and what the future holds. We are also the people
    most likely to follow the rules. The super rich have the money,
    connections, time and resources to continue to avoid tax compliance. I
    don't even have the time or energy to iron my clothes or make dinner
    beyond a sandwich some days.

    I am a dual national living in my country of second citizenship, with
    my spouse. It doesn't make me less American or somehow a ``bad''
    American, which is how laws like FATCA and the ways in which American
    emigrants are talked about make me feel. I have never met an American
    or anyone else who, upon my explanation of the tax situation of
    Americans abroad who say it's a good thing. All of the m are appalled
    and immediately see the unfairness of it. Many non-Americans ask my why
    I don't renounce. Frankly, I'd rather cut my right arm off. I was born
    and American, and I shall leave this earthly world an American. Being
    American is the source of the characteristics and attributes people
    value in me the most. In my over 20 years living in the UK, I have been
    ambassador for American ideals and values.

    In the United States we are nurtured to believe ourselves part of a
    tradition of justice, equality, opportunity, fairness--and as such a
    beacon to the world in all these things and more. Our foundations as a
    nation rest on the humane and compassionate ideals of the American
    Enlightenment:

            ``We hold these truths to be self-evident, that all men are
            created equal, that they are endowed, by their Creator, with
            certain unalienable rights, that among these are life, liberty,
            and the pursuit of happiness.''

    Laws are conceived and established by governments to promote the
    security, prosperity, and well-being of a nation and its people. In the
    United States of America, since 1776 we--the people and our
    Government--have agreed that citizenry are endowed with the unalienable
    rights of life, liberty, and the pursuit of happiness.

    It is with great regret, then, that I find myself writing this letter
    because the United States of America, through FATCA and its
    citizenship-based taxation regime, has abandoned me, betrayed my trust
    and loyalty, and denied my me unalienable rights to life, liberty, and
    the pursuit of happiness.

    The United States of America was founded by men and women who could no
    longer tolerate the oppression and overreach of a British government
    hungry for revenue. Punitive taxes prohibited healthy business,
    innovation, growth--and for many people, simple survival. Despite the
    lessons taught to us by the founding of our own nation, it is strange
    to find ourselves here in 2021, where American citizens abroad--making
    new lives for themselves, on distant shores, are being subject to the
    same intolerable intrusions, demands, and punishments as our ancestors.

    Many submissions to this hearing will make highly technical legal
    arguments. And I am grateful to the knowledge and expertise of the men
    and women who can do this. I am a university guidance counsellor. I
    make no pretence to understanding the most complex tax code in the
    world. My representation for myself and the estimated 9 million
    Americans abroad is historical, moral, and ethical--and deeply
    personal. Laws should never be conceived that--intentionally or
    otherwise--harm individuals' fundamental rights. FATCA and the tax code
    that applies to Americans residing abroad harms us in diverse ways,
    depending on circumstances and where we live. There is even no equity
    within an already unequitable situation.

    Sadly, because we are diaspora, because there are no votes to be
    garnered from supporting us; because of a persistent erroneous belief
    we are all ``GILTI'' ``FATCATs'' with Swiss bank accounts--no one in
    the United States Government cares about us and no one is moved to help
    alleviate the deliberate harm being caused to us. We are the collateral
    damage of well-intended but poorly conceived legislation. Laws must
    work for all citizens or they work for none. FATCA sets a terrible
    precedent for the rights of every United States citizen--paving the way
    for intolerable intrusions into privacy and oppressive monitoring not
    subject to normal legal safeguards such as probably cause and warrants.
    Our founding fathers would be appalled at the road the United States
    Government taken with FATCA, and citizenship-based taxation.

    Representative Neal once said that he did ``not accept'' that FATCA is
    a ``burden.'' I am sure if Representative Neal found himself considered
    a criminal by virtue of having a ``foreign'' bank account he would only
    find it a burden, he would find it an intolerable injustice:

        1.  Reporting to FinCEN is an enormous psychological burden. In no
    other situation are American citizens presumed to be guilty by virtue
    of certain characteristics (i.e., a ``foreign'' bank account). This is
    an utter betrayal of U.S. citizens by the U.S. Government. It causes me
    weeks of psychological stress and anxiety every year.

        Query:  How would you feel if you were considered a criminal by
    virtue of where you lived, and on no other basis?

        2.  I have been refused accounts by banks, prohibited from
    investing in local green energy schemes, and discouraged from board
    membership of charities.

        3.  It is a time burden to check my accounts--up to 8 hours to
    check and recheck the data, plus enter it into the FinCEN site.

        4.  I choose to do my own FBARS because my affairs are fairly
    simple--for others it can add hundreds or thousands in compliances
    costs to engage a tax professional to do this. I accept the near
    constant stress and worry about excessive fines for mistakes because I
    can't afford to add to what I already pay my accountant to ensure my
    IRS compliance.

        5.  My bank account is not foreign or abroad. I do not live ``off-
    shore.'' I reside permanently in the UK. It is my local bank. I
    generally spend a maximum of 21 days a year in the U.S.

        6.  Being happily married, I share a bank account with my UK
    spouse. FATCA means that his data--that of a citizen completely foreign
    to the U.S., who has never lived or worked there--is being shared with
    a foreign government and he is subject to the laws of a foreign
    country.

        Query:  Would any of you be happy putting your most sensitive
    information in the hands of a foreign government, as my spouse is
    forced to?

        7.  Others I am sure will provide more detailed on nuanced
    discussion of data protection. Suffice to say, given the recent
    Treasury data breach, I do not feel satisfied that my most sensitive
    financial data is currently in good hands via FATCA.

        Queries:  Can you absolutely 100% guarantee the safety of my
    personal data? What compensation or support will I receive if I become
    a victim of a data breach caused by FATCA?

        8.  FATCA has prevented me from setting up a small charitable
    foundation with my spouse to support first generation university
    students (like I was) with small grants (100-200) towards
    their university education. I don't have the time, money, energy or
    know-how to tackle compliance with U.S. laws. It distresses me that I
    am prevented from paying forward the same support to young people in
    small scholarships that helped me at that age.

    In every way, FATCA undermines and denies hard working Americans (who
    happen to live abroad) their rights to life, liberty, and the pursuit
    of happiness. I have been deeply affected by the stories of Tina, the
    Canadian woman (but also ``U.S. Person'') who late in life discovered
    her obligations as an accidental American. Can we all stop to imagine
    and empathise for a moment how the realisation of compliance and its
    costs must have felt? Can you feel the tight knot of fear she felt when
    realising that FATCA would cost Tina her modest savings and support for
    retirement? How can members of Congress be happy and content with this
    sort of suffering? Let's remember in this Easter season: ``What you do
    to the least of my people, you do to me.''

    The story of Ronald Aries has also touched me. Can you imagine working
    hard, as a highly trained professional on whom the safety and lives of
    others depends, get to a well-deserved retirement and find yourself on
    the precipice of losing everything? Read this--and imagine yourself as
    Ronald Aries. You get a letter from your bank closing your account,
    refusing your mortgage on the house you were buying for your old age,
    plus 10s, if not 100s of thousands of dollars in compliance costs and
    fines. What is happening to Ronald Aries is not moral, it is not just.
    In every way it abandons the humane ideals of the American nation.

    I am delighted to pay taxes. In the UK, we have a fairly simple,
    straightforward system and I barely have to think about it. On the rare
    occasion in the past 20 years when there has been an error--mine or
    HMRC's--I ring them up, we settle the matter--there are no punishments
    or penalties for making a mistake. I either increase my monthly
    contributions or decrease depending where the error lies. My taxes
    ensure that children are educated, we have law enforcement, fire
    services, clean streets, disability support, a safety net for those who
    have lost their jobs, good roads, universal health care free at the
    point of delivery, and so much more. Every year, all UK citizens
    receive a statement informing them of how their tax money is spent.

    No one disagrees with the intention of American lawmakers to hold large
    companies or resident Americans ``off-shoring'' vast wealth accountable
    for tax contributions. The U.S. Government might find it more effective
    to start at the other end of the process--changing hearts and minds
    about taxes--making them something people want to contribute to rather
    than avoid. As a constructive suggestion in all of this, what about
    periodic (3-4 times a year) televised updates of how federal tax
    dollars are being spent nationally and locally to support and improve
    people's lives? Inspire people instead of alienating and frightening
    them. Make tax avoidance as socially unacceptable as smoking in a
    restaurant or drink driving.

    If the United States Government wants to create a fairer society, it
    needs to start by setting the example. FATCA is a law of anger,
    vengeance, fear, and punishment. It is a microcosm of the whole
    legislative philosophy of the United States Government at the moment.
    Bring back inspiration, aspiration, hope, compassion, and our
    unalienable rights to the process--and America will flourish.

    As second constructive suggestion, I urge the United States Government
    to explore (and implement) progressive forms of taxation that enable
    some of the ambitious changes we need and have proposed for society:
    e.g., sugar taxes, fossil fuel taxes, higher sales taxes, land taxes,
    etc. Here in the UK, besides paying some of the highest income tax in
    the world, I pay 20% valued added (sales) tax on almost all goods and
    services, car tax (higher for more polluting vehicles), and also pay
    council tax to cover local infrastructure, social, welfare investment
    and other services.

    All countries in the world (excepting Eritrea, of course) demonstrate
    that it is possible to fund their governments (some such as Denmark,
    the Netherlands and Sweden, quite generously) without harassing their
    overseas private citizens. Other nations who have tried citizenship-
    based taxation (e.g., Mexico, Romania) gave it up, or limit it to a few
    years after someone emigrates.

    Queries: Why is the United States of America different? Why do you have
    to be so unjust to us? Why do you hate us? We are a tremendous source
    of free soft power all over the world. Instead of cultivating and
    supporting us, you punish us--over and over.

    There isn't even equity in your punishment of us--it depends entirely
    on the nature of the tax treaty the United States has with the country
    we live in--if indeed there is one. I am aware that I enjoy the
    advantages of the tax treaty between the U.S. and the UK, whilst my
    fellow citizens living in Mozambique, Jordan, Singapore or Afghanistan
    do not. People are prevented from saving adequately for their
    retirement due to laws around PFIC (which I don't understand, and so
    avoid anything other than a standard savings account in a bank), and
    are subject to double and even triple taxation--no doubt putting higher
    social care burdens on the country where they live. Women are already
    at a disadvantage globally in terms of retirement income. FATCA and
    citizenship-based taxation reinforces and deepens this disadvantage.

    Query: As a middle aged, middle income woman--how would you, under
    current laws, recommend that I save adequately, responsibly, and
    without penalty for my retirement in the UK?

    Whilst I can understand that updating the tax code to reflect the 21st
    century needs and interests of American citizens abroad will be time
    consuming, ``A Simple Regulatory Fix for Citizenship Taxation''
    (Richardson, Snyder, and Alpert (2020) 169 Tax Notes Federal 275.
    Available at SSRN: https://ssrn.com/abstract=3725506) easily and fairly
    solves problems for everyone. It will enable the IRS to refocus efforts
    on tax avoiders, rather than spending time and money on America
    citizens who are tax resident (and compliant) in their country of
    residence.

    I am over halfway through my life, if I can trust the actuarial tables.
    Things I should be worrying about:

          My mother's (who lives 3000 miles away) advancing dementia.

          Her recent stroke.

          Her recovery from bowel cancer.

          The fact that she cares for my 101 year-old grandmother--who
    lives 6 hours from my parents.

          My sister who is caring for my mother, my 80 year-old father,
    and my 101 year-old grandmother.

          My preventive chemotherapy for breast cancer and maintaining
    good health.

          As a childless woman, making adequate preparations for my own
    old age.

    Things I should not be worrying about:

          Complying with burdensome, amoral, intrusive laws that have no
    positive benefits for society or individuals.

          The excessive penalties should I make a mistake.

    Thank you for taking the time to organise this hearing, to read and
    listen to all of the evidence, including mine. I hope that on hearing
    our stories, engaging with our suggestions, and on the balance of
    evidence you will be able to work with us to find a solution the
    restores our rights and freedoms as American citizens. At the very
    least, please find it in your heart to have a little mercy on us.

    Yours sincerely,

    Darcey Gillie

                                     ______

                       Letter Submitted by Betsy Gillies
    I am a citizen of the United States of America. I live outside the
    United States in New Zealand where I am a tax resident and where I am
    subject to full taxation. My story is as follows:

    I was born and raised in the USA and fully identify as an American. In
    my mid 20's, I married a New Zealander. We spent time in both countries
    and decided to permanently settle and raise our family in New Zealand
    10 years ago. We do not own property in the USA, nor have any economic
    ties to the USA. I am not a high earner or a wealthy individual by New
    Zealand or American standards.

    I am a tax resident of New Zealand, but subject to both the New Zealand
    and U.S. tax systems. These tax systems do not speak the same language
    and are completely incompatible. As a result, tax advantages,
    strategies, credits and loopholes I have in each country cancel each
    other out, so I generally pay the highest tax rate from both countries
    combined or I am double taxed. The most damaging aspect
    extraterritorial tax for me is that I am unable to plan for retirement
    due to the double taxation of any retirement or investment account that
    I hold in New Zealand or in the USA. This leaves me very vulnerable and
    dependant on others in the future.

    Additionally, tax laws in both countries are so complex and out of sync
    with each other, that I need to hire a specialized expat tax accountant
    to make sense of it all and do my taxes. I only make around $7,000 per
    year and can pay up to $2,000 for sound advice and service. Fees for
    specialized expat financial and retirement planning advice are even
    more steep.

    I try to educated myself through reading expat tax forums on Facebook,
    trying to familiarize myself with the extremely complex tax lingo and
    issues (that I still don't understand), hoping that this will help me
    avoid making mistakes both now and in the future. However, this can be
    confusing and very risky.

    To sum it up, U.S. taxes is something I think about everyday. My U.S.
    tax obligations bring stress and anxiety in to my life and to my
    marriage, along with financial vulnerability. I feel like the U.S. tax
    system punishes me, just because I choose to live somewhere else.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                        Letter Submitted by Gary Gillis
    I am a proud citizen of the United States of America. I live outside
    the United States in England where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Of course I love America. But, we never
    know where life will take us. I moved from America many years ago.
    Although the days sometimes go slowly, the years go quickly. I long ago
    realized that although I will always love America, I am living
    permanently abroad. In fact the last fifteen years have absolutely
    flown by.

    The problem I have is that the U.S. tax laws make it very difficult for
    me to live the same kind of life that my friends and neighbours live.
    You see, they are subject to only one tax system. As a U.S. citizen, I
    am subject to the tax system where I live and the U.S. tax system.
    Those systems are generally not compatible. Most attempts at
    responsible financial/retirement planning where I live are frustrated
    by the need to comply with U.S. tax laws. How can this be fair? How can
    the United States impose taxation on the non-U.S. income and assets of
    a person who is a tax resident of another country--with no economic
    connection to the United States?

    My last tax return for 2019 was more than one hundred pages--and my
    taxes are not even that complex. Because the taxes are much higher here
    I don't even end up owing anything! I can't help but think the time
    spent by me, my tax accountant, and any IRS agents reviewing my returns
    could be better spent in other areas.

    Having said that I should probably clarify that while I usually don't
    pay taxes I did last year. Why is that? Because I simply tried saving
    for my retirement and put money in basic index funds through a local
    broker. My accountant notified me that these are classified as PFICS
    and intended to prevent money laundering. Surely there are better ways
    to catch that? Because of this I had to pretend I sold everything and
    calculate any profits--even though I hadn't sold anything and didn't
    have any profits. And for PFICS you don't pay capital gains taxes, but
    ordinary income taxes. And not at my marginal tax rate, but the highest
    statutory income tax rate.

    I immediately transferred my funds to an American broker. But about a
    year later I decided to buy a house and needed the funds so transferred
    them back to the UK--losing thousands in the process.

    You may also be surprised to learn of the bizarre treatment we are
    subject to when we refinance or sell our houses. As an example assume I
    buy a house for 1 million with an interest only mortgage
    (just to keep it easy). If the exchange rate at the time is 1.4 then
    the IRS views this as a $1.4 million USD mortgage. We do not normally
    have 30 year fixed rate mortgages over here so we usually have to
    refinance after five years. If at that the time the exchange rate is
    1.2 then the IRS says we had a $1.4 million debt forgiven and replaced
    with a $1.2 million obligation, and taxes us on this phantom ``gain''
    of $200,000?! Even though I have the same mortgage balance, with the
    same home, in the same neighborhood, with the same family, and the same
    job, as I had all along. Just for refinancing. This cannot be right.

    I do not live ``offshore''. I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I am not a ``mini-multinational''. I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    NOT immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Leslie Gilotti
    I am a proud citizen of the United States of America. I live outside
    the United States in London, United Kingdom, where I am a tax resident
    and where I am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. Many financial institutions in the UK
    won't even accept Americans and other U.S. persons for this reason.

    How can this be fair? How can the United States impose taxation on the
    non-U.S. income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes--40% in my case. I also pay additional kinds of taxes
    such as VAT, National Insurance contributions, Council Tax and more to
    my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I simply live in the UK, where I
    have permanent residency (the British equivalent of a Green Card). This
    doesn't make me less American. But, it does mean that I am subject to
    the laws of the country where I live. I am not ``GILTI'' of anything. I
    am simply a Pennsylvania girl who married a Brit and decided to settle
    in her husband's country. I live a normal, financially modest life. I
    ask only to be able to carry on my life without interference from the
    Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                    Letter Submitted by Christina M. Glennie
    I am a proud citizen of the United States of America. I live outside
    the United States in the UNITED KINGDOM where I am a tax resident and
    where I am subject to full taxation. I have passed this ``benefit'' on
    to my children. One who remains living and working in the UK and my
    second who has decided to study at the University of Wisconsin, despite
    his Wolverine mother.

    I am an emigrant from America. I met a boy and moved to the UK after I
    graduated from the University of Michigan. He had a job, I did not, and
    we were young in love and didn't think past that. Although the days
    sometimes go slowly, the years go quickly. I long ago realized that
    although I will always love America, I am living permanently abroad. I
    am a tax resident of my country of residence. I am required to organize
    my financial and retirement planning in that country. The problem I
    have is that the US tax laws make it very difficult for me to live the
    same kind of life that my friends and neighbours live. You see, they
    are subject to only one tax system. As a US citizen, I am subject to
    the tax system where I live and the US tax system. Those systems are
    generally not compatible. Most attempts at responsible financial/
    retirement planning where I live are frustrated by the need to comply
    with U.S. tax laws. How can this be fair? How can the United States
    impose taxation on the non-U.S. income and assets of a person who is a
    tax resident of another country--with no economic connection to the
    United States? I am a higher rate tax payer in the UK--I pay 40% tax on
    most of my income. I am happy to pay it, as I use the services here--
    and it ``is what I signed up for.''

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence. My kids are 21 and 23 and I recently passed
    some money to them that they inherited from their USA grandparents upon
    death. ALL OF THE UK investments, bar cash, were not available to them,
    as they are dual nationals, and the U.S. FATCA is prohibitive. The
    average price of a flat in London is $450k. My daughter is a social
    worker. Without growth in her investments, she will never buy a house.
    Cash interest rates are .2% Why is she penalized? I pay $6k a year to
    keep us all tax compliant, as we do not want to renounce. I invest via
    my husband and have to keep more assets in his name because of U.S. tax
    laws. I am a mid level marketing manager, not a high net worth
    individual. I would never recommend to my kids to pursue this
    investment strategy with their partners. It is too risky. I lucked out.

    Because we are U.S. citizens, I am subject to the U.S. extraterritorial
    tax regime, which means the United States imposes taxation on my non-
    U.S. income even though I am a fully taxable on that income, in the
    country where I reside and do not live in the United States. There is
    no other advanced country in the world that imposes such
    extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen? U.S. expats would be the
    13th largest voting block in the USA.

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. I owed money when I paid of my mortgage
    last year due to these fictional rises. I live in a damp cottage in
    Buckinghamshire, how is that fair? As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

    Christina M. Glennie

    Plus Lucinda Glennie and Max Glennie

                                     ______

                 Letter Submitted by Melvyn and Judith Goldberg
    I am a proud citizen of the United States of America. I live outside
    the United States in Canada where I am a tax resident and where I am
    subject to full taxation.

    I am an American expat. I am temporarily living outside the United
    States for reasons of work and career advancement. When I first moved
    abroad I learned a lot. I learned that other countries have well
    developed tax systems that require payment of a wide range of taxes. I
    can tell you that I pay a lot of taxes. I can also tell you that the
    U.S. tax system treats my non-U.S. income and assets very unfairly. The
    fact that I am temporarily living abroad doesn't mean that I don't have
    to plan for retirement.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                       Letter Submitted by David Goldfarb
    I am a proud citizen of the United States of America. I grew up in New
    York City and studied at MIT, where I received a BSc in Computer
    Science and Engineering. I chose to move to Israel shortly after
    graduation but remain a proud U.S. citizen. I am a tax resident of
    Israel and am subject to full taxation here, at rates that exceed the
    U.S. tax rates. Nonetheless, I am also subject to additional U.S.
    taxes, e.g., the 3.8% Medicare tax which I must pay, even though it is
    for a program whose benefits are not available to me as a non-resident
    of the United States.

    The U.S. policy of taxing non-resident citizens is nearly unique
    worldwide. It imposes an onerous burden on U.S. citizens who live
    overseas. My annual U.S. tax filing ranges from 100 to 150 pages each
    year and is far too complex for me to complete without the assistance
    of an expensive accountant. And this is even though my net U.S. tax
    burden is sometimes relatively minimal since the higher Israeli taxes
    take ``first bite''. The cumbersome reporting system forces huge
    compliance costs even when the revenue accrued by the U.S.--justified
    or not--is often tiny.

    I do not have a tax-advantaged retirement plan. Although Israel offers
    retirement plans that are essentially like U.S. IRAs, and although
    these plans are mandatory and I do contribute to them, nonetheless I
    receive no tax benefit. The nominal benefits disappear because the U.S.
    tax regulations ``see'' that I am not paying foreign tax on these plans
    and that they are (obviously) not U.S.-domiciled plans. Therefore, I am
    taxed by the U.S. on all the tax benefits that I should have accrued
    locally. My retirement receives no tax benefit.

    In addition, I run a small business in Israel. My business is not a
    multinational corporation and all of its income is domestic to the
    country where I live. However, because I am a U.S. citizen, the U.S.
    tax code treats me the same as Apple or Google. If I use a local
    business structure that's treated as a corporation under U.S. tax law,
    then I'm forced to fill in the same form 5471 as Apple must complete
    for each foreign subsidiary--translating all of my business records
    into U.S. dollars even though I do no business in that currency. My
    business is subject to GILTI even though I have no intangible income.
    How can I compete with my neighbours who are not U.S. citizens and who
    have only one tax system to deal with?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes, e.g., VAT,
    medical, and the equivalent of Social Security to Israel.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1. The hearing focused on U.S. multinational corporations. But here
    is the reality: U.S. tax rules treat individuals living outside the
    United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2. I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Leland Gordon
    April 3, 2021

    Dear Sir/Madame:

    I am an American/Canadian citizen permanently living in Canada. I am
    required to still file U.S. taxes along with Canadian taxes. I have
    lived in Winnipeg since 2008. I was a good U.S. resident when I lived
    in Miamisburg, OH and paid U.S. taxes.

    The IRS filing process when living abroad is complicated. It is also
    expensive; typically, $400 a year, as it requires a specialized
    accountant. The forms are not the same as a typical U.S. tax return. It
    also wastes IRS resources, as most filers end up not owing U.S. tax.

    The U.S. is the only major country in the world that makes its citizens
    file taxes when living abroad. Every year I get stressed due to the
    burden of the U.S. filing. I am required to file U.S. taxes for the
    rest of my life. It is just not fair.

    This policy is having a significant effect on thousands of citizens
    permanently living abroad who still absentee vote.

    I am requesting the foreign tax filing requirement for U.S. citizens be
    removed and instead be made residence based. This is an issue that
    could likely easily garner bipartisan support.

    Sincerely and respectfully,

    Leland Gordon

                                     ______

                     Letter Submitted by David M. Gottesman
    I am a proud citizen of the United States of America. I live outside
    the United States in Israel where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. U.S. tax advantaged vehicles for
    retirement planning, like IRAs are taxed in Israel, and Israeli tax
    advantaged vehicles for retirement planning are taxed by the U.S.
    (incredibly harshly if I may add) How can this be fair? How can the
    United States impose taxation on the non-U.S. income and assets of a
    person who is a tax resident of another country--with no economic
    connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes: VAT, social
    security, health care tax to Israel.

    I am not some extremely wealthy fat cat trying to avoid taxes. I am a
    regular employee of a large multi national corporation (Intel). I am an
    electrical engineer.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! I can't
    offset U.S. tax on foreign retirement vehicles with my foreign income
    tax, it specifically does not allow me to.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                    Letter Submitted by James Richard Graham
    I am a proud citizen of the United States of America but I live outside
    the United States in Australia where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America and I always will.
    That said, I moved from America many years ago. I am a tax resident of
    Australia and I plan on retiring here. Unfortunately for me as an
    American citizen, I am required to organize my financial and retirement
    planning in that country. It's only unfortunate because U.S. tax laws
    make it very difficult for me to live the same kind of life that my
    friends and neighbours live. They are subject to only one tax system--
    that of Australia. As are the majority of my other dual citizen
    friends--those from every other country in the world. British
    nationals, Irish nationals, Japanese and Korean nationals--they can ALL
    plan for retirement, make intelligent investment decisions and live
    their lives here in Australia without having to pay or file taxes in
    their ``native'' country.

    As a U.S. citizen, I am subject to the tax system where I live and the
    U.S. tax system. Those systems are generally not compatible despite the
    taxation treaties. Most attempts at responsible financial/retirement
    planning where I live are frustrated by the need to comply with U.S.
    taxlaws. This is not only not fair, but I am treated differently than
    people living in the U.S.. How can the United States impose taxation on
    the non-U.S. income and assets of a person who is a tax resident of
    another country--with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes--far higher than those I would pay in the U.S. I also
    pay additional kinds of taxes including GST and property taxes to
    Australia.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! How can you investigate
    something with no first hand witnesses?

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life and plan for my retirement without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    Many investment options are closed to me and some of my locally tax
    protected retirement investments are treated as PFICs by the IRS and
    punatively taxed.

    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. When we sold our primary residence
    several years back I was hit with a ``Phantom gains tax'' because the
    currency had changed in the interim--despite the fact that I bought and
    sold the residence in Australian dollars--my local currency. Because of
    the differing rules between the countries I was also hit with an
    additional capital gains tax because the house was treated as an
    investment property rather than my primary residence. On top of that we
    were hit with the Net Investment Tax, which as far as I can tell, was
    deliberately written to abrogate the double taxation treaty with
    Australia. As a tax resident of both the United States and my country
    of residence, I get the worst of both tax systems.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    On top of all this, over the years that we have been outside the U.S.
    it has cost us well into 6 figures (U.S.$) just for filing fees. We
    have owed tax twice. But the horrific complexity and cost of filing our
    U.S. taxes seems to get worse every year. We pay accountants to do this
    for us, but the preparation of the documentation typically takes more
    than 200 hours. Australia and the U.S. have different financial years
    and different reporting requirements. We have property in an investment
    trust here (standard practice in Australia) that costs us $2,500 a year
    to have filed in the U.S.. If I remove the assets from the trust it
    becomes a locally taxable event. I'm stuck.

    My wife put additional monies into her superannuation. Unknowingly this
    created a situation where the IRS now considers her superannuation (an
    Australian cross between a 401k and social security) to be a grantor
    trust. Again, it costs us hundreds to file the forms for this and the
    IRS now considers it a PFIC and taxes her at 40% on her locally tax
    protected primary retirement savings vehicle. This is extremely unjust.
    For many years, Americans abroad have been attempting to get both
    Treasury and Congress to address these issues.

    In addition to the heavy personal costs of doing our taxes, I have been
    unable to take jobs because my local employers were unwilling to have a
    senior executive who could not sign checks and equally unwilling to
    have their business accounts subject to IRS inspection. It's become
    increasingly difficult to hire American expatriates. It's bad for
    Americans and it's bad for American business. For the majority of my
    career I have worked for American companies selling American goods and
    services abroad. Sadly, today I would probably not have gotten the
    chances I did then, and it's unlikely that my children will have those
    opportunities either. It's becoming an increasingly difficult burden
    for U.S. businesses.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation. Please, please, please join the rest of the
    world in a rational approach to residence based taxation. That
    failing--provide exemptions for dual citizen long term expatriate
    residents in their country of residence.

    Thanks and Regards,

    James Richard Graham

                                     ______

                      Letter Submitted by Bradford P. Guay
    I am a proud citizen of the United States of America. I live outside
    the United States in Germany where I am a tax resident and where I am
    subject to full taxation.

    I love the United States, but I am an emigrant from America as life has
    taken me in a different direction. I moved from America many years ago
    and expect to be permanently abroad as my family and my livelihood are
    now here in Germany. I am a tax resident of Germany, therefore I am
    required to organize my financial and retirement planning here. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to both the German and the U.S. tax systems. Those systems are
    generally not compatible. Most attempts at responsible financial/
    retirement planning where I live are frustrated by the need to comply
    with U.S. tax laws. How can this be fair? How can the United States
    impose taxation on the non-U.S. income and assets of a person who is a
    tax resident of another country--with no economic connection to the
    United States?

    I do not live ``offshore''. I do live in a country where I pay very
    high income taxes, much higher than in the U.S.. I also pay additional
    kinds of taxes (for example, VAT) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational''. I am a ``dual-national'' living
    permanently in another country. It doesn't make me less American. But,
    it does mean that I am subject to the laws of the country where I live.
    I ask only to be able to carry on my life without interference from the
    Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and Germany, I get the worst of both tax systems. What one
    giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Sincerely,

    Brad Guay

                                     ______

                       Letter Submitted by Jeffrey Gunsch
    I am no longer a proud citizen of the United States of America. I am an
    angry American citizen living outside the United States. The reasons
    for why I am angry will be outlined in this letter. I live in Taiwan
    where I am a tax resident and where I am subject to full taxation
    already.

    I am an emigrant from America. Sure, I miss America, but I surely do
    not miss the government that has become bigoted, hypocritical and out
    to get people that choose to do something different with their life! I
    moved from America many years ago thinking it would only be for a short
    one or two year stint. Although those days went by slow at the time, it
    has now been over 20 years. I realized long ago that although I will
    always miss where I grow up in America, I probably will be living
    permanently overseas. I am a tax resident of my country of residence. I
    am required to organize my financial and retirement planning in Taiwan,
    however, that is often thwarted by the U.S. governments overstepping
    their bounds and not only not caring about Americans overseas, but not
    caring that they don't care that they are damaging businesses, families
    and people who are citizens of the U.S. who just happen to live abroad!
    The problem I have is that the U.S. tax laws and FATCA make it very
    difficult for me to live the same kind of life that my friends and
    neighbours live. You see, they are subject to only one tax system. As a
    U.S. citizen, I am subject to the tax system where I live and the U.S.
    tax system. (This is known as double taxation and may I add without
    representation!) Those systems are generally not compatible. Most
    attempts at responsible financial/retirement planning where I live are
    frustrated by the need to comply with U.S. tax laws. How can this be
    fair? How can the United States impose taxation on the non-U.S. income
    and assets of a person who is a tax resident of another country--with
    no economic connection to the United States? How can the U.S. basically
    sanction every country in the world because you government officials
    just seem not to trust people who have a bank account outside of the
    U.S. Many of us living overseas are fed up with DC for years and years
    and years of ignoring us and creating new laws that continual target
    us!

    I do not live ``offshore'' as you define it!!!! I do live in a country
    where I pay taxes already! I also pay additional kinds of taxes
    (example VAT) to my country of residence. And I still have to pay
    embassy fees! So in essence, we are triple taxed!

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation. Why does the U.S. have to be
    hypocritical about everything!?

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen? What makes you think that
    an individual maybe earning 30-50k a year is somehow a multinational
    cooperation and should be treated as such?!

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy, unrealistic
    and hypocritical! I respectfully stress and suggest that subsequent
    hearings include witnesses who have experienced running businesses
    outside the United States and/or WHO are actually living outside the
    United States. To put it another way: Subsequent hearings should deal
    with the reality on the ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship without a passport for that country!
    But it doesn't make me any less American not living in the U.S.! But,
    it does mean that I am subject to the laws of the country where I live!
    I am not GILTI of anything. I ask only to be able to carry on my small
    business, my work, and my life without interference from the Internal
    Revenue Code and U.S. Treasury and the likes of Elizabeth Warren who
    want to make laws like FATCA stronger of the United States. These tax
    laws only aim to hurt the U.S. and its people not make herself stronger
    and eliminate burdens on citizens caused by Washington!

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax. We are tired of being thrown under the
    bus each and every time a new law is passed! Congress never considers
    the consequences of such laws and how they impact the lives of millions
    of Americans peacefully, hardworking outside of the U.S.!

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh. Why should I be taxed on
    phantom gains because of currency changes over years and years and
    years?! The house is not in the U.S.! I am not living in the U.S.! I am
    not living in the U.S. with investments overseas! I am physically
    present and living and working in a foreign country!

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! Not one bit!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.
    FBAR needs to go! Stop scrutinizing my foreign--which are actually
    local bank accounts! It is frankly none of your business how much money
    I have in my bank accounts in the country in which I reside! You do not
    subject Americans living in the U.S. to such nonsense, why do you
    insist to harass us?! We are tired of being the brunt of Washington's
    stupidity and global arrogance. The laws you make have no consideration
    nor respect for those of us who live in another country under another
    tax system. We have really only one request, summarized--leave us alone
    and stop making new laws that hurt us!

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation. And get rid of FATCA!

                                     ______

                        Letter Submitted by Aaron Gutman
    I am a citizen of the United States of America. I have lived outside
    the United States in Japan for 12 years, where I am a tax resident and
    where I am subject to full taxation. I have no intention to return to
    the United States for anything other than visiting friends and family.

    Politically, I am very left leaning. I would consider myself a
    socialist libertarian. I do believe strongly that there is a collective
    good, and in some manner, funds must be raised to support it. When I
    lived in the U.S., I paid taxes without complaint and supported that
    common good. Here in Japan I have been happy to do the same.

    I definitely appreciate the need to prevent people and companies who
    reside or do business in the United States from using tax havens to
    avoid paying their dues to society. If you benefit from a system, you
    should help to pay for it.

    However, as someone who considers my emigration to be permanent, it is
    an unfair burden to be accountable for the overhead of reporting, and
    potentially paying tax to the U.S.. As Japan's tax rate is sufficiently
    high, I actually never end up owing anything. Yet, every year I have
    the burden of compiling records to prove that I don't owe.

    There are other invasive areas to which permanent emigrants are
    compelled, such as FBAR. Most average U.S. citizens would never be
    affected. But if you live abroad and work in a normal job, use your
    normal (foreign) bank account to collect your salary, you are now
    saddled with more than a normal level of reporting.

    This becomes even more complicated if you seek to form or have part
    ownership of a company. Even if your business has zero relationship to
    the U.S., FATCA puts a huge burden on even a small startup that is
    punitive and might prevent you from taking this entrepreneurial step.
    Or your partners might opt not to want you on the team for fear of the
    extra overhead.

    Similarly, foreign banks often will not accept American clients due to
    the increased cost of risk management.

    Then there is the matter of renunciation. Many times I've heard
    Americans say things like, ``if you don't like it, leave.'' Well, it
    turns out that isn't so simple. Besides the aggressive fee (over
    $2,000) charged to apply, I've heard horror stories of 6 figure tax
    assessments being levied on people who simply no longer want to be a
    U.S. citizen.

    As an American citizen living abroad, I do not get the full benefit of
    citizenship. I have no local representation. I have more administrative
    hurdles in reporting and compliance, and I am sometimes treated as a
    pariah externally due to the extension of these hurdles to any business
    or financial partners abroad.

    I am all for the U.S. protecting itself from abuse from those who seek
    to benefit from the U.S. while simultaneously exploiting loopholes. But
    that is not the average American emigrant's story. Most of us simply
    decided to pursue our lives elsewhere. It's nothing personal, we just
    don't live in the U.S. anymore.

    If you value the things which I was always taught America stands for,
    such as no taxation without representation, basic fairness, and not
    exploiting minority groups--then you should take care in any
    legislative actions to target them at the true perpetrators of tax
    avoidance, and not to cast your net over regular people who just live
    somewhere else.

    My suggestion is to create a semi-permanent status one can apply for,
    short of renunciation, whereby one can register as having no financial
    interest in the U.S. This way if circumstances change and one decides
    to return to the U.S., it could be reversible. Or, should that person
    become a citizen elsewhere and decide to take the final step of
    renunciation, it would be a simple matter as they're already
    established as non-residents.

                                     ______

                    Letter Submitted by Kevin Robert Haggard
    I am a proud citizen of the United States of America. I live outside
    the United States in New Zealand where I am a tax resident and where I
    am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America four years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example GST)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is not just. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally, the U.S. extraterritorial tax regime makes it difficult
    for me to save, invest, participate in pension plans and generally
    behave in a financially responsible way. I am held back from opening a
    small business because of this tax regime. This is because all of these
    essential activities are taking place in my country of residence and
    not in the United States. My retirement investments are foreign to the
    United States, but local to me. In addition, the United States impose
    taxes on things (for example sale of principal residence) when my
    country of residence does not. Because I am required to live my life
    with the USD as my functional currency, I am subject to ``fake income''
    on nothing but changes in the exchange rate. As a tax resident of both
    the United States and my country of residence, I get the worst of both
    tax systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Thomas Hale
    I am a proud citizen of the United States of America. I live outside
    the United States in Germany, where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America and still love America. But, we never
    know where life will take us. I moved from America many years ago.
    Although the days sometimes go slowly, the years go quickly. I long ago
    realized that although I will always love America, I am living
    permanently abroad. I am a tax resident of my country of residence. I
    am required to organize my financial and retirement planning in that
    country. The problem I have is that the U.S. tax laws make it very
    difficult for me to live the same kind of life that my friends and
    neighbours live. You see, they are subject to only one tax system. As a
    U.S. citizen, I am subject to the tax system where I live and the U.S.
    tax system. Those systems are generally not compatible. Most attempts
    at responsible financial/retirement planning where I live are
    frustrated by the need to comply with U.S. tax laws. How can this be
    fair? How can the United States impose taxation on the non-U.S. income
    and assets of a person who is a tax resident of another country--with
    no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example 19%
    VAT) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Sincerely, Thomas Hale
    U.S. Citizen, taxpayer and voter

                                     ______

                      Letter Submitted by Steven Hamernick
    I am citizen of the United States. I live outside the United States in
    Canada where I am a tax resident and where I am subject to full
    taxation.

    I do not live ``offshore.'' I live in a country where I pay very high-
    income taxes. I also pay additional kinds of taxes (GST, PST, etc) to
    my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I live in Canada and have done so my whole life. I do not work in the
    U.S. nor have I generated income from a U.S. entity. I have no U.S.
    investment or retirement fund in the U.S. Yet I have to pay two
    governments taxes. One for my country of residence and the other
    because I have a passport. In addition; I am a Canadian Military
    veteran; 25 years spent defending Canada (not the U.S.). Why in world
    should I have to pay U.S. tax for this pension (non-medical) that I
    receive from defending Canadian interests rather than the U.S.?

    I have two observations about the hearing on March 25th.

        1. The hearing focused on U.S. multinational corporations. But here
    is the reality: U.S. tax rules treat individuals living outside the
    United States, the same way they treat U.S. multinationals doing
    business outside the United States. I am not a multi national
    corporation. I am an individual person, not a single participant
    recognized how individuals are affected by these rules. Yet, the focus
    of the hearing was supposed to be about individuals. How did this
    happen?

        2. Not one witness had any personal experience with a company or
    individual running a business with interests outside the USA. Not one!
    This is negligent. I demand that subsequent hearings include witnesses
    with experience running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings require factual experience based reality rather
    than abstract theory.

    The hearings were nothing more than a hearing for the sake of a hearing
    to appease the subject and proclaim, ``see we are addressing this''.
    Hollow, disingenuous and oblivious are kind words to describe the
    proceedings. If I ran a meeting in this manner; I would not have a
    single client.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of primary citizenship my entire life. The U.S. is
    secondary; my only tie to the U.S. is a passport, and that does not
    make me less American. It does mean that I am subject to the laws of
    the country where I live. I want to live and prosper in the country of
    my primary residence without Internal Revenue Code taking taxes for
    nothing more than a passport.

    As a general principle: Any and all changes to the taxation of U.S.
    corporations will have a huge impact on the U.S. taxation of U.S.
    individual citizens living outside the United States and running small
    businesses outside the United States. Individuals are not immune to the
    effects of raising the U.S. corporate income tax rate and/or doubling
    the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for my family to save,
    invest, participate in pension plans and generally behave in a
    financially responsible way. This is because all of these essential
    activities are taking place in my country of residence and not in the
    United States. My retirement investments are foreign to the United
    States, but local to me. I am not wealthy and the IRS has made it
    impossible to prosper for me in Canada. I cannot have a TFSA as the IRS
    considers it passive income? RESP for my kids, RDSP for my kids, cannot
    have my name attached. My wife and I are a team trying make a better
    life for our family; Internal Revenue handcuffs me and my wife and we
    cannot function as this team. In addition, the United States impose
    taxes on things (for example sale of principal residence) when my
    country of residence does not. I am at the mercy of an exchange rate
    with institutions on both side of the border which takes advantage of
    exchange.

    To believe that foreign tax rules, Foreign Tax Credit and/or the
    Foreign Earned Income Exclusion solve these problems. They do not; One
    has to be oblivious or willfully oblivious to believe this. But they
    knew this and do not care. Expats make up a small number of citizens,
    and our vote is not really required for government reps to hold unto a
    job. We do not matter because all they have to do is appease those
    voters who they deem matter.

    Unfortunately, I do not make enough to use all the loopholes that are
    granted to the wealthy and corporations; they can afford to make
    campaign contributions and lobby to garner a level of influence, I
    cannot, I am an expat trying to make a better life for my family no
    thanks the Internal Revenue.

    The U.S. extraterritorial tax regime is nothing more than a cash cow.
    One way to scrape back is through taxation by citizenship vice
    residence. The over arching reach to catch the big fish illegally
    hiding their money has netted little more than expats trying to get by.
    The net was cast wide and the big fish continue to slip by while the
    little fish drown. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues. A
    sham hearing is all expats get?

    It is time the United States stop its extraterritorial tax regime; to
    join the rest of the advanced world and tax based upon residency, not a
    passport!

                                     ______

                          Statement of Michelle Hanlon
        Chairman Wyden, Ranking Member Crapo, and distinguished members of
    the Committee, I am submitting this document as a Statement for the
    Record for the Senate Finance Committee Hearing held on March 25, 2021
    entitled ``How U.S. International Tax Policy Impacts American Workers,
    Jobs, and Investment.'' I am a chaired professor at the Sloan School of
    Management at the Massachusetts Institute of Technology. My research
    focuses on the effects of taxation and accounting on corporate
    decision-making and on the intersection of tax and accounting such as
    the accounting for income tax and book-tax conformity. I am an editor
    at the Journal of Accounting and Economics and I am the Area Head of
    Economics, Finance, and Accounting at the Sloan School. I testified at
    the Senate Finance Committee hearing held on March 16, 2021 entitled
    ``Made in America: Effect of the U.S. Tax Code on Domestic
    Manufacturing''. In the March 25th hearing, Senator Warren brought up
    her plan to tax financial accounting income and I am submitting this
    document for the record to address the issue of taxing financial
    accounting income (also known as book income). I included a brief
    discussion in my testimony for the March 16th hearing as well.

        My main point in this Statement for the Record is that using
    financial accounting income as part of an alternative minimum tax
    system (or to assess a surcharge) raises many concerns and it not a
    good policy option. Financial accounting serves a critical role in the
    economy and using financial accounting income as part of an alternative
    minimum tax system will alter how firms report financial accounting
    income. This lowers the quality of financial accounting earnings and
    results in less information provided to debt and equity capital markets
    as well as to other users of financial statements. In addition, if
    firms report lower financial accounting income in response to the
    alternative minimum tax (AMT), then the tax revenues raised from such
    an AMT will not be as high as estimated. Moreover, using financial
    accounting income as part of an alternative minimum tax possibly gives
    accounting standard setters influence over tax revenues and also will
    likely lead to Congress having influence over financial accounting
    standards, which is not a desirable outcome.\1\
    ---------------------------------------------------------------------------
        \1\ Much of this statement is based on my American Accounting
    Association Presidential Scholar Address from the American Accounting
    Association meeting in 2020 and the forthcoming paper based on that
    talk. In addition, some of the below is based on my testimony from the
    March 16th hearing.
    ---------------------------------------------------------------------------

    Financial Accounting Income and Taxable Income

        In the U.S. and in many countries around the world, companies
    compute financial accounting (book) income and taxable income by
    applying different rules. Fundamentally, financial accounting income
    and taxable income are computed for different purposes. Financial
    accounting is the manner by which managers inside the firm convey
    information about firm performance to various stakeholders--
    shareholders, creditors, customers, suppliers, employees, etc. For
    companies reporting in accordance with formal accounting standards
    (e.g., Generally Accepted Accounting Principles (GAAP) in the U.S.)
    financial accounting income is computed using the accrual method of
    accounting. In contrast, taxable income is designed to raise revenue
    for governments to use for public finance. The tax rules are often also
    used by governments to incentivize certain behavior (e.g., investment)
    and to constrain certain behavior (e.g., ``excess'' executive
    compensation). Taxable income is computed generally using a hybrid of
    the cash method (e.g., bad debts are not estimated for tax purposes)
    and the accrual method (e.g., for sales and inventory). Taxable income
    allows far less managerial discretion in reporting accruals. In
    contrast, financial accounting requires many estimated, accrued
    expenses. For example, in addition to the bad debt example just
    mentioned, warranty expenses are estimated and recorded for financial
    accounting when the product is sold. However, for tax purposes warranty
    costs are deducted as the warranty costs are incurred (paid). For
    financial accounting purposes there are many expenses that are
    estimated in advance of payment because the expense is known to exist
    and the financial accounting rules require the expense to be estimated
    and recorded so income is not overstated.

        As another example of a difference between book and taxable
    incomes, currently the U.S. allows ``full expensing'' of qualified
    equipment for tax purposes (100% bonus depreciation, IRC Section
    168(k)). This is done in the tax code to provide incentives for
    investment. However, financial accounting does not allow full
    expensing; rather, firms depreciate assets over the estimated useful
    lives of the assets so that the expense associated with the equipment
    is reported in the same periods as the revenue generated from using the
    asset (described at a high level). There are many other differences
    between book and tax incomes because the purposes of the two measures
    are different. Thus, reported income for financial accounting can be
    quite different than taxable income for the same firm in the same year
    (e.g., see McGill and Outslay 2002; and for large sample evidence see
    Hanlon, LaPlante, and Shevlin 2005).

        In the U.S., the rule-making responsibility for the financial
    accounting standards is granted to the Financial Accounting Standards
    Board (FASB) by the Securities and Exchange Commission (SEC). The
    accounting standard setting is set apart from the government for valid
    reasons. Financial accounting is meant to reflect economic performance
    of the firm. The standard setting process is intended to be largely
    void of lobbying efforts by special interest groups and largely void of
    FASB trying to incent or discourage particular activities.

    Proposals for Taxing Book Income and Research Evidence

        Senator Elizabeth Warren in her campaign for President proposed a
    7% surcharge on corporations making more than $100 million of book
    income. The tax would have been applied to financial accounting income.
    Senator Warren estimated that the tax would raise at least $1 trillion
    over a decade and increase projected corporate tax receipts by roughly
    30%. Senator Warren's reasoning was that ``our corporate tax code is so
    littered with loopholes that simply raising the regular corporate tax
    rate alone is not enough'' (Faler 2019).

        Similarly, President Joe Biden's proposed tax plans include a
    resurrection of the AMT for corporations (even though it was just
    thankfully abolished in the Tax Cuts and Jobs Act in 2017). His
    campaign plan advocated for a minimum tax on corporations with book
    profits of $100 million or higher. Corporations would pay the greater
    of their regular corporate income tax or the 15% minimum tax while
    still allowing for net operating loss (NOL) carryovers and foreign tax
    credits. In advocating for this plan while on the campaign trail, now
    President Biden stated ``I don't think any company, I don't give a damn
    how big they are, the Lord Almighty, should absolutely be in a position
    where they pay no tax and make billions and billions and billions of
    dollars'' (Buncombe 2020).

        Senator Warren brought up these proposals at the March 25th
    hearing. She said that companies use ``. . . loopholes and tax shelters
    to drive down taxable income'' and that she is all for ``. . . closing
    loopholes.'' However, many items that actually reduce a company's tax
    liability are not ``loopholes'' they are incentives provided by the
    government for a reason. The U.S. has allowed accelerated depreciation
    for tax purposes for many years. Congress has gone further by allowing
    ``bonus depreciation'' when the economy is soft. As mentioned above,
    the rules currently allow 100% full expensing. Congress does this to
    incentivize and promote investment. Taxing book income will offset
    these incentives because such incentives are not present in financial
    accounting income. Taxing book income as part of an AMT or via a
    surcharge, will also offset green energy credits, research credits, and
    many other incentives Congress has put in place to promote the economy
    and incentivize other behaviors. Enacting an AMT or book surcharge
    works against all these incentives. The incentives will not be
    effective if they are offset via an AMT.\2\ If the U.S. wants to
    eliminate these incentives, we should just do so directly rather than
    taxing book income.
    ---------------------------------------------------------------------------
        \2\ Depending on how the rules are written, the effect of the
    minimum tax could be very harsh. For example, during periods of
    accelerated depreciation the minimum tax would apply denying the
    deduction, while in later periods with no remaining taxable
    depreciation, the higher taxable income would be the tax base.

        The current proposals seem to be targeting companies like Amazon
    who currently report large profits to shareholders but very little-to-
    no tax expense on their financial statements. Senator Warren used
    Amazon as an example in the March 25th hearing. Let me be clear, the
    tax expense on a company's financial statements does not necessarily
    reflect what companies actually pay in tax (Outslay and McGill 2004;
    Hanlon 2003). For Amazon, one item that likely reduces their taxable
    income relative to financial accounting income is equity-based
    compensation deductions for tax purposes. It is important to be
    cognizant that for equity-based compensation, mirroring that corporate
    compensation deduction for Amazon is taxable income for Amazon
    employees who receive the compensation. Thus, equity-based pay is not a
    loophole either; it is compensation. The employee reports taxable
    income and the company obtains a deduction for the same amount of
    compensation. Just because the compensation amount is different between
    financial accounting and tax purposes for the company is not an issue.
    If Congress thinks Amazon's tax deduction should be equal to what is
    recorded for financial accounting, then should the employees' taxable
    ---------------------------------------------------------------------------
    income be that same amount as well?

        In sum, whatever the reason that a company's tax is ``too low'' in
    the eyes of Senator Warren and the Biden Administration (international
    tax planning and rules, equity-based compensation, depreciation rules,
    etc.) those rules should be evaluated directly and not addressed in a
    stealth fashion by a book minimum tax. In addition, it is important to
    not counteract investment incentives in the tax code with a book
    minimum tax.

        The U.S. tried taxing book income once before and it did not work
    well. The Tax Reform Act of 1986 enacted the Business Untaxed Reported
    Profits (BURP Adjustment), also called the Book Income Adjustment (BIA)
    into the tax code as part of the calculation of the corporate
    Alternative Minimum Tax (AMT). The AMT was a parallel tax computation
    that had a broader tax base and lower tax rate; whichever system yields
    the higher tax liability is the one the company pays. The BURP
    Adjustment was computed as 50% of the difference between the pre-tax
    financial accounting income and the alternative minimum tax base
    (before the BURP Adjustment) for U.S. entities. If this was positive,
    meaning financial accounting income exceeded the pre-BURP adjusted AMT,
    then the 50% differential was added. If the pre-BURP AMT base was
    higher than financial accounting income, then no adjustment was made.
    When enacted, this adjustment was to apply for 1987-1989 and then a new
    method of computing the AMT would apply.

        There are five published papers that examine the effects of the
    BURP Adjustment (Gramlich 1991, Dhaliwal and Wang 1992; Boynton,
    Dobbins, and Plesko 1992; Manzon 1992; and Wang 1994). The papers use
    different samples, different data, and different methods to examine
    whether financial accounting income was ``managed'' downward during the
    BURP adjustment period.\3\ The authors in all five papers generally (1)
    acknowledge that there were many items that changed in the Tax Reform
    Act of 1986 and (2) try to control for the other changes and resulting
    incentives. The evidence in all five papers is consistent with firms
    likely subject to the BURP adjustment reporting lower financial
    accounting earnings (lower accounting accruals) during the BURP
    adjustment period (relative to firms not likely affected). Thus, the
    inference is that firms altered their financial reporting after the
    change in the tax code that required financial accounting income to be
    used in the computation of the tax base for these firms.\4\
    ---------------------------------------------------------------------------
        \3\ For example, Boynton et al. (1992) employ IRS Statistics of
    Income data as well as Compustat data and also take into account
    detailed aspects such as the effects of net operating loss carryovers
    (NOLs) and Foreign Tax Credits (FTCs).
        \4\ Choi, Gramlich, and Thomas (2001) examine all five papers and
    suggest that the results are biased due to choice of scaling variables,
    researcher identification and selection of the firms likely to be
    subject to the AMT and those not likely to be subject to the AMT,
    measurement errors in discretionary accruals, and other reasons. The
    results in the prior five papers are perhaps more sensitive than
    originally reported, but the main result still exists after Choi et
    al.'s adjustments.

        Dharmapala (2020) uses this setting and the prior papers on the
    BURP adjustment to estimate the responsiveness of financial accounting
    income to taxation and provide some economic magnitudes of the effects.
    Dharmapala (2020) specifically analyzes the results in Dhaliwal and
    Wang (1992) and estimates a 17% decline in financial reporting income
    from 1986 to 1987 in response to the BURP adjustment (which equates to
    a roughly 10% tax on book earnings). His estimate thus implies an
    elasticity of 1.7. He also examines Manzon (1992) and estimates an
    elasticity of financial accounting income to tax range of between 1.4
    and 2.1. Dharmapala (2020) concludes that there is a high degree of
    responsiveness of financial accounting income to taxation of financial
    accounting income. Indeed, he finds that financial accounting income is
    more responsive to tax than taxable income. He conjectures that this is
    due to there being more discretion in financial reporting.\5\
    ---------------------------------------------------------------------------
        \5\ See also U.S. Congress, House, June 8, 1989. The then-acting
    Assistant Treasury Secretary for Tax Policy, John Wilkens, stated,
    ``The book income adjustment may be having a detrimental effect on the
    quality of financial reporting. The linkage between financial statement
    income and tax liability creates an incentive for corporations
    potentially subject to the AMT to apply generally accepted accounting
    principles (GAAP) in a way that reduces the amount of net book income
    subject to the book income adjustment.''
    ---------------------------------------------------------------------------

    Concerns and Conclusions

        Taxing book income leads to many concerns. First, in response to
    taxing book income companies will likely alter their reporting behavior
    in order to achieve lower taxation. Thus, their reported income would
    not be a measure of income that faithfully represents the economics of
    the transactions for the reporting period, but rather a lower income
    than they should report in order to avoid taxation. This would likely
    not just be a reduction in upwards earnings management but rather a
    loss of managers' private information to external stakeholders,
    including the capital markets, about performance.\6\
    ---------------------------------------------------------------------------
        \6\ See Hanlon, Maydew, and Shevlin (2008) for research on a case
    where book-tax conformity increased and firms reported lower income and
    that income was less informative.

        Second, if financial accounting is used as part of an AMT system,
    some people worry that FASB would have too much say over tax revenues.
    There is also another concern--that Congress will have too much
    influence over financial accounting standards. It seems unlikely that
    the U.S. Congress would relinquish control of taxing rights and thus,
    will possibly exert more influence over the standard setting process.
    Thus, the accounting standards could be subject to the preferences of
    elected officials with no background in accounting and subject to more
    lobbying efforts by constituents.\7\
    ---------------------------------------------------------------------------
        \7\ The American Accounting Association issued a Resolution in
    Support of Independent Private Sector Accounting Standard-Setting in
    September 2020. AAA Resolution here.

        Third, a book AMT (or surcharge) would be much more complex than
    President Biden or Senator Warren surmise. For example, it is not the
    case that book income is always higher than taxable income. Many firms
    report accounting losses. Would there be net operating loss
    carryforwards in the AMT system? In addition, the consolidation rules
    for financial accounting and tax purposes are different (for domestic
    and foreign entities, equity method investees for financial accounting,
    mark-to-
    market method investments, etc.) and the notion of aligning even just
    the U.S. consolidated group is not as simple as it seems. There would
    be many more complexities and it would certainly be imperative to make
    sure these issues are fully thought through before a book AMT is
    ---------------------------------------------------------------------------
    seriously considered.

        In conclusion, a surcharge based on financial accounting income or
    an AMT that uses financial accounting income as part of the base is a
    bad idea. I understand that such a policy is tempting because financial
    accounting income is another measure of income that is readily
    available. But, if Congress thinks that there are problems with the tax
    system, it would be far better to clean up the tax code than to create
    new problems for financial accounting and the capital markets by taxing
    book income.

    References

    Boynton, C., P. Dobbins, and G. Plesko. 1992. Earnings management and
            the corporate alternative minimum tax. Journal of Accounting
            Research 30 (Supplement): 131-53.

    Buncombe, A. 2020. `` `I don't give a damn how big they are': Joe Biden
            says Amazon must start paying more tax.'' The Independent
            (Seattle). Sunday May 24, 2020.

    Choi, W. W., J. D. Gramlich, and J. K. Thomas. 2001. Potential errors
            in detecting earnings management: Reexamining studies
            investigating the AMT of 1986. Contemporary Accounting Research
            18 (Winter): 571-613.

    Dhaliwal, D. 2001. Discussion of ``Potential errors in detection of
            earnings management: Reexamining studies investigating the AMT
            of 1986.'' Contemporary Accounting Research 18 (4): 615-23.

    Dhaliwal, D., and S. Wang. 1992. The effect of book income adjustment
            in the 1986 alternative minimum tax on corporate financial
            reporting. Journal of Accounting and Economics 15 (1): 7-26.

    Dharmapala, D. 2020. The tax elasticity of financial statement income:
            implications for current reform proposals. National Tax Journal
            73: 1047-1064.

    Faler, B. 2019. ``Warren calls for new tax on corporations.'' Politico,
            April 11, 2019.

    Gramlich, J. D. 1991. The effect of the alternative minimum tax book
            income adjustment on accrual decisions. Journal of the American
            Taxation Association 12 (1): 36-56.

    Guenther, D. 1994. Earnings management in response to corporate tax
            rate changes: evidence from the 1986 Tax Reform Act. The
            Accounting Review 69: 230-243.

    Guenther, D., E. L. Maydew, and S. Nutter. 1997. Financial reporting,
            tax costs, and book-tax conformity. Journal of Accounting and
            Economics 23: 225-248.

    Hanlon, M. 2003. What can we infer about a firm's taxable income from
            its financial statements? National Tax Journal 56 (December):
            831-863.

    Hanlon, M., S. K. Laplante, and T. Shevlin. 2005. Evidence for the
            possible information loss of conforming book income and taxable
            income. Journal of Law and Economics 48: 407-442.

    Hanlon, M., and T. Shevlin. 2005. Book-tax conformity for corporate
            income: An introduction to the issues. Tax Policy and the
            Economy 19, edited by James M. Poterba. NBER Cambridge, MA:
            101-134.

    Hanlon, M., E. L. Maydew, and T. Shevlin. 2008. An unintended
            consequence of book-tax conformity: a loss of earnings
            informativeness. Journal of Accounting and Economics 46
            (December): 294-311.

    Hanlon, M., and E. L. Maydew. 2009. Book-tax conformity: implications
            for multinational firms. National Tax Journal LXII (March):
            127-153.

    Hanlon, M. 2021. Testimony before the United States Senate Finance
            Committee. March 16, 2021.

    Manzon, G. B. 1992. Earnings management of firms subject to the
            alternative minimum tax. Journal of the American Taxation
            Association 14(2): 88-111.

    Manzon, G. B., and G. Plesko. 2002. The relation between financial and
            tax reporting measures of income. Tax Law Review 55, 175.

    McClelland, J., and L. Mills. 2007. Weighing the benefits and risks of
            taxing book income.'' February 19, 2007, Tax Notes, 779-787.

    McGill, G., and E. Outslay. 2002. Did Enron pay taxes? Using accounting
            information to decipher tax status. Tax Notes, August 19.

    McGill, G. and E. Outslay. 2004. Lost in translation: Detecting tax
            shelter activity in financial statements. National Tax Journal
            (September 57): 739-756.

    Neubig, T. 2006. Where's the applause? Why most corporations prefer a
            lower rate. 111 Tax Notes 483 (April 24).

    Plesko, G. 2000. Book-tax differences and the measurement of corporate
            income. In Proceedings of the Ninety-Second Annual Conference
            on Taxation, 1999. National Tax Accociation. Washington DC:
            171-176.

    Plesko, G. 2006. Testimony before the Committee on Finance, U.S. Senate
            (13 June).

    Scholes, M. S., G. P. Wilson, and M. A. Wolfson. 1992. Firms' responses
            to anticipated reductions in tax rates: The Tax Reform Act of
            1986. Journal of Accounting Research 30 (Supplement): 161-185.

    Wang, S. 1994. The relationship between financial reporting practices
            and the 1986 alternative minimum tax. The Accounting Review
            69(3):495-506.

                                     ______

                       Letter Submitted by Ian K. Harris
    I am a proud citizen of the United States of America. I live outside
    the United States in Germany where I am a tax resident and where I am
    subject to full taxation.

    I am an American expat. I am temporarily living outside the United
    States for reasons of work and career advancement. When I first moved
    abroad I learned a lot. I learned that other countries have well
    developed tax systems that require payment of a wide range of taxes. I
    can tell you that I pay a lot of taxes. I can also tell you that the
    U.S. tax system treats my non-U.S. income and assets very unfairly. The
    fact that I am temporarily living abroad doesn't mean that I don't have
    to plan for retirement.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1. The hearing focused on U.S. multinational corporations. But here
    is the reality: U.S. tax rules treat individuals living outside the
    United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2. I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in a
    foreign country with two daughters who have dual citizenship. It
    doesn't make me less American. But, it does mean that I am subject to
    the laws of the country where I live. I am not GILTI of anything. I ask
    only to be able to carry on my life without interference from the
    Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Francis Hasek
    Dear Chairman Wyden, Ranking Member Crapo, Members of the Committee,

    I wish to make the following statement for the record on the above
    subject. This statement is being made in a totally personal capacity.

    Before starting on my statement, I observe that all the witness
    testimony is from persons who are located within the United States and
    barring Ms Huang, appear to have limited experience of living and
    working outside the United States. I hope that this statement may help
    redress the imbalance.

    I am what would be considered an ``Accidental American'' whereby I was
    born in the United States to foreign citizen parents and left at a
    young age, similar to the circumstances of Boris Johnson, the UK's
    current Prime Minister. Since my departure in the early 1980's my
    return visits to the United States gave been short and infrequent such
    that my children do not qualify for U.S. citizenship. In similar
    circumstances, Boris Johnson is quoted in response to his U.S. tax
    demand as saying ``I think it's absolutely outrageous. Why should I
    [pay U.S. tax]? I haven't lived in the United States since I was five
    years old.''

    The Tax Cuts and Jobs Act was a major disappointment for all Americans
    overseas in the way that whilst it introduced the concept of
    territorial taxation for corporate taxpayers, it failed to address
    major international distortions faced by individual taxpayers. In
    short, the legislation avoided a golden opportunity change the United
    States' policy in imposing citizen-based taxation (a policy only shared
    with Eritrea) to one of residency-based taxation. Residency-based
    taxation is strongly advocated by both Republicans Overseas and
    Democrats Abroad.

    The ongoing policy of citizen-based taxation on Americans overseas has
    multiple drawbacks, not only for the individual taxpayers concerned but
    also on American workers within the USA.

    For Americans overseas, the tax policy has an immediate impact on their
    quality of life, through lower income, limited access financial
    services, and the ability to save for their retirement. If self-
    employed matters are much worse where their U.S. citizen owned small
    business are faced with being at a competitive disadvantage through
    their U.S. tax burden. The Tax Cuts and Jobs Act also was shown to have
    specific short comings, for instance through the forced repatriation of
    retained earnings and risk of punitive tax penalties of long-standing
    small businesses owned and operated by Americans overseas.

    In the eyes of foreign decision makers, the known complexities of the
    U.S. tax code and the imposition of citizen-based taxation has the
    following negative impact for American workers overseas. Foreign
    business owners are fearful in offering Americans employment in certain
    roles or equity or stock participation in their business where they
    perceive a risk of extra tax compliance burdens. The reluctance to
    employ even extends to instances where Americans overseas are turned
    down for voluntary and charitable roles which involve signatory powers
    over bank accounts.

    For American workers within the USA the impact of citizen-based
    taxation has two major drawbacks. Firstly it adds to foreign perception
    of the U.S. tax code being highly complex and for private business
    owners one which bears a risk of being trapped into a complex and
    unattractive tax regime. This actively scares away foreign investment
    and ultimately job creation. Secondly, the citizen-based tax approach
    deters Americans from working overseas and advocating on behalf of
    their own country and American employers. In comparison, no other
    significant economy puts this restriction on their citizens. Instead
    many foreign governments actively support their business communities
    overseas through trade offices, their diplomatic corps, and tax policy.
    If wanting to find a successful example of overseas citizens advocating
    for their country, look at Ireland, a country with a population
    comparable to Alabama.

    In order to protect the U.S. tax base, there are a number of options
    available to law makers. The first is to continue taxing U.S. sourced
    income for citizens overseas, consistent with the concept of
    territorial taxation. The second is through having strong tax
    residency/domicile rules, for the latter there are strong examples that
    could be drawn from the United Kingdom or Australia.

    Yours Sincerely,

    Francis Hasek

                                     ______

                         Letter Submitted by Jim Healy
    To Whom It May Concern:

    The U.S. is the only advanced country in the world that taxes its
    citizens on their world-wide income when those citizens live, work and
    pay tax in another country. I not only pay taxes in Ireland, where I
    live, but I also file a tax return to the IRS every year. Declaring
    non-U.S. income on IRS forms is very complicated. Hiring an accountant
    who understand the U.S. tax system as well as the Irish tax system can
    be very expensive, which makes meeting U.S. tax obligations a serious
    financial burden even if no tax is owed.

    I'm an American and I live in Ireland with my wife and daughter. My
    family are not wealthy. The money I spend on tax return preparers feels
    unnecessary and could be better spent on my day-to-day family expenses.

    I will admit that I let my tax filing obligations slide for the first
    17 years that I was living in Ireland. A few years ago, I hired an
    accountant to help me get my tax filing up to date. I had to take out a
    loan to do so and I only paid it back recently. Ordinary American
    citizens shouldn't have to go through this when they're not living and
    working in the U.S.

    I value my American citizenship. I pay attention to U.S. politics as
    much if not more than the average citizen and I vote in elections,
    especially presidential election. I don't think it's fair that
    ordinary, working class Americans like me, making a living and paying
    tax abroad, are subject to inordinately complex and sometimes punitive
    U.S. tax filing.

    The current law is costly, punishing and unfair. It is causing some
    Americans abroad to consider renouncing U.S. citizenship. I hope that
    shocks you because it shocks me.

    I am asking the Senate Finance Committee to hold hearings on Americans
    abroad and U.S. taxation. I encourage you to invite testimony from
    experts who can provide an accurate profile of the Americans abroad
    community and describe the burden that U.S. tax filing places upon us.
    I urge you to also explore the implications of a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation.

    Thank you very much for your consideration.

    Kind regards,

    Jim Healy

                                     ______

                       Letter Submitted by Eleanor Heine
    While not initially intending to, I have become a long-term expat. This
    had nothing to do with any business, or indeed my career, which (such
    as it is) has been forged in Europe. And I never even knew until
    relatively recently that, just because I am a U.S. citizen, I am
    required to file a tax return. After all, I have always followed the
    laws of the country I live in and paid my taxes there. I have no U.S.
    assets or income; yet I am subject to double taxation on my income in
    the UK. This is a practice that the USA has the ``honor'' of sharing
    with one other country in the world: Eritrea. Not a good look for the
    U.S.A.

    As a U.S. citizen, I am subject to the tax system where I live as well
    as to the U.S. tax system, and the two are often not compatible. The
    upper tax rate here in the UK is 40% and other taxes also apply, such
    as VAT. Responsible financial and/or retirement planning can be
    penalised under U.S. tax laws. I do not understand how this can be
    fair: how can the United States impose taxation on the non-U.S. income
    and assets of a person who is a tax resident of another country? This
    seems even more egregious when that person has no economic connection
    to the United States.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    that does not reflect the fact that U.S. tax rules treat individuals
    living outside the United States the same way they treat U.S.
    multinationals doing business outside the United States. Although the
    focus of the hearing was supposed to be about individuals, not a single
    participant recognized how individuals are affected by these rules. Why
    was this the case?

        2.  Although it is not my particular situation, I found it shocking
    that no witness appeared who had personal experience of running a
    business outside the USA. Any subsequent hearings should include
    witnesses who are actually living outside the USA and/or who have
    actually experienced running businesses outside the United States.
    Otherwise the proceedings are dealing with ``theory'' rather than
    reality.

    This situation is extremely unjust. For many years, Americans abroad
    have been attempting to get both Treasury and Congress to address these
    issues and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                       Letter Submitted by Stephen Helms
    The U.S. is the only advanced country that taxes its citizens on their
    world-wide income when those citizens live, work and pay tax in another
    country. I not only pay taxes in the Netherlands where I have lived for
    nearly a decade but I also file a tax return to the IRS every year.
    Declaring non-U.S. income on IRS forms is very complicated and there is
    a risk of huge fines in case of mistakes. Hiring tax return preparers
    that understand the U.S. tax system as well as the Dutch tax system can
    be very expensive, which makes meeting U.S. tax obligations a serious
    financial burden even if no tax is owed: I currently must pay more than
    $500 to handle the paperwork each year with otherwise simple finances.

    I'm an ordinary American. I moved to the Netherlands to do scientific
    research, fell in love, and now am staying abroad longer term. I am
    thankful there is a tax treaty between the Netherlands and U.S. that
    prevents double taxation, but I am still burdened with complex tax
    paperwork each year. Furthermore, the U.S. tax reporting system hinders
    my access to banking and investment services in the Netherlands: I am
    unable to open an investment account or local equivalent to a Roth IRA
    as a result of FACTA concerns. U.S. brokerages often also do not want
    to handle Americans living abroad. This leaves people like me who live
    abroad and have legitimate reasons to have a large portion of our
    financial life outside the U.S. in a complicated situation that can
    result in an inability to invest our savings and reach financial
    security.

    I value my American citizenship. I pay attention to U.S. politics as
    much if not more than the average citizen and I vote in every election
    for which I'm eligible. But I don't think it's fair that ordinary
    Americans like me, making a living and paying tax abroad, are subject
    to inordinately complex and sometimes punitive U.S. tax filing.

    The current law is costly, punishing, and unfair, and it is causing
    some Americans abroad like me to consider renouncing U.S. citizenship
    just to be able to manage our financial lives. I hope that shocks you
    because it shocks me.

    I am asking the Senate Finance Committee to hold hearings on Americans
    abroad and U.S. taxation. I encourage you to invite testimony from
    experts who can provide an accurate profile of the Americans abroad
    community and describe the burden that U.S. tax filing places upon us.
    I urge you to also explore the implications of a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation.

    Thank you.

    Stephen Helms

                                     ______

                      Letter Submitted by Martha Henderson
    The U.S. is the only advanced country that taxes its citizens on their
    world-wide income when those citizens live, work and pay tax in another
    country. I not only pay taxes in Australia where I live but I also file
    a tax return to the IRS every year. Declaring non-U.S. income on IRS
    forms is very complicated. Hiring tax return preparers that understand
    the U.S. tax system as well as the Australian tax system can be very
    expensive, which makes meeting U.S. tax obligations a serious financial
    burden even if no tax is owed.

    I'm an ordinary American. I moved to Australia in 1973 after marrying
    an Australian citizen. My husband and I are not wealthy. Paying for
    U.S. tax return preparers leaves a hole in our budget, and we certainly
    cannot afford for me to be double-taxed.

    For 40 of the 47 years I have lived in Australia I was part of the
    Australian workforce, 38 of them full time. Throughout those years I
    contributed to the Australian superannuation/retirement fund system for
    which I have been and continue to be taxed by both the Australian and
    the U.S. governments. For several years I had to pay 3.8% Net
    Investment Income Tax on my retirement fund income even though I am not
    entitled to medical insurance coverage in the U.S. This is
    discriminatory.

    My investment options are limited, as tax on them as well as the time,
    effort and expense of reporting for some types of investments mean they
    are not worthwhile for me or other Americans living overseas.

    Currency fluctuations make it very difficult to estimate and budget for
    annual U.S. tax payments, particularly since they result in skewed
    capital gains and losses on my investment sales. This leads to great
    uncertainty as to whether or not I will have enough income to support
    my modest lifestyle from year to year. This ever-present uncertainty is
    exceedingly stressful.

    My husband and I purchased our home in the mid 1970s. It is not subject
    to Australian capital gains tax if we sell it. Since I have recently
    retired it would make sense to relocate, however we cannot afford to
    because of U.S. capital gains tax.

    My U.S. tax returns are very complex; their preparation is exceedingly
    time consuming and expensive. Every year I am faced with the stress of
    obtaining all of the evidence required for my tax return in time to
    submit it by the absolute deadline due to differing financial years.
    This situation was even worse for my 2019 tax return due to COVID-19.

    I value my American citizenship. I pay attention to U.S. politics as
    much if not more than the average citizen and I vote in every election
    for which I'm eligible. But I don't think it's fair that ordinary,
    working class Americans like me, making a living and paying tax abroad,
    are subject to inordinately complex and sometimes punitive U.S. tax
    filing.

    The current law is costly, punishing, and unfair, and it is causing
    some Americans abroad to consider renouncing U.S. citizenship. I hope
    you find that as shocking as I do.

    I am asking the Senate Finance Committee to hold hearings on Americans
    abroad and U.S. taxation. I encourage you to invite testimony from
    experts who can provide an accurate profile of the Americans abroad
    community and describe the burden that U.S. tax filing places upon us.
    I urge you to also explore the implications of a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation.

    Thank you.

    Martha Henderson

                                     ______

                       Letter Submitted by Suzanne Herman
    I am a proud citizen of the United States of America. I live outside
    the United States in Canada where I am also a citizen and tax resident
    and where I am subject to full taxation.

    I run a small business in the country where I live. My business is not
    a multinational corporation and all of its income is domestic to the
    country where I live. However, because I am a U.S. citizen, the U.S.
    tax code treats me the same as Apple or Google. If I use a local
    business structure that's treated as a corporation under U.S. tax law,
    then I'm forced to fill in the same form 5471 as Apple must complete
    for each foreign subsidiary--translating all of my business records
    into U.S. dollars even though I do no business in that currency. My
    business is subject to GILTI even though I have no intangible income.
    How can I compete with my neighbours who are not U.S. citizens and who
    have only one tax system to deal with?

    This is my story as told to the CBC National News when the Tax Cuts and
    Jobs Act was made into law:

    Trump's tax reform affects Canadian residents | CBC.ca

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to Canada.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that receives
    revenue from income and people who have no economic connection to the
    United States.

    I would like to make two general observations about the hearing on
    March 25th:

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.
    It is truly a bipartisan issue.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.
    Thank you for your consideration,

    Suzanne Herman

                                     ______

                    Letter Submitted by Jozette Herrera-Lee
    I am a proud citizen of the United States of America. I live outside
    the United States in London England UK where I am a tax resident and
    where I am subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by M.E. Howard
    I am a proud 73 year old citizen of the United States of America. In
    1981 I moved to the United Kingdom of. Great Britain on a temporary
    secondment and have now retired. I am a tax resident and subject to
    full taxation here.

    I am an emigrant from America. Sure, I love America but we never know
    where life will take us. I moved from America many years ago and fully
    expected to return but I earned the right to stay in Britain and now
    have family and friends here. The years go quickly but I long ago
    realized that although I will always love America, I shall live
    permanently abroad as I have paid a great deal in UK taxes to the UK's
    National Health Service.

    As a resident of the UK, I am naturally required to organize my
    financial and retirement planning in this country. The problem I have
    is that the U.S. tax laws make it impossible for me to live the same
    kind of life that my friends and neighbours live. You see, they are
    subject to only one tax system. As a U.S. citizen, I am subject to the
    tax requirements where I live AND the U.S. tax system. These systems
    are not compatible. Attempts at responsible retirement planning here in
    the UK are frustrated by the need to comply with U.S. tax laws. Most
    pension platforms will not accept Americans or actually ask Americans
    to withdraw from these financial investments, due to egregious
    paperwork requirements demanded by the U.S. government. This is not
    fair. How can the United States impose taxation on the non-U.S. income
    and assets of a person who is a tax resident of another country with no
    economic connection to the United States?

    I do not live ``offshore.'' I live in a country where I pay very high
    income taxes. I also pay additional kinds of taxes (Value Added Tax for
    example) to my country of residence. Yet, because I am a U.S. citizen,
    I am subject to the U.S. extraterritorial tax regime, which means the
    United States imposes taxation on my non-U.S. income even though I am
    fully tax-paid on that income in the country where I reside. I now live
    on a small pension; paying for specialised accountants to do both a UK
    as well as U.S. tax returns takes a disproportionate amount of money
    and time compared to those who live in the United States. There is no
    other advanced country in the world that imposes such extraterritorial
    taxation!

    I would like to make general observations about the hearing on March
    25th.

        1.  The focus of the hearing was supposed to be about individuals.
    The hearing focused on U.S. multinational corporations. But here is the
    reality: U.S. tax rules treat individuals living outside the United
    States the same way they treat U.S. multinationals doing business
    outside the United States. I am a flesh and blood person. Not a single
    participant recognized how individuals are affected by these rules. How
    did that happen?

        2.  I was shocked that there were witnesses who neither had
    personal experience with a company nor even an individual running a
    business with interests outside the USA! Not a single one! This makes
    the process a travesty. I respectfully request that subsequent hearings
    include witnesses who have experienced running businesses outside the
    United States and at least actually having lived outside the United
    States. Subsequent hearings should deal with the reality on the ground
    and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' person who
    happened to leave the U.S. for a job and who now, after 40 years, must
    adopt living in my country of second citizenship.It doesn't make me
    less American. I worked and paid into my social security ``pension''
    for 25 years before I moved for a job; I have however been subjected to
    the WEP provision and so have already had my retirement income reduced.
    But, it does mean that I am clearly subject to the laws of the country
    where I live. I am not 'GILTI' of anything. I ask only to be able to
    carry on my small, retired, law-abiding life without interference from
    the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States.
    Individuals are NOT immune to the effects of raising the U.S. corporate
    income tax rate and/or doubling the GILTI tax.

    More generally, whether or not one is a small business owner, the U.S.
    extraterritorial tax regime makes it difficult for me to invest and
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to file my U.S. return using the U.S. Dollar
    as my functional currency, I am also subject to ``fake income'' on
    nothing but changes in the exchange rate. Deemed a tax resident of both
    the United States and my country of residence, I get the worst of both
    tax systems. What one giveth, the other taketh.

    And please do not believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They do not! Especially
    for retirees.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.
    The time has come for the United States to abandon its extraterritorial
    tax regime, based on a 1860 ruling, and join the rest of the just world
    in adopting a system of residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Louisa Icke
    I am a proud citizen of the United States of America. I live outside
    the United States in New Zealand where I am a tax resident and where I
    am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT or
    GST) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to live my life
    without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Anchal Jain
    To the Senate Committee on Finance:

    My name is Anchal Jain and I used to live in Fremont, CA before moving
    to Singapore in 2007. Our family of four moved to Singapore because of
    my severely disabled son. For various reasons (financial, inability to
    find caretakers), we were finding it very challenging to adequately
    care for him in the U.S. Additionally, my husband found an excellent
    opportunity in Singapore and we also wanted our daughter to experience
    what it was to live in a different country.

    The first year that we paid taxes from Singapore, we were dismayed to
    learn that U.S. practices citizenship based taxation and that we would
    have to pay taxes in two countries.

    This system introduces all sort of problems for Americans living
    abroad. Some of which we experienced were:

          Copious amounts of time spent trying to comprehend how the tax
    code works with the Singapore tax code.
          Paying costly fees to tax advisors to help fill out our taxes.
    Initially, we tried to do this on our own with Turbo Tax, but quickly
    realized that it would be foolish to attempt it on our own. We would
    either lose money or make mistakes and get fined!
          Time spent filling out the FBAR. I feel like my government is
    treating me like a criminal asking for this level of detailed
    information.
          Due to the onerous American tax regulations, local banks in
    Singapore do not want to take us on as clients and American brokerage
    firms in the U.S. block us from buying and selling stocks on the
    market. We're essentially hamstrung when trying to effectively invest
    and save money for our future.

    The U.S. is one of only four countries that taxes based on citizenship
    and not based on residence. The other three countries Eritrea, Hungary,
    and Myanmar! There is no other developed or wealthy country that
    follows this practice. I implore the committee to hold hearings on
    Americans abroad and U.S. taxation and invite testimony from experts
    who can provide an accurate profile of the Americans abroad community.
    The U.S. should join the ranks of other developed nations on this
    matter and move from a citizenship based taxation to a residency based
    taxation system.

    Thank you for your time.

    Sincerely,
    Anchal Jain
    Voting in California (15th Congressional District)

                                     ______

                      Letter Submitted by Craig Jefferson
    I am a proud citizen of the United States of America. I live outside
    the United States in England where I am a tax resident and where I am
    subject to full taxation.

    You see I am an ``accidental American''. I was born in America, but we
    moved back to England shortly after my birth. I don't remember ever
    living in America. My only experience of America is from television,
    movies and the occasional American tourist I meet. Yet, (at first I
    couldn't believe this could be possible) I am required to file U.S. tax
    returns and pay tax on my non-U.S. income to America. But it gets
    worse. I am also required to file complex information returns
    describing the details of my finances to America. I can't even
    understand the forms. How can this be? What is the reason for this? No
    other country does this! Of course, I am proud to be an American. Who
    wouldn't be? But, I have no idea how to comply with the rules imposed
    on me. What am I supposed to do? Renounce my U.S. citizenship? It feels
    like something I should keep but I simply don't know what to do and I
    can't deal with the stress. Therefore, when the U.S. embassy stops
    doing emergency visits I will be visiting to renounce my citizenship so
    that the nightmare ordeal will be over for me.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. I have had many banks reject my application for an
    account due to the fact I am American. This is because all of these
    essential activities are taking place in my country of residence and
    not in the United States. My retirement investments are foreign to the
    United States, but local to me. In addition, the United States impose
    taxes on things (for example sale of principal residence) when my
    country of residence does not. Because I am required to live my life
    with the USD as my functional currency, I am subject to ``fake income''
    on nothing but changes in the exchange rate. As a tax resident of both
    the United States and my country of residence, I get the worst of both
    tax systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Esther Jenke
    My U.S. citizenship will always be part of my DNA. I live outside the
    United States in Germany where I am a tax resident and where I am
    subject to full taxation. As a result of U.S. tax policies and FATCA I
    was forced to renounce my U.S. citizenship. Although I could no longer
    be officially a U.S. citizen, I will always regard myself as a U.S.
    citizen in my heart. I am writing in the hopes that in a small way, my
    experience will help with change--changes that will give American
    citizens the freedom to leave the United States and live a prosperous
    life. To put it simply: The United States must stop exporting its
    system of extraterritorial taxation and regulation, to people who live
    in other countries.

    When I first moved abroad I learned a lot. I learned that other
    countries have well developed tax systems that require payment of a
    wide range of taxes. I can tell you that I pay a lot of taxes. I can
    also tell you that the U.S. tax system treated my non-U.S. income and
    assets very unfairly. The fact that I was a U.S. citizen living outside
    the United States, didn't mean that I didn't have to plan for
    retirement.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I was a U.S. citizen, I was subject to the U.S.
    extraterritorial tax regime, which means the United States imposed
    taxation on my non-U.S. income even though I was and am fully taxable
    on that income, in the country where I reside. This was true even
    though I did not live in the United States. There is no other advanced
    country in the world that imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    Because, I am no longer a U.S. citizen, for me, the nightmare of the
    U.S. extraterritorial tax regime has ended. I now have the freedoms
    that are afforded to other people in my country of residence. But, if I
    were still a U.S. citizen living outside the United States, I would
    say:

    I am not a ``mini-multinational.'' I am a real person living outside
    the U.S. It doesn't make me less American, but, it does mean that I am
    subject to the laws of the country where I live. I am not GILTI of
    anything. I ask only to be able to carry on my life without
    interference from the Internal Revenue Code of the United States. I
    want to be able to save for my retirement without the IRS taking
    everything I have saved. I want to be treated as an equal to my
    colleagues and be able to live a normal financial life outside the
    U.S..

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax credit rules and/or the
    Foreign Earned Income Exclusion solve these problems. They don't!

    American extraterritorial taxation is extremely unjust. For many years,
    Americans abroad have been attempting to get both Treasury and Congress
    to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    In closing, please understand that middle class individuals, people who
    would be your friends and neighbors in the USA, are being forced to
    renounce their U.S. citizenship.

    This insanity and injustice must stop!

    God bless the United States of America!

                                     ______

                    Letter Submitted by Kenneth Glen Johnson
    I am a proud citizen of the United States of America. I live outside
    the United States in Argentina where I am a tax resident and where I am
    subject to full taxation.

    I have lived outside of the USA most of my life, my parents were
    missionaries in Argentina and we moved here when I was about 13 years
    old. When I graduated from high school here in Argentina I went to the
    USA and got my degree in business administration and then I returned to
    Argentina where I worked for several years and married my Argentine
    wife and we have been married over 40 years. We moved to the USA and I
    joined Maersk Inc. which is part of the A.P. Moller Group of companies
    based in Denmark. In 1993 I was transferred to lead the start up of
    operation in Chile to expand and operations of the company in South
    America and then I was transferred to Argentina to also start up
    operations there and then I was transferred to Mexico where I headed
    the Maersk Mexico operations until I took an early retirement package
    in 1998. Along with my wife and two grown children we moved back to
    Argentina. Since 1993, 28 years I have not lived in the USA and only
    travel there on vacations to visit friends and family. But as a USA
    citizen and Argetine permanent resident I have to file taxes each year
    with the IRS and I am subject to both USA and Argetine personal and
    business income tax and other taxes.

    After my retirement and return to Argentina, along with past work
    colleagues we started up a trucking business that my partners managed
    and I assisted as needed. I wanted to continue to enjoy retirement but
    still remain active in business operation to keep active and not get
    bored. This business has been active for over 10 years and though only
    mildly profitable, it has provided a reasonable retrun on investment
    and income and a lot of satisfaction to be able to provide jobs for 10
    employees and it lets me remain active and share many years of
    experience.

    In 2018 I decided to start a construction business in Argentina to try
    to provide my family with some income and perhaps grow this business
    into something that eventually can provide my children and
    grandchildren with a source of income and investment tool so that they
    can make a decent living in a country that offers limited opportunities
    and decent jobs. So now I am trying to start up a small family business
    in Argentina which is to say the least very challenging. It is a small
    company that is building a small 10 unit apartment building in
    Argentina. But unlike the trucking and logistics company I am involved
    in but own a minority share, this family construction business is owned
    by my family members who are all USA citizens and as such the company
    is considered USA controlled and subject to all corporation filings and
    requirements established under the USA tax laws.

    My business is not a multinational corporation and all of its income is
    domestic to the country where I live. However, because I and my family
    are U.S. citizens, the U.S. tax code treats me the same as Apple or
    Google. Since I use a local business structure that's treated as a
    corporation under U.S. tax law, I'm forced to fill in the same form
    5471 as Apple must complete for each foreign subsidiary--translating
    all of my business records into U.S. dollars even though I do no
    business in that currency. My business is subject to GILTI even though
    I have no intangible income. How can I compete with my neighbours who
    are not U.S. citizens and who have only one tax system to deal with?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes VAT, Gross
    Income (ingresos brutos) and another 160+ various state and municipal
    taxes to my country of residence.

    I have to also pay Asset taxes on all financial and real property
    assets I have in Argentina at 1,5% of asset value and 2.5% of assets
    held in the USA which are considered foreign holdings in Argentina and
    none of these taxes are allowed as deductions or provided any
    consideration on my tax filings in the USA. I keep most of my assets in
    the USA since they are a result of my retirement savings and mostly
    held in an IRA account but also due to the high inflation, devaluation
    and insecurity of the local banking and securities systems in
    Argentina. Unfortunately the USA government failed to renew a tax
    agreement with Argentina that expired in 2014 that provided equal
    treatment of USA citizens with Argentine citizens in terms of taxation
    on their citizens. Up until 2014 under the tax treaty signed between
    Argentina and the USA citizens assets were allowed to be treated
    equally and under Argentine law retirement savings similar to 401K and
    IRA funds are not subject to tax, but because my retirement plan was
    USA or ``foreign'' with the expiry of the tax treaty not only are these
    funds taxable, they are taxable at double the rate as locally held
    assets under the Argentine tax rules.

    I am also subject to the payment of an additional wealth tax of 2.5% of
    total assets in Argentina and 5% on assets held in the USA, if my total
    assets exceed $200,000,000 Argentine pesos (USD $2,051,000). So far I
    have not reached this minimum but with the high inflation and
    devaluation it is only a matter of time that my retirement and pension
    assets will most likely become subject to this tax, which again is not
    provided any consideration or deductibility under USA law, since this
    type of tax does not exist in the USA.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in Argentina where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't all my
    pension, retirement income and investment income is taxed the same as
    is anyone living in the USA! I only receive the benefit of the Foreign
    Earned Income Exclusion on earned income i.e. Salaries and work
    performed which I have very little of. Why is the income exclusion only
    limited to ``Earned'' income on non-residents of the USA, the exclusion
    should at be extended to all income, pension, retirement and social
    security when an individual is not living in the USA and is not able to
    enjoy the benefits of those living in the USA, such as Medicare that I
    do pay for but can not use in Argentina but keep just in case I visit
    the USA and have to be hospiltalized.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.
    Who represents me in the USA? Supposedly the congressperson in the
    state where I last lived.... seriously??? You think they even know I
    exist and that they are duly representing me and my interests? Expats
    are in a position of absolute taxation without proper representation
    and respectfully the U.S. Consulate and Embassy could not care less
    about ``individual situations and circumstances of USA citizens''
    living in foreign countries, even though the local tax rules and
    judgments affect many if not most USA citizens living and working in
    the country they are assigned. USA Expats are left on their own with no
    proper U.S. government representation in the USA or locally in the
    country where they live.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Scott Johnson

    The Reality:

    Your hearing on March 25, 2021 did not focus on individuals but focused
    on the taxation of U.S. multinational corporations. Much of the hearing
    discussed the GILTI rules found in Section 951A (which is part of
    Subpart F) of the Internal Revenue Code. Much discussion focused on (1)
    doubling the GILTI tax and (2) objecting to the fact that the first 10%
    of income earned by the CFC is not subject to U.S. taxation and that it
    should be. In short your proposals include making the GILTI rules more
    punitive with respect to multinationals.

    Although your discussion focused on (perhaps one hundred) multinational
    corporations, your proposals would have a devastating effect on the
    millions of Americans abroad, who run small businesses through small
    corporations outside the United States and are NOT multinationals. Put
    another way: Your proposal to punish the few corporations, would result
    in the absolute destruction of the many individuals.

    The Solution:

    Congressional committees (Senate Finance and Ways/Means) are
    considering changes to legislation governing international taxation.
    The Committees seem to understand international taxation as applying
    ONLY to corporations. But, the same rules that apply to U.S.
    corporations apply to U.S. individuals--particularly those individuals
    living abroad. Before making changes that would destroy the lives of
    those millions of Americans abroad, you should consider making a simple
    and obvious legislative change which is:

    Rewrite the Subpart F regime (951 to 965) so that it does not apply to
    individual Americans abroad who live outside the United States within
    the meaning of IRC 911, are tax residents of other countries and carry
    on business (through small business corporations) in their country of
    tax residency. It's that simple.

    The carnage that you are proposing to cause, is the direct result of
    the U.S. extraterritorial tax regime. The ultimate solution would be
    for the United States to enter the 21st century by transitioning to a
    system of residency-based taxation.

    Scott Johnson

                                     ______

                      Letter Submitted by David Johnstone
    I am a proud citizen of the United States of America, but I am
    submitting this statement due to the callous disregard that the hearing
    you held on March 25, 2021, showed for me and the 9 million other U.S.
    citizens that the State Department estimates live outside the United
    States.\1\ Since 2002, I have lived in France, where I am a tax
    resident, where I have earned 100% of my income since at least 2005,
    and where I am subject to full taxation at an effective rate double
    that of the effective rate that I would have been taxed at if I had
    lived in the United States and had the same amount of income sourced
    there. Yet, due to the international tax laws in place that you or your
    predecessors have voted for over the years, presumably with the
    laudable intention of targeting corporate and individual offshore tax
    evasion, I have had to pay even more on occasion to the United States
    than the already very high effective tax rate (more than 38%) that I
    already pay on my French income. To make matters worse, you, the
    Congress of the United States, presume to hold hearings on
    international taxation such as the one I am writing about without ever
    mentioning or even considering the impact that the policies you debate
    and sometimes enact have on individual Americans who, voluntarily or
    involuntarily, reside or have resided outside the borders of the United
    States.
    ---------------------------------------------------------------------------
        \1\ Sources: https://www.democratsabroad.org/carmelan/
    democrats_abroad_taxation_of_ameri
    cans_abroad_with_the_sfc and https://democratsabroad.atlassian.net/
    wiki/download/attachments/6731497642/
    Democrats%20Abroad%20Submission%20to%20SCF%20Hearing%20on%20
    Intl%20Tax%20Policy%20Impacts.pdf?api=v2.

    Let me repeat more clearly that, you, the Congress of the United
    States, and in particular, this committee, have made abundantly clear
    that you do not care one whit about how the laws you enact negatively
    impact individual Americans who live or have lived abroad and have
    perfectly legitimate reasons for having non-U.S. income, especially
    non-U.S. retirement and disability pensions paid for through local,
    mandatory contributions, welfare income, bank accounts, retirement
    savings, homes, or local but non-U.S.-based businesses.\2\
    ---------------------------------------------------------------------------
        \2\ Source: http://seatnow.org/wp-content/uploads/2021/03/
    SenateFinance2021-SEAT-submission.pdf (p. 7) and https://
    www.finance.senate.gov/imo/media/doc/The%20International%20
    Tax%20Bipartisan%20Tax%20Working%20Group%20Report.pdf (July 7, 2015,
    pp. 80-81: ``Of the 347 submissions made to the international working
    81 group, nearly three-quarters dealt with the international taxation
    of individuals, mainly focusingon citizenship-based taxation, the
    Foreign Account Tax Compliance Act (FATCA), and the Report of Foreign
    Bank and Financial Accounts (FBAR).'').

    My personal situation is as follows: I am currently disabled, and every
    year, I must choose between fulfilling my very burdensome and time-
    consuming U.S. tax filing obligations \3\ and a possible recovery from
    my long-term illness so that I can work again, at least part-time.
    Generally, I owe no additional tax to the United States, but this is by
    no means a sure thing: any financial decision, no matter how trivial
    were it to be made in the United States, requires hours or days of
    careful searching and verification so that I can minimize the impact on
    me as a dual tax resident. For example, if my health improves, one of
    the possibilities that is open to me as a French resident is to form a
    local business. However, the Tax Cuts and Jobs Act (``TCJA'') that was
    passed under the previous, Republican majority, has effectively closed
    that possibility to me, as the GILTI provision was made applicable to
    individual taxpayers such as myself, as well as to the multinational
    corporations that it supposedly sought to tax more effectively, and
    with even more unfavorable provisions attached for Americans residing
    abroad than for multinationals. Lest the Democratic members of this
    committee object that a law passed under a Republican-controlled
    Congress is not their responsibility, I understand that President Biden
    proposes to double the GILTI rate and to remove many or all the
    protections that remained for individual Americans residing abroad, no
    matter how low their income.\4\
    ---------------------------------------------------------------------------
        \3\ I spend 50-200 hours per year on my U.S. tax return for a very
    simple situation (single, no dependents, renter, no trusts or
    complicated pensions or businesses). This does not include the time
    spent record-keeping throughout the year or researching the tax
    implications of any minor financial decision. This compares to the 3
    hours that my French tax return takes to research and prepare and
    probably 3 to 10 hours of preparation if I resided in the U.S. and all
    my income was U.S.-source. I estimate that hiring a professional tax
    preparer would make me lose even more time on my U.S. tax return, in
    addition to the higher cost than for U.S. residents, but with no
    additional assurance that I will have filed correctly, according to the
    judgment of the IRS.
        \4\ Source: https://us-tax.org/2021/04/03/gilti-act-now-stop-toxic-
    gilti-changes-on-the-horizon/?fbclid=IwAR0ZX2qDYsx5DRUD9UV-
    T9FfkjquLxXL3iUB-vqrLkCs752d2-sKEO1QZ9k.

    The end result is that the policies you are reportedly currently
    contemplating will effectively shut off one of the ways in which I may
    eventually be able to return to work. Furthermore, these policies will
    take away rights from me that U.S.-resident individuals, including non-
    citizens enjoy, and I will end up with fewer rights, and higher costs
    ---------------------------------------------------------------------------
    than my non-American neighbors here in France.

    In addition, I do not have the option of returning to the United States
    to live (or of renouncing my U.S. citizenship). According to my
    understanding, returning to live in the United States will result in
    the loss of all my income (my French disability pension), as well as my
    health insurance. Therefore, if I stay in France, the policies
    reportedly under consideration by Congress, including this committee,
    will lead to loss of opportunity and a reduced prospect for returning
    to work. Conversely, if I return to the United States, for example, to
    make my life manageable so that I do not have to navigate two
    incompatible tax systems, I will become a burden for the United States
    taxpayer, which I currently am not.

    Thus, the mere fact that GILTI applies to Americans abroad and that the
    current administration desires to strengthen its provisions without any
    consideration whatsoever for United States citizens residing abroad
    should outrage you, the members of this committee, regardless of your
    party affiliation.

    Beyond the filing burden and GILTI provisions that apply to Americans
    residing abroad who are tax residents of other countries, I can list
    many other items of current legislation that negatively impact us,
    myself included:

          Double or punitive tax treatment:
              Social welfare payments (aged, indigent,
    disability, unemployment, childcare, parental leave) from foreign
    governments--I have personally been subject to this ``punishment'' in
    the form of double taxation for daring to live outside the borders of
    the United States.
              Contributions to and distributions from pensions
    and 401k-style retirement plans--After many hours of research, it
    appears that I cannot participate in any of the French or U.S. plans
    available due to residency restrictions for U.S. accounts and current
    U.S. tax law treatment of French plans.
              Foreign retirement, education and other savings
    plans--I cannot participate in any of the French or United States plans
    available due to residency restrictions and current U.S. tax law.
              Retail investment products, such as ETFs or
    mutual funds--As an EU resident, I cannot invest in U.S. ETFs or mutual
    funds, and as a U.S. citizen, I cannot invest in local equivalents
    without facing punitive taxation and burdensome filing requirements due
    to U.S. tax law (as a former finance professional, this is particularly
    offensive, since these sorts of investments are otherwise the best way
    to diversify my investments, lower my risks and fees, and maximize my
    returns).
              Non-qualified non-U.S. pension plans.
              Bequests to foreign surviving spouses.
              No tax deductibility for interest payments on
    primary residence.
              Transition Tax/GILTI.
              Tax on phantom currency gains without any
    realization event occurring.
              Mismatch of the dating of foreign and U.S.
    taxation events, often by many years.
              And many others.

          Other built-in punishments for having or having had a foreign
    residence:
              Financial and criminal penalties for mistakes, no
    matter how small, for anything foreign, with no regard to whether the
    foreign asset or income is held by a U.S. resident or a foreign
    resident with an obvious reason or a legal requirement to have such
    ``foreign'' assets or income (e.g., forms 8938, 3520 and FBAR).
              Penalties for individuals who are small business
    owners for making simple mistakes on forms that are the same regardless
    of the gravity of the error or the amount of the taxable income in
    question (e.g., a Paris taco stand owner earning $30,000 faces the same
    penalty for making a mistake as Google) (e.g., form 5471).
              Different definitions of what constitutes a trust
    if it is U.S.-based or non-U.S.-based, with foreign mandatory
    retirement accounts often being considered as trusts.
              The requirement that individual Americans abroad
    must use the United States Dollar as their reference currency, even
    when they have no U.S.-source income, and may never have even set foot
    in the United States.
              Moving to a third country automatically disallows
    most or all protective income tax treaty provisions available to U.S.
    citizens.
              And many others.

    I believe that it is most useful to name these policies and laws
    collectively the ``U.S. extraterritorial tax regime''. This means that
    the United States imposes taxation on my non-U.S. income, even though I
    am a fully taxable on that income, in the country where I reside and do
    not live in the United States. As I have indicated above, I have had no
    U.S.-source income since at least 2005, so by all measures, I have no
    economic connection with the United States. In addition, I receive no
    United States government services that are in any way tied to the
    federal income tax and have not done so since I left the United States
    in 2002. In fact, under current legislation, I even cost the United
    States government money due to the recent stimulus bills and to the
    cost incurred by the IRS and the Department of the Treasury in
    administering the current tax code and related legislation. As far as I
    can tell, the only link that binds the United States government and I
    is the absurdly burdensome and penalty-laden extraterritorial taxation
    that I am subject to and that the IRS and the Department of the
    Treasury are required to administer, and which even they do not appear
    to fully understand. Simply stated, there is no other advanced country
    in the world that imposes such extraterritorial taxation, and in my
    case, it is easy to see that the current situation is a lose-lose
    situation for me and the United States government and other taxpayers.

    Returning to the hearing held on March 25th, I would like to make two
    general observations.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    theories disconnected from reality.

    It should be superfluous to point out that I am not a ``mini-
    multinational,'' as current tax laws and regulations clearly categorize
    me as. Rather, I am a dual-national living in my country of second
    citizenship. This does not make me less American. But it does mean that
    I am subject to the laws of the country where I live. I am not GILTI of
    anything. I ask only to be able to carry on my life without
    interference from a foreign tax code, the Internal Revenue Code of the
    United States, which leads inexorably to my having fewer rights and
    opportunities than my neighbors or even non-U.S. citizens who live in
    the United States. More importantly, I want to have the opportunity to
    recover from long-term illness and be able to work again.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its punitive and
    poorly designed extraterritorial tax regime and join the rest of the
    world in adopting a system of residence-based taxation.

    Lest one object that the United States has always had its current
    system of taxation of the non-U.S. income of non-resident citizens,
    that is not the case. Congress has, in essence, already adopted this
    system in the past. Indeed, under the original Civil War income tax and
    from 1926 to 1962, the United States did not impose any income tax on
    any of the non-U.S. income of bona-fide residents of other countries
    who were United States citizens!\5\ Thus, even when the highest
    marginal income tax rate was 90%, the United States Congress decided
    that it was unfair to tax the non-U.S.-source income of United States
    citizens who were bona-fide residents of other countries. In light of
    that fact, it beggars belief how both Republican and Democratic
    majority Congresses now believe that it is right and proper to tax non-
    resident citizens at higher rates than if they had stayed in the United
    States (especially on business, savings or welfare income that has no
    connection whatsoever with the United States).
    ---------------------------------------------------------------------------
        \5\ Source: https://www.americansabroad.org/history-of-us-taxes-
    abroad-from-1787-to-2001/.

    Furthermore, lest one object that moving to a residence-based taxation
    system would open the door for abuse, there are plenty of ways to
    counter those abuses which you or your predecessors apparently prefer
    to ignore, presumably to avoid having to spend time helping your fellow
    Americans and your constituents, who generally are not as politically
    active due to their foreign residence. However, I have no doubt that
    the United States has individuals who are competent enough to figure
    out how to apply a system used by the rest of the world and each of the
    50 States while preventing abuse. Assuming that prior reporting is
    accurate, two anti-abuse measures that you appear to have never
    ---------------------------------------------------------------------------
    considered are as follows:

          U.S. persons who are bona-fide residents of other countries but
    who continue to receive all or substantially of their income from U.S.
    sources, either directly or indirectly, will continue to be considered
    United States residents for tax purposes and subject to the entire
    Internal Revenue Code;

          U.S. persons who are bona-fide residents of other countries but
    whose assets (either all or substantially all), whether held directly
    or indirectly, are located in the United States, will continue to be
    considered United States residents for tax purposes and subject to the
    entire Internal Revenue Code.

    These tests can collectively be referred to as a center-of-economic-
    interest test. Furthermore, in order to make the residence-based
    taxation system effective, the savings clause should be abandoned for
    all income tax treaties, and Americans allowed to avail themselves of
    residence tie-breaker rules, subject to anti-abuse measures such as the
    ones outlined above.

    One of the outcomes of a change to a residence-based taxation system is
    that it will be easier to understand and to enforce. Indeed, broadly
    speaking, enforcement efforts will shift to determining whether an
    individual is a resident or not, rather than vainly attempting to track
    down in 200+ jurisdictions around the world any person suspected of
    being a United States citizen or green card holder.

    Finally, the United States should move to a residence-based taxation
    system without regard to revenue neutrality. The little I have
    mentioned of my own situation should be sufficient for you to
    understand that this issue is a moral and human rights issue, not a
    revenue issue.

    In any event, the gross revenue brought in under current rules amounts
    to less than 0.2% of federal income tax revenues, and this amount
    includes income received from U.S.-sources by non-residents and income
    received by U.S. government employees and military personnel stationed
    abroad, almost all of whom would continue to be taxed exclusively by
    the United States under a residence-based taxation system.\6\
    ---------------------------------------------------------------------------
        \6\ Source: https://www.irs.gov/pub/irs-soi/17in52oa.xlsx.

    Thus, the amounts at stake are so low that a request for ``revenue
    neutrality'' by your part is nothing more than an excuse offered to
    ---------------------------------------------------------------------------
    avoid doing the right thing by 9 million of your fellow citizens.

    Respectfully submitted by:

    David Johnstone

                       Letter Submitted by Jill Johnstone
    I am a citizen in good standing of the United States of America. I live
    outside the United States in Canada where I am a tax resident and where
    I am subject to full taxation.

    I am an emigrant from America, having married a Canadian and moved to
    Canada over 15 years ago. Although I still have family living in the
    U.S. and visit there often, I expect to be living permanently abroad. I
    am a tax resident of my country of residence. I am required to organize
    my financial and retirement planning in that country. The problem I
    have is that the U.S. tax laws make it very difficult for me to live
    the same kind of life that my friends and neighbours live. You see,
    they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. My attempts at responsible
    retirement planning where I live have been frustrated by the need to
    comply with U.S. tax laws, particularly the failure of the U.S.-Canada
    tax treaty to recognize Canada's federally regulated Tax Free Savings
    Account (TFSA). After several years of trying to deal with cumbersome
    extra forms for reporting my TFSA on my U.S. tax forms, I am extremely
    frustrated with the United States for making in almost impossible for
    me to maintain what is a fully legitimate retirement account in Canada
    simply because I am a U.S. citizen.

    I do not live ``offshore.'' I live in a country where I pay very high
    income taxes. I also pay additional kinds of taxes (for example, GST)
    in Canada, my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    Based on my understanding of the recent hearing on March 25th, I would
    like to make two additional observations:

        1.  This hearing emphasized U.S. multinational corporations.
    Unfortunately, U.S. tax rules treat individuals living outside the
    United States the same way they treat U.S. multinationals doing
    business outside the United States. This appears to have been largely
    ignored in the hearing. As a U.S. citizen living abroad, I would like
    to see some representation of how individual, flesh and blood people
    are affected by these rules.

        2.  I also understand that there were no witnesses who had personal
    experience with a company or individual running a business with
    interests outside the USA. This seems preposterous. I hope that
    subsequent hearings will include witnesses who have experienced running
    businesses outside the United States and actually living outside the
    United States.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I would like to be able to carry on my small business affairs and
    my life without interference from the Internal Revenue Code of the
    United States.

    Finally, please understand that any and all changes to the taxation of
    U.S. corporations will have a huge impact on the U.S. taxation of U.S.
    individual citizens living outside the United States and running small
    businesses outside the United States. Individuals are not immune to the
    effects of raising the U.S. corporate income tax rate and/or doubling
    the GILTI tax.

    More importantly, the U.S. extraterritorial tax regime makes it
    difficult for me to save, invest, participate in pension plans and
    generally behave in a financially responsible way. This is because all
    of these essential activities are taking place in my country of
    residence and not in the United States. My retirement investments are
    foreign to the United States, but local to me. In addition, the United
    States impose taxes on things (for example, sale of principal residence
    or investment income from a registered tax free savings account) when
    my country of residence does not. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems.

    This situation is extremely unjust and is not well mitigated by either
    foreign tax rules and/or the Foreign Earned Income Exclusion. I firmly
    believe the time has come for the United States to abandon its
    extraterritorial tax regime and join the rest of the world in adopting
    a system of residence-based taxation.

    Thank you for your consideration of these issues.

                                     ______

                       Letter Submitted by Dominic Jones
    I am a dual citizen of the United States of America and of Germany. I
    grew up and live in Germany where I am a tax resident and where I am
    subject to full taxation.

    I am an ``accidental American.'' I was born in USA because my parents
    happened to live there because of my father's job at the time of my
    birth. Neither my father nor my mother were U.S.-citizens at that time
    (father: Jamaican, mother: German) and their intention was definitely
    not to give birth to a child in USA just to obtain American citizenship
    for him. As a matter of fact, my mother went to the German Consulate
    immediately after my birth to obtain a German passport for me. My
    mother moved back to Germany with me when I was 8 months old and I
    never returned to USA again, except for visits. She found out the first
    time from the U.S. Embassy in Munich when I was 3 years old that
    because of my birth place, I am American citizen besides being German
    citizen; when she intended to apply for a visa to travel to USA with me
    for a visit.

    I know America from my visits as well as from movies and I like the
    beautiful country and its people a lot. Still, my life always has been
    and will be in Germany. Germany is where I spent all my life, where I
    work, where I live with my German wife, where most of my family and all
    of my friends are. I have never in my entire life benefited from any
    U.S.-infrastructure such as education, health care, welfare and the
    like. Due to a chronic disease, I could not ever live in USA even if I
    wanted to, because I would not be able to afford health insurance
    there.

    Yet, in 2015, I had to find out from my bank that I am required to file
    U.S. tax returns and to pay tax on my non-U.S. income to America. At
    first I couldn't believe this could be possible. But, it gets worse. I
    am also required to file complex information returns describing the
    details of my finances to America. The forms are especially complicated
    to me because I am self-employed, and moreover, I can't even understand
    the forms. I have no idea how to comply with the rules imposed on me
    and I am always worried about making unintentional mistakes. While I am
    struggling to survive here with building up my little self-employed
    existence, I can't even afford the expensive consultants necessary to
    complete the forms. I simply don't know what to do and I can't deal
    with this additional stress and financial burden of paying consultants.

    I am having a hard time to even get a bank account. When the banks see
    my place of birth, they are not very eager to have me as a customer
    because they are not keen on FATCA-reports. So I always get the account
    with the most expensive bank fees. And they simply denied me an account
    recently when I wanted to start a stock savings plan for my retirement.

    Under these circumstances, the only solution I could think of is to
    relinquish my American citizenship, even though I am proud to be
    American as well. And even though I cannot even really afford the
    expensive renunciation fee of 2,350 USD, either. Why is it so
    expensive? It cost 400 USD a couple of years ago. I have filed for
    renunciation last year in August and so far all I received was an auto
    reply that my application has been received. This means--another tax
    return due for 2020, 2021 and possibly 2022! And this, although I am
    struggling to make ends meet here where I live.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (for example
    VAT) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live nor do I own any
    assets in the United States. There is no other advanced country in the
    world that imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    the country of my other citizenship by ancestry. According to U.S. law,
    this doesn't make me less American. But, it does mean that I am subject
    to the laws of the country where I live. I am not GILTI of anything. I
    ask only to be able to carry on my small business and my life without
    interference from the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult if not nearly impossible
    for me to save, invest, participate in pension plans and generally
    behave in a financially responsible way. This is because all of these
    essential activities are taking place in my country of residence and
    not in the United States. My retirement investments are foreign to the
    United States, but local to me. In addition, the United States impose
    taxes on things (for example sale of principal residence) when my
    country of residence does not. My mother says she can't even die
    because she owns a little house in which she lives and which I would
    inherit. It was her who worked for it in Germany, who payed taxes for
    it in Germany and all of a sudden it would become subject to U.S. tax
    laws because of my American citizenship. This is absolutely not fair!
    Because I am required to live my life with the USD as my functional
    currency, I am subject to ``fake income'' based on nothing but changes
    in the exchange rate. As a tax resident of both the United States and
    my country of residence, I get the worst of both tax systems. What one
    giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime for individuals, and join the rest of the advanced world in
    adopting a system of residence-based taxation.

    America is the great, exemplary country standing for liberty, equality,
    and justice. I urge you to please grant freedom and justice as well to
    people like me!

    God bless America!

                                     ______

                        Letter Submitted by Marian Kane
    I am a proud citizen of the United States of America. I live outside
    the United States in Belgium where I am a tax resident and where I am
    subject to full taxation.

    I am an American who moved from the United States when I got married in
    1989. Our intention was to return to the U.S. in 1993, and when that
    didn't happen, to retire to my wonderful home town in Florida. But life
    never goes as planned. Although I will always love America, I live
    abroad permanently and I am a tax resident of my country of residence,
    Belgium. I am required to organize my financial and retirement planning
    in that country.

    Unfortunately, the U.S. tax laws make it very difficult for me to live
    the same kind of life that my friends and neighbours live. You see,
    they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system, and
    they are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional taxes (e.g., VAT) to my
    country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime. This means that the United States imposes
    taxation on my non-U.S. income even though I am a fully taxed on my
    income in Belgium where I reside. I do not live in the United States
    and have no earnings in the U.S.. There is no other advanced country in
    the world that imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am a ``dual-national'' living in my country of second citizenship. It
    doesn't make me less American, but it does mean that I am subject to
    the laws of the country where I live. I ask only to be able to carry on
    my life without interference from the Internal Revenue Code of the
    United States.

    As a general principle: The U.S. extraterritorial tax regime makes it
    difficult for me to save, invest, participate in pension plans and
    generally behave in a financially responsible way. This is because all
    of these essential activities are taking place in my country of
    residence and not in the United States. My retirement investments are
    foreign to the United States, but local to me. In addition, the United
    States impose taxes on things (for example sale of principal residence)
    when my country of residence does not. Because I am required to live my
    life with the USD as my functional currency, I am subject to ``fake
    income'' on nothing but changes in the exchange rate. As a tax resident
    of both the United States and my country of residence, I get the worst
    of both tax systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

    And thank you for your consideration,

    Marian Kane

                                     ______

                    Letter Submitted by George C. Karadimas
    I am a proud citizen of the United States of America. I live outside
    the United States in GREECE where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of BIRTH. I am required to
    organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbors live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of BIRTH citizenship. It doesn't make me less American. But,
    it does mean that I am subject to the laws of the country where I live.
    I am not GILTI of anything. I ask only to be able to carry on my life
    without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

    George C. Karadimas

                                     ______

                         Letter Submitted by Jill Kent
    My name is Jill Kent and I am an American citizen.

    I moved from the USA when I met my husband and we needed to settle in
    Scotland due to his job. This was 26 years ago, but I still return
    ``home'' every year to be with my parents and extended family. I still
    love American and very much consider myself American. I am a tax
    resident of my country of residence. I am required to organize my
    financial and retirement planning in that country. I find it very
    unfair to have to be a part of two tax systems. As a U.S. citizen, I am
    subject to the UK tax system and the U.S. tax system. The systems are
    generally not compatible. Most attempts at responsible financial/
    retirement planning where I live are frustrated by the need to comply
    with U.S. tax laws. How can this be fair? How can the United States
    impose taxation on the non-U.S. income and assets of a person who is a
    tax resident of another country--with no economic connection to the
    United States?

    I am an elementary school teacher. I pay very high income taxes here. I
    also pay VAT, National Insurance, Road tax and Council tax.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, here in the UK and do not live in the United States. There is
    no other advanced country in the world that imposes such
    extraterritorial taxation.

    I would like to make two general observations about the hearing March
    25th.

    1.  The hearing focused on U.S. multinational corporations. But here is
    the reality: U.S. tax rules treat individuals living outside the United
    States, the same way they treat U.S. multinationals doing business
    outside the United States. Although, I am a flesh and blood individual
    person, not a single participant recognized how individuals are
    affected by these rules. Yet, the focus of the hearing was supposed to
    be about individuals. How did this happen?

    2.  I was disappointed that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! I respectfully suggest
    that subsequent hearings include witnesses who have experienced running
    businesses outside the United States and/or actually living outside the
    United States.

    I am not a ``mini-multinational.'' I am an American citizen living in
    as a resident of another country. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live.

    It is expensive for me to hire an accountant to sort out my tax that is
    owed in the U.S., even though my salary is small enough to be exempt
    from paying tax. I understand the importance of contributing my fair
    share but no other developed country has these laws and this is very
    stressful for me.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems.And please don't believe that foreign tax rules and/or the
    Foreign Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you for your consideration.

    Sincerely,

    Jill Kent

                                     ______

                      Letter Submitted by Theodore Kiendl
    I am a U.S. citizen who lives in the UK and who is liable for U.S.
    taxes in addition to of those of UK where I live. I am also a disabled
    veteran of the Vietnam War who receives Disability Compensation from
    the Department of Veterans Affairs to provide me with a reasonable
    standard of living in exchange for my multiple war disabilities. It is
    my principal source of income; I am not a rich man.

    The reality of my situation is that I have to pay an IRS approved
    accountant here in the UK to prepare my U.S. taxes plus a specialist
    firm to handle my savings to ensure that I don't fall foul of IRS
    regulations and end up being fined for what would be perfectly normal
    and acceptable investments in the UK. In practical terms, the result of
    double taxation is that the U.S. Government pays me to pay British
    firms to ensure that I don't pay excessive tax to the IRS in addition
    the already high level British taxes that I am required to pay. Crazy?
    Yes. But this is particularly galling as Disability Compensation is
    counted as non-taxable for U.S. resident veterans. Unfortunately, the
    end result of this unfair double taxation is that the VA Disability
    Compensation that was intended to provide a reasonable standard of
    living ends up being severely depleted with obvious consequences.

    I don't think that this situation is difficult to fix: Either exempt
    U.S. citizens living abroad from the obligation to file with IRS or tax
    us but require the IRS to reimburse all our UK taxes and associated
    costs instead. Double taxation and its associated costs is simply
    grossly unfair and predatory. And it would not be tolerated were not
    the 9 million double-taxed U.S. citizens scattered across the globe and
    without dedicated representatives in the U.S. Congress. So, if
    morality, decency and a sense of fair play still play a part in the
    U.S. Senate, your duty should be clear. The current situation is
    grotesque.

    Yours sincerely,

    Theodore Kiendl

                                     ______

                       Letter Submitted by Angela Kitchen
    I am a proud citizen of the United States of America. I live outside
    the United States in England where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. I still consider myself to be American.
    But, we never know where life will take us. I moved from America in
    1992, to return with my husband to the UK. We had lived in the U.S. for
    three years. But even following the proper procedures for his
    paperwork, the process at the time left him unable to work for over
    three year. I long ago realized that although I will always love
    America, I am living permanently abroad. I am a tax resident of my
    country of residence. I am required to organize my financial and
    retirement planning in that country. The problem I have is that the
    U.S. tax laws make it very difficult for me to live the same kind of
    life that my friends and neighbours live. They are subject to only one
    tax system. As a U.S. citizen, I am subject to the tax system where I
    live and the U.S. tax system. Those systems are generally not
    compatible. Most attempts at responsible financial/retirement planning
    where I live are frustrated by the need to comply with U.S. tax laws.
    How can this be fair? How can the United States impose taxation on the
    non-U.S. income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am an individual
    person, not a single participant recognized how individuals are
    affected by these rules. Yet, the focus of the hearing was supposed to
    be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. This is crazy. I respectfully suggest that
    subsequent hearings include witnesses who have experienced running
    businesses outside the United States and/or actually living outside the
    United States. To put it another way: Subsequent hearings should deal
    with the reality on the ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second residency. It doesn't make me less American. But,
    it does mean that I am subject to the laws of the country where I live.
    I am not GILTI of anything. I ask only to be able to carry on with my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. And the paperwork is so confusing, I have to pay an tax
    accountant to ensure that I file the correct paperwork every year,
    costing almost $3,000.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Yours Sincerely,

    Angela Kitchen

                                     ______

                    Letter Submitted by Robert Douglas Klein
    I am a proud citizen of the United States of America. I live outside
    the United States in Calgary, Alberta Canada where I am a tax resident
    and where I am subject to full taxation.

    I emigrated from the United States of America with my family when I was
    ten years old. Sure I love the U.S. and my hometown of Hartford,
    Wisconsin. But, we never know where life will take us. I moved from the
    U.S. almost 51 years ago. Although the days sometimes go slowly, the
    years go quickly. I long ago realized that although I will always love
    the U.S. of A, I am living permanently abroad. I am a tax resident of
    Canada. I have worked with my accountant to organize my financial and
    retirement planning in Canada. The problem I have is that the U.S. tax
    laws make it very difficult for me to live the same kind of life that
    my friends and neighbours live. You see, they are subject to only one
    tax system. As a U.S. citizen, I am subject to the tax system where I
    live and the U.S. tax system. Those systems are generally not
    compatible. Most attempts at responsible financial/retirement planning
    where I live are frustrated by the need to comply with U.S. tax laws.
    How can this be fair? How can the United States impose taxation on the
    non-U.S. income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example
    Corporate Taxes for my Controlled Foreign Corporation) to Canada.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in Canada where I reside and do not live in the United States.
    There is no other advanced country in the world that imposes such
    extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Brian Kling
    For just over 15 years, I have lived outside the United States in
    Switzerland where I am a tax resident, subject to full taxation and
    obligations just like any other person living here. I do not live
    ``offshore''. I do live in a country where I pay very high income
    taxes. I also pay additional kinds of taxes (example VAT) to my country
    of residence.

    I am married with two daughters. I am an average person making a
    respectable middle-class income. I am employed by a local company, I
    own a small apartment where I live. My oldest daughter is in university
    and the younger one will go in another year. I don't have a fancy car,
    a second home, a boat or other typical things associated with extra
    wealth; I'm an ``average guy'' trying to make a living and supporting
    my family.

    I would like to make two general observations about the hearing on
    March 25.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not even one! This is crazy. I respectfully
    suggest that subsequent hearings include witnesses who have experienced
    running businesses outside the United States and/or actually living
    outside the United States. To put it another way: Subsequent hearings
    should deal with the reality on the ground and not the theory in the
    cloud. Further, this is taxation without representation--yes harkens
    back to the Boston Tea Party and the founding of the United States of
    America.

    I can say that the U.S. government makes living life abroad as an
    American quite a burden for a number of reasons:

    Double taxation--I am subject to full taxation in my country of
    residence AND as a U.S. citizen, I must file a U.S. tax return every
    year and be subject to further taxes.

          The only countries in the entire world that require this
    citizen-based ``double taxation are the United States and. . . .
    Eritrea. That's right, the only two countries in the world. ALL other
    first, second and third world nations do not subject their citizens to
    this undo burden. Does this really make sense to you? How can the U.S.
    government justify this?

          I do not own any property or businesses in the United States, I
    have no financial interests there--so when I file my U.S. tax return
    and sometimes I owe money, I ask myself ``for what?'' What benefit am I
    getting for paying this money to the U.S. government? If there is an
    emergency here in Switzerland (highly unlikely) and the government
    steps in to rescue me, I am billed for it. I don't use the
    infrastructure over there, so what reason is there that I should owe
    further money beyond the already extensive taxes I pay right here in
    the country where I live?

          As you know, filing U.S. taxes is a complex puzzle both for you
    living there and for us living abroad. There are many rules, sub-rules,
    requirements and regulations that are difficult for the average person
    to decipher and to follow. Further there are strong threats of
    penalties if we do it wrong. So many people living abroad pay an
    accounting firm hoping that they will know better how to follow the
    myriad of complex questions and policies. This can cost from $1500 or
    more--money on top of any potential tax payment obligations.

    Financial Reporting--we are subject to FATCA, FBAR and FINCEN because
    we live abroad.

    FATCA--according to the IRS, FATCA (the Foreign Account Tax Compliance
    Act), was enacted in 2010 as part of the Hiring Incentives to Restore
    Employment (HIRE) Act, is an important development in U.S. efforts to
    combat tax evasion by U.S. persons holding investments in offshore
    accounts. Wait, let's read that again. Legislation for ``hiring
    incentives to restore employment'' somehow also becomes twisted into
    ``combat[ting] tax evasion by U.S. persons . . .'' How did this evolve,
    does this make sense to you?

          Note on their website, the IRS classifies FATCA under
    ``Corporations''--so already we have this discrepancy of a policy aimed
    at Corporations that has somehow been warped to include individuals.

          Further, note that in the provisions, any individual holding
    $50,000 or more in financial assets is subject to this scrutiny for
    potential tax evasion. Imagine I live and work abroad for 15 years
    (which I have). Of course I have a pension account here, and of course
    over that time it is over $50K USD, and yes I have some savings to
    protect my family against any future unforeseen mishaps. How does
    $50,000 become the benchmark to identify potential tax evaders? That is
    ridiculously low and will cover practically every U.S. citizen living
    abroad, which then implies we are all potential tax evaders. That feels
    great, that our own government implies we are all criminals, guilty
    until proven innocent.

    FBAR--then we have FBAR (Report of Foreign Bank and Financial
    Accounts), where we should report any accounts that have $10,000 or
    more at any one time during the course of the year. Imagine this, you
    must try to go back over account statement to determine, if even for a
    second you had a balance at or over $10,000. And again, this covers all
    U.S. citizens living abroad--just a normal bank account where your
    paychecks go then becomes an additional reporting burden every year,
    and then there's a savings account, college fund, pension... And again,
    this amount is very low--if the intent is to catch tax evaders, how
    likely is it they have such low assets? How much at this level would
    they even make? Would a person with millions really distribute it
    across a huge number of accounts to get under this $10,000 threshold?

    FINCEN--and there is the Financial Crimes Enforcement Network.

          This requirement is placed upon foreign financial institutions
    for compliance. The result? Many banks abroad now refuse any potential
    client who is a U.S. citizen, because the burdens of ensuring
    compliance and the potential penalties for making a mistake are very
    high. When I tried to get a mortgage to buy my apartment, I really had
    to shop around, because more than half of the typical banks refused to
    do business with U.S. citizens, period. So I feel like a second-class
    citizen; I am treated like an outcast in the banking system due to
    these regulations imposed by the U.S. government.

    I am required to organize my financial and retirement planning in my
    country of residence. The problem I have is that the U.S. tax laws make
    it very difficult for me to live the same kind of life that my friends
    and neighbours live. You see, they are subject to only one tax system.
    As a U.S. citizen, I am subject to the tax system where I live and the
    U.S. tax system. Those systems are generally not compatible. Most
    attempts at responsible financial/retirement planning where I live are
    frustrated by the need to comply with U.S. tax laws. How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States? Yet, because I am a U.S. citizen, I am subject to
    the U.S. extraterritorial tax regime, which means the United States
    imposes taxation on my non-U.S. income even though I am a fully taxable
    on that income, in the country where I reside and do not live in the
    United States. There is no other advanced country in the world that
    imposes such extraterritorial taxation. Does this sound just or fair to
    you?

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to live my life
    without interference from the Internal Revenue Code of the United
    States.

    Again, no other country except Eritrea has this ``citizen-based''
    taxation requirement--why does the U.S. do this to its citizens abroad?
    Why does every other nation not do it? We are the outlier here and
    there is no plausible justification for it. If you want to catch ultra-
    wealthy tax evaders, then fund a team to do just that; go after people
    and corporations with high net worth, find them and prosecute them. But
    the current system subjects the majority of average people to this
    ridiculous burden of time and money with no justification for doing so.
    You make us all jump through all these hoops, treat us like criminals
    (and make policies where we are also treated like criminals locally by
    the banks) and the wealthy tax evading corporations and individuals
    still for the most part get away with what they have always done. The
    government's focus and efforts are in the wrong place.

    As a general principle: Please understand that all changes to the
    taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States.
    Individuals are not immune to the effects of raising the U.S. corporate
    income tax rate and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    I respectfully ask you to initiate a stop of this unjust burden upon
    due citizens of the United States living abroad. The time has come to
    abolish such unfair practices that only the United States and Eritrea
    impose upon their citizens. Join the rest of the world in providing
    fair policies for citizens living abroad!

        Sincerely,

        Brian Kling

                                     ______

                        Letter Submitted by Caroline Koo
    Work brought me to live in Switzerland where I am a tax resident,
    subject to full taxation and pay my fair share of taxes.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the U.S. imposes taxation on
    my non-U.S. income even though that income is fully taxable in the
    country where I reside. Please note there is no other developed country
    in the world that imposes such extraterritorial taxation.

    I'd like to suggest that subsequent hearings should focus on the
    obstacles that ordinary U.S. persons face while living overseas as
    result of FATCA, for example.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States.Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally the U.S. extraterritorial tax regime in combination with
    FATCA created exceptionally high barriers for me to save, invest,
    obtain mortgages, participate in pension plans and generally behave in
    a financially responsible way for future retirement planning. This is
    because all of these essential to vital financial health activities are
    taking place in my country of residence and not in the United States.
    My retirement investments in my country of residence are considered
    foreign to the United States, and there is no clarity on how they would
    be treated.

    FATCA made it extremely difficult for U.S. expats to have regular
    banking and financial services. Foreign financial institutions simply
    do not want U.S. persons because of high costs and potential penalty
    involved with FATCA compliance. Consequently, we U.S. expats become
    second class citizens when it comes to financial services--limited
    offerings to U.S. persons when there are services. Most foreign
    financial institutions prefer to close accounts of U.S. persons.

    In addition, the United States impose taxes on things (for example, FX
    gains on sale of residence although losses are not deductible) when my
    country of residence does not. Because we are required by the
    extraterritorial tax regime to treat our lives as if we were living in
    the U.S. despite the fact our day-to-day life is in another currency
    from earnings to expenses. We are subject to ``fictitious income''
    purely on fluctuations of the exchange rate.

    As a tax resident of both the U.S. and my country of residence, I get
    the worst of both tax systems. What one giveth, the other taketh =
    double taxation at its worst.

    The amount of time it takes just to be compliant with FBAR or form
    8938--it's a waste of human productivity. We live outside of U.S. of
    course we would have foreign accounts. Eyebrow should be raised for
    U.S. persons whose primary residence is in the U.S. and yet have
    foreign accounts.

    And please note foreign tax rules and/or the Foreign Earned Income
    Exclusion do not help offset or address any of these above problems.

    The existing framework unfairly treats U.S. expats as if we were some
    kind of tax collateral damage and no one seems to care. There are
    approximately nine million of us but no one represents our voice in the
    government. Most of us U.S. expats are tax paying resident in our
    country of residence but the requirements of FATCA treats us as if we
    were tax cheats just because we are not living in the U.S. While FATCA
    attempts to derail the real U.S. tax cheaters and evaders who
    apparently are still evading taxes according to the latest study. most
    of us ordinary U.S. expats are caught in the net of FATCA and are the
    ones bearing and suffering the burden of it.

    For many years Americans abroad have been attempting to get both
    Treasury and Congress to address these unfair practices. If the U.S.
    government truly cares about all of its citizens regardless where they
    reside, the time has come for the U.S. to abolish its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence- based taxation,

    Thank you for your attention and consideration.

                                     ______

                       Letter Submitted by Nancy Koopman
    I am a proud citizen of the United States of America. I live outside
    the United States in Canada where I am a tax resident and where I am
    subject to full taxation. I have filed and paid U.S. taxes for many,
    many years. Never hesitating and always telling my accountant ``no grey
    areas''. If we owe taxes . . . we pay taxes. In both countries. But, my
    husband and I want the taxation of our Canadian income and business to
    be fair. The 2017 Transition Tax imposed upon us has almost crippled
    us. It has impacted our retirement plans. But . . . the dutiful
    American Citizen residing in a foreign country, is and will continue
    paying.

    The American Dream . . . we have held onto that dream, with all the
    costs associated.

    I run a small business in the country where I live. My business is not
    a multinational corporation and all of its income is domestic to the
    country where I live. However, because I am a U.S. citizen, the U.S.
    tax code treats me the same as Apple or Google. If I use a local
    business structure that's treated as a corporation under U.S. tax law,
    then I'm forced to fill in the same form 5471 as Apple must complete
    for each foreign subsidiary--translating all of my business records
    into U.S. dollars even though I do no business in that currency. My
    business is subject to GILTI even though I have no intangible income.
    How can I compete with my neighbours who are not U.S. citizens and who
    have only one tax system to deal with?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                     Letter Submitted by Cynthia A. Kraver
    I am a proud citizen of the United States of America. I live outside
    the United States in France where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I am no longer able to prepare for my retirement with retirement
    products in France because they are considered PFIC--Passive Foreign
    Investment Corporations. Every year I must pay on profits that I have
    not realised and could not withdraw, like a 401k that makes a profit.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                 Letter Submitted by Robert Alexander Kraybill
    To: Chairman Wyden and Ranking Member Crapo:

    Thank you for your willingness to convene a committee hearing on this
    issue and to consider the situations of everyday Americans who live and
    work or run small businesses abroad. I would like to add my voice to
    those of others regarding this important discussion on international
    tax reform.

    I am an ordinary American who relocated from the U.S. to Singapore in
    order for my wife--a naturalized American citizen--to be closer to her
    elderly parents who live in Bangladesh, the country of her birth. We
    have lived here now for 17 years but expect to return to the United
    States eventually. For the past 12 years, my wife and I have run a
    small business here at which we both work full-time.

    The United States is the only developed country to tax its citizens on
    their world-wide income when those citizens live, work, and pay taxes
    in another country. This puts undue administrative burden on ordinary
    American citizens like me as well as what I consider an unfair
    financial burden.

    My wife and I pay personal income taxes in Singapore. In addition, we
    file and pay our U.S. personal income tax every year. The difference in
    complexity of the tax systems is shocking. The Singapore tax authority
    typically sends me a text message shortly before the filing due date
    providing me a provisional draft of my return which they have filled
    out and asking me to let them know if there are any changes. (Usually,
    none are needed.) They then bill me on a convenient monthly payment
    plan payable over the course of the 12 months following the due date of
    my return.

    By contrast, filing my U.S. tax return with the IRS is complicated and
    expensive. I am typically required to file for extensions to December
    15th each year despite working with a specialist expat tax advisor. Of
    course, I also need to estimate and pay estimated taxes throughout the
    year prior to the due date of my return.

    This was bad enough before the GILTI tax was enacted. I sympathize with
    the goal of the GILTI tax to crack down on U.S. corporations that shift
    profits into overseas tax havens by transferring intellectual property
    abroad or through other suspect tax planning methods. But you might be
    surprised to learn that the GILTI rules also apply to American citizens
    like me and my wife who run small businesses in our country of
    residence. I certainly was surprised! In fact, individual small
    business owners are treated much worse than multinational corporations
    in this regard as we do not benefit from the 50% credit against
    international GILTI profits to which multinational corporations are
    entitled.

    Since the GILTI rules have come into effect, I have been forced to hire
    corporate tax accountants whose charges have typically run into 5
    figures annually even though our business is small enough that we have
    not actually been subject to any GILTI income tax.

    In addition, I am required each year to file a Report of Foreign Bank
    and Financial Accounts reporting my overseas bank accounts to FinCEN.
    The penalties for failing to do so are incredibly punitive. It is
    telling that FinCEN stands for ``Financial Crimes Enforcement Network''
    which suggests that Americans living abroad who open a checking account
    in their country of residence are criminally suspect. I understand that
    the U.S. government has a legitimate reason to request information on
    the Swiss bank accounts of wealthy U.S. residents who have no business
    having an overseas account. But why should ordinary bona-fide expats
    like me be subject to the same requirements in relation to our day-to-
    day checking accounts?

    The way that the current laws are structured puts Americans abroad in a
    situation where they have to navigate a costly, punishing, and unfair
    tax system. My colleagues from other developed countries like
    Australia, Canada, New Zealand, Sweden, Denmark, France, the United
    Kingdom, etc., are baffled at the way that Americans abroad are treated
    by the U.S. tax system. To them the U.S. tax system is laughable for
    being so myopic. To me it is embarrassing, hurtful, and maddening
    because it is so bad for the American ``brand.''

    As a result of U.S. tax policy towards individual citizens living
    abroad, I have, over the years, been denied the ability to open bank
    accounts, seek out other financial services, enter into financing
    agreements such as loans, and even apply for credit. It is my direct
    experience that U.S. tax policies are hurting ordinary individual
    taxpayers like me who live abroad. People like me, and other Americans
    that I am in contact with in Singapore and other parts of the world, in
    no way resemble the mythical wealthy Americans ``living large''
    overseas. My wife and I have not moved abroad to avoid taxes. We have
    moved here for personal family reasons. We did not set up a Singapore
    company in order to shift profits out of the U.S. or to take advantage
    of low-cost labor or lax regulatory policy. We simply set up a small
    business in the country in which we live.

    I value my American citizenship. I pay close attention to American
    politics. I am active in organizations that aim to raise the political
    awareness of American voters living overseas. I vote in all of the
    elections for which I am eligible. Having said all of that, I believe
    that the United States has a regressive, backwards approach to
    international taxes--hurting individual middle-class citizens and
    unfairly benefitting corporations who shield their earnings overseas. I
    do not think it is fair that an ordinary American like me, making my
    living abroad, should be subject to these complex and (sometimes)
    punitive U.S. tax filing requirements.

    I request that the Senate Finance Committee hold hearings concerning
    the way that Americans abroad are impacted by the U.S. tax system (and
    the financial reporting requirements that go with it.) I encourage you
    to invite testimony from experts who can provide an accurate profile of
    the community of Americans who live abroad and describe the burden that
    U.S. tax filing places on us. Find out the real situation and hear the
    stories of real Americans abroad rather than having policy continue to
    be influenced by apocryphal stereotypes of wealthy Americans living in
    tax havens. I urge you to explore and examine the data on the impact of
    U.S. tax policy on overseas citizens and to support a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation.

    Thank you for your kind consideration.

    Sincerely,

    Robert A. Kraybill

                                     ______

                         Letter Submitted by Asher Krim
    My children and I are proud citizens of the United States of America.
    We live outside the United States in Israel where we are tax residents
    (and citizens) and where I am subject to full taxation.

    I am a dual-citizen through-and-through. I love America and visit my
    family there whenever possible, and regularly vote in U.S. presidential
    elections. My spouse is not American, and it was her work prospects
    that brought us to eventually settle in Israel. I made sure to get my
    children registered as U.S. citizens to give them the opportunity to
    move back there in the future, if they so choose.

    As a relatively high-earning U.S. citizen living in Israel, my finances
    are complicated. I am required to organize my financial and retirement
    planning in Israel, and I am unable to take advantage of many local
    investestment vehicles due to risks of double taxation and PFIC
    concerns. While there is a tax treaty between Israel and America, it
    contains many pitfalls. As an example--stock grants are taxed at
    vestment time by the American tax code, but not taxed until they are
    exercised by the Israeli tax code. My local bank refuses to allow me to
    invest through them because they fear retribution from the IRS if they
    get anything wrong--Bank Leumi was fined nearly $200M for assisting tax
    avoidance, and that has scared off banks from legal dealings with U.S.
    citizens. I am treated as a financial leper, through no fault of my
    own, and have missed out on profitable investments for nothing more
    than the sin of being a U.S. citizen.

    The problem I have is that the U.S. tax laws make it very difficult for
    me to live the same kind of life that my friends and neighbours live.
    You see, they are subject to only one tax system. As a U.S. citizen, I
    am subject to two tax systems. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States? I am made to feel like a pariah for my U.S.
    citizenship. Some of my friends in similar situations have even
    seriously discussed giving up their U.S. citizenship because of the
    economic upside that they see to needing to comply with only the
    Israeli tax system. This is not an option I am willing to entertain for
    my family, but I mention it to underscore how dire the situation is.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (such as 17%
    VAT and high import taxes) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxable on that
    income in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

          The hearing focused on U.S. multinational corporations. But here
    is the reality: U.S. tax rules treat individuals living outside the
    United States the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen? How can we bring the
    focus back to individuals, who do not have the resources that
    corporations due to comply with the hardship of adhering to multiple
    tax systems?

          I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. I respectfully suggest that subsequent
    hearings include witnesses who have experienced actually living and
    working outside the United States.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. Please, let's stop punishing dual-nationals like me for living
    their lives overseas.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally, the U.S. extraterritorial tax regime makes it difficult
    for me to save, invest, participate in pension plans and generally
    behave in a financially responsible way. This is because all of these
    essential activities are taking place in my country of residence and
    not in the United States. My retirement investments are foreign to the
    United States, but local to me.

    And please don't believe that foreign tax rules, the Foreign Earned
    Income Exclusion, or Tax Treaties solve these problems. They don't! At
    best, they can remove some of the more-glaring occurrences of double-
    taxation. But the risks of falling into a tax trap are still
    significant due to constantly changing tax rules in each country and
    differences in definitions of tax events.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both the Treasury and Congress to address these
    issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Shalom Krim
    I am a proud citizen of the United States of America. I live outside
    the United States in Bet Shemesh, Israel where I am a tax resident and
    where I am subject to full taxation.

    I am an American expat. I am temporarily living outside the United
    States for reasons of work and career advancement. When I first moved
    abroad I learned a lot. I learned that other countries have well
    developed tax systems that require payment of a wide range of taxes. I
    can tell you that I pay a lot of taxes. I can also tell you that the
    U.S. tax system treats my non-U.S. income and assets very unfairly. The
    fact that I am temporarily living abroad doesn't mean that I don't have
    to plan for retirement.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Daniel Kuettel
    Why must 330 million U.S. residents in their richest $20 trillion
    wealthy economy, hoarding 30% of all global wealth as a TaxHaven,
    greed, hunger and lust with unfair bias for unfair double-taxation from
    unrepresented non-residents? Shameless!

    Dear Representation for the Represented

    You are represented; I am unrepresented.

    You provide representation to your local constituents only; I'm not
    allowed to represent anyone.

    You received U.S. citizenship; I am an ethnic American.

    You likely didn't serve in the U.S. Armed Forces; I am a U.S. Army
    Veteran.

    You are likely a fresh immigrant to the U.S.; I am a native emigrant
    from the U.S..

    You privilege from the residency America offers you; I live where I can
    work.

    America benefits you with a lavish lifestyle; America is my heritage.

    You are likely a wealthy fat cat with millions in savings; I work hard
    to pay my bills and taxes.

    Your millions stashed in America are hidden from the automatic exchange
    of information.

    You enjoy residency-based taxation; Unrepresented migrant workers are
    unfairly double-taxed.

    Your birthplace is irrelevant; U.S. national origin discrimination
    targets my U.S. birthplace.

    You are protected by the U.S. Constitution; I am in the hands of your
    good faith.

    You write policy in your favor; I am harmed by the policy you write.

    The policy you write benefits you; Renouncing U.S. citizenship protects
    me from your harmful benefits.

    I understand and respect that you neither have the time nor interest to
    represent America's unrepresented non-resident population. America has
    so many problems and issues that the concerns of unrepresented non-
    residents will never appear on your radar. Your needs are more
    important for you than the sufferings of the unrepresented. This letter
    will be ignored.

    Yet, the renunciation of U.S. citizenship is permanent, irreversible.
    Renunciation fees and exit taxes are a hardship for diaspora, but a
    benefit for you. You will never understand.

    Detaching unrepresented non-residents from the impact of policy which
    benefits you, would protect unrepresented non-residents from the
    unintended consequences of your inability to concern yourself with
    their issues. A very small change would accomplish a much greater good!
    You won't budge, but I pray for a miracle.

    Best regards

    Daniel Kuettel

                                     ______

                      Letter Submitted by Daniel Kutnicki
    I am a proud citizen of the United States of America. I live outside
    the United States in Israel where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

    1.  The hearing focused on U.S. multinational corporations. But here is
    the reality: U.S. tax rules treat individuals living outside the United
    States, the same way they treat U.S. multinationals doing business
    outside the United States. Although, I am a flesh and blood individual
    person, not a single participant recognized how individuals are
    affected by these rules. Yet, the focus of the hearing was supposed to
    be about individuals. How did this happen?

    2.  I was shocked that there was no witness who had personal experience
    with a company or individual running a business with interests outside
    the USA. Not a single one! This is crazy. I respectfully suggest that
    subsequent hearings include witnesses who have experienced running
    businesses outside the United States and/or actually living outside the
    United States. To put it another way: Subsequent hearings should deal
    with the reality on the ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or live my life without interference from the
    Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                      Letter Submitted by Alexander Lange
    The U.S. is the only advanced country that taxes its citizens on their
    world-wide income when those citizens live, work and pay tax in another
    country.

    I not only pay taxes in Sweden where I live but I also file a tax
    return to the IRS every year. Declaring non-U.S. income on IRS forms is
    very complicated. Hiring tax return preparers that understand the U.S.
    tax system as well as the Swedish tax system can be very expensive,
    which makes meeting U.S. tax obligations a serious financial burden,
    even if no tax is owed.

    I'm an ordinary American. I moved to Sweden to be with my family. I
    value my American citizenship. I pay attention to U.S. politics as much
    if not more than the average citizen and I vote in every election for
    which I'm eligible. I don't think it's fair that ordinary Americans
    like me, making a regular living and paying tax abroad, are subject to
    inordinately complex and sometimes punitive U.S. tax
    filingrequirements.

    The current law is costly, punishing, and unfair.

    I am asking the Senate Finance Committee to hold hearings on Americans
    abroad and U.S. taxation. I encourage you to invite testimony from
    experts who can provide an accurate account of the Americans abroad
    community and describe the burden that U.S. tax filing places upon us.
    I urge you to also explore the implications of a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation.

    Thank you,

    Alexander Lange

                                     ______

                    Letter Submitted by Michael Banares Lao
    I am a proud citizen of the United States of America. I live and work
    outside the United States in The People's Republic of China where I am
    a tax resident and where I am subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay income
    taxes. Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. I respectfully suggest that subsequent
    hearings include witnesses who have experienced running businesses
    outside the United States and/or actually living outside the United
    States. To put it another way: Subsequent hearings should deal with the
    reality on the ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    Please don't believe that foreign tax rules and/or the Foreign Earned
    Income Exclusion solve these problems. They do not. The Foreign Earned
    Income Exclusion, in particular, does not benefit American citizens
    because it prevents us from contributing to an IRA which in turn makes
    it much more difficult to retire at a decent age.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                         Letter Submitted by Winnie Lau
    I am a proud citizen of the United States of America. I live outside
    the United States in Hong Kong where I am a tax resident and where I am
    subject to full taxation.

    I am an American expat. I am temporarily living outside the United
    States for reasons of work and career advancement. When I first moved
    abroad I learned a lot. I learned that other countries have well
    developed tax systems that require payment of a wide range of taxes. I
    can tell you that I pay a lot of taxes. I can also tell you that the
    U.S. tax system treats my non-U.S. income and assets very unfairly. The
    fact that I am temporarily living abroad doesn't mean that I don't have
    to plan for retirement.

    I do not live ``offshore.'' I do live in a country where I pay high-
    income taxes.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There are no other advanced countries in the world that impose
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although I am a flesh-and-blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is insane. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United

    States and/or actually living outside the United States. To put it
    another way: Subsequent hearings should deal with the reality on the
    ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American! It
    does mean that I am subject to the laws of the country where I live. I
    am not GILTI of anything. I ask only to be able to carry on my small
    business and/or live my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States but local to
    me. In addition, the United States imposes taxes on things (for example
    sale of principal residence) when my country of residence does not.
    Because I am required to live my life with the USD as my functional
    currency, I am subject to ``fake income'' on nothing but changes in the
    exchange rate. As a tax resident of both the United States and my
    country of residence, I get the worst of both tax systems. What one
    giveth, the other taketh.

    The existing foreign tax rules and/or the Foreign Earned Income
    Exclusion could not solve these problems!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Ellen Lebelle
    I am a citizen of the United States of America. I live outside the
    United States in France, where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. But, we never know where life will take
    us. I moved from America many years ago, in January 1972, after
    marrying my French husband. I long ago realized that although I will
    always love America, I am living permanently abroad. I am a tax
    resident of my country of residence. I am required to organize my
    financial and retirement planning in that country. The problem I have
    is that the U.S. tax laws make it very difficult for me to live the
    same kind of life that my friends and neighbors live. They are subject
    to only one tax system. As a U.S. citizen, I am subject to the tax
    system where I live and the U.S. tax system. Those systems are
    generally not compatible. Most attempts at responsible financial/
    retirement planning where I live are frustrated by the need to comply
    with U.S. tax laws. How can this be fair? How can the United States
    impose taxation on the non-U.S. income and assets of a person who is a
    tax resident of another country--with no economic connection to the
    United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual. Not a single one! This is
    crazy. I respectfully suggest that subsequent hearings include
    witnesses who have experienced running businesses outside the United
    States and/or actually living outside the United States. To put it
    another way: Subsequent hearings should deal with the reality on the
    ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only that my children, born in
    France, be able to carry on a small business and/or live their lives
    without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Ellen Lebelle, Franco-American, retired, mother of 4 children, 3 of
    whom are still Franco-Americans

                                     ______

                    Letter Submitted by Nicholas Matthew Lee
    Dear Senators,

    I am writing to you in my capacity as a U.S. citizen, resident outside
    of the United States. While there are numerous ways in which the United
    States tax code uniquely disadvantages its citizens in an international
    context, I will dedicate the first and most likely to be read part of
    this letter to simply urging the Senate Finance Committee to become
    aware of the collateral damage that previous attempts at international
    regulation have inflicted on U.S. citizen workers resident abroad.

    For an understanding of the problem, know that there are approximately
    7 to 9 million U.S. citizens outside of its borders, living abroad for
    reasons ranging from love, to work, to family circumstances. The
    default position taken by the treasury since the 1970s is that
    Americans have no legitimate business outside of America, evidenced by
    policies requiring the reporting of all foreign assets to the
    Treasury's Financial Crimes Enforcement Network (FinCEN), punitive
    reporting and tax rules around Passive Foreign Investment Companies
    (PFICs), onerous and oftentimes illegal requirements for foreign
    businesses to report on suspected American customers (FATCA), and most
    recently the GILTI tax on U.S. owned but foreign domiciled businesses.

    This complicated web of reporting requirements and tax rules that apply
    to Americans and American owned small businesses outside of the U.S.
    poses a substantive burden on individual workers, and it strongly
    dissuades people from attempting to start their own side business.

    Understand: Under the laws of the country I live in (the Netherlands),
    if I was to open a side business selling arts and crafts on an online
    platform like Etsy, I would need to register and create a business
    entity. While the book-keeping on the foreign side would be relatively
    straightforward and affordable, the filing costs alone to stay
    compliant on U.S. taxes are typically thousands of dollars--enough to
    make any small side business a certain losing proposition.

    The disadvantages continue: If we consider that the United States tax
    code fails to recognize the existence and legitimacy of foreign pension
    plans in most countries, it becomes a risk for a multinational business
    to employ a U.S. Person, knowing that this employee may be saddled with
    impossible and punitive PFIC reporting requirements until reaching the
    age of retirement. This lack of tolerance for American workers holding
    pensions in their country of residence also means that they are unable
    to make use of tax incentives in their host country that encourage the
    healthy financial practice of saving for retirement.

    By this point, I think I've painted a clear and general picture of the
    harms inflicted on U.S. workers and U.S. small business owners by
    failed attempts to reign in international corporate and individual tax
    evasion.

    If by now, and I hope, you are in agreement that this is a problem
    worth investigating further, please continue reading for a listing of
    common issues uniquely faced by the 7 to 9 million U.S. citizens living
    outside the U.S. that are directly within the means of the Senate
    Finance Committee and the Treasury to address.

    Citizenship Based Taxation

    In short, the United States is one of the only countries in the world
    that follows the unique practice of taxing its citizens wherever they
    live, whether or not they are within or outside of its borders. The
    only other noteworthy country with a similar policy of taxing
    nonresident citizens is Eritrea, a country condemned regularly for its
    human rights abuses. The Netherlands recently expelled one of their top
    diplomats over this tax policy.

    The United States has historically enjoyed a blind eye to this in
    diplomatic circles by virtue of its size, much to the distress of its
    citizens.

    This practice is the root of many of the problems that I describe
    below, both from collateral damage on misguided compliance campaigns to
    specific and harmful costs that are incurred by Americans attempting to
    comply with this abusive and overreaching tax regime.

    Expensive Tax Preparation and Filing Fees

    While the U.S. Government has attempted in the past to make tax
    preparation affordable and accessible by methods such as the Free
    Filing program, the reality is that most free tax preparation software
    is unable to handle even the most basic overseas tax returns, excluding
    those needing to make use of the Foreign Earned Income Exclusion (FEIE)
    or the Foreign Tax Credit (FTC).

    Much of the commercially available software is similarly inadequate for
    those purposes--TurboTax cannot advise on how to properly make use of
    the Foreign Tax Credit, cannot account on the application of tax
    treaties, and it most certainly cannot adequately handle more
    complicated areas of personal taxation such as PFIC reporting under IRS
    form 8621.

    This requires the use of highly specialized tax accountants, with costs
    ranging from $750 for a basic tax return to thousands of dollars if a
    foreign pension is involved. I personally was quoted $6,000 by one
    accountant as a starting price for a personal tax return as a
    nonresident U.S. citizen.

    These astronomical filing costs, before even accounting for taxes that
    may be owed to the United States, are an economic drain not placed on
    any other workers in our home countries. We all still have to file and
    pay taxes in our country of residence as well, but only Americans have
    to file and pay in two countries at once.

    This either leaves us with less money to live on at the end of the day,
    or it makes us more expensive for our employers.

    Passive Foreign Investment Companies

    The United States, aiming to avoid the use of offshore investments by
    its tax residents, applies punitive and intentionally excessive tax
    reporting requirements in cases of PFIC ownership.

    Unfortunately, because the U.S. considers its offshore citizens to
    still be its residents, their domestic assets are regarded as offshore
    investments subject to PFIC rules. A U.S. citizen resident abroad
    cannot reasonably keep their assets in the country they reside in.

    This is especially problematic in the context of retirement accounts,
    which are typically highly regulated and required to remain onshore in
    the same jurisdiction as the place of employment. Thus, accounts that
    would reasonably qualify in a U.S. context as a Traditional IRA or a
    401k may fall under punitive PFIC rules, incurring both substantial tax
    costs and astronomical preparation fees.

    Existing relief by way of the tax treaties and the recent IRS Revenue
    Procedure 2020-17 is insufficient, as it fails to recognize many common
    foreign retirement accounts and it still subjects Americans to punitive
    taxation and reporting if the U.S. does not consider the account to be
    tax exempt on the same terms as a Traditional IRA or 401k.

    PFICs and Interplay With Foreign Regulations

    Many countries have financial regulations of their own, whether
    intended as consumer protection or the prevention of offshore tax
    evasion. The obligation for Americans to offshore their money to the
    U.S. causes problems in multiple contexts:

          The European Union has the MiFiD II/PRIIPs regulations, which
    require investment funds to meet certain transparency standards in the
    name of consumer protection. Because U.S. investment funds do not meet
    this standard, it is unlawful for U.S. brokers to offer these products
    to EU residents. Because FATCA and PFIC rules prohibit U.S. Persons
    from holding EU compliant and EU domiciled assets, this either leaves
    Americans unable to safely invest their assets or it requires them to
    lie to their broker about residency, creating a substantial compliance
    risk for U.S. businesses.

          Many countries such as Italy or Germany apply punitive taxation
    on assets that are domiciled outside of a domestic bank or broker. This
    in turn means that not only are U.S. citizens unique in incurring tax
    filing and tax costs in relation to their citizenship, they also face a
    higher domestic tax burden in their home countries than citizens of
    other countries.

    FBAR and FATCA Reporting

    FBAR and FATCA asset reporting, like U.S. tax preparation costs, are
    uniquely faced by U.S. citizens in comparison to other countries. In
    addition, the draconian penalties for even non-willful violations are a
    constant source of stress and financial insecurity for Americans.

    Because the United States regards domestically held assets by overseas
    citizens as ``offshore'', it unfairly associates ordinary American
    workers and small business owners with wealthy criminals seeking to
    hide their wealth.

    FATCA Induced Account Closures

    FATCA imposes onerous audit and reporting requirements for banks that
    some consider to be beyond their risk tolerances or means. There have
    been numerous reports in recent years of Americans having their bank,
    investment, and retirement accounts unilaterally closed by their
    financial institutions on account of being a ``U.S. Person'' for tax
    purposes. This is legally mandated discrimination against Americans.

    More distressingly, there are many cases of ``Accidental Americans'',
    those born to a U.S. parent or born in the U.S. and moved shortly
    afterwards to a foreign jurisdiction. Many of these Americans lack
    social security numbers or the means to obtain social security numbers,
    making it virtually impossible for them to hold financial accounts in
    either the country they live or in the United States. Additionally,
    because many of them lack sufficient ties to the United States, it is
    made even more difficult for them to live normal financial lives.

    FATCA Reporting in European Jurisdictions

    FATCA reporting is especially problematic in the context of the
    European Union, where the General Data Protection Regulation took
    effect. There is increasing unrest in the EU about the decision to
    share vast amounts of sensitive financial information with U.S.
    agencies that are regarded as insufficiently protected against data
    breaches and insufficiently compliant with European privacy rights.

    This legislative overreach of the United States into foreign
    jurisdictions is resulting in substantial litigation that threatens the
    already minimal effectiveness of FATCA.

    Foreign Spouses

    In this day and age, it is quite common for Americans to fall in love
    with and marry non-Americans. Many people however are concerned about
    ensnaring their spouses and children in the U.S. tax code, and it is
    not an uncommon point to hear discussion along the lines of ``If I
    intentionally am not listed on my child's birth certificate, are they
    still stuck being a U.S. citizen?''

    It should be deeply distressing for members of the Senate to hear that
    U.S. citizenship is regarded as a curse, rather than an asset, and that
    basic family institutions such as marriage and acknowledgment of
    paternity are viewed with fear and suspicion.

    Conclusion

    With this letter, I hope to have raised awareness of the immense harm
    that the United States' International Tax Policy inflicts on American
    Workers.

    If there is any doubt as to the tolerability of these measures, simply
    apply the following test: If a hostile foreign power declared that they
    would impose similar restrictions and taxes on American citizens living
    in America, would the U.S. let this slide?

                                     ______

                   Letter Submitted by Alyssa Marie Lefebvre
    I am a citizen of the United States of America. I live outside the
    United States in the United Kingdom where I am a tax resident and where
    I am subject to full taxation.

    I am an emigrant from America. Sure I used to reside in America, but,
    we never know where life will take us. I moved from America many years
    ago. I long ago realized that although I will always have grown up in
    America, I am living permanently abroad.

    I am a tax resident of my country of residence. I am required to
    organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system.

    As a U.S. citizen, I am subject to the tax system where I live and the
    U.S. tax system. Those systems are generally not compatible. Most
    attempts at responsible financial/retirement planning where I live are
    frustrated by the need to comply with U.S. tax laws. How can this be
    fair? How can the United States impose taxation on the non-U.S. income
    and assets of a person who is a tax resident of another country--with
    no economic connection to the United States? I understand this for
    ``high-flying'' residents like Jeff Bezos, Bill Gates, movie stars,
    celebrities, Meghan and Harry, etc. but why do normal people who do not
    maintain multiple homes and do not earn income in the hundreds of
    millions in other countries get subjected to these insane taxation
    laws?

    I live in the south of England where incomes are high because the cost
    of living is high, yet the IRS has deemed a ``one size fits all''
    income threshold for anyone living outside the U.S. My salary is no
    higher than the average person living in Silicon Valley or Manhattan,
    in fact, it's probably lower.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (e.g. VAT) to
    my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States. I also think requiring citizens to
    pay extortionate fees to renounce their citizenship is
    unconstitutional.

    If I do not want the benefits of being American anymore, why does that
    have to cost me over $2,000 to relinquish? This is 2021, ``admin fees''
    no longer cut it as a reason when it is generally known that there are
    automated ways of managing information like this.

    It is nonsense, and frankly, obscene to treat citizens this way. Why
    are we punished for wanting to lead a life elsewhere? Why are we
    treated as criminals just because we choose to live outside the U.S.?
    Why does the IRS have privileges to see our finances purely because we
    live abroad? If we lived in the United States, the only the IRS would
    be able to review private bank accounts would be through a court order.
    It is unacceptable.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! The most just
    thing would be to leave Americans who maintain ZERO economic ties to
    the United States alone. I can understand if expats wish to maintain
    economic ties to the U.S., fine, keep taxing them and forcing them to
    file expensive tax returns (there is no possible way a normal person
    living abroad could do their own taxes, the IRS has made sure of that
    with their endless and complex forms), that is their choice. I choose
    to live abroad, I have no financial ties to the U.S., but my father is
    American and I currently maintain my citizenship so that in the event
    something awful (god forbid) happens to him, I can get back to the U.S.
    easily.

    Each year I file my taxes, I get closer to renouncing and god forbid
    something did happen to my father after I renounced and I couldn't get
    back because of something to do with having a foreign passport, I would
    blame the U.S. government. This is how you make real people feel who
    have decided to live elsewhere. Of course, whoever reads this may
    respond as most other Americans I have spoken to about this respond
    ``If you don't want to be a citizen, just renounce''. I hate that my
    only option is to renounce the country where I grew up, just to live a
    normal life in the country where I am also a citizen.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.
    America likes to think of itself as ``the greatest country on Earth''
    but I can tell you, this is not how Americans living abroad feel. We
    feel it's the worst because we are persecuted for existing outside of
    the U.S.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you for your time. Although this may seem dramatic or over the
    top, this is truly what it's like to live as American abroad.

                                     ______

                 Letter Submitted by April Michelle Lennox-Hill
    Please forgive the lateness of this submission as I was only recently
    made aware that the Senate was addressing this important taxation
    issue. I am a citizen of the United States of America just like you,
    however I am also a citizen of the United Kingdom (UK) where I am also
    a fully taxed resident.

    If speaking ``officially,'' I am a dual national, having emigrated from
    America many years ago. I finished my B.A. in Arizona in December 2000
    after a study year abroad in the UK, and was then invited back to the
    same university in the UK for my M.A. studies in 2002. However, whilst
    here for my M.A., I realised I had created for myself a really
    wonderful life with good friends, and colleagues which I did not wish
    to leave. This feeling of belonging was only further reinforced when I
    met and married a wonderful British man and went on to have 3 lovely
    little boys with him. Once I began building my life here with friends,
    colleagues and family means I was already home. The trade-off of course
    is, returning to the U.S. is at best slim as it would require uprooting
    our 3 children and my husbands' lives. So, I am here and I am happy,
    but there's a very high price attached to this decision.

    The ``price'' to which I refer above, is that I am HEAVILY taxed as a
    UK resident, and yet, I am required to organise my financial and
    retirement planning here in the UK (which affects my husband too) for
    the betterment of our family's financial security and future, but
    there's a serious problem we keep encountering. U.S. tax laws make it
    very difficult for me to live the same kind of life that my friends and
    neighbours live as they are subject to only one tax system, whereas I
    am sadly subject to two systems of taxation which becomes invariably
    complicated and highly frustrating. In short, because I have decided to
    retain my U.S. citizenship, despite choosing to live abroad
    permanently, I (and my family) are effectively ``punished'' by the U.S.
    tax system which runs parallel to my U.K. taxation obligations. And
    sadly, these two tax systems are generally speaking simply not
    compatible, as most attempts on my part at responsible financial/
    retirement planning where I live are hugely frustrated by the need to
    comply with U.S. tax laws.

    This is a very unfair position to put not only myself, but my entire
    family here in the U.K. How the United States can in good conscience
    impose taxation on the non-U.S. income and assets of a person who is a
    taxed resident of another country is beyond my understanding. I have no
    economic connection to the United States, so why I should be subject to
    taxation is the real question of which I would appreciate your kind
    consideration.

    Just for clarity, I do not live ``offshore.'' I do however live in a
    country where I pay very high income taxes. I also pay additional kinds
    of taxes (for example, the U.K. has ``VAT'') to my country of
    residence, the United Kingdom.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income here in the U.K. where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    this does not simply affect multinational corporations: U.S. tax rules
    treat individuals living outside the United States the same way they
    treat U.S. multinationals. And despite the fact that I am an individual
    person, not a single participant recognized how individuals are
    affected by these rules. Yet, the focus of the hearing was supposed to
    be about individuals. This in my opinion was a mistake which I hope
    will be reconsidered.

        2.  I was shocked to hear that there was no witness who had
    personal experience with a company or individual running a business
    with interests outside the USA. Not a single one. That seems an
    impossible situation to assess without some sort of tangible witness
    testimony. I respectfully request that subsequent hearings include
    witnesses who have actually lived outside the United States and paid
    taxes to another government.

    To clarify, I am not a ``mini-multinational.'' I am a ``dual-national''
    living in my country of second citizenship. It doesn't make me less
    American, in actual fact unlike most Americans who take their
    citizenship as a ``given,'' I have had to ``weigh up'' how important
    keeping my citizenship is to me, considering the strain it puts on
    myself, and the burden it places on my husband and financial
    limitations it imposes on my children by extension. I am subject to the
    laws of the country where I live, yet I feel penalised by the U.S.
    government by choosing to live in another country. Put simply, I ask
    only to be able to carry on my life without interference from the
    Internal Revenue Code of the United States.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way whilst living outside the U.S. This is because all of
    these essential activities are taking place in my country of residence
    and not in the United States. My retirement investments are foreign to
    the United States, but local to me. In addition, the United States
    impose taxes on things (for example sale of principal residence) when
    my country of residence does not. Because I am required to live my life
    with the USD as my functional currency, I am subject to ``fake income''
    on nothing but changes in the exchange rate. As a tax resident of both
    the United States and my country of residence, I get the worst of both
    tax systems. What one giveth, the other taketh away from not only me,
    but our 3 little boys as well.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems, because they do not.

    This situation has been extremely unjust for so long, and I am
    imploring you now to take the next appropriate step to rectify the
    flawed extraterritorial tax regime. For many years, Americans abroad
    have been attempting to get both Treasury and Congress to address these
    issues to no avail, but you are finally listening and I am so very
    pleased. The time has come for the United States to abandon its
    extraterritorial tax regime and join the rest of the world in adopting
    a system of residence-based taxation.

    Thank you for taking the time to hear my experience of being an
    American dual-citizen who has settled in the UK.

                                     ______

                       Letter Submitted by Cameron Lewis
    Dear Senators:

    I am writing to you to urge you to reevaluate the U.S. policy to tax
    U.S. nationals living abroad. This imposes a significant burden for all
    concerned nationals--requiring them to prepare and file taxes in two
    countries--and for some, results in paying an excessive double taxation
    for countries where treaties are either not present or contain gaps.
    These people do not benefit from the taxes they pay, and therefore
    taxing them is unjustified.

    This policy clearly comes from good intentions, but in attempting to
    prevent tax evasion of the mega-wealthy, it steamrollers the ordinary
    citizen.

    The U.S. is one of only two countries in the world, the other being
    Eritrea, that maintains this policy, and it is time that the U.S. joins
    the rest of the world in not punishing its citizens for living abroad.

    Thank you for your consideration,

    Cameron Lewis

                                     ______

                     Letter Submitted by Laura Ashley Lewis
    To the Senate Committee on Finance:

    Thank you for the opportunity to submit this statement for the record
    of your recent hearing on in the impact of U.S. international tax
    policy on American workers, jobs and investment. I understand that the
    March 25, 2021, hearing did not include a discussion on the impact of
    U.S. tax policy on citizens actually living abroad, whose lives are
    directly, and often negatively, impacted by resulting U.S. tax laws.

    I am a 34-year old American who was born and raised in eastern North
    Carolina. I have lived in Singapore for the past six years, having come
    here for work. Living in North Carolina, I could barely make ends meet
    teaching in my public school. In Singapore, I am fortunate enough to
    live in a country that pays teachers a living wage, enabling me to pay
    off my student debt, and save money for the future.

    That being said, I urge the Committee to listen to the voices of U.S.
    citizens living abroad when considering any further changes to U.S.
    international tax law. I'm just an average American living overseas.
    I'm not living overseas to hide my money, nor am I a tax dodger. It
    just makes all the sense in the world that you be taxed in the country
    that you are living in, the country of whose public services you are
    using and paying in to. Whenever I relocate to the United States, I
    will be proud to pay taxes that go toward providing Americans with
    quality healthcare, safe roads, first-class schools and peace of mind
    for retirement. I just ask that Congress consider the impact of U.S.
    tax policy on average citizens like me who happen to live abroad and
    suffer the unintended consequences of U.S.. International tax policy.

    Sincerely,

    Laura Ashley Lewis
    North Carolina (3rd Congressional District)

                                     ______

                        Letter Submitted by Rebecca Lieb
    The U.S. is the only advanced country that taxes its citizens on their
    worldwide income when those citizens live, work, and pay tax in another
    country. I not only pay taxes in Greece where I live but I also file a
    tax return to the IRS every year. Declaring non-U.S. income on IRS
    forms is very complicated. Hiring tax return preparers that understand
    the U.S. tax system as well as the Greek tax is very expensive, which
    makes meeting U.S. tax obligations a serious financial burden even when
    no tax is owed.

    I'm an ordinary American. My husband and I moved to Greece in 2018
    because the cost of my U.S. health insurance. My (not our--my) annual
    health insurance premium, plus the $6,000 deductible, meant I was
    paying $44,000 per year for my healthcare. My premiums rose steeply
    every year.

    I was being treated for cancer when the Affordable Care Act (ACA) went
    into effect. None of my doctors nor hospital were covered by the ACA
    while I was in the middle of treatment. The following year, I had an
    accident resulting in still more medical bills.

    That's why I made the gut-wrenching decision to close my business,
    which provided me with a very comfortable six-figure income, to sell my
    New York City apartment, and to leave the U.S..

    I was terrified that I would become a casualty of the U.S. healthcare
    system if I stayed in America where, as I am sure you are aware, the
    majority of bankruptcy filings are from average Americans who have
    health insurance, but then fall ill. Greece is a beautiful country, but
    I'm in exile here.

    I am not wealthy. Counterintuitively, it made more sense to stop
    working and leave the U.S. rather than be burdened with the cost of
    healthcare there. I miss working, my home, country, friends,
    colleagues, and family. I had hoped to earn more money for retirement,
    but it was untenable to remain at home, although you'd think American
    would want to keep tax-paying citizens like me in the county.

    Now that I live abroad my income has been all but eliminated. My
    husband and I were forced into early retirement because the U.S. has no
    affordable healthcare. We're not allowed to work here in Greece, and
    we're both too young to collect social security benefits. We certainly
    don't have room in our household budget to spend on tax return
    preparers on both sides of the Atlantic, and we certainly can't afford
    to be double-taxed on what income we do have from our investments,
    which we must live from.

    I value my American citizenship. I pay attention to U.S. politics as
    much if not more than the average citizen and I vote in every election
    for which I'm eligible. But I don't think it's fair that ordinary,
    working class Americans like me, making a living and paying tax abroad,
    are subject to inordinately complex and often punitive U.S. tax filing.

    The current law is costly, onerous, and unfair. It is causing some
    Americans abroad to consider renouncing U.S. citizenship. I hope that
    shocks you because it shocks me.

    I am asking the Senate Finance Committee to hold hearings on Americans
    abroad and U.S. taxation. I encourage you to invite testimony from
    experts who can provide an accurate profile of the Americans abroad
    community and describe the burden that U.S. tax filing places upon us.
    I urge you to also explore the implications of a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation.

    Thank you.

    Rebecca Lieb

                                     ______

                       Letter Submitted by Alek Lisefski
    Being U.S.-born, I am a lifelong citizen of the United States of
    America. However, I live outside the United States in New Zealand where
    I am a tax resident and where I am subject to full taxation.

    While I emigrated away from America, I will always love the USA and
    want to see it be the best, most just country it can be. But when it
    comes to tax law, and how that affects those living outside the U.S.,
    there is certainly huge room for improvement.

    I am living permanently abroad, now a permanent resident of New
    Zealand. Of course this means I am a tax resident of New Zealand as
    well, and have been for many years, since first living and working
    here. I am required to organize my financial and retirement planning in
    New Zealand. However, this is greatly hampered by U.S. tax law, so much
    so that I cannot take part in the retirement savings or investment
    options available in New Zealand.

    The problem I have is that the U.S. tax laws make it very difficult for
    me to live the same kind of life that my friends and neighbours live.
    You see, they are subject to only one tax system. As a U.S. citizen, I
    am subject to the tax system where I live and the U.S. tax system.
    Those systems are generally not compatible. For example, the IRS does
    not recognize a New Zealand Kiwisaver retirement account as a valid
    retirement account, therefore it is subject to double-taxation. And the
    investments made within a Kiwisaver account are considered overseas
    investments, again subject to U.S. taxation and onerous reporting
    requirements. This all amounts to me losing money when I try to save
    for retirement in New Zealand (due to high taxation as well as very
    expensive accounting fees to meet U.S. tax law and FATCA reporting
    requirements)! All my attempts at responsible financial/retirement
    planning where I live are frustrated by the need to comply with U.S.
    tax laws. How can this be fair? How can the United States impose
    taxation on the non-U.S. income and assets of a person who is a tax
    resident of another country--with no economic connection to the United
    States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes (33%). I also pay additional kinds of taxes (such as
    GST) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second residency. It doesn't make me less American. But,
    it does mean that I am subject to the laws of the country where I live.
    I am not guilty of anything, but sometimes being a U.S. citizen,
    choosing to live abroad, it feels as though the USA treats me as a
    criminal, with so many extra requirements and tax burdens that those
    living in the USA are not subject to. I ask only to be able to carry on
    my life without interference from the Internal Revenue Code of the
    United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you for your time and consideration.

                                     ______

                       Letter Submitted by Elliott Locke
    I am a proud citizen of the United States of America. I live outside
    the United States in Spain where I am a tax resident and where I am
    subject to full taxation.

    I am an entrepreneur, building a startup here in Barcelona. As you no
    doubt know, starting any business is complicated.

    From a tax reporting perspective, building my dream company puts me in
    a no-win situation as an American abroad.

    On the one hand, I must be fully compliant with Spanish tax law as I
    and my company reside here.

    On the other, citizen-based taxation and the GILTI rules in the TCJA
    force me to create the exact structure your committee wants to
    eliminate.

    By forcing Americans abroad to create local entities held ultimately by
    U.S. LLCs via a c-corp just to open a small business, we run the risk
    of:

          Looking like tax evaders in the country we live in;

          Being subject to triple and even quadruple taxation; and

          Becoming uncompetitive compared to our non-U.S. citizen peers.

    The last point is particularly poignant as America's entrepreneurial
    and business spirits are unrivalled in the world.

    For Americans living abroad like myself, we represent a wonderful, soft
    diplomatic asset for our country. We promote American business values,
    championing a system of can-do innovation that has made America the
    greatest country on earth.

    Furthermore, we provide valuable insights to our countrymen and women
    back home on important domestic debates regarding healthcare, social
    safety nets and cross-cultural insights that makes our country a
    richer, more equitable place.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was disappointed that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living
    abroad. It doesn't make me less American. But, it does mean that I am
    subject to the laws of the country where I live. I am not GILTI of
    anything. I ask only to be able to carry on my business activity and/or
    my life without interference from the Internal Revenue Code of the
    United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way.

    My startup focuses on helping people living abroad, including
    Americans, get financial and investment advice, providing capital into
    U.S. markets, creating jobs, and ultimately generating tax revenue for
    the American people. All of our clients wish to do so in a compliant-
    manner, avoiding offshoring, tax evasion, and other less-than-ethical
    practices.

    This is because all of these essential activities are taking place in
    my country of residence and not in the United States. My retirement
    investments are foreign to the United States, but local to me. In
    addition, the United States impose taxes on things (for example sale of
    principal residence) when my country of residence does not. Because I
    am required to live my life with the USD as my functional currency, I
    am subject to ``fake income'' on nothing but changes in the exchange
    rate. As a tax resident of both the United States and my country of
    residence, I get the worst of both tax systems. What one giveth, the
    other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Additionally, the United States can help pursue President Biden's and
    Secretary Yellen's goals to create a more just global taxation system
    by leaving FATCA and joining the OECD's Common Reporting Standard
    (CRS).

    Combined with America's shift to a residence-based taxation system, the
    country can become more competitive internationally, fight tax evasion
    with our international partners, and prevent hardworking, middle-class
    Americans living abroad from becoming collateral.

    Thank you for taking the time to consider my comments.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Gerald Loftus
    For a quarter century, I served--mostly overseas--as a State Department
    Foreign Service Officer. Since retirement, my post-retirement jobs have
    either been as a U.S. Government (DOD) contractor, or as the employee
    of a U.S.-based nonprofit. My U.S. Government pension is in U.S.
    dollars, as is my Social Security, and my post-retirement salary was
    always paid in U.S. dollars from a U.S. source. It goes without saying
    that I always pay my U.S. income tax, and it is subject to withholding.
    Therefore a U.S. bank account is a necessity.

    I have always had a U.S. bank account, and with it a debit card.
    However, when I recently failed to receive a new debit card after the
    expiration of my last one, I was told that the bank--Bank of America,
    where I have had an account for years, and where my USG pension is
    direct-deposited monthly--no longer issues debit cards to depositors
    with foreign addresses. And the reason they cited was the ``U.S.
    Patriot Act.''

    This came as a shock to me. In all the years where I served my country
    overseas, there was never any question but that I could continue to
    safely deposit my savings in my home country, the United States. Now
    that is threatened. The upshot of this practice will be to discourage
    American citizens who live, work, or retire abroad to move their
    savings outside the U.S.. Surely that cannot be the goal of U.S. tax
    and banking policy.

    We need common sense to return to our international tax and banking
    policy.

    Gerald Loftus
    U.S. Foreign Service Officer, retired

                                     ______

                        Letter Submitted by Craig Lowery
    I am a proud citizen of the United States of America. I live outside
    the United States in Australia where I am a tax resident and where I am
    subject to full taxation. I am a U.S. Army Veteran and am patriotic and
    loyal to America.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes to my country
    of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                     Letter Submitted by Maria Fatima Luis
    I am a proud citizen of the United States of America. I live outside
    the United States in the United Kingdom where I am a tax resident and
    where I am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago thinking
    it was a temporary move maybe a two year experience. Although the days
    sometimes go slowly, the years go quickly. I married and then raised
    children who are also dual citizens. I am a tax resident of my country
    of residence. I am required to organize my financial and retirement
    planning in that country. The problem I have is that the U.S. tax laws
    make it very difficult for me to live the same kind of life that my
    friends and neighbours live. I have spent thousands a year just to fill
    out complicated forms, many banks don't want to have U.S. citizens as
    clients, I cannot invest in certain products etc. I am very limited in
    what I can do financially. I also feel I spend an inordinate amount of
    time every year dealing with taxes in the country I reside in which are
    already 45% for high income earners plus dealing with my tax paperwork
    and FBAR documentation. As a regular person, I am made to feel as if I
    am constantly watched or made to feel as I am not being compliant with
    so many rules. So as a U.S. citizen, I am subject to the tax system
    where I live and the U.S. tax system. Those systems are generally not
    compatible. Most attempts at responsible financial/retirement planning
    where I live are frustrated by the need to comply with U.S. tax laws.
    How can this be fair? How can the United States impose taxation on the
    non-U.S. income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

              Letter Submitted by Marian Magee and David Castillo
    We are citizens of the United States of America. We live outside the
    United States in Australia where we are tax residents and subject to
    full taxation by the Australia government.

    My husband and I moved to Australia from America almost 25 years ago.
    Although we will always love America, we are living permanently abroad.
    We own our home and run a small business in Australia. We are citizens
    and tax residents of our country of residence, Australia. We are
    required to organize our financial and retirement planning in
    Australia. The problem we have is that the U.S. tax laws make it very
    difficult for us to navigate two tax systems. As U.S. citizens, we are
    subject to the Australia tax system where we live and the U.S. tax
    system due to our U.S. citizenship. These two systems are generally not
    compatible. Most attempts at responsible financial/retirement planning
    where we live are frustrated by the need to comply with U.S. tax laws.
    There is a lack of fairness when the United States imposes taxation on
    the non-U.S. income and assets of a person who is a tax resident of
    another country with no economic connection to the United States.

    My husband and I run a small consulting business in the country where
    we live. Our business is not a multinational corporation and all of its
    income is domestic to the country where we live. However, because we
    are U.S. citizens, the U.S. tax code treats us the same as Apple or
    Google. We use a local business structure that's treated as a
    corporation under U.S. tax law, we are forced to fill in the same form
    5471 as Apple must complete for each foreign subsidiary--translating
    all of our business records into U.S. dollars even though we do no
    business in that currency. Our business is subject to GILTI even though
    we have no intangible income. We are subject to two tax systems and
    must file bot U.S. and Australian tax returns simply due to our dual
    citizenship, even though we are tax residents of Australia alone where
    we pay a 35% tax rate on all of our global income. We also pay
    additional kinds of taxes (GST, Medicare, local Council taxes) in
    Australia, our country of residence.

    Because we are U.S. citizens we are subject to the U.S.
    extraterritorial tax regime, where United States imposes taxation on
    our non-U.S. income even though we are a fully taxed on that income in
    Australia where we reside. We do not live in the United States and have
    not lived there for years. There is no other advanced country in the
    world that imposes such extraterritorial taxation.

    Two general observations about the hearing on March 25th.

        1.  The hearing focused on U.S. multinational corporations. The
    reality is that the U.S. tax rules treat individuals living outside the
    United States the same way they treat U.S. multinationals doing
    business outside the United States. There should be a discussion where
    the focus of the hearing is about individuals, where participants are
    given the opportunity to hear how individuals are affected by these
    rules.

        2.  I respectfully suggest that subsequent hearings include
    witnesses who are living and running businesses as dual citizens
    outside the United States.

    Please understand that any and all changes to the taxation of U.S.
    corporations will have a huge impact on the U.S. taxation of U.S.
    individual citizens living outside the United States and running small
    businesses outside the United States. Individuals are not immune to the
    effects of raising the U.S. corporate income tax rate and/or doubling
    the GILTI tax.

    More generally the U.S. extraterritorial tax regime makes it difficult
    for us to save, invest, participate in pension plans and generally
    behave in a financially responsible way. This is because all of these
    essential activities are taking place in our country of residence and
    not in the United States. Our savings and retirement investments are
    foreign to the United States, but local to us. In addition, the United
    States impose taxes on things (for example sale of principal residence)
    when my country of residence does not. Because we are required to live
    our lives with the USD as our functional currency, we are subject to
    ``imaginary'' income on paper only due to exchange rate differences. As
    citizens of both the United States and Australia, but tax residents of
    only Australia, we are taxed by both countries. Foreign tax credits and
    the Foreign Earned Income Exclusion mitigate some of these issues but
    don't solve the real problems. The Tax Treaty between Australia and the
    USA only protects the right of the U.S. to tax its citizens, it does
    not provide protection from double taxation.

    For many years, Americans abroad have been attempting to get both
    Treasury and Congress to address these issues and adopt a system of
    residence-based taxation.

                                     ______

                     Letter Submitted by Kristen Maier-Lenz
    Dear Madam:
    Dear Sir:

    I am a proud citizen of the United States of America. I live outside
    the United States in Germany where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

    1. The hearing focused on U.S. multinational corporations. But here is
    the reality: U.S. tax rules treat individuals living outside the United
    States, the same way they treat U.S. multinationals doing business
    outside the United States. Although, I am a flesh and blood individual
    person, not a single participant recognized how individuals are
    affected by these rules. Yet, the focus of the hearing was supposed to
    be about individuals. How did this happen?

    2. I was shocked that there was no witness who had personal experience
    with a company or individual running a business with interests outside
    the USA. Not a single one! This is crazy. I respectfully suggest that
    subsequent hearings include witnesses who have experienced running
    businesses outside the United States and/or actually living outside the
    United States. To put it another way: Subsequent hearings should deal
    with the reality on the ground and not the theory in the cloud.

    I am living in Europe as an American citizen and this doesn't make me
    less American. But, it does mean that I am subject to the laws of the
    country where I worked and where I live. I am not GILTI of anything. I
    ask only to be able to carry on my life without interference from the
    Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. As a tax resident of both the United States and my country of
    residence, I get the worst of both tax systems. What one giveth, the
    other taketh.

    And please don't believe that a Double Taxation Avoidance Act like it
    exists between the U.S. and my country of residence (Germany) solves
    these problems. It does not!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

    Kristen Maier-Lenz

                                     ______

                   Letter Submitted by Dwight Jeffrey Manners
    The U.S. is the only advanced country that taxes its citizens on their
    world-wide income when those citizens live, work and pay tax in another
    country. I not only pay taxes in Belgium where I live but I also file a
    tax return to the IRS every year. Declaring non-U.S. income on IRS
    forms is very complicated. Hiring tax return preparers that understand
    the U.S. tax system as well as the Belgian tax system is very
    expensive, which makes meeting U.S. tax obligations a serious financial
    burden even if no tax is owed.

    I'm an ordinary American. I initially moved to Europe in 1982 on
    assignment with a U.S. multi-national company. In 2006 I lost my job in
    Europe while on assignment with another U.S. multinational firm. I
    decided to remain in Europe as my career opportunities were greater
    there and worked as an independent consultant. In 2015 I retired, and
    my wife and I decided to remain in Europe for family reasons. With my
    modest pension income, it is a considerable financial burden for me to
    spend money on U.S. tax return preparers. Further, due to the different
    approaches to taxing personal income, even with the foreign tax credit
    and the higher income tax rates in Belgium, I am still paying some U.S.
    taxes! As a retiree I cannot afford to be subject to double taxation.

    Additionally, U.S. laws and regulation have severely restricted banking
    and investment opportunities for U.S. citizens.

    I value my American citizenship. I closely follow U.S. politics as much
    if not more than the average citizen and I vote in every election for
    which I'm eligible. But I don't think it's fair that ordinary, middle
    class Americans like me, retired and paying tax abroad, are subject to
    inordinately complex and sometimes punitive U.S. tax filing.

    The current law is costly, punishing, and unfair, and it is causing
    some Americans abroad to consider renouncing U.S. citizenship. I hope
    that shocks you because it shocks me.

    I have recently read in the New York Times that the IRS is under
    resourced and consequently has not been able to follow up on some
    369,000 high income U.S. households which have not filed tax returns.
    At the same time the IRS is expending effort to review the millions of
    tax returns of U.S. citizens who reside abroad in countries which have
    higher personal income tax rates than the U.S.. I would expect that
    these tax returns of U.S. citizens residing abroad bring very little
    tax revenue to the U.S. treasury due to the foreign tax credit. Thus,
    it would be a win-win solution if U.S. citizens residing in and filing
    tax returns in those countries which have taxation rates similar to or
    higher than the U.S. were exempted from filing a normal U.S. tax
    return. It should be sufficient to file a simple form demonstrating
    that one has filed with the foreign country in which one resides. Such
    a measure would allow the IRS to reallocate its efforts to pursuing and
    reviewing those returns which would actually generate tax revenues for
    the U.S. treasury, while at the same time saving those U.S. citizens
    who reside abroad the high expense of preparing and filing their U.S.
    tax returns.

    In closing, I am asking the Senate Finance Committee to hold hearings
    on Americans abroad and U.S. taxation. I encourage you to invite
    testimony from experts who can provide an accurate profile of the
    Americans abroad community and describe the burden that U.S. tax filing
    places upon us. I urge you to also explore the implications of a switch
    from our current system of Citizenship Based Taxation to Residency
    Based Taxation.

    Thank you.

    Dwight Jeffrey Manners

                                     ______

                       Letter Submitted by Tanja Manners
    The U.S. is the only advanced country that taxes its citizens on their
    world-wide income when those citizens live, work and pay tax in another
    country. I not only pay taxes in Austria where I live but I also file a
    tax return to the IRS every year. Declaring non-U.S. income on IRS
    forms is very complicated. Even with my small income, the U.S. tax
    system is incredibly complicated and I generally have to hire an
    account who understands the U.S. tax system as well as the Austrian tax
    system and it's a lot of money to pay for this service to, in general,
    find out I don't even owe any taxes to the U.S. because my income is
    too small. It's an incredibly frustrating process every year and it's a
    serious financial burden especially when no tax is even owed.

    I'm an ordinary American. I choose to live in Austria for my job as an
    administrator at a university and as mentioned before, I don't exactly
    have high salary. I don't have the budget to spend on tax return
    preparers and certainly could not afford to be double-taxed.

    I value my American citizenship. I pay attention to U.S. politics as
    much if not more than the average citizen and I vote in every election
    for which I'm eligible. But I don't think it's fair that ordinary,
    working class Americans like me, making a living and paying tax abroad,
    are subject to inordinately complex and sometimes punitive U.S. tax
    filing.

    The current law is costly, punishing, and unfair, and it is causing
    some Americans abroad to consider renouncing U.S. citizenship. I hope
    that shocks you because it shocks me.

    I am asking the Senate Finance Committee to hold hearings on Americans
    abroad and U.S. taxation. I encourage you to invite testimony from
    experts who can provide an accurate profile of the Americans abroad
    community and describe the burden that U.S. tax filing places upon us.
    I urge you to also explore the implications of a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation.

    Thank you.

    Tanja Manners

                                     ______

                       Letter Submitted by Michael Marino
    Dear Members of the Senate Committee on Finance,

    I hereby submit a statement regarding how US International Tax Policy
    has affected my family and me.

    I have lived in Germany since October 2010. My residence for purposes
    of voting is in Washington State (7th Congressional District).

    US international tax policy has posed a significant challenge to me
    throughout my time living abroad. It has mainly caused me difficulties
    while obtaining and maintaining German bank accounts--which one
    requires while living abroad--and while trying to invest in my families
    and my future. To give some concrete examples:

          Due to PFIC limitations, I am unable to invest in ETF funds that
    are based outside of the U.S. without incurring significant U.S. tax
    penalties. Since ETF funds are one of the cheapest ways to diversely
    invest in one's future and prepare for retirement, this has posed a
    significant impediment to such planning. With the recent introduction
    of EU policies and laws in reciprocal response to the U.S. FATCA laws,
    I have lost the ability to invest in ETFs through my U.S. banking
    institution, meaning this important avenue for future planning has now
    been cut off to me completely.

          Several German banks have refused my daughters (who are U.S.
    citizens) and me financial services, due to the complex reporting
    requirements demanded by FATCA. This significantly limits us in our
    choices for affordable banking.

          Whereas I have had until now limited income tax liability in the
    U.S. due to the fact that Germany's tax rates are higher, the personal
    reporting I must undertake every year to submit my U.S. taxes consumes
    an inordinate amount of time and financial resources. Until now, I have
    luckily been able to avoid professional tax assistance, but as I am
    confronted with the obtuse language of the tax laws and the increasing
    risk of unintentional non-compliance with the U.S. tax code, it becomes
    more likely that I will have to engage expensive aid to help me in
    future tax preparation. Finding such aid is further complicated by the
    requirement that such professionals must be intimately familiar with
    both U.S. and German tax laws.

    I understand that the purposes of some of these U.S. tax laws have been
    to limit tax avoidance and evasion by corporations and persons.
    However, my family and I belong to the group of ordinary, working
    Americans who must live with the unintended consequences of these laws
    every day.

    I am happy to respond to requests for clarification or for further
    information.

    Regards,

    Michael Marino

                                     ______

                        Letter Submitted by Justine Mark
    I am a strong supporter of transparency, and unlike many other expats I
    don't mind filing out tax forms every year if it helps stop
    corporations from evading taxes and laundering money abroad. However,
    there are some major problems with the current expectations of
    Americans living abroad in how we're expected to file taxes that are
    particularly harmful to middle class and low income Americans abroad.

    Last year I helped a friend who recently got a green card file his U.S.
    taxes abroad for the first time. We tried to go through IRS free file,
    but only some of the free file services cover international income, and
    it's hard to tell which services support that and which do not. Unable
    to find a system that would let him file taxes for free, my friend was
    forced to use most of the last =40 in his bank account, that he needed
    for food, to pay the filing fee for his American taxes. This was
    problem even though he owed the government nothing. It think that's
    wrong, and it shouldn't happen to anyone.

    If my friend had been in the states there are programs, like the VITA
    program, to help people file their taxes for free. While these programs
    are hard enough to find in the U.S., they don't exist or are impossible
    to find abroad. Expat taxes are even more complicated than standard tax
    filings in the U.S., while many accidental Americans and people who
    have been living abroad for a long time know even less about filing
    taxes than the average American does, and may not speak English
    fluently. These people face a harder process to file their U.S. taxes
    than most Americans do with less support than the average American
    receives.

    There are services that specialize in helping expats file taxes, but
    most of them are prohibitively expensive (starting around =200), and
    there are no subsidies or help paying that fee for lower income tax
    filers abroad. While there's a program to get caught up on filing past
    years taxes, most of these services charge =500 or more to help people
    with that. Many of the people who need those services the most can't
    afford that. =500 is enough to cover rent or feed their family for a
    month.

    How hard is it for the IRS to tell the difference between earned salary
    income and corporate income? Or between an individual's savings and/or
    checking account and an illicit offshore account? Can we exempt some
    classes of income, like salary income and income support from a foreign
    government, from taxes abroad entirely, or at least set a much higher
    limit on filing and/or paying taxes on foreign income than where it is
    now?

    Here are a few things I'd like to see to keep the transparency benefits
    of requiring international reporting while protecting the interests of
    individuals living abroad:

          Significantly increase the filing threshold to 60K or something.
    People making minimum wage abroad shouldn't have to worry about filing
    U.S. taxes at all.

          Have a free and easy system for most expats to report their
    income without paying outrageous fees to third parties. This system
    should let people report things in the local currency and language.

          Automatically forgive people who failed to file taxes in past
    years as long as their income that year was below a threshold for those
    years, and/or provide people free support to get caught up on their
    back taxes.

          Increase the Foreign Earned Income Exclusion significantly, say
    to 500K, while coming up with other systems to prevent abuse, such as
    checking people actually work full time at their jobs and pay local
    income taxes. The current amount, of 100k, is easily a middle class
    income in many parts of the world, especially if you have a family. If
    you're an engineer or a doctor and are doing very well for yourself
    internationally there's no reason you should pay taxes on your salary
    twice. Filing foreign taxes should be about money laundering
    billionaires, not even the upper middle class living abroad. No more
    than 1% of expats should make more than the excluded amount.

    Clearly I don't have all the answers here, but I know that our system
    to ensure transparency and prevent money laundering and tax evasion
    needs to be easier on people who work for a living abroad than it is
    now. People who don't understand the unnecessarily complex system of
    filing U.S. taxes abroad, and can't afford to hire someone who does,
    are unnecessarily hurt by the current system. We need to create a
    system to hold corporations and billionaires accountable without
    penalizing people for being poor abroad, or making life difficult for
    middle class families living abroad.

                                     ______

                   Letter Submitted by Mario J. Martin-Burgos
    I am a proud citizen of the United States of America. I live outside
    the United States in Spain where I am a tax resident and where I am
    subject to full European and Spanish taxation and laws.

    I was born in the USA, and I've travel to the USA for short times to
    see family and for visiting a country I was proud to be born. But make
    this clear, I've never work and I have no assets or incomes in the USA.
    Yet, (at first I couldn't believe this could be possible) I am required
    to file U.S. tax returns and pay tax on my non-U.S. income to America.
    The complexity of the forms I can't even understand, just to prove I
    own nothing, is a complete nightmare that require a professional
    advisor that cost me thousand of dollars. The recommendation is don't
    even try, because most probably you'll ended with a fine of thousand of
    dollars for a misinterpretation of two incompatible tax systems to fit
    in an already too complex USA tax system. So, it is better that the IRS
    never hear I even exist, despite I have nothing to hide.

    But It got worst. Currently, I have serious problems with banks. I am a
    full Spanish citizen, but my ID says ``born in the USA''. Without
    further questioning, banks and brokers deny me to open an account,
    mentioning some FATCA law. Only after denouncing a discrimination and
    the intervention of the Spanish bank authorities I was allowed to have
    a bank account. Here is not like in America; without a bank account you
    can't do anything, from receiving a salary, to buy a car. Recently, my
    current broker forbids me to buy stocks in any American related
    company. All of this because someone wrote in FATCA ``born in the USA''
    as incrimination indicia, which is a violation of the non-
    discrimination clause of the international tax agreements and a
    violation of constitutional rights.

    Of course, I am proud to be an American. I know USA citizens living in
    Spain, but only those who have born in the USA have problems. Banks
    don't care if you are a USA citizen, they only care if you born there.
    When I try to explain the current problem to my Spanish fellows, they
    roll their eyes in disbelieve. Having an American citizenship should be
    an advantage, not a curse, right? Well, it is so serious that I am
    considering renunciation. How I can believe in a country that enforces
    discrimination to its own citizens.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                      Letter Submitted by Stephen Matthew
    To whom this may concern:

    I am a proud citizen of the United States of America. I live outside
    the United States in the Netherlands where I am a tax resident and
    where I am subject to full taxation.

    I am an emigrant from America from 45 years ago and still a proud
    American. We never know where life will take us. I moved from
    Connecticut in 1976, originally to play baseball for a summer, found a
    girl and the rest is history. Although the days sometimes go slowly,
    the years go quickly. I long ago realized that although I will always
    love America, I am living permanently abroad. I am a tax resident of my
    country of residence. I am required to organize my financial and
    retirement planning in that country. The problem I have is that the
    U.S. tax laws make it very difficult for me to live the same kind of
    life that my friends and neighbours live. You see, they are subject to
    only one tax system. As a U.S. citizen, I am subject to the tax system
    where I live and the U.S. tax system. Those systems are generally not
    compatible. Most attempts at responsible financial/retirement planning
    where I live are frustrated by the need to comply with U.S. tax laws.
    How can this be fair? How can the United States impose taxation on the
    non-U.S. income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American. It
    does mean that I am subject to the laws of the country where I live. I
    am not GILTI of anything. I ask only to be able to carry on my life
    without interference and burden from the Internal Revenue Code of the
    United States.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! This is
    extremely unjust. For many years, Americans abroad have been attempting
    to get both Treasury and Congress to address these issues. The time has
    come for the United States to abandon its extraterritorial tax regime
    and join the rest of the world in adopting a system of residence-based
    taxation.

    Thank you for listening.

    God bless the United States of America!

    Yours truly,

    Steve Matthew

                                     ______

                       Letter Submitted by Marie Mattson
    I was born outside the United States. I inherited my U.S. citizenship
    from my father. I live outside the United States in Canada where I am a
    tax resident and where I am subject to full taxation. Even when I owe
    no U.S. tax, I pay hundreds of dollars a year to comply. To put it
    simply: The United States must stop exporting its system of
    extraterritorial taxation and regulation, to people who live in other
    countries.

    I don't understand why the United States is trying to impose taxation
    on none U.S. income. I live in a country with a well-developed tax
    system that requires payment of a wide range of taxes. I can tell you
    that I pay a lot of taxes. I can also tell you that the U.S. tax system
    treats my non-U.S. income and assets very unfairly. It is somewhere
    between difficult and impossible to be a tax resident of more than one
    country. How can I plan for retirement? It is impossible to make
    financial plans as two separate tax structures have to be taken into
    account. Very often the two tax structures force me to forego tax
    advantages in one country because of the tax impact in the other. For
    example, the Canadian Tax Free Savings Account (TFSA) is an amazing
    tool to save for retirement however the tax requirements imposed by the
    U.S. strip all benefit away.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxed on that
    income, in the country where I reside. There is no other advanced
    country in the world that imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. I am subject to the laws of the
    country where I live. I ask only to be able to carry on my life without
    interference from the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax credit rules and/or the
    Foreign Earned Income Exclusion solve these problems. They don't!

    American extraterritorial taxation is extremely unjust. For many years,
    Americans abroad have been attempting to get both Treasury and Congress
    to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    This insanity and injustice must stop!

    God bless the United States of America!

                                     ______

                    Letter Submitted by Mark William Mattson
    I am a proud citizen of the United States of America. I live outside
    the United States in Canada where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxed on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life, without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States imposes taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both the Treasury and Congress to address these
    issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Martha McGloin
    I am a proud citizen of the United States of America. Since May 1978, I
    have lived outside the United States in Canada where I am a tax
    resident and where I am subject to full taxation.

    I moved from the United States 43 years ago to take advantage of a nine
    month fellowship. Although the days sometimes go slowly, the years go
    quickly. I long ago realized that although I will always love the USA,
    I am living permanently abroad. I am a tax resident of my country of
    residence. I am required to organize my financial and retirement
    planning in that country. The problem I have is that the U.S. tax laws
    make it very difficult for me to live the same kind of life that my
    friends and neighbours live. You see, they are subject to only one tax
    system. As a U.S. citizen, I am subject to the tax system where I live
    and the U.S. tax system. Those systems are generally not compatible.
    Most attempts at responsible financial/retirement planning where I live
    are frustrated by the need to comply with U.S. tax laws. How can this
    be fair? How can the United States impose taxation on the non-U.S.
    income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States? I do not
    live ``offshore''. I do live in a country where I pay very high income
    taxes. I also pay additional kinds of taxes to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation. The financial limitations and risks
    incurred due to this extraterritorial taxation have led me to initiate
    the process to renounce my American citizenship--a step that is
    difficult for both me and my family, but one that is necessary in order
    that I not create a significant costs for my family in Canada.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! Subsequent hearings should
    deal with the reality on the ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    The U.S. extraterritorial tax regime makes it difficult for me to save,
    invest, participate in pension plans and generally behave in a
    financially responsible way. This is because all of these essential
    activities are taking place in my country of residence and not in the
    United States. My retirement investments are foreign to the United
    States, but local to me. In addition, the United States impose taxes on
    things such as the sale of principal residence when my country of
    residence does not. Because I am required to live my life with the USD
    as my functional currency, I am subject to ``fake income'' on nothing
    but changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation,

    Sincerely,

    Martha McGloin
    Toronto, Canada

                                     ______

                       Letter Submitted by Rachel McKean
    I am a proud citizen of the United States of America. I live outside
    the United States in New Zealand where I am a tax resident and where I
    am subject to full taxation.

    I run a small business in the country where I live. My business is not
    a multinational corporation and all of its income is domestic to the
    country where I live. However, because I am a U.S. citizen, the U.S.
    tax code treats me the same as Apple or Google. If I use a local
    business structure that's treated as a corporation under U.S. tax law,
    then I'm forced to fill in the same form 5471 as Apple must complete
    for each foreign subsidiary--translating all of my business records
    into U.S. dollars even though I do no business in that currency. My
    business is subject to GILTI even though I have no intangible income.
    This makes it exceptionally difficult to manage our business as it is
    very difficult trying to plan and manage tax obligations for 2
    countries with conflicting policies. Not to mention the impact on our
    ability to compete in our local market.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable (and
    pay those taxes) on that income in the country where I reside, and do
    not live in the United States. There is no other advanced country in
    the world that imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! Especially as
    business owner and shareholder, not just a an employee earning a wage.
    Wealth and investment planning is very difficult and I feel like my
    wings are clipped and can't realise the full potential with our
    business.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                      Letter Submitted by Victoria Meacham
    I was born outside the United States. I inherited my U.S. citizenship
    from my father. I have never lived in the United States. I live outside
    the United States in Scotland where I am a tax resident and where I am
    subject to full taxation. To me the United States is only about
    taxation. I find it very difficult to afford to comply with U.S. tax
    filing. Even when I owe no U.S. tax, I pay hundreds of pounds a year to
    comply. I would love to simply renounce my U.S. citizenship. But it is
    not easy to afford the renunciation fee of $2,350. Incredibly I can't
    afford to comply, and I can't afford to renounce. I feel as though I am
    a slave to a country that I never lived in. To put it simply: The
    United States must stop exporting its system of extraterritorial
    taxation and regulation, to people who live in other countries.

    I don't understand why the United States is trying to impose taxation
    on none U.S. income. I live in a country with a well-developed tax
    system that requires payment of a wide range of taxes. I can tell you
    that I pay a lot of taxes. I can also tell you that the U.S. tax system
    treats my non-U.S. income and assets very unfairly. It is somewhere
    between difficult and impossible to be a tax resident of more than one
    country. How can I plan for retirement?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I was a U.S. citizen, I was subject to the U.S.
    extraterritorial tax regime, which means the United States imposed
    taxation on my non-U.S. income even though I was and am fully taxable
    on that income, in the country where I reside. This was true even
    though I did not live in the United States. There is no other advanced
    country in the world that imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1. The hearing focused on U.S. multinational corporations. But here
    is the reality: U.S. tax rules treat individuals living outside the
    United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2. I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of first citizenship. I am subject to the laws of the
    country where I live. I am not GILTI of anything. I ask only to be able
    to carry on my small business and live my life without interference
    from the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax credit rules and/or the
    Foreign Earned Income Exclusion solve these problems. They don't!

    American extraterritorial taxation is extremely unjust. For many years,
    Americans abroad have been attempting to get both Treasury and Congress
    to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    This insanity and injustice must stop!

    God bless the United States of America!

                                     ______

                      Letter Submitted by William Melhorn
    I am a citizen of the United States of America. I live outside the
    United States in Canada where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure, I care deeply about America. But,
    we never know where life will take us. I moved from America many years
    ago. Although the days sometimes go slowly, the years go quickly. I
    long ago realized that although I will always care about America, I am
    living permanently abroad. I am a tax resident of my country of
    residence. I am required to organize my financial and retirement
    planning in that country. The problem I have is that the U.S. tax laws
    make it very difficult for me to live the same kind of life that my
    friends and neighbours live. You see, they are subject to only one tax
    system. As a U.S. citizen, I am subject to the tax system where I live
    and the U.S. tax system. Those systems are generally not compatible.
    Most attempts at responsible financial/retirement planning where I live
    are frustrated by the need to comply with U.S. tax laws. For example, I
    cannot take advantage of the tax savings one gets via a ``tax free
    saving account'' because it not recognized by the U.S. Internal Revenue
    Code. How can this be fair? How can the United States impose taxation
    on the non-U.S. income and assets of a person who is a tax resident of
    another country--with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes ( for example,
    the GST-Federal Goods And Services tax )in my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. Really Senators. This laughable.

        2.  Indeed, I was shocked that there was no witness who had
    personal experience with a company or individual running a business
    with interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``Permanent Resident of
    Canada'' and a U.S. citizen living in Canada. It doesn't make me less
    American. But, it does mean that I am subject to the laws of the
    country where I live. I am not GILTI of anything. I ask only to be able
    to carry on my small business and/or my life without interference from
    the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    NOT immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax systems
    (In others words, double taxation among other things).

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues
    with little or no effect. This has left many non-resident Americans
    both frustrated and very angry. To the point, that many have chosen to
    renounce citizenship, and many more are considering so.

    So, what is real solution to all of this: It is time for the United
    States to abandon its extraterritorial tax regime and join the rest of
    he world in adopting a system of residence-based taxation system.

                                     ______

                       Letter Submitted by Philip Michael
    I am a proud citizen of the United States of America. I live outside
    the United States in Toronto, Canada, where I am a tax resident and
    where I am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. My parents moved from America many years ago,
    shortly after I was born, with me. Although the days sometimes go
    slowly, the years go quickly. I long ago realized that although I will
    always love America, I am living permanently abroad. I am a tax
    resident of my country of residence. I am required to organize my
    financial and retirement planning in that country. The problem I have
    is that the U.S. tax laws make it very difficult for me to live the
    same kind of life that my friends and neighbours live. You see, they
    are subject to only one tax system. As a U.S. citizen, I am subject to
    the tax system where I live and the U.S. tax system, which also
    restricts certain financial tools for retirement and savings. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (GST, HST) to
    my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally, the U.S. extraterritorial tax regime makes it difficult
    for me to save, invest, participate in pension plans and generally
    behave in a financially responsible way. This is because all of these
    essential activities are taking place in my country of residence and
    not in the United States. My retirement investments are foreign to the
    United States, but local to me. In addition, the United States impose
    taxes on things (for example: sale of principal residence) when my
    country of residence does not. Because I am required to live my life
    with the USD as my functional currency, I am subject to ``fake income''
    on nothing but changes in the exchange rate. As a tax resident of both
    the United States and my country of residence, I get the worst of both
    tax systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God Bless the United States of America!

                                     ______

                       Letter Submitted by Robert Michael
    I am no longer a proud citizen of the United States of America. Since
    my childhood, I live outside the United States in The Netherlands where
    I am a tax resident and where I am subject to full Dutch taxation.

    You see I am an ``accidental American''. I was born in America. But, I
    was removed from America when I was 2 years old. I grew up in my
    parents' home country and thus mine, The Netherlands. I have no family
    in the U.S., no assets in the U.S. Yet, (at first I couldn't believe
    this could be possible) I am required to file U.S. tax returns and pay
    tax on my non-U.S. income to America. Everything in my life is non-
    U.S.! But, it gets worse. I am also required to file complex
    information returns describing the details of my Dutch finances to
    America. I can't even understand the American forms. How can this be?
    What is the reason for this? No other country does this! During more
    than 60 years no one ever informed my family, not the IRS, not the
    Dutch IRS. Nobody! How can the U.S. impose its extraterritorial law of
    citizenship based taxation on people not even being made aware of it by
    the U.S. government? Do you have any idea how guilty my elderly father
    and mother are feeling? Subjecting their child to this Kafkaesk U.S.
    tax system? I would have renounced in a heartbeat when I turned 18. I'm
    63 now. I have no idea how to comply with the rules imposed on me.
    Also, I can't afford the expensive consultants. What am I supposed to
    do? Renounce my U.S. citizenship? I can't even afford the U.S.$2350
    renunciation fee to do so. I simply don't know what to do and I can't
    deal with the stress.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence. Not one of my Dutch bank accounts are
    foreign to me, but suddenly because I'm being identified as a so-called
    U.S. person (FATCA) and I'm being severely discriminated against and
    treated as a second class citizen. The U.S. is making my life
    miserable.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income and assest even though I am a fully
    taxable on that in the country where I reside, and do not live in the
    United States. And because I am married, also my wife's income and
    assets are taxed by the U.S.. She is not a U.S. person and caused by
    the financial problems of FATCA she is forced to divorce me!

    There is no other advanced country in the world that imposes such
    extraterritorial taxation.

    I would like to make three general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States.

        3.  To put it another way:
            a.  Subsequent hearings should deal with the reality on the
    ground and not the theory in the cloud.
            b.  I am not a ``mini-multinational'' I am a ``dual-national''
    living in my country of premier citizenship.
            c.  I am subject to the laws of the country where I live.
            d.  I am not GILTI of anything.
            e.  I ask only to be able to carry on my small business and/or
    life my life without interference from the Internal Revenue Code of the
    United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way for me and my family. This is because all of these
    essential activities are taking place in my country of residence and
    not in the United States. My retirement investments are foreign to the
    United States, but local to me. In addition, the United States impose
    taxes on things (for example sale of principal residence) when my
    country of residence does not. Because I am required to live my life
    with the USD as my functional currency, I am subject to ``fake income''
    on nothing but changes in the exchange rate. As a tax resident of both
    the United States and my country of residence, I get the worst of both
    tax systems. What one gives, the other takes.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                       Letter Submitted by Lauren Miller
    I am a citizen of the United States of America. I live outside the
    United States in England where I am a tax resident and where I am
    subject to full taxation.

    I am an ``accidental American.'' My mother is an American citizen and
    grew up in California and Oregon, but I was born and raised in England.
    American citizenship was applied for me at my birth so that I would
    have the legal right to move back to America to live with the rest of
    my family if I chose to when I grew up. I have never lived in America.
    But I always imagined in the future I would live there for a time with
    my family.

    Despite having never been resident, I am required to file U.S. tax
    returns and pay tax on my non-U.S. income to America. But, it gets
    worse. I am also required to file complex information returns
    describing the details of my finances to America. What is the reason
    for this? No other country does this! I used to be proud and grateful
    that I wasan American citizen, but now it is a significant source of
    stress in my life. There seem to be reems of complex rules I am
    supposed to comply with, but the system is alien to me as I was not
    brought up with any of these requirements. I can't afford the expensive
    consultants, I am a PhD student, researching treatments for Dementia.
    And science does not pay as well in England as it does in America; when
    I graduate, I do not expect to earn much more than I do now. I
    investigated renouncing my citizenship--in fact in a free clinic I was
    advised to do so because it would make my life so much easier. But I
    don't want to; it's not fair that I should have to give up the freedom
    to be with my family for a tax code. And then there's the small matter
    of how much it costs to renounce citizenship, which seems to be going
    up all the time as more and more people get rid of their passports. I
    can't actually afford the U.S.$2350 renunciation fee. The American
    government has me in a complete bind; one way or another I am going to
    have to spend a lot of money. I simply don't know what to do and it is
    hugely stressful.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States.

    There is no other advanced country in the world that imposes such
    extraterritorial taxation.

    Schemes in my country of residence to try and help people like me get
    buy, such as tax free savings accounts and investments where the
    government contributes are not recognised in the U.S. and are actually
    penalised. I was told by a tax advisor never to invest in shares in my
    name because the U.S. government will treat it like a foreign business,
    but to get someone in my English family to do it for me, Can you an
    imagine a more un-American thing? Being told never to invest because
    you are American?

    I would like to make two general observations about the hearing on
    March 25.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I ask only to be able to carry on my life without interference
    from the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    NOT immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not.

    Because I am required to live my life with the USD as my functional
    currency, I am subject to ``fake income'' on nothing but changes in the
    exchange rate. As a tax resident of both the United States and my
    country of residence, I get the worst of both tax systems. What one
    giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    I am a young woman of 24, and I just want to get on with my life. I
    want to get a job when I graduate with my PhD, without having to figure
    out what forms I need to fill out so I don't pay tax twice. I want to
    be able to buy a house without having to worry about if, when I sell it
    in 20 years' time, I will have to pay tax to the U.S. government. I
    want to be able to have children without having to worry about whether
    the U.S. government will tax the child benefit I am paid by my country
    of residence. I want to be able to invest in the UK governments tax
    free schemes and pensions without fear of what the U.S. government will
    claim in the end.

    When I was growing up, I was always taught that to be American was to
    believe in fairness and justice. America was the good guy, and they
    stood up for the little people. Well, I am a little person, and America
    is financially crippling me.

                                     ______

                       Letter Submitted by Pamela Miller
    To the Senate Committee on Finance:

    Thank you for the opportunity to submit this statement for the record
    of your recent hearing on in the impact of U.S. international tax
    policy on American workers, jobs and investment. I understand that the
    March 25, 2021, hearing did not include a discussion on the impact of
    U.S. tax policy on citizens actually living abroad, whose lives are
    directly, and often negatively, impacted by resulting U.S. tax laws.

    Almost 25 years ago, I married a Belgian citizen and moved from
    Tennessee to Belgium to start our life together in his home country.
    During the early years of our marriage, we worked, bought a house
    together, and had two children (BE-U.S. dual citizens). Career
    opportunities, education opportunities, and home ownership are a few of
    the reasons we decided to stay in Belgium and raise our family here.

    I implore the Committee to listen to the voices of U.S. citizens living
    abroad when considering any further changes to U.S. international tax
    law. Below are a few of the major impacts FATCA and Citizen based
    taxation have on my life abroad.

    ISSUES

          Before FATCA, my banking options were those I could expect in
    the U.S.--checking/savings/retirement/investment/college savings for
    the children. After FATCA, my bank, out of fear of the penalties
    imposed for mistakes in compliance on the reporting requirements, has
    closed all my accounts save my checking account. I am no longer able to
    save for my retirement nor attempt to improve my financial standing via
    investments. I was a financially independent woman but have now become
    financially dependent upon my husband for our future retirement.

          In a few years, our children will be old enough to join the work
    force, marry if they desire, and consider home ownership. Should our
    sons decide to continue living abroad, home ownership and retirement
    savings, savings of any kind, will not be available to them unless they
    renounce their U.S. citizenship. Our sons identify as Americans and
    hope to one day live in the U.S., but they also expect part of their
    adulthood will be spent living overseas. The potential decision to
    renounce their U.S. citizenship will not be taken lightly, but already
    serves as a source of stress and concern for us.

          Annual filing of taxes and FBAR is a financial and psychological
    burden. Due to the complexities of filing from abroad, I use the
    services of a specialized tax accountant in spite of the fact that my
    income has never, in 25 years, exceeded the Foreign Earned Income
    Exclusion. However, I invest time and money every year to prove that
    and must comb through bank records to be able to accurately file the
    FBAR report.

    While I understand the original intent of FATCA, I believe the full
    impact of the legislation on average American citizens living overseas
    was not fully investigated and the stories of the subsequent reality of
    financial life of Americans abroad have not been heard. Repeal of
    FATCA, or instituting Residence Based taxation like all other countries
    in the world (save Eritrea), would afford citizens such as myself some
    relief from our current financial situation. This combined with changes
    to or the elimination of FBAR reporting would allow us to once again
    have the financial freedoms our fellow citizens in the U.S. enjoy.

    CONCLUSION

    I am a proud U.S. citizen and have raised my sons to be the same. Our
    family lives what would be considered in the U.S. a middle-class life.
    It pains me to be treated like a tax cheat by my own country for the
    simple reason that I married and live abroad.

    Now is your opportunity to rectify the U.S. International tax situation
    for non-resident Americans and give some relief to your fellow citizens
    who have been struggling under the burden of FATCA and CBT for more
    than 10 years.

    Sincerely,

    Pamela Miller
    Voting in Tennessee (9th Congressional District)

                                     ______

                   Letter Submitted by Margaret Lynn Morrison
    The U.S. is the only advanced country that taxes its citizens on their
    world-wide income when those citizens live, work and pay tax in another
    country. I not only pay taxes in the United Kingdom where I live but I
    also file a tax return to the IRS every year. Declaring non-U.S. income
    on IRS forms is very complicated. Hiring tax return preparers that
    understand the U.S. tax system as well as the UK tax system can be very
    expensive, which makes meeting U.S. tax obligations a serious financial
    burden even if no tax is owed.

    I'm an ordinary American. I moved to the UK to be with my husband (who
    is not American). We are a normal family, living in a single country,
    working regular jobs. We are not millionaires using shell companies to
    hide our income. We don't have room in our household budget to spend on
    tax return preparers, and we certainly cannot afford to be double-
    taxed.

    I moved abroad in 2013 and have continuously lived outside of the
    United States since that time. I spend less than two weeks per year in
    the United States. I am married to an Italian man and we have two
    children. I recently started my own small business (I am a writer). I
    pay income and company taxes in the UK. I also file U.S. taxes
    annually, at a cost of around $400 per year for an accountant to
    prepare them on my behalf. Now that I have started a new business, my
    U.S. tax obligations have become even more onerous, and I will need to
    pay $800 each year for tax prep, at a minimum, despite not owing any
    U.S. taxes.

    My husband, as an Italian citizen, does not share this burden. He is
    taxed once in the UK on his UK income. He is not required to report his
    earnings back to the Italian government. He struggles to understand why
    this burden is placed on me.

    Additionally, we have two children who have never lived in the U.S.,
    despite holding U.S. citizenship (through me). They may very well
    choose to live abroad for their entire lives. Yet, due to their
    birthright citizenship, they will also inherit this burden of filing
    taxes in the U.S.

    I value my American citizenship. I pay attention to U.S. politics as
    much if not more than the average citizen and I vote in every election
    for which I'm eligible. But I don't think it's fair that ordinary,
    working class Americans like me, making a living and paying tax abroad,
    are subject to inordinately complex and sometimes punitive U.S. tax
    filing. I certainly don't think it is fair that my tax burden should
    increase significantly in both cost and complexity simply because I am
    a small business owner in another country--selling nothing more than my
    own services and with zero employees, working out of my own home.

    The current law is costly, punishing, and unfair, and it is causing
    some Americans abroad to consider renouncing U.S. citizenship. I have
    honestly considered it and done a cursory investigation, despite not
    yet holding citizenship in any other country. I hope that shocks you
    because it shocks me.

    I am asking the Senate Finance Committee to hold hearings on Americans
    abroad and U.S. taxation. I encourage you to invite testimony from
    experts who can provide an accurate profile of the Americans abroad
    community and describe the burden that U.S. tax filing places upon us.
    I urge you to also explore the implications of a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation.

    Thank you.

    Margaret Lynn Morrison

                                     ______

                      Letter Submitted by David Moskowitz
    Dear Senate,

    I am an American, living overseas since 1997.

    Every year, I dutifully submit hundreds of pages of tax forms to the
    IRS and banking info to FINCEN, costing me thousands in accounting
    fees, owing in most cases, $0 on my income I earn abroad. It takes me
    nearly a week to collate all the information needed to submit this
    documentation. In fact, I pay more to my US accountant to help with
    this, than I pay in taxes to the country in which I reside. If I earned
    any capital gains, eg from selling my local home abroad, I'd owe
    potentially thousand to the US and nothing to the country I actually
    live in. This is very strange.

    Because of FATCA, it has become very difficult to open up personal and
    business bank accounts in the country in which I live, they won't take
    on U.S. persons as the compliance cost is too high for them.

    This was before the TCJA, which magnified the problem and
    discriminatory way in which American expats are treated by the U.S. tax
    system. No consideration was given to the expat operating a small
    business abroad. It destroyed the ability to compete, invest, or grow a
    business in the country in which we lived.

    Instead of competing with local companies on equal ground, if an
    American own more than 50% of a local (what you view as foreign)
    company, we are personally responsible for any profits that aren't
    taxed at a rate which they'd be taxed at in the U.S. As if the market
    and business was in the U.S. Imagine trying to compete when you pay
    more in taxes than a non-us person owned business would. This doesn't
    even touch on the compliance nightmare that the TCJA added.

    In attempting to save towards retirement, we are forced to navigate a
    minefield of confusing rules regarding types of retirement accounts and
    their designation by the IRS. eg is it a pfic?, did I accidently put
    money into a foreign fund? Is my local governments retirement system a
    pfic, to figure it out you may now have to pay someone thousands to
    figure out what paperwork is needed to be filed.

    Can I invest in a local (foreign) company? What if my investment puts
    them over a 50% U.S. person ownership? Is it now a CFC or possibly a
    pfic? Uh oh, I am now personally liable for it's profits and need to
    submit their financials to the IRS. Oh, guess you don't want my
    investment.

    Can I sit on the board of a non-profit? In what capacity? Can I be a
    signer to their bank account? Would that make me liable to send in more
    paperwork to IRS and FINCEN? How much will this cost me to figure out?
    OK, better not bother to help them.

    Please move to a residency based taxation system, like 99% of all other
    nations. Allow me to compete on equal ground, live a normal life, and
    not live under the fear and anxiety that I may make a mistake on some
    paperwork and be unfairly penalized ($10k to $100k!) for not filing the
    correct paperwork.

    Thank you for your consideration in correcting this injustice.

    David Moskowitz

                                     ______

                         Letter Submitted by Owen Muise
    I am a proud citizen of the United States of America. I live outside
    the United States in Germany where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from the United States. Although I still love the
    U.S.A., life sometimes brings unexpected change: I moved from the U.S.
    many years ago. Although the days sometimes go slowly, the years go
    quickly. I long ago realized that although I will always feel like an
    American, I am living permanently abroad. I am a tax resident of
    Germany, my country of residence. I am required to organize my
    financial and retirement planning in that country. The problem I have
    is that the U.S. tax laws make it very difficult for me to live the
    same kind of life that my friends and neighbors live. You see, they are
    subject to only one tax system. As a U.S. citizen, I am subject to the
    tax system where I live plus the U.S. tax system. Those systems are
    generally not compatible. Most attempts at responsible financial/
    retirement planning where I live are frustrated by the need to comply
    with U.S. tax laws.

    For example, banks and other financial organizations will not allow me
    to invest in stocks or funds of any kind because of the U.S. government
    requirement that they also comply with FACTA, which they, because of
    the complications, are not willing to do. While other nationalities can
    obtain these services, I as an American cannot. I am discriminated
    against because of the unreasonable U.S. regulations. How can this be
    fair? How can the United States impose taxation and regulations on the
    non-U.S. income and assets of a person who is a tax resident of another
    country and with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside and although I do not, and have
    not, lived in the United States for many years. There is no other
    advanced country in the world that imposes such extraterritorial
    taxation. According to my information, the only other countries that do
    so are Eritrea and Myanmar. Does the United States want to compare
    itself concerning treatment of its citizens to Eritrea and Myanmar?

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States the same way they treat U.S. multinationals doing
    business outside the United States. I am a flesh and blood individual
    person. Not a single participant at the hearing recognized how
    individuals are affected by these rules. Yet, the focus of the hearing
    was supposed to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience earning their income as an employee or as an individual
    running a business with interests outside the U.S.A. Not a single one!
    This is crazy. I respectfully suggest that subsequent hearings include
    witnesses who have experienced employment or running a business outside
    the United States and actually live outside the United States. To put
    it another way: Subsequent hearings should deal with the reality on the
    ground and not with only vague or poorly informed theoretical
    considerations.

    I am currently a permanent resident of a country outside of the United
    States. This doesn't make me any less American. But it does mean that I
    am subject to the laws of the country where I live. I am not GILTI of
    anything. I ask only to be able to carry on my life without
    unreasonable interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States.
    Individuals are not immune to the effects of raising the U.S. corporate
    income tax rate and/or doubling the GILTI tax.

    More generally (whether or not one is a simple employee or a small
    business owner), the U.S. extraterritorial tax regime makes it
    difficult for me to save, invest, participate in pension plans and
    generally behave in a financially responsible way. This is because all
    of these essential activities are taking place in my country of
    residence and not in the United States. My retirement investments are
    foreign to the United States, but local to me. In addition, the United
    States imposes taxes on things (for example sale of principal
    residence) when my country of residence does not. Because I am required
    to live my life with the USD as my functional currency, I am subject to
    ``fake income'' on nothing but changes in the exchange rate. As a tax
    resident of both the United States and my country of residence, I get
    the worst of both tax systems.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you for your time and consideration.

    Owen Muise

                                     ______

                      Letter Submitted by Christina Nawab
    I am a proud citizen of the United States of America. I live outside
    the United States in New Zealand where I am a tax resident and where I
    am subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    I live on a very modest income. I'm not wealthy, but still must spend
    at least $300 per year for assistance filing my taxes, of which I'm not
    liable, but must prove anyways. I would like to invest for my future,
    retirement and buy a house one day, but that doesn't seem possible with
    the current expat tax laws.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Robert Newson
    I am a proud citizen of the United States of America. I live outside
    the United States in Switzerland where I am a tax resident and where I
    am subject to full taxation.

    I came to Switzerland over 30 years ago, because they offered me a job
    when America didn't. As things often happen, I fell in love with a
    Swiss girl and we married. That's the kind of story Americans love. Why
    should I be penalized for falling in love or trying to make something
    of my life? I feel like I have no voice, nor do I have the advantages
    that other Americans have. This immunization process we're going
    through right now is a perfect example. While Americans (and others)
    residing in the U.S. are being taken care of rather quickly--taxpayer
    or not!--when I go onto the U.S. embassy website for guidance, it tells
    me basically to deal with the situation myself. Taxation without
    receiving services accorded to other Americans is blatantly indecent
    and abusive, in my opinion.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Tracy Nissan
    I am a proud citizen of the United States of America. I live outside
    the United States in the United Kingdom where I am a tax resident and
    where I am subject to full taxation.

    I am an emigrant from America and moved from America many years ago.
    Although the days sometimes go slowly, the years go quickly. I long ago
    realized that although I will always love America, I am living
    permanently abroad. I am a tax resident of my country of residence. I
    am required to organize my financial and retirement planning in that
    country. The problem I have is that the U.S. tax laws make it very
    difficult for me to live the same kind of life that my friends and
    neighbors in the UK live as they are subject to only one tax system. As
    a U.S. citizen, I am subject to the tax system in the UK where I live
    and the U.S. tax system. Those systems are generally not compatible.
    Most attempts at responsible financial/retirement planning where I live
    are frustrated by the need to comply with U.S. tax laws. How can this
    be fair?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to the UK, my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am an individual
    person, not a single participant recognized how individuals are
    affected by these rules. Yet, the focus of the hearing was supposed to
    be about individuals. How did this happen?

        2.  I respectfully suggest that subsequent hearings include
    witnesses who are actually living outside the United States. To put it
    another way: Subsequent hearings should deal with the reality on the
    ground.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live, I ask only to be able to carry on my life without interference
    from the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States.
    Individuals are not immune to the effects of raising the U.S. corporate
    income tax rate and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                         Letter Submitted by Brian Nitz
    I pay taxes in Ireland and must file tax returns to the United States
    IRS. If my income is high enough or if I spend too much time in one
    country or the other, I must pay taxes in both the U.S. and Ireland.
    This part seems fair enough but it doesn't match current U.S.
    international tax policy.

    Americans with very high incomes can hire accountants, lawyers and tax
    preparation experts and shelter enormous amounts of income from the
    U.S. and where they are living.

    But Americans with low or middle-class incomes, even U.S. citizen
    children as soon as they turn 18 are faced with complex laws which
    claim to aim at ``fat cats'' but threaten us with potential of severe
    tax penalties that can far exceed our income in any country. U.S.
    international tax laws prevent us from being treasurers at our local
    church or volunteer organization. U.S. international tax laws prevent
    us from attempting to start or maintain small businesses or rental
    properties in either country. U.S. international tax laws discourage us
    from saving enough for our children to have the option to go to college
    in the U.S.

    In 1983, the U.S. Supreme Court ruled on the legal principal of
    proportionality and required that the following standards be met:

        1.  Compare the nature and gravity of the offense and the harshness
    of the penalty;

        2.  Compare the sentences imposed on other criminals in the same
    jurisdiction, i.e., whether more serious crimes are subject to the same
    penalty or to less serious penalties; and

        3.  Compare the sentences imposed for commission of the same crime
    in other jurisdictions.

    With its threats of disproportionate and severe penalties against U.S.
    citizens simply based on where they live, FATCA violate all three of
    these legal standards.

    At the same time FATCA and other U.S. international tax laws have
    increased the burden of federal taxes on Americans working abroad, U.S.
    states have made it much more difficult for us to vote. My home state
    of Wisconsin has pulled us from the voting rolls several times and made
    it impossible for us to vote in several elections without organizing a
    flight to the U.S. every election day. Several of our requests for
    absentee ballots never resulted in a ballot and of those which did, the
    ballot often arrived AFTER election day even when we submitted near the
    earliest possible date. Covid-19 has now kept us from returning to the
    U.S. for more than a year and so we are unable to establish the
    documents necessary for the adults in our family to vote in the next
    Wisconsin election.

    Many Americans living abroad now have taxation without representation
    which brings to mind a terrible precedent set by King George III in the
    1700s. Please, let's not go there.

    What I suggest instead is a dose of common sense regarding U.S.
    international tax law responsibility and voting rights which recognize:

          Americans living and working abroad help our nation maintain a
    vibrant and prosperous relationship with the international community.
          Americans and corporations should not be able to shelter huge
    amounts of money simply by establishing alternate residencies in other
    countries.
          Existing tax treaties should be enforced so that immigrants
    paying taxes in the U.S. are fairly balanced by Americans paying taxes
    abroad.
          Ordinary middle-class U.S. citizens working abroad should not
    have to hire tax lawyers and accountants to prove that they are not
    hiding billions.
          Ordinary U.S. citizens should be encourage to save and/or invest
    money at home and abroad, save for college, start small businesses,
    lease properties . . . without the fear of triggering penalties which
    can be many times the size of their annual income.
          If it's possible to securely file taxes and pay taxes from
    abroad by e-filing or postal service, it's certainly possible to vote
    securely from abroad.

    Thank you.

    Brian Nitz
    U.S. Voting address: Appleton Wisconsin

                                     ______

                       Letter Submitted by Sylvia Norton
    I am a proud citizen of the United States of America. I live outside
    the United States in Vancouver, BC, Canada where I am a tax resident
    and where I am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America in 1968 after 2 years in
    Brazil with the American Peace Corp. Although the days sometimes go
    slowly, the years go quickly. Although I will always love America, I am
    living permanently abroad. I am a tax resident of my country of
    residence. I am required to organize my financial and retirement
    planning in that country. The problem I have is that the U.S. tax laws
    make it very difficult for me to live the same kind of life that my
    friends and neighbours live. You see, they are subject to only one tax
    system. As a U.S. citizen, I am subject to the tax system where I live
    and the U.S. tax system. Those systems are generally not compatible.
    Most attempts at responsible financial/retirement planning where I live
    are frustrated by the need to comply with U.S. tax laws. How can this
    be fair? How can the United States impose taxation on the non-U.S.
    income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Ian Norville
    I am a proud citizen of the United States of America. I live outside
    the United States in UAE where I am a tax resident and where I am
    subject to full taxation.

    I am an American expat. I am temporarily living outside the United
    States for reasons of work and career advancement. When I first moved
    abroad I learned a lot. I learned that other countries have well
    developed tax systems that require payment of a wide range of taxes. I
    can tell you that I pay a lot of taxes. I can also tell you that the
    U.S. tax system treats my non-U.S. income and assets very unfairly. The
    fact that I am temporarily living abroad doesn't mean that I don't have
    to plan for retirement.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                               Oxfam America \1\
    ---------------------------------------------------------------------------
        \1\ Oxfam America is a nonprofit organization dedicated to end the
    injustice of poverty.
    ---------------------------------------------------------------------------

                         1101 17th St., NW, Suite 1300

                           Washington, DC 20036-4710

    There is consensus that one objective of international tax policy
    should be to maximize U.S. competitiveness. However, seemingly
    conflicting factual claims made during the hearing have shed confusion
    as to the best way to achieve that objective. This statement seeks to
    clarify the confusion and concludes that the United States should go
    back to a worldwide tax system, albeit without the loophole that
    existed prior to the Tax Cuts and Jobs Act (TCJA).

    Much of the confusion stems from the fact that there are two distinct
    concepts of U.S. competitiveness:

        1.  The competitiveness of U.S. multinational corporations
    (relative to multinational corporations based in foreign countries) on
    global markets.

        2.  The competitiveness of the United States (relative to other
    countries) as a destination of investment.

    The first type of competitiveness is in the interest of investors in
    U.S. multinational corporations. That is not the same as American
    investors: about a third of the stock of U.S. corporations are owned by
    foreign investors,\2\ and likewise 401(k) holders and other American
    investors own diversified portfolios that include stocks and bonds of
    foreign corporations.
    ---------------------------------------------------------------------------
        \2\ https://bit.ly/3uhBxZp.

    The second type of competitiveness is in the interest of American
    workers. Because U.S. investors can diversify their portfolio while
    U.S. workers cannot easily relocate abroad, and more importantly
    because U.S. investors have done very well in the past decades compared
    to American workers (notably but not only because capital has not been
    taxed as much as labor), Oxfam America believes that Congress should
    prioritize the second type of competitiveness, which will be called
    ---------------------------------------------------------------------------
    here the ``competitiveness of American workers.''

    There is a tradeoff between the two types of competitiveness. A
    territorial system (i.e., imposing no U.S. tax on the foreign profits
    of U.S. multinational corporations) maximizes the first type of
    competitiveness. A worldwide system (i.e., taxing the foreign profits
    of U.S. multinational at the same rate as their domestic profits)
    maximizes the second type. It is by definition impossible to maximize
    both types of competitiveness at the same time.

    Prior-TCJA, the United States had a worldwide system on paper with a
    35% rate, although the huge deferral loophole (which the TCJA rightly
    rescinded) made it a hybrid system in practice. Post-TCJA, the United
    States has a hybrid system both on paper and in practice, with a tax
    rate on foreign profits (i.e., the GILTI rate of 10.5%) \3\ equal to
    half the rate on domestic profits (i.e., the statutory rate of 21%).
    ---------------------------------------------------------------------------
        \3\ The GILTI rate is scheduled to increase to 13.125% in 2025.
    Moreover, because the GILTI regime gives a credit of only 80% of
    foreign taxes paid, the effective minimum rate on foreign profits
    (combining U.S. and foreign taxes) will be 16.4% from 2025 onwards.

    To maximize the competitiveness of American workers, the domestic rate
    matters most. Everything else being equal, the lower it is relative to
    the rates prevailing in foreign countries, the better. That could be
    called ``tax competitiveness.'' However, everything else is not equal.
    Tax is only one factor influencing the location of investment. The
    United States is a very attractive destination of investment for many
    other reasons: the largest market in the world, the educated and
    dynamic work force, strong rule of law, etc. The United States can
    therefore afford a higher rate than the average of its competitors
    while remaining a competitive destination of investment. Moreover,
    competitiveness is not the only objective of tax policy. Raising
    revenues to fund public goods and services and equity considerations
    are also important. Raising revenues for things like education and
    ---------------------------------------------------------------------------
    infrastructure actually boosts competitiveness.

    Conflicting factual statements were made during the hearing about the
    trend in U.S. tax competitiveness. It was claimed that the corporate
    tax to GDP ratio declined over time and compared to other countries. It
    was also claimed that these trends could be driven at least in part by
    a shift of American businesses away from corporations to other types of
    legal entities like partnerships that are not subject to the corporate
    tax. Both statements are true. The right measure of tax competitiveness
    is the effective corporate tax rate, i.e., the ratio of corporate tax
    revenue to pre-tax corporate profits. The denominator declines with the
    shift away from incorporation, but rises as the profitability of
    corporations increases. Figure 1 shows that both the U.S. statutory and
    effective rates have indeed declined over time. Internationally
    comparable data on effective rates is scarce. Figure 2 only shows the
    average statutory rate in OECD countries (the effective rate must be
    somewhat lower). It has declined over the past decades--a phenomenon
    known as the ``race to the bottom.''\4\ It was 23.59% in 2019, compared
    to 25.77% in the United States.\5\
    ---------------------------------------------------------------------------
        \4\ One witness at the hearing referred to this phenomenon as
    ``race to the middle.'' This is disingenuous. Countries with rates
    above the middle have tended to adjust them downwards to the middle.
    But countries with rates below the middle have not tended to adjust
    them upwards to the middle. As a result, the average rate has trended
    downwards. It really is a race to the bottom.
        \5\ Sum of federal and average state tax rates taking into account
    federal deduction for state taxes. https://stats.oecd.org/
    Index.aspx?DataSetCode=TABLE_II1.

    The effective rate in Figure 1 does not provide a completely accurate
    picture of tax competitiveness, however. To measure the first type of
    competitiveness, state and local corporate taxes as well as taxes paid
    to foreign governments should be added to the numerator. To measure the
    second type of competitiveness, state and local corporate income taxes
    should be added to the numerator, and federal taxes owed on foreign
    profits (i.e., worldwide profits not deferred pre-TCJA and GILTI tax
    post-TCJA) should be deducted from the numerator. Data is not readily
    available to make these adjustments. Still, these adjustments would
    probably not change the overall picture provided by Figures 1 and 2:
    U.S. tax competitiveness is currently not a problem and there is room
    ---------------------------------------------------------------------------
    to increase the domestic corporate tax rate.

    The international agreement currently under negotiation to set a global
    minimum tax is very important to put a floor under the race to the
    bottom. It would create even more room to increase the U.S. rate
    without harming competitiveness.

    While the domestic rate (relative to that of other countries) directly
    matters for the competitiveness of American workers, the foreign rate
    matters indirectly because it affects revenues. For any given revenue
    goal that Congress decides, a worldwide system would maximize the
    competitiveness of American workers. This can be illustrated with
    President Biden's proposal to raise the domestic rate to 28% and the
    foreign rate to 21%. Assuming a two-to-one split between domestic and
    foreign profits, the same revenue goal could be achieved with a
    worldwide rate slightly above 25%. The United States would be a more
    attractive destination for investment with a 25% domestic rate than
    with a 28% rate: it would not only incentivize U.S. multinational
    corporations to invest in the United States rather than abroad, but it
    would also increase investment in the United States by U.S. domestic
    corporations and by foreign multinationals.

    The price to pay for that--given the revenue goal--would be to increase
    the rate on foreign profits from 21% to 25%. That would decrease the
    competitiveness of U.S. multinational corporations on global markets.
    Specifically, a higher foreign rate would carry two types of costs.

    First, a higher foreign rate would make U.S. multinationals' operations
    in low-tax countries like Ireland more costly than what foreign
    multinationals pay for similar operations in those same countries. But
    we don't really want U.S. multinationals to set up operations and
    create jobs in Ireland: we want them to create jobs in America!

    That extra cost only matters for operations that cannot be repatriated
    to America, like marketing and sales activities aiming at the foreign
    market. Such activities typically represent a low share of the total
    value of U.S. multinational corporations' profits.

    Moreover, that extra cost only applies to operations in low-tax
    countries because all corporations regardless of their country of
    residence must pay tax to the countries of operation at those
    countries' prevailing rates. As Table 1 shows, most U.S. competitors
    have domestic tax rates above or only slightly below 25%. With a
    worldwide rate of 25%, the highest tax disadvantage that U.S.
    multinationals' operations would face compared to their competitors in
    major markets is in Britain, with a six-point difference, which is not
    a big disadvantage. The 25% worldwide rate will hurt profits shifted to
    tax havens--and that is the goal, for equity reasons. Such profits are
    the product of tax planning and do not reflect real operations. There
    are only a handful of jurisdictions like Ireland or Singapore that have
    both low tax rates and the capacity to attract real operations (but not
    that much, as they are small countries).

    Second, a higher foreign rate would increase the price U.S.
    multinationals pay to acquire foreign corporations relative to the
    price paid by foreign multinationals. But we don't really want U.S.
    multinationals to spend their cash on foreign acquisitions: we want
    them to invest in America!

    The reverse is more concerning: under a worldwide system, U.S.
    multinational corporations are more likely to be bought by foreign
    multinationals in order to lower their tax bill on non-U.S. operations.
    That was a trend before the TCJA when a high 35% worldwide tax rate
    prevailed. However, changes in law and regulations can prevent such
    ``inversions'' by treating foreign corporations owned by at least 50%
    of American shareholders or effectively managed from the United States
    like U.S. corporations for tax purposes.

    In conclusion, the downsides of a worldwide system are modest compared
    to its advantages of maximizing the competitiveness of American workers
    and ending tax havens abuse. And there is room to increase the
    statutory corporate tax rate without harming the competitiveness of
    American workers, especially if foreign countries raise their own rates
    in line with a potential international agreement on a global minimum
    tax.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

       Table 1: Statutory rates in major U.S. competitor countries (2019)
    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
    Canada                                                          26.7% *
    ------------------------------------------------------------------------
    China                                                               25%
    ------------------------------------------------------------------------
    France                                                              28%
    ------------------------------------------------------------------------
    Germany                                                         29.8% *
    ------------------------------------------------------------------------
    Italy                                                             27.9%
    ------------------------------------------------------------------------
    Japan                                                               34%
    ------------------------------------------------------------------------
    Mexico                                                              30%
    ------------------------------------------------------------------------
    United Kingdom                                                      19%
    ------------------------------------------------------------------------
    * Including average state tax.
    Source: www.inequalityindex.org.

                    Letter Submitted by Robert P. Palomo Jr.
    My name is Robert Palomo Jr. I am a U.S. citizen living in the Russian
    Federation, my wife's native country, where we moved some 25 years ago
    for family reasons. I am an ordinary American who works for a living. I
    pay taxes in the country where I live, and I also file a U.S. tax
    return every year. Compared to the flat-tax system of the Russian
    Federation, the U.S. tax system is extremely convoluted, even for U.S.
    residents. The only way I can ensure that I can comply with U.S. law
    has been to hire tax preparers who specialize in expatriate tax
    matters. Even though I do not earn enough to owe U.S. income tax, my
    cost for tax preparation runs in excess of $1,200 every year. I shop
    around, and the service I use is priced competitively.

    During the years when I worked as an independent contractor, I was
    required to pay U.S. Social Security tax, and Medicare tax in addition
    to income tax in my country of residence. I don't mind contributing to
    the system so much, as it provides a safety net to my neighbors who may
    need a leg up sometime. But I know that I am unlikely to ever receive
    benefits from either of them. I am not a wealthy person. I am past
    retirement age but still working. I really don't have money to spend on
    specialist tax return preparation. That and double taxation has been a
    detriment to my ability to save for retirement.

    Even though I can demonstrate a long history of residence abroad, U.S.
    tax law severely restricts the amount of time I can spend in the U.S.
    in any given year before I am subject to income tax for the full year.
    This proved an extreme hardship in 2010, when both my parents passed
    away within three months of each other. I could not afford to remain in
    the country to be with my siblings and help them with estate matters,
    not to mention mutual comfort in a difficult time. I have elderly close
    relatives in the U.S., and this situation is likely to occur again in
    the not so distant future.

    I have always valued my American citizenship. I pay attention to U.S.
    politics. I vote in every election for which I'm eligible. I think it
    unfair that ordinary, working class Americans like me, making a living
    and paying tax abroad, are subject to inordinately complex and
    sometimes punitive U.S. tax filing requirements. The tax law treats
    people like me as tax cheats and money launderers, and the burden of
    proof that we are not is placed on us. The onerous, burdensome, and
    unfair U.S. tax laws will likely mean I will never be able to afford to
    return to my native country. At times, I have even considered
    renouncing my citizenship. I haven't done so because my benevolent
    government will charge me $1,500 for the ``service.'' I know other
    Americans who have, and who still are, contemplating severing ties
    because of the current state of U.S. tax law. I hope you will find that
    as shocking a thing to be forced to contemplate as we do.

    I ask the Committee to hold hearings on Americans living abroad and
    U.S. taxation as it relates to them. I encourage you to seek testimony
    from experts who can provide an accurate profile of Americans living
    abroad, who can illustrate better than I am able to here, the burden
    that U.S. tax filing places on people like me. I urge the Committee to
    also explore the implications of a switch from our current system of
    citizenship-based taxation to residency-based taxation.

    Thank you.

    Robert P. Palomo Jr.

                                     ______

                         Letter Submitted by Jodi Payne
    I am a proud citizen of the United States of America. I live outside
    the United States in New Zealand where I am a tax resident and where I
    am subject to full taxation.

    I am an emigrant from America. I love America and I also love my
    husband, a native New Zealander. I moved from America after we married,
    in 1997. I long ago realized that although I will always love America,
    I am living permanently abroad. I am a tax resident of my country of
    residence. I am required to organize my financial and retirement
    planning in that country. The problem I have is that the US tax laws
    make it very difficult for me to live the same kind of life that my
    friends and neighbours live. You see, they are subject to only one tax
    system. As a US citizen, I am subject to the tax system where I live
    and the US tax system. Those systems are generally not compatible. Most
    attempts at responsible financial /retirement planning where I live are
    frustrated by the need to comply with U.S. tax laws. How can this be
    fair? How can the United States impose taxation on the non-U.S. income
    and assets of a person who is a tax resident of another country--with
    no economic connection to the United States? Both of my children were
    born in New Zealand. They are automatically American citizens and, as
    such, are also subject to this system. This affects them purchasing
    their first home, thinking about starting a business, etc. It also
    affects their future spouses. Even as a child, it affects them opening
    their first savings account banks here require my children to sign a
    statement saying they are tax residents of the USA.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes to my country
    of residence such as their 15% sales tax on everything.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, purchase
    a home, invest, participate in pension plans and generally behave in a
    financially responsible way. This is because all of these essential
    activities are taking place in my country of residence and not in the
    United States. My retirement investments are foreign to the United
    States, but local to me. In addition, the United States impose taxes on
    things (for example sale of principal residence) when my country of
    residence does not. Because I am required to live my life with the USD
    as my functional currency, I am subject to ``fake income'' on nothing
    but changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems.

    I really feel for my children, who essentially have the option of being
    self-employed taken from them unless they want to pay an exorbitant
    amount of taxes when you take into account they are being taxed twice.
    They are also experiencing taxation without representation. Having
    never lived in America, they have no senator to contact no
    representative. I thought Americans understood the un-fairness of that
    as far back as the 1700s.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God Bless The United States Of America!

    Sincerely,

    Jodi Payne, and my two children

                                     ______

                      Letter Submitted by Vanessa Peacock
    I am a proud citizen of the United States of America. I live outside
    the United States in the UK where I am a tax resident and where I am
    subject to full taxation.

    I am an American expat. I am temporarily living outside the United
    States for reasons of work and career advancement. When I first moved
    abroad I learned a lot. I learned that other countries have well
    developed tax systems that require payment of a wide range of taxes. I
    can tell you that I pay a lot of taxes. I can also tell you that the
    U.S. tax system treats my non-U.S. income and assets very unfairly. The
    fact that I am temporarily living abroad doesn't mean that I don't have
    to plan for retirement.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                     Letter Submitted by Thomas C. Pedersen
    Dear Senate Finance Committee,

    I am a citizen of the United States of America.

    I love my country and served as a member of the U.S. Army for 20 years
    and retired from active duty in 1993. For the last 28 years I have
    lived and worked outside of the United States, primarily in Japan.

    I am a permanent resident of Japan, and I am subject to full taxation
    in Japan, a high corporate tax-rate jurisdiction.

          I run a small business in Japan.
          My business is not a multinational corporation, and I have no
    interest in any corporation or business in the United States.
          All of the income of my small company in Japan is subject to
    local corporate taxation

    I expect my case is quite similar to many American expatriates who are
    living abroad and operating small businesses.

    The problem is that because I am a U.S. citizen, the U.S. tax code
    treats me the same as Apple or Google.

    If I use a local business structure that's treated as a corporation
    under U.S. tax law, then I'm forced to fill in the same form 5471 as
    Apple must complete for each foreign subsidiary--translating all of my
    business records into U.S. dollars even though I do no business in that
    currency. It also requires that I employ U.S. tax accountants at
    significant personal cost to file my tax returns.

    My business is subject to GILTI even though I have no intangible
    income. How can I compete with my neighbours who are not U.S. citizens
    and who have only one tax system to deal with?

    I do not live in a low-tax ``offshore'' country. I live in Japan, a
    country where I pay very high individual and corporate income taxes.

    I also pay additional kinds of taxes (example Residence Taxes, and VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on undistributed earnings in the small local corporation I own
    in Japan. I pay Japan Corporate tax on those earnings, and I also pay
    tax on any income distributed from the local corporation. I am taxed on
    non-U.S. income of this local corporation even though I am a fully
    taxable on that income in the country where I reside, and do not live
    in the United States.

    I would like to make general observations about the Senate Finance
    Committee hearing on March 25th, 2021:

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States.

        2.  Although I am an individual person, not a single participant
    recognized how individuals are affected by these rules. Yet, the focus
    of the hearing was supposed to be about individuals. How did this
    happen?

        3.  It is hard to believe that there was no witness who had
    personal experience with a company or individual running a business
    with interests outside the USA. Not even one!

        4.  I respectfully suggest that subsequent hearings include
    witnesses who have experienced running businesses outside the United
    States and/or actually living outside the United States.

    Subsequent hearings should consider the real plight of U.S. Citizens,
    individual Americans, who are living abroad and running small
    businesses.

    I am not a ``mini-multinational.'' I am an American Citizen living for
    the last decades as a permanent resident of Japan. It doesn't make me
    less American, but it does mean that I am subject to the laws of the
    country where I live.

    I ask only to be able to carry on my small business and without undue
    interference from the Internal Revenue Code of the United States based
    on legislation which (I believe) was actually intended to prevent
    Multinational Corporations from avoiding taxes through off-shore
    entities (not punish Americans living abroad and running small
    business).

    Please understand that any and all changes to the taxation of U.S.
    corporations will have a huge impact on the U.S. taxation of U.S.
    individual citizens living outside the United States and running small
    businesses outside the United States. Individuals are not immune to the
    effects of raising the U.S. corporate income tax rate and/or doubling
    the GILTI tax.

    This is extremely unjust. Americans abroad have been attempting to get
    both Treasury and Congress to address these issues, and I have paid
    over $15,000 to hire accountants to navigate the complexities of being
    in compliance with GILTI tax laws, and had retained earnings in my
    small company taxed retroactive to 2017. This is an egregious overreach
    of tax policy that inhibits my ability to compete on a level playing
    field with any competitor from another country.

    Again, I honorably served my country for over 20 years as a member of
    the armed forces to protect our way of life. I have faithfully paid all
    taxes while residing overseas to support our government and all
    Americans, but this GILTI tax levied on small business owners if unfair
    and I do not believe it was designed to be punitive to small
    entrepreneurs. But that is the result.

    On behalf of all such Americans living abroad, I ask for your earnest
    support, and your Representation. Please help us.

    Sincerely,

    Thomas C. Pedersen

                                     ______

                       Letter Submitted by Emily Perretti
    I am a proud citizen of the United States of America. I live outside
    the United States in England where I am a tax resident and where I am
    subject to full taxation.

    I am an American expat. I am temporarily living outside the United
    States for reasons of work and career advancement. When I first moved
    abroad I learned a lot. I learned that other countries have well
    developed tax systems that require payment of a wide range of taxes. I
    can tell you that I pay a lot of taxes. I can also tell you that the
    U.S. tax system treats my non-U.S. income and assets very unfairly. The
    fact that I am temporarily living abroad doesn't mean that I don't have
    to plan for retirement.

    I make a very average amount of money here, but I need to pay for
    special accountants who take care of my U.S. taxes. They tell me about
    all the limitations I have and things to avoid or else I will pay loads
    of taxes to the USA. It doesn't seem fair that because I am here, I
    can't plan for my life in the way I should. I am proud to be an
    American, my only option should not be to renounce my citizenship so
    that things are slightly easier for me (even though renouncing is quite
    an expensive and painstaking process as well!). I want my children to
    have the option to live to America, but I am nervous to have them enter
    a tax system in a country they have never lived in. It makes it
    difficult for me and my British husband to plan for our future, and
    especially theirs!

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by George Pinkham
    This committee hearing has focused on the taxation of U.S. companies
    operating abroad. I believe that this committee should take this
    opportunity to also examine the situation of the workers themselves,
    i.e., the U.S. citizens who work abroad and act as ambassadors for
    American values.

    Unfortunately, Americans who choose to live and work abroad have long
    been ignored. Please use these hearings to right this situation

    In the public mindset, expats are wealthy Americans who have fled the
    United States to escape paying U.S. taxes in a far away land where they
    live a life of luxury. This misperception has nothing to do with
    reality. Most Americans have moved abroad for professional reasons.
    Typically U.S. expats live and work in a country where they pay the
    same tax as local residents. In some countries, what an American expat
    pays far exceeds the federal income tax that they would pay had they
    remained in the U.S. and yet they end up paying additional U.S. tax.
    For the sake of illustration, I will use the example of an American
    living and working in France.

    1. Financial Reporting.

        Since 1970, the Bank Secrecy Act requires U.S. persons who own a
            foreign bank account, brokerage account, mutual fund, unit
            trust or other financial account to file a Report of Foreign
            Bank and Financial Accounts (FBAR). In addition, certain
            taxpayers may also have to complete and attach to their return
            Form 8938 Statement of Special Foreign Financial Assets (FATCA)
            if certain thresholds are met. Generally, U.S. citizens who
            live and work abroad must file both forms. Form 8938
            essentially duplicates the information found on the FBAR
            return. Both forms are complex and take a fair amount of
            investigation since you must report the highest amount found in
            that account during the year and then convert that amount into
            U.S. Dollars. It is easy to get this wrong and the penalties
            are daunting.

        Americans living abroad necessarily have a foreign bank account or
            several bank accounts in the country in which they live but
            most do not have foreign accounts outside of that country. For
            example, an expat working and living in France will typically
            have one or more French bank accounts but no foreign accounts
            outside of France. FBAR and FATCA require these expats to spend
            time researching and reporting information that the IRS can
            easily obtain using the exchange of information clause of the
            Income Tax Treaty between France and the United States. I would
            recommend that FBAR and FATCA reporting exclude ``local''
            financial accounts for Americans residing abroad if the country
            in which they are residing has concluded an Income Tax Treaty
            with the United States that includes an exchange of information
            clause.

        FATCA has had numerous serious harmful effects for Americans. Many
            foreign banks do not want to open new bank accounts for
            American citizens who are working abroad. Almost all banks and
            brokerage houses refuse to open brokerage accounts of any kind
            for American expats. In fact, both of my banks in France
            required me to shut down existing brokerage accounts when FATCA
            was enacted, citing ``bank policy''. This means that many
            interesting French investment opportunities are simply not open
            to Americans because the foreign financial institutions do not
            want to deal with the complex rules imposed on them by FATCA.
            This is aggravated by the fact that most of the major U.S.
            investment platforms refuse to deal with American expats unless
            the expat also has a permanent U.S. address.

    2. Income Taxes.

        The United States is the only country which applies the same tax
            regime to all its citizens, regardless of where they live.\1\
            This situation has been allowed to endure only because U.S.
            expats do not have any representation in Congress. They are
            ignored because their votes are scattered across the 50 states.
            Thus, in effect, U.S. expats have taxation without
            representation.
    ---------------------------------------------------------------------------
        \1\ As I understand it, the Philippines abandoned their system of
    worldwide taxation in 1996. The U.S. should follow suit.

        Most countries, of course, have taxation that is based on the
            residence of the taxpayer. If you are a resident, you are taxed
            on your worldwide income. If you are not a resident you are not
            subject to tax. This means that Americans who are competing for
            work in low tax jurisdictions (e.g., most of the Middle East)
            are at a serious competitive disadvantage when compared with
            their European or Asian colleagues. In the past, most Americans
            companies would offer tax equalization packages to Americans
            they sent abroad but these packages have proved prohibitively
            expensive and many companies have abandoned them. They have
            chosen instead to hire persons who are not U.S. citizens. This
            has the effect of considerably reducing the presence of
            Americans abroad who project American influence where they live
            and work. This is a serious concern that should be investigated
    ---------------------------------------------------------------------------
            by Congress.

        The worldwide system of U.S. taxation inevitably causes tax
            conflicts when U.S. citizens live abroad. For example, when a
            U.S. citizen lives in France, France wants to tax that person
            because he or she is a resident of France and the United States
            wants to tax that person simply because he or she is a U.S.
            citizen. That conflict is resolved by a complex system of
            foreign tax credits. When combined with the alternative minimum
            tax, the taxation of an expat is so complex that no taxpayer
            can navigate it without the assistance of a tax professional.
            That assistance comes at a cost. If you are an American living
            in France, getting your Federal income tax return prepared by a
            professional will typically cost between $2,500 and $4,000,
            more if you also need help with your French income tax return.

        The main problem of using the foreign tax credit system is that the
            taxpayer always ends up paying the higher of the two taxes. Let
            me explain by giving a few examples:

        (a) Real Property

             If an expat buys a primary residence in France and
                subsequently realizes a gain on the sale, that gain is
                exempt from French tax but will nevertheless be taxed in
                the U.S. If the Euro has appreciated against the Dollar,
                the capital gain in U.S. Dollars will be subject to tax in
                the U.S. even if the taxpayer has not realized a gain when
                the amount is computed in Euros. To add insult to injury,
                under the Tax Cuts and Jobs Act (TCJA), it is no longer
                possible to deduct property taxes on a foreign home. The
                inequities are obvious. American expats should not be
                subject to federal taxes on their primary or secondary
                residence when they establish a residence outside the
                United States.

        (b) Investments

             Some investment opportunities are closed to Americans who live
                in France because many financial institutions find the
                FATCA reporting rules too burdensome and simply exclude all
                Americans. In addition, many of the investment funds that
                are open to Americans are considered to be companies rather
                than partnerships under the U.S. tax rules and are
                therefore subject to PFIC rules and regulations even when
                they are taxed in France, which usually makes the
                investment prohibitively expensive. Finally, it is
                impossible for an American expat to invest in any tax-
                exempt or tax deferred products because they will end up
                being taxed in the U.S. even when they are not taxed in
                France. The result is total paralysis. It becomes
                impossible to carry out proper retirement financial
                planning. This is particularly true for U.S. expats who
                work at foreign companies and, as a result, do not have
                access to any 401(k) plans.

    3. The Foreign Tax Credit System.

        As we have seen earlier, the U.S. resolves the competing claims of
            the French tax system and the U.S. tax system by a complex
            system of foreign tax credits to which Congress has added the
            Alternative Minimum Tax which is even more complex.

        (a) Foreign Tax Credit

             The foreign tax credit only works for French taxes that are
                deemed to be income taxes. France has a number of hybrid
                taxes that are in fact income taxes and the IRS has
                consistently refused to allow taxpayers to claim a foreign
                tax credit for these taxes. For example, when France
                created two new taxes called the CSG (contribution sociale
                genralise) (in 1991) and the CRDS (contribution pour le
                remboursement de la dette sociale) (in 1996) the IRS argued
                that CSG and the CRDS covered by the totalization agreement
                between the United States and France and therefore did not
                allow a foreign tax credit for these taxes. After 20 years
                of litigation, the State Department finally conceded the
                issue in 2019 and agreed with the French government that it
                would allow U.S. taxpayers to claim a foreign tax credit
                for the CSG and the CRDS. Expats lost millions. They could
                not amend any years prior to 2010 and those deductions were
                lost forever. For the 10 years that could be changed,
                professional firms were charging up to $2,000 per year
                needing to resubmitted to amend the returns. Surely there
                must be a system that is both simpler and more just.

        (b) Alternative Minimum Tax (AMT)

             The original intent of the AMT was to close loopholes for the
                wealthy. Because the effect of inflation, it increasingly
                has become a concern for all taxpayers, particularly U.S.
                citizens who live outside the United States. In addition,
                there have been clear legislative abuses in the past that
                have been costly for Americans living abroad. For example,
                the Tax Reform Bill of 1986 limited foreign tax credits for
                alternative minimum tax purposes to 90% of the alternative
                minimum tax before credits. This resulted in clear double
                taxation by legislative intent. In effect, Americans living
                abroad would pay a foreign income tax but be allowed a
                credit for only 90% of the tax paid, causing 10% of the
                income to be taxed twice. For taxpayers who were living in
                countries high taxes, this law was a very expensive new
                rule, adding thousands of Dollars to their taxes. The law
                was also outrageously unfair, violating the basic
                principles on which international taxation is founded. Many
                taxpayers decided to litigate, arguing that this law
                violated the income tax treaties that the U.S. had signed.
                Congress may have been aware of this litigation. In any
                event, it was not until 2004 that this law was finally
                abolished ending the double taxation. Nevertheless, the AMT
                continues to erode the fair application of the foreign tax
                credit system. The layering of the foreign tax credit and
                the AMT continues to create inequities in surprising ways.
                The system is too complex and hides many traps for the
                unwary.

        The arguments for taxing Americans who live abroad on income that
            is already taxed locally have always struck me as being flimsy.
            What services does the U.S. render to expats? There used to be
            an array of services available at U.S. embassies and consulates
            but today these services are no longer free. In fact, they are
            very expensive. For example, if you simply need to notarize a
            document, the fee is $50 per seal. Therefore, you will be
            charged $150 for a single document that requires the Consular
            Officer to sign and acknowledge your signature in three places.

        I would advocate the elimination of citizenship-based taxation and
            respectfully request that Congress hold hearings to consider
            the current tax situation of Americans who are living abroad.

        In order to avoid abuses, the U.S. could institute a type of
            deemed-disposition exit tax, similar to Canada's tax, for
            persons who are moving abroad. Alternatively, the United States
            could continue to tax U.S. citizens who move abroad for a
            number of years but only if they move to a jurisdiction where
            they pay very little tax.

                                     ______

                      Letter Submitted by Brad Piontkowski
    I am a citizen of the United States of America. I live outside the
    United States in Panama where I am a tax resident and where I am
    subject to full taxation.

    I do not live ``offshore''. I do live in a country where I pay income
    taxes. I also pay additional kinds of taxes (example VAT) to my country
    of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States.

    There is no other advanced country in the world that imposes such
    extraterritorial taxation. (Though the tiny African dictatorship of
    Eritrea does, so the U.S. is just like them! We should be so proud!)

    I would like to make two general observations about the hearing on
    March 25.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational''. I am a ``dual-national'' living in
    my country of residence. It doesn't make me less American. But, it does
    mean that I am subject to the laws of the country where I live. I am
    not GILTI of anything. I ask only to be able to carry on my small
    business and/or my life without interference from the Internal Revenue
    Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    In addition, the United States impose taxes on things (for example sale
    of principal residence) when my country of residence does not. Because
    I am required to live my life with the USD as my functional currency, I
    am subject to ``fake income'' on nothing but changes in the exchange
    rate. As a tax resident of both the United States and my country of
    residence, I get the worst of both tax systems. What one giveth, the
    other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    And one more related issue, get rid of FATCA! Those insane regulations
    have cost me and other Americans too much money because of the
    draconian rules that Uncle Sam has imposed on financial institutions
    around the world which means most of them will not accept Americans. In
    addition to these overbearing and unjust regulations giving them ``one
    more reason to hate the U.S.,'' I personally have lost so much
    investment income simply because of the country I happened to be born
    in. And, it's been proven that FATCA costs much more money in
    compliance than it's ever brought in in revenue. In short, it's a lose
    lose lose situation with no benefit to the U.S. treasury or U.S.
    citizens!

                                     ______

                       Letter Submitted by Chris Pointon
    I am a proud citizen of the United States of America. I live outside
    the United States in the UK where I am a tax resident and where I am
    subject to full taxation.

    My family and I moved from the U.S. to the UK seven years ago to be
    close to our ageing parents. Our kids are now in college in the UK and
    making their own lives here, so it's probable we'll remain here for the
    long term.

    I am a tax resident of the UK, so I am required to organize my
    financial and retirement planning in that country. The problem I have
    is that the U.S. tax laws make it very difficult for me to live the
    same kind of life that my friends and neighbours live. You see, they
    are subject to only one tax system. As a U.S. citizen, I am subject to
    the tax system where I live and the U.S. tax system. Those systems are
    generally not compatible. Most attempts at responsible financial /
    retirement planning where I live are frustrated by the need to comply
    with U.S. tax laws. I'm a software engineer--making a decent living
    doing an ordinary job. Just doing my tax returns to the UK and U.S.
    authorities and making sure I don't fall foul of massive IRS fines
    costs me over $3,000 in advisor fees every year. These aren't costs I
    had when I lived in the U.S., or costs my fellow UK residents have to
    bear.

    Even worse, my children, who are just setting out on their adult lives,
    are having their futures blighted by being unable to save and invest
    the same way as their peers. UK investment funds are subject to Passive
    Foreign Investment Company taxation so they simply don't accept U.S.
    citizens. This removes the main diversified higher-growth savings
    option for my children, leaving them only cash-based funds that are
    actually losing ground against inflation. The UK government provides
    much-needed savings tax incentives for young people to help them save
    for major life events like buying their first house. These are wiped
    out by U.S. taxation, and my kids are unable to participate in
    equivalent U.S. schemes due to residency requirements.

    It's a total Catch-22 happening to ordinary Americans overseas--not
    billionaires hiding cash in tax havens, or giant U.S. corporations
    shifting profits to low tax economies. How can this be fair? How can
    the United States impose taxation on the non-U.S. income and assets of
    a person who is a tax resident of another country--with no economic
    connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxable on that
    income in the country where I reside, and I do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American. But
    it does mean that I am subject to the laws of the country where I live.
    It seems that tax policy is being viewed through the lens of its effect
    on corporations and individuals with vast financial resources, without
    any thought given to the U.S. citizens with much more ordinary lives
    being disproportionately affected by the proposed measures.

    I am not GILTI of anything. I ask only to be able to live my life
    without interference from the Internal Revenue Code of the United
    States. If your target is tax-avoiding billionaires and multinationals,
    why not set a floor on assets held/income earned before individuals and
    companies become subject to scrutiny? Setting this at, say, $10M would
    remove the burden for the vast majority of overseas Americans who're
    simply living their lives outside the U.S.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me and my family to
    save, invest, participate in pension plans and generally behave in a
    financially responsible way. This is because all of these essential
    activities are taking place in my country of residence and not in the
    United States. My retirement investments are foreign to the United
    States, but local to me. In addition, the United States impose taxes on
    things (for example sale of principal residence) when my country of
    residence does not. Because I am required to live my life with the USD
    as my functional currency, I am subject to ``fake income'' on nothing
    but changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Scott Prina
    Dear Senate Finance Committee,

    I am a citizen of the United States of America.

    I love my country, but for the last 30 years I have lived and worked
    outside of the United States, in Japan.

    I am a permanent resident of Japan, and I am subject to full taxation
    in Japan.

    I run a small business in the Japan.

    My business is not a multinational corporation, and I have no interest
    in any corporation or business in the United States.

    All of the income of my small company in Japan is domestic to the
    country where I live.

    I expect my case is quite similar to many American expatriates who are
    living abroad and operating small businesses.

    The problem is that because I am a U.S. citizen, the U.S. tax code
    treats me the same as Apple or Google.

    If I use a local business structure that's treated as a corporation
    under U.S. tax law, then I'm forced to fill in the same form 5471 as
    Apple must complete for each foreign subsidiary--translating all of my
    business records into U.S. dollars even though I do no business in that
    currency.

    My business is subject to GILTI even though I have no intangible
    income. How can I compete with my neighbours who are not U.S. citizens
    and who have only one tax system to deal with?

    I do not live in a low-tax ``offshore'' country. I live in Japan, a
    country where I pay very high income taxes.I also pay additional kinds
    of taxes (example Residence Taxes, and VAT) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on undistributed earnings in the small local corporation I own
    in Japan. I pay Japan Corporate tax on those earnings, and I also pay
    tax on any income distributed from the local corporation. I am taxed on
    non-U.S. income of this local corporation even though I am a fully
    taxable on that income in the country where I reside, and do not live
    in the United States.

    The March 25, 2021 Senate Finance Committee hearing on March 25th,
    2021.

    I would like to make two general observations about the hearing:

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States.

        2.  Although I am an individual person, not a single participant
    recognized how individuals are affected by these rules. Yet, the focus
    of the hearing was supposed to be about individuals. How did this
    happen?

        3.  It is hard to believe that there was no witness who had
    personal experience with a company or individual running a business
    with interests outside the USA. Not even one!

        4.  I respectfully suggest that subsequent hearings include
    witnesses who have experienced running businesses outside the United
    States and/or actually living outside the United States.

    Subsequent hearings should consider the real plight of U.S. Citizens,
    individual Americans, who are living abroad and running small
    businesses.

    I am not a ``mini-multinational''. I am an American Citizen living for
    the last several decades as a permanent resident of Japan. It doesn't
    make me less American, but it does mean that I am subject to the laws
    of the country where I live.

    I ask only to be able to carry on my small business and without undue
    interference from the Internal Revenue Code of the United States based
    on legislation which (I believe) was actually intended to prevent
    Multinational Corporations from avoiding taxes through off-shore
    entities (not punish Americans living abroad and running small
    business).

    Please understand that any and all changes to the taxation of U.S.
    corporations will have a huge impact on the U.S. taxation of U.S.
    individual citizens living outside the United States and running small
    businesses outside the United States. Individuals are not immune to the
    effects of raising the U.S. corporate income tax rate and/or doubling
    the GILTI tax.

    This is extremely unjust. Americans abroad have been attempting to get
    both Treasury and Congress to address these issues.

    On behalf of all such Americans living abroad, I ask for your earnest
    support, and your Representation. Please help us.

    Sincerely,

    Scott Prina

                                     ______

             Promote America's Competitive Economy (PACE) Coalition

                        1000 Maine Avenue, SW, Suite 500

                              Washington, DC 20024

    The PACE Coalition applauds the focus of today's hearing on how U.S.
    international tax policy impacts American workers, jobs, wages, and
    investment. The PACE Coalition, a broad coalition of American business
    organizations and companies, is dedicated to supporting U.S. policies
    that promote economic growth and long-term prosperity for all
    Americans.\1\ There can be no more important guide to setting U.S. tax
    policy than its effects on the standard of living of American workers
    and their families.
    ---------------------------------------------------------------------------
        \1\ More information on the Promote America's Competitive Economy
    (PACE) Coalition can be found at https://keeppace.us/.

    Americans have always outcompeted the world. American innovation and
    the skills and dedication of America's workforce have kept the United
    States as the largest and most productive economy in the world for over
    a century. As this nation works to rebuild our economy from the
    unprecedented job loss resulting from the pandemic, we must be focused
    not only on a strong short-run recovery, but also on sustainable long-
    ---------------------------------------------------------------------------
    term economic growth that creates rising incomes for all Americans.

    America's economic position in the world economy is being challenged
    today. U.S. international tax policies should ensure we can keep pace
    with our competitors in the global economy.

          The United States produces a smaller share of world output than
    in any decade in at least 40 years.\2\
    ---------------------------------------------------------------------------
        \2\ Ten-year share of world GDP (2010-2019) (constant dollars,
    current dollars, and purchasing price parity) compared to decades
    ending in 1989, 1999, and 2009, from the World Bank, World Development
    Indicators: https://databank.worldbank.org/source/world-development-
    indica
    tors#.
    ---------------------------------------------------------------------------
          U.S. companies account for a smaller share of global cross-
    border investment than they did in any decade in at least 40 years.\3\
    ---------------------------------------------------------------------------
        \3\ Ten-year share of world outward stock of foreign direct
    investment, using official exchange rates: UNCTAD, https://
    unctadstat.unctad.org/wds/TableViewer/tableView.aspx?ReportId=
    96740.
    ---------------------------------------------------------------------------
          U.S. companies once dominated the list of the world's largest
    companies, but no longer do.
          China now has more companies on the list of Fortune Global 500
    companies than does the United States, and the number of U.S. companies
    that have fallen off the list in the past 20 years is greater than the
    number any country other than China has on the list.\4\
    ---------------------------------------------------------------------------
        \4\ Fortune Global 500, https://qlik.fortune.com/global500/.
    ---------------------------------------------------------------------------
          By some measures the U.S. economy is already smaller than
    China's, and China's economy is forecast to grow faster than the U.S.
    economy for years to come.\5\
    ---------------------------------------------------------------------------
        \5\ 2019 GDP measured using purchasing price parity: World Bank,
    World Development Indicators: https://databank.worldbank.org/source/
    world-development-indicators#.

    As China's place in the global economy has increased in recent decades,
    so has the strength of its companies. In 1995, China had only 3
    companies on Fortune's list of the 500 largest global companies, while
    the United States had 151 (Figure 1). By the 2020 edition of Fortune's
    list, China had increased its number to 124, while the U.S. total fell
    to 121. Higher taxes on U.S. job creators will only put Chinese
    companies at a competitive advantage in the years ahead. Ensuring a
    ---------------------------------------------------------------------------
    competitive tax code will enable continued U.S. innovation leadership.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     China is one focus of the economic competition the United States
    faces today, along with our traditional competitors in counterpart
    advanced economies. America can succeed in this economic challenge it
    faces based on the talent, skills, perseverance, and ingenuity of its
    workforce, as well as policies that ensure the global competitiveness
    of American companies. If the United States gives our competitors an
    advantage, however, we risk falling behind. And once the United States
    cedes this advantage, it will be even harder to regain it.

    The United States must maintain competitive tax policies for its
    workers and, by extension, for the globally engaged American companies
    that help American workers sell goods and services in the foreign
    markets where 95% of the world's population lives and over 75% of
    consumption occurs.

     A Competitive Corporate Tax Rate to Attract Productivity Boosting
                        Investment

    A competitive U.S. corporate tax rate increases the amount of business
    investment in the United States, augmenting the productivity of
    America's workers, boosting their wages, and increasing the long-term
    growth of the economy.

    The current U.S. corporate income tax rate is 25.8%, including state
    income taxes. By comparison, the International Monetary Fund estimates
    the average corporate income tax rate for 65 other high-income
    countries was 19.9% in 2020; for the 84 middle-income countries, the
    average tax rate was 23.7%. The only group with a higher average tax
    rate than the United States are the 18 low-income countries, with an
    average corporate income tax rate of 28.5%.\6\
    ---------------------------------------------------------------------------
        \6\ International Monetary Fund, Fiscal Affairs Division, Tax
    Policy Rates Database.

    All countries have lowered their corporate tax rate over the past three
    decades, with the greatest reductions occurring between 1990 and 2010
    (Figure 2). Concerns about a ``race to the bottom'' neglect to mention
    that (i) the race ended about 10 years ago, and the United States was
    the loser, (ii) the refusal of the United States to lower its corporate
    tax rate over this period (we actually raised our rate) made it more
    advantageous for the rest of the world to reduce corporate tax rates,
    and (iii) countries were motivated to reduce their corporate tax rates
    solely to increase the incomes of their citizens and future economic
    growth. Corporate rate reduction is not a beggar-thy-neighbor policy--a
    lower corporate tax rate can increase income and economic growth
    independent from any reallocation of investment from one country to
    ---------------------------------------------------------------------------
    another.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     As a group, it is the high-income countries--countries with a
    skilled and educated workforce, good infrastructure, and democratic
    governments--that have the lowest corporate tax rates. These are also
    the countries which often are the most likely alternative locations for
    investment that would otherwise be made in the United States--
    investments that rely on a skilled workforce.

    If the United States increased its federal corporate tax rate to 28%,
    as proposed by President Biden, the combined corporate tax rate
    including state income taxes would increase to 32.3%. This rate would
    be the highest among the 37 advanced economies of the OECD, and 12.4
    percentage points higher than the average of the 65 other high-income
    countries shown in Figure 3. The 32.3% rate would be 7.3 percentage
    points higher than China's headline 25% statutory tax rate, and more
    than double the 15% tax rate China provides for high technology
    industries. The U.S. rate would be higher than even the average rate of
    low-income countries, which currently as a group have the highest tax
    rate in the world. Such a high U.S. rate would be a recipe for slow
    U.S. economic growth and stagnant incomes.

    The ultimate harm from a high U.S. corporate tax rate falls on the
    American worker. As Professor Laura Tyson, former President Bill
    Clinton's top economic advisor, wrote:

            For many years, the conventional wisdom was that the corporate
            income tax was principally borne by the owners of capital in
            the form of lower returns. Now, with more mobile capital,
            workers are bearing more of the burden in the form of lower
            wages and productivity as investments move around the world in
            search of better tax treatment and higher returns.\7\
    ---------------------------------------------------------------------------
        \7\ Laura D'Andrea Tyson, ``The Logic of Cutting Corporate Taxes,''
    The New York Times, April 8, 2011, available at https://
    economix.blogs.nytimes.com/2011/04/08/the-logic-of-cutting-corporate-
    taxes/.

     Globally Competitive U.S. International Tax Rules to Enhance U.S.
                        Competitiveness

    The U.S. economy is strengthened through innovative and competitive
    global American companies. Globally engaged American companies directly
    and indirectly support approximately half of all private sector jobs in
    the United States--76.6 million jobs in their companies, their supply
    chain, and their communities through the spending by their
    employees.\8\ In 2018, 26.6 million American workers were employed
    directly by globally engaged American companies and they earned total
    compensation of $2.3 trillion.\9\
    ---------------------------------------------------------------------------
        \8\ Economic Impacts of Globally Engaged U.S. Companies:
    Employment, Labor Income, and GDP (May 2016), available at: http://
    businessroundtable.org/sites/default/files/
    Economic_Impacts_of_Globally_Engaged_U.S.
    Companies_FINAL_for_Distribution_0.pdf.
        \9\ Bureau of Economic Analysis, Activities of U.S. Multinational
    Enterprises, 2018, and National Science Foundation, Business Research
    and Development: 2018.

    Globally engaged American companies boost U.S. productivity. More than
    40% of all the gains in U.S. labor productivity since 1990 are
    attributable to multinational companies.\10\ Globally engaged American
    companies performed $322 billion in research and development,
    comprising 85% of their global R&D and 73% of all business R&D in
    2018.\11\ They also invested $722 billion in U.S. plant and equipment,
    79% of their global capital expenditures in 2018.
    ---------------------------------------------------------------------------
        \10\ Jason Cummings, et al. Growth and competitiveness in the
    United States: The role of its multinational companies, https://
    www.mckinsey.com/featured-insights/americas/growth-and-competitiveness-
    in-us#.
        \11\ Bureau of Economic Analysis, Activities of U.S. Multinational
    Enterprises, 2018, and National Science Foundation, Business Research
    and Development: 2018.

    Globally engaged American companies open up the world for American
    workers to sell the goods and services they produce. Over half of all
    goods and services that are exported from the United States are by
    globally engaged American companies or to their foreign affiliates. The
    foreign affiliates of American companies are primarily there to serve
    foreign markets. Approximately 90% of the sales of goods and services
    by their foreign affiliates are to foreign customers.\12\
    ---------------------------------------------------------------------------
        \12\ Bureau of Economic Analysis, Activities of U.S. Multinational
    Enterprises, 2018.
    ---------------------------------------------------------------------------
    U.S. and Foreign International Taxes
    American companies compete in foreign markets head-to-head with
    foreign-headquartered multinationals and locally owned foreign
    companies. Both U.S. and foreign companies pay tax in the local foreign
    country in which they operate. Foreign-headquartered multinational
    companies from all other G7 countries (Canada, France, Germany, Italy,
    Japan, and the United Kingdom) owe no current tax on their active
    foreign business income and, when the earnings are repatriated home,
    the foreign income is 95% to 100% exempt from home country tax under
    the territorial tax systems of these countries. As a result,
    repatriated foreign income in these other countries typically result in
    a home country tax ranging between zero and 1.5%.

    In contrast, the United States treats all active foreign business
    income in excess of a 10% return on tangible property as taxable income
    under the global intangible low-taxed income (``GILTI'') provision of
    current law. A 50% deduction is permitted against this income, which in
    principle results in a 10.5% rate of tax applied against this income
    (half the 21% U.S. rate). U.S. companies may apply a foreign tax credit
    against U.S. tax on this income, but only 80 percent of foreign taxes
    are creditable. In theory this would result in no additional U.S. tax
    on foreign earnings taxed at a foreign rate in excess of 13.125% (since
    80 percent of foreign taxes at a foreign tax rate of 13.125% would
    provide sufficient foreign tax credits to offset the effective U.S. tax
    rate of 10.5%). However, due to complicated expense allocation rules to
    determine the foreign tax credit, U.S. companies generally incur
    additional U.S. tax on foreign earnings taxed in excess of 13.125%, and
    even on foreign earnings taxed at foreign rates in excess of the U.S.
    21% tax rate.\13\
    ---------------------------------------------------------------------------
        \13\ Richard Rubin, ``Tax Changes Hit Overseas Profits of Some U.S.
    Companies,'' The Wall Street Journal, March 27, 2019.

    In contrast to the U.S. GILTI rules, no other advanced economy applies
    a minimum tax to the foreign earnings of their multinational companies.
    Due to GILTI, globally engaged American companies generally pay more in
    ---------------------------------------------------------------------------
    tax on their foreign earnings than do their foreign competitors.

    U.S. companies are therefore generally tax disadvantaged relative to
    their foreign competitors because of GILTI. Proposals by President
    Biden to increase the rate of tax--at least doubling the rate of tax
    under GILTI--would extremely disadvantage U.S. companies, since their
    foreign competitors would continue to be exempt from additional tax on
    their foreign earnings.

    The greater the tax disadvantage faced by U.S. companies, the greater
    the impact will be on their ability to successfully compete in foreign
    markets. As the tax disadvantage increases, U.S. companies will
    contract their sales in foreign markets, causing a contraction
    throughout the company--including in the United States where its
    employees help support the foreign operations through both production
    and managerial activities.

    It has been estimated that a 10 percent increase in the number of
    foreign employees of a U.S. company will cause a 6.5 percent increase
    in the number of its U.S. employees.\14\ Likewise, if the foreign
    employment of the company contracts, its U.S. employment will similarly
    contract.
    ---------------------------------------------------------------------------
        \14\ Mihir A. Desai, C. Fritz Foley, and James R. Hines Jr.,
    ``Domestic effects of the foreign activities of U.S. multinationals,''
    American Economic Journal: Economic Policy, February 2009.

    As a result, an increase in U.S. taxes imposed on the foreign
    operations of U.S. companies has a feedback effect that causes a loss
    of U.S. jobs. Any loss in foreign market share of U.S. companies will
    accrue to the benefit of foreign-headquartered multinational companies
    who will increase employment. Growth of foreign-headquartered companies
    at the expense of U.S. companies may result in yet further decline of
    U.S. companies as they lose the efficiency benefits of economies of
    scale. These effects may also cause the U.S. company to become less
    ---------------------------------------------------------------------------
    competitive in the U.S. market.

    A level playing field for globally engaged American companies and their
    foreign-headquartered rivals requires that the United States not impose
    additional taxes on the foreign earnings of U.S. companies beyond those
    paid by foreign-headquartered companies to their governments. Increases
    in the GILTI tax rate would further disadvantage American companies and
    their U.S. workers.

                                     * * *

    The world economy has become more challenging for American workers and
    the American companies for whom they work. Other countries have sought
    to create a tax advantage over the United States--even countries we
    consider our close economic partners.

    The United States needs a competitive tax code to defend its economic
    interests and support American jobs. If U.S. companies must jump over
    hurdles and steer around stumbling blocks that companies headquartered
    elsewhere in the world do not face, we are only disadvantaging
    Americans and advantaging foreign competitors, including China.

    Imposing higher taxes on the foreign earnings of American companies is
    not in the U.S. interest and risks American jobs and investment in the
    United States. By maintaining competitive tax rules for American
    companies and their workers, we can better ensure our economic security
    and the broader benefits that flow from a strong economy.

                                     ______

                   Letter Submitted by Jacqueline S. Pruskin
    I'm a citizen of the USA where I was born. I also am an emigrant. I
    live outside the United States in the United Kingdom where I'm
    domiciled, am a tax resident and where I am subject to high taxation on
    my worldly income and capital gains.

    I don't consider that I live ``offshore.'' I left at the young age of
    22 to marry a young Englishman and it was decided to live in the UK
    with him and our son for practical and family reasons. I never thought
    I would return to live in the U.S. because I had found my home where I
    wished to pursue my personal happiness and opportunities to develop my
    talents and skills.

    I pay high income taxes where I live, including additional kinds of tax
    such as 20% VAT on nearly everything that I purchase to my country of
    residence. The UK government has always allowed capital gain in the
    primary home to be free of capital gains taxes. We pay huge taxes on
    the purchase of our home property--called the stamp duty, it can be as
    high as 15% on top of the agreed sale price. The U.S. does not impose
    that in the USA.

    The UK also has a very high inheritance tax with the threshold for
    paying it starting at less than $500,000 only. Then it is 40% of the
    value of everything that the person who has died leaves as his or her
    estate. There is no way to get round this.

    I had truly nothing when I first arrived in the UK, and all that I have
    now I have because of my years of work and savings in the UK. I am not
    a tax avoider in the UK nor in the USA .I file my U.S. tax return, and
    every year there is something or other for which I have to pay the IRS.

    My filing costs for just myself as a retired single divorced woman on a
    modest income are approximately $3,800 per annum on top of the UK
    compliance costs of $1,380 per annum. Having to do this every year
    becomes very hard and stressful as I've grown older and income has
    become tighter. I'm worried particularly that I cannot invest my
    savings in financial products in the way a wholly English person can in
    the UK, or an American can who lives in the USA.

    I don't know if any of you knows this, but because of the extreme
    compliance risks involved for non-U.S. (off shore) financial companies
    and banks, they do not accept clients with USA citizenship indices.

    Likewise in the past two years American financial companies such as
    Merrill Lynch, Wells Fargo and most others have closed the accounts of
    Americans who do not actually live inside the USA. Even though I
    maintain my U.S. address via my son who lives there, that is no longer
    enough for me to be accepted to invest my savings in the USA.

    I am trapped between not being able to invest my savings for a decent
    return in the UK and I am also now not allowed to invest my savings for
    decent return in the USA. This is a horror story.

    Because I am a U.S. citizen, I'm subject to the U.S. extraterritorial
    tax regime, which means the United States imposes its taxation on my
    non-U.S. income generated where I live permanently even though I am
    fully taxable on that income in the country where I reside outside the
    borders of the United States. There is no other advanced country in the
    world that imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States in the same way they treat U.S. multinationals doing
    business outside the United States. Please, hear me--I am not a
    multinational, not a corporation, I am a flesh and blood, individual,
    ordinary human person, now old, fully retired. YET not a single
    participant at that hearing recognized how individuals are affected by
    these rules even though the focus of the hearing was supposed to be
    about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with an individual running a business with interests outside
    the USA as I used to do. Not a single one! I would laugh if I could but
    this attitude is a very harmful one, insidious too--and I respectfully
    suggest that subsequent hearings include witnesses who have experienced
    running businesses ( also like me just managing their life) outside the
    United States. To put it another way: Subsequent hearings should deal
    with the reality on the ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' Stop calling me and others like me
    names that demean my life and humanity. I am instead a ``dual-
    national'' living in the country of second citizenship. It doesn't make
    me less American. I vote in the U.S. Elections, my American thoughts
    and ideas are communicated regularly with other Americans, family and
    friends new and old. What I sense and feel matters and rebounds. When I
    had my own self-employed business I was not a multinational, I was just
    one lone person with a talent for finding and buying beautiful things
    and I created a market for them that gave me an income from which I
    could build my life, send my child to school and college, get out of a
    difficult marriage and save for my old age.

    Being a dual national means that I am subject to the laws of the
    country where I live. I am not GILTI of anything. I ask only to be able
    to carry on my life in the country where I am resident without
    interference from the Internal Revenue Code of the United States.

    As a general principle: Individuals living their lives outside the USA
    are not immune to the effects of raising the U.S. corporate income tax
    rate and/or doubling the GILTI tax. Please understand that any and all
    changes to the taxation of U.S. corporations will have a huge impact on
    the U.S. taxation of U.S. individual humans living outside the U.S.,
    running small businesses in the countries where they reside. It can
    destroy a small business, destroy a family.

    I already suffer from the USA extraterritorial taxation regime in a way
    I never could have expected. Because of collateral damage since the
    start of FATCA over ten years ago it has made it difficult for me to
    save, invest, participate in pension plans and generally behave in a
    financially responsible way for my imminent old age. This is because
    all of these essential activities are taking place in my country of
    residence and not in the United States. My retirement investments are
    foreign to the United States, but local to me. In addition, the United
    States impose taxes on things (for example sale of principal residence)
    when my country of residence does not. Because I am required to live my
    life with the USD as my functional currency, I am subject to ``fake
    income'' on nothing but changes in the exchange rate. As a tax resident
    of both the United States and the UK, I get the worst of both tax
    systems. What one giveth, the other taketh. I do not feel respected at
    all by the USA, instead I am called a criminal and a tax avoider just
    because live outside the USA. Madness!

    Finally, please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! They do not
    solve the main problems. Anyhow retired for many years, I no longer
    earn, so earned income credits no longer apply to me. Is this just?

    This situation is extremely unjust and unnecessary. For many years,
    Americans abroad have been attempting to get both Treasury and Congress
    to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation. That is the most sensible of any solution put
    up for inspection. Indeed it is the only solution.

                                     ______

                                 Public Citizen

                          215 Pennsylvania Avenue, SE

                              Washington, DC 20003

                                  202-546-4996

                                www.citizen.org

    March 25, 2021

    U.S. Senate
    Committee on Finance
    219 Dirksen Senate Office Building
    Washington, DC 20510

    Dear Chairman Wyden, Ranking Member Crapo and Honorable Committee
    Members:

    On behalf of more than 500,000 members and supporters of Public Citizen
    nationwide, we thank you for holding this timely session and
    respectfully offer the following comments to the record for the hearing
    entitled ``How U.S. International Tax Policy Impacts American Workers,
    Jobs, and Investment.''
    Because of a global ``race to the bottom''--where multinational
    companies use accounting maneuvers to book their profits in low- or no-
    tax jurisdictions, or ``tax havens,''--since the mid-1980s, the average
    tax rate paid by corporations across the world has dropped from 49% to
    less than 23%.\1\ And since the 2017 tax giveaway bill, the Tax Cuts
    and Jobs Act (TCJA) was passed in 2017, the U.S. domestic corporate
    rate on the books is just 21%.--with the average rate actually paid
    being much less. A recently released government report found that the
    average corporate rate was only just 7.8% in 2018--half the average
    rate prior to passage of the TCJA.\2\ The result of that law has been
    stark. According to a report from ITEP, ``91 of the most profitable
    corporations in the United States paid effective tax rates of zero or
    less on their 2018 U.S. income.''\3\
    ---------------------------------------------------------------------------
        \1\ Kimberly A. Clausing, Emmanuel Saez, Gabriel Zucman, Ending
    Corporate Tax Avoidance and Tax Competition: A Plan to Collect the Tax
    Deficit of Multinationals (2021). UCLA School of Law, Law-Econ Research
    Paper No. 20-12, https://ssrn.com/abstract=3655850.
        \2\ Joint Committee on Taxation Staff, ``U.S. International Tax
    Policy: Overview and Analysis,'' at 58 (2021).
        \3\ Matthew Gardner, Lorena Roque, and Steve Wamhoff, Corporate Tax
    Avoidance in the First Year of the Trump Tax Law (2019). Institute on
    Taxation and Economic Policy Report, https://tinyurl.com/waptbt9m.

    While egregious tax avoidance strategies by multinational corporations
    have been going on for years, they were intensified thanks to
    provisions from the 2017 tax giveaway bill, the Tax Cuts and Jobs Act
    (TCJA). The TCJA created a loophole that allows U.S. multinationals to
    pay half the domestic rate--or even nothing at all--on foreign-booked
    profits.\4\ American workers bear the brunt of these current harmful
    tax incentives that drive investments to other countries. While worker
    productivity has increased in recent years, wages have stagnated and
    jobs have increasingly been outsourced, exacerbating the extreme income
    inequality we are seeing in our nation.
    ---------------------------------------------------------------------------
        \4\ Kimberly A. Clausing, ``Profit Shifting Before and After the
    Tax Cuts and Jobs Act,'' 73(4) National Tax Journal 1233-1266 (2020),
    http://dx.doi.org/10.2139/ssrn.3274827.

    Public Citizen supports the No Tax Breaks for Outsourcing Act (S. 714)
    and urges the Senate to pass this crucial legislation that would end
    the preferential tax treatment that has incentivized sending jobs and
    profits overseas. This bill would level the playing field for American
    small businesses by ensuring U.S. multinational corporations pay the
    same tax rate on profits earned abroad as they do domestically. This
    legislation would also generate significant revenue to offset the cost
    of funding priorities like repairing our nation's crumbling
    infrastructure.\5\ A study estimates eliminating offshore tax loopholes
    could garner $77 billion in revenue annually.\6\
    ---------------------------------------------------------------------------
        \5\ Press Release, Senator Chris Van Hollen., Van Hollen,
    Whitehouse, Doggett, Durbin Introduce no Tax Breaks for Outsourcing Act
    (March 11, 2021), https://tinyurl.com/mc74yau3.
        \6\ Kimberly A. Clausing, ``Five Lessons on Profit Shifting from
    the U.S. Country by Country Data'' (2020). Tax Notes Federal. 169(9).
    925-940., https://ssrn.com/abstract=3736287.

    This is an ideal time for the Senate to pass the No Tax Breaks for
    Outsourcing Act since countries are working in concert through the OECD
    (Organisation for Economic Co-operation and Development) to address tax
    avoidance of multinational entities.\7\ Now is a prime opportunity for
    the U.S. to take further action on ending the TCJA international
    loopholes to provide further momentum to ensure these negotiations for
    a global minimum tax come out as strong as possible to combat profit
    shifting.
    ---------------------------------------------------------------------------
        \7\ OECD, Tax Challenges Arising from Digitalisation--Report on
    Pillar Two Blueprint: Inclusive Framework on BEPS, OECD/G20 Base
    Erosion and Profit Shifting Project, OECD Publishing (October 2020),
    https://tinyurl.com/4xnypcb7.

    In addition to rolling back the tax giveaways that were bequeathed to
    corporations thanks to the TCJA, Public Citizen urges the Senate to go
    even further and tackle the problem of profit shifting directly by
    passing comprehensive legislation on this topic, the Stop Tax Havens
    Abuse Act (S .725) as a remedy to truly solve the excessive problem of
    ---------------------------------------------------------------------------
    profit shifting.

    Furthermore, our nation must take additional actions to hold
    corporations to task and shine light on these unpatriotic multinational
    corporations who are engaging in the risky behavior of shifting profits
    to low tax countries all while draining our nation's coffers. We urge
    this committee to work in tandem with the Banking, Housing, and Urban
    Affairs Committee to pass the Disclosure of Tax Havens and Offshoring
    Act, which would require public country by country reporting and ensure
    that corporations disclose across the board all the countries in which
    they pay taxes. This would help investors and the public determine
    whether or not corporations are profit shifting to tax havens,
    shortchanging the U.S. government and creating reputational and
    financial risk. Public disclosure of this country-by-country
    information, which corporations already report privately to government
    authorities, will bring accountability and ensure investors have the
    full picture about companies' tax responsibility.

    Public Citizen urges the committee to embrace these commonsense ways to
    raise revenue, curb tax avoidance, and protect U.S. jobs and domestic
    small businesses. We look forward to working with you to bring these
    policy solutions to fruition as well as to holistically take on the
    challenge to unrig our tax code and reinvest in American communities.

    Thank you for the opportunity to submit this statement for the record.
    For questions, please email sharley@citizen.org or
    rstewart@citizen.org.

    Sincerely,

    Susan E. Harley, J.D.
    Managing Director
    Public Citizen's Congress Watch division

    Robert L. Stewart
    Tax and Disclosure Advocate
    Public Citizen's Congress Watch division

                                     ______

                      Letter Submitted by Barbara Quinton
    Honorable Senators,

    I am an American citizen who has lived continuously in Hong Kong for
    the past 20 years. As a U.S. citizen I vote in Portland, Oregon. U.S.
    taxation and FATCA are making my and my family's life hell. One bank
    has already informed us they will close our account. Others refuse us
    investment and mortgage services. We are ready to renounce our
    citizenship and become Chinese citizens because of the way the IRS
    treats us like criminals.

    I do not live ``offshore.'' I do live in a territory where I pay income
    tax. I also pay additional high property taxes, rates and stamp duties
    and other ``fees and charges'' which are in fact taxes to the Hong Kong
    government.

    I was shocked that there was no witness at your hearing who had
    personal experience with a company or individual running a business
    with interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who are
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    Any and all changes to the taxation of U.S. corporations will have a
    huge impact on the U.S. taxation of U.S. individual citizens living
    outside the United States and running small businesses outside the
    United States. Individuals are not immune to the effects of raising the
    U.S. corporate income tax rate and/or doubling the GILTI tax.

    Please don't pontificate that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    Regarding taxation of U.S. citizens living permanently abroad:

    This must end. I propose that any U.S. citizen who remains continuously
    abroad for three (3) years should be exempt from U.S. income taxes and
    filing requirements (including bank account filing requirements under
    FBAR and FATCA).

    For example, the citizen is responsible for filing IRS forms (while
    still getting the 2555 and foreign earned income exemptions) and paying
    taxes (if owed) for the first 3 years residence abroad. Thereafter, he
    registers with the IRS as a Tax Exempt U.S. Citizen Abroad, proves that
    he/she has been compliant in all taxes paid and forms filed, and is
    from then on free of U.S. filing requirements, until he or she returns
    to work in the United States. This can be construed as reasonable,
    since expatriates on 2-year contracts are generally only temporary in
    their intentions and their thinking, and those staying longer are
    generally more committed to remaining outside the U.S. longer-term. I
    believe no U.S. person should file or pay U.S. taxes when living
    abroad, but I think redefining a ``bonafide foreign resident'' as
    someone abroad more than 3 years might possibly be a solution palatable
    to all.

    Regarding FBAR and FATCA:

    Same as above. However, adding a 3-year rule imposes even more
    complexity on foreign financial institutions. For this reason, I
    strongly advocate the total repeal of FATCA.

    Thank you for your attention.

    Sincerely,

    Barbara Quinton

                                     ______

                        Letter Submitted by Eileen Ramm
    Dear Legislators,

    I married a UK citizen 40 years ago and have been living in the UK ever
    since, but retain USA citizenship because I want to.

    I do not earn money in the USA but submit a yearly USA tax return. I
    pay UK taxes and submit yearly UK returns. Thus I am doing two returns
    a year, one for USA and one for UK.

    To complete a USA tax return it takes me ages as the tax year is a
    different period of time and things like UK insurance valuations are
    based on the UK tax year.

    Is there a better way to do this?

    Mrs Eileen Ramm

                                     ______

                      Letter Submitted by Jared Rasmussen
    I am a proud citizen of the United States of America. I live outside
    the United States in Finland where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I fell in love with a Finnish girl in 2006. We
    married and I moved to Finland in 2008. We have 2 young dual citizen
    daughters. I come home every summer to visit family in Washington state
    and North Carolina. I long ago realized that although I will always
    love America, I am living permanently abroad. I am a tax resident of my
    country of residence. I am required to organize my financial and
    retirement planning in that country. The problem I have is that the
    U.S. tax laws make it very difficult for me to live the same kind of
    life that my friends and neighbours live. You see, they are subject to
    only one tax system. As a U.S. citizen, I am subject to the tax system
    where I live and the U.S. tax system. Those systems are generally not
    compatible. Most attempts at responsible financial/retirement planning
    where I live are frustrated by the need to comply with U.S. tax laws.
    How can this be fair? How can the United States impose taxation on the
    non-U.S. income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                      Letter Submitted by Andrew Razgulin
    Hi, I am writing in regard to the hearings that took place on March 25,
    2021. I would like to make the following two observations.

        1.  The hearing focused on U.S. multinational corporations. But the
    same U.S. tax rules apply to individuals living outside the United
    States, as they do to U.S. multinationals doing business outside the
    United States. It is neither fair, nor practical to equate the two. Not
    a single participant recognized how individuals are affected by these
    rules.

        2.  There was no witness who had any personal experience with
    living abroad as an American. To understand the effect that these rules
    have on ordinary people one must have been in our shoes. At least once.
    It would immensely benefit law makers to understand how these rules end
    up working in practice.

    In closing, I would like to call for United States to join the rest of
    the world in adopting a system of residence-based taxation. We are not
    GILTI, we merely live abroad.

    Andrew Razgulin

                                     ______

                        Letter Submitted by Brendan Read
    The U.S. is the only advanced country that taxes its citizens on their
    world-wide income when those citizens live, work, and pay tax in
    another country. My wife and I not only pay taxes in Canada where we
    live but we also file a joint tax return to the IRS every year.
    Declaring non-U.S. income on IRS forms is very complicated. Hiring tax
    return preparers that understand the U.S. tax system as well as
    Canada's tax system can be very expensive, which makes meeting U.S. tax
    obligations a serious financial burden even if no tax is owed.

    I'm an ordinary American. I moved to Canada to accept a job offer after
    being laid off by my previous employer in the U.S. My family is not
    wealthy; my wife is retired and on Social Security. And I am
    approaching retirement age. We don't have room in our household budget
    to spend on tax return preparers, and we certainly cannot afford to be
    double-taxed.

    Moreover, I and other Americans who work in Canada are subject to the
    unfair Windfall Elimination Provision (WEP) clawback from our Canada
    Pension Plan (CPP) earnings on our Social Security, resulting in less
    income at retirement. Unfair in that you can only be a resident in one
    country at a time. We pay/paid into the CPP and Canadian taxes, like we
    had paid into Social Security and American taxes. In fairness,
    shouldn't we receive the full CPP and Social Security benefits we had
    worked hard for?

    I value my American citizenship. I pay attention to U.S. politics as
    much if not more than the average citizen and I vote in every election
    for which I'm eligible. But I don't think it's fair that ordinary,
    working class Americans like me, making a living and paying tax abroad,
    are subject to inordinately complex and sometimes punitive U.S. tax
    filing.

    The current law is costly, punishing, and unfair, and it is causing
    some Americans abroad to consider renouncing U.S. citizenship. I hope
    that shocks you because it shocks me.

    And surely handling returns from Americans living abroad must be
    burdening the IRS with added costs, causing it devote staff and other
    resources, like IT, that should be used to handle the taxes of
    Americans resident in the U.S. Like preventing future debacles like the
    delays in the processing of tax returns with the stimulus payments.

    Isn't it time to truly put the ``Internal'' in Internal Revenue
    Service?

    I am asking the Senate Finance Committee to hold hearings on Americans
    abroad and U.S. taxation. I encourage you to invite testimony from
    experts who can provide an accurate profile of the Americans abroad
    community and describe the burden that U.S. tax filing places upon us.
    I urge you to also explore the implications of a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation. And, finally, to look at the lack of fairness of the
    application of the WEP on Americans who worked/have worked in other
    countries, like Canada.

    Thank you.

    Brendan Read

                                     ______

                        Letter Submitted by Carole Reed
    I am a proud citizen of the United States of America. I live outside
    the United States in Canada where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

    Sincerely,

    Carole Reed

                                     ______

                     Letter Submitted by Mary Ann Reinisch
    I am a proud American Citizen. I I have lived outside the United Stated
    in England for 45 years. I married a British man. I have worked for the
    UK local government and the National Health Service as a Social Worker
    all my professional career in the United Kingdom. I am now a retired
    widow living on my pension. Unlike in the United States, the salaries
    here for public service are quite modest.

    I love America. My heart will always be in the United States. I
    continue to exercise my voting rights and to submit my tax returns
    every year.

    I long ago realized that although I will always love America, I am
    living permanently abroad. I am a tax resident of my country of
    residence. I am required to organize my financial and retirement
    planning in that country. As a U.S. citizen, I am subject to the tax
    system where I live and the U.S. tax system. Those systems are
    generally not compatible. Most attempts at responsible financial/
    retirement planning where I live are frustrated by the need to comply
    with U.S. tax laws. How can this be fair? How can the United States
    impose taxation on the non-U.S. income and assets of a person who is a
    tax resident of another country--with no economic connection to the
    United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example, Value
    Added Tax on almost all goods and services) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two observations about the Hearing on March 25th:

        1.  The Hearing concentrated on multi-national corporations and did
    not differentiate between those entities and individuals. I am an
    individual and not a multi-national corporation and never have been. I
    am a dual-national and not an ``off-shore.'' I want to be able to live
    my life here without the long arm of the United States Internal Revenue
    Code treating me as if I were an entity. Please do not overlook me and
    many others like me who are individuals and should not be treated as if
    we are the same as multi-national corporations.

        2.  I understand that there were no witnesses called with personal
    experience of either running a business or company with interests
    outside of the Untied States or, like me, of being an American
    individual working and living separately in another country. This
    oversight, I hope, can be corrected in the future to enable you to
    obtain a full, fair and proper picture of the reality American citizens
    abroad face.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    who may or may not being running small businesses outside the United
    States. Individuals are not immune to the effects of raising the U.S.
    corporate income tax rate and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    If I am required to pay capital gains on selling my principal
    residence, I will very painfully have to give up my American
    citizenship. Otherwise I will be paying the United States Internal
    Revenue the money invested in my only asset and retirement investment--
    my home. This I need to pay for my future nursing care. This cannot be
    just.

    I must re-iterate that this situation is extremely unjust. For many
    years, Americans abroad have been attempting to get both Treasury and
    Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Michael Rempen
    I am a proud citizen of the United States of America. I live outside
    the United States in Berlin, Germany, where I am a tax resident and
    where I am subject to full taxation.

    I run a small business in the country where I live. My business is not
    a multinational corporation and all of its income is domestic to the
    country where I live. However, because I am a U.S. citizen, the U.S.
    tax code treats me the same as Apple or Google. If I use a local
    business structure that's treated as a corporation under U.S. tax law,
    then I'm forced to fill in the same form 5471 as Apple must complete
    for each foreign subsidiary--translating all of my business records
    into U.S. dollars even though I do no business in that currency. My
    business is subject to GILTI even though I have no intangible income.
    How can I compete with my neighbours who are not U.S. citizens and who
    have only one tax system to deal with?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes (42%!). I also pay additional kinds of taxes like VAT
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Matthew Riedel
    I am a proud citizen of the United States of America. I live outside
    the United States in New Zealand where I am a tax resident and where I
    am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    NOT immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                    Letter Submitted by Christine B. Roberts
    I am a proud citizen of the United States of America. I live outside
    the United States in Australia where I am a tax resident and dual
    citizen and where I am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago to marry
    and Australian who I love. Although the days sometimes go slowly, the
    years go quickly. I long ago realized that although I will always love
    America, I am living permanently abroad, with my ``foreign'' husband
    and dual citizen children.

    I am a tax resident of my country of residence, Australia. I am
    required to organize my financial and retirement planning in that
    country. The problem I have is that the U.S. tax laws make it very
    difficult for me to live the same kind of life that my friends and
    neighbours live. You see, they are subject to only one tax system. As a
    U.S. citizen, I am subject to the tax system where I live and the U.S.
    tax system. Those systems are generally not compatible. Most attempts
    at responsible financial/retirement planning where I live are
    frustrated by the need to comply with U.S. tax laws. How can this be
    fair? How can the United States impose taxation on the non-U.S. income
    and assets of a person who is a tax resident of another country--with
    no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example GST)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I also am fully taxable on my worldwide income by Australia while
    residing here, so my worldwide income is taxed twice, since neither
    country nor the tax treaty recognizes the other's retirement
    instruments thus treats them all as grants of one type or another.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States the same way they treat U.S. multinationals doing
    business outside the United States. Although I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy and
    negligent. I respectfully suggest that subsequent hearings include
    witnesses who have experienced running businesses outside the United
    States and/or actually living outside the United States. To put it
    another way: Subsequent hearings should deal with the reality on the
    ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States. The bank accounts the IRS deems
    ``foreign'' happen to be the local to me, accounts I need in that
    country to function as a resident of that country. They do not contain
    money earned in the USA and stashed ``overseas''!

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States imposes taxes on certain things
    (for example sale of principal residence) when my country of residence
    does not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' from nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules, treaties and/or the
    Foreign Earned Income Exclusion solve these problems. They don't! The
    ``savings clause'' negates most of it.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    At least put through an Executive order to exclude emigrants' local
    ``foreign'' bank accounts and businesses which they need to exist
    living with their families abroad.

    God bless the United States of America!

    Christine B. Roberts

                                     ______

                      Letter Submitted by Rachel Rockwell
    Hello fellow Americans,

    I am a proud citizen of the United States of America. Two years ago, I
    moved permanently from the United States to Canada, where I am a tax
    resident subject to full taxation that exceeds what I would have paid
    in the United States. I moved because I met my fiance, a humble
    Canadian, who needed to stay in Ontario for his job. I moved because I
    wanted to support my partner, get married, and start a family. I did
    not move because I hate America, and I truly miss my hometown, my
    family, and the wonderful environment I grew up in. It has been over a
    year since I've been able to visit and I am anxiously awaiting the day
    we can travel safely and freely again.

    I was surprised at how focused the hearing was on U.S. multi-national
    corporations, and how little it focused on the effect of U.S. tax
    policy on its own citizens living abroad, who are the very ``American
    workers'' that were supposed to be discussed. I am also surprised that
    no one was brought forth who had experience or any sort of relationship
    with someone living and/or running a business outside of the United
    States. I think this is a grave oversight and stands akin to asking a
    lawyer how a doctor does their job. It does not feel like the interests
    of the people have been represented, and I would urge that the
    committee make a greater effort to truly understand the impact on the
    individual taxpayer--your own American Workers abroad.

    I am a young professional trying to create a comfortable and secure
    life for the family I one day hope to have. I am not a particularly
    high earner--currently I make the equivalent of maybe U.S. $40,000 a
    year on a good exchange rate day. I did not abscond the country with
    millions or stuff my money into offshore tax havens. I'm just a
    regular, everyday citizen trying to live my life like everyone else.

    Unfortunately, U.S. tax laws make things like planning for retirement
    very difficult and put me at a financial disadvantage compared to my
    friends and coworkers here. For example, I am unable to make use of the
    most advantageous retirement savings vehicle that Canada offers, the
    Tax-Free Savings Account (TFSA). Outside of registered retirement
    accounts, I cannot freely invest in the funds I want to invest in
    without incurring onerous paperwork, taxation, and reporting duties due
    to the classification of PFICs. I cannot open or contribute to a
    retirement account in the U.S. because no financial institutions will
    take me on since I am not a resident of the U.S., and any contributions
    I make to my existing Roth IRA are not recognized in Canada. Because I
    am also a new immigrant to Canada, I have no allowance to contribute to
    a Registered Retirement Savings Plan (RRSP), which is the only
    retirement account that I may safely invest in as a U.S. citizen, and
    thus I have effectually been forced to take over a year off of saving
    for retirement. So here I am, 30 years old, stuck in between each
    country's tax code, unable to effectively save, invest, or plan for my
    future.

    Come tax season, I must file my taxes not once, but twice--once in
    Canada, and once in the U.S. My financial reporting obligations do not
    end there, though. They also include living in fear of the financial
    penalties from accidentally misreporting or missing a ``foreign'' bank
    account--of which I have many, since I live and work here, in Canada,
    where these accounts are my local bank accounts that I need for
    everyday life--and digging through obscure tax code to discern the
    nature of taxation on certain assets in each country. Although the
    Foreign Earned Income Exclusion is useful, it does not alleviate the
    struggle of trying to navigate both countries' tax codes at the same
    time, and I elect to take the Foreign Tax Credit in any case as I pay
    more in taxes to Canada than I would owe to the U.S.

    The cost to complete and file my taxes is not insignificant, either. I
    have received quotes ranging from a minimum of $325 to over $1000--and
    may I remind you, I make less than $40k USD a year. You wouldn't advise
    anyone to pay that much for a simple 1040. Unfortunately, it's not just
    the 1040--it's the 1116. The 8938. FinCEN Form 114. Form 8621 if you
    have PFICs. The list goes on, and the cost seems to increase
    exponentially the more forms you need to fill out, just because you
    tried to live the same life as everyone else lives.

    I just want to be able to live my life freely. Please understand that
    there are millions of U.S. citizens just like me who have been caught
    up in the crossfire of U.S. extraterritorial taxation and conflicting
    tax codes. The time has come for the United States to abandon its
    extraterritorial tax regime and join the rest of the world in adopting
    a system of residence-based taxation.

                                     ______

                       Letter Submitted by David Rosalia
    To the Senate Committee on Finance:

    Thank you for the opportunity to submit this statement for the record
    of your recent hearing on in the impact of U.S. international tax
    policy on American workers, jobs and investment. I understand that the
    March 25, 2021, hearing did not include a discussion on the impact of
    U.S. tax policy on citizens actually living abroad, whose lives are
    directly, and often negatively, impacted by resulting U.S. tax laws.

    I am an American and I am proud of my American heritage. My family
    traces its roots back to American Indians on my mother's side and on my
    father's side our family goes back generations in New York and my
    father even has a small street named after him in New York.

    Whenever I travel back home to America, I feel like I come alive, like
    I am re-born. I am proud that such a diverse and living culture is
    mine; that I am a part of it and it is a part of me. When I lived in
    the Hamptons as a child, I would often run into American legends like
    Billy Joel, and Christie Brinkley, Harrison Ford, Paul Simon, Arnold
    Schwarzenegger, Woody Allen, and many others. I have many fond memories
    and my whole family living in the states and all of that makes me who I
    am.

    Even though I love the States, life has taken me to Europe. I was
    married to a Belgian, we tried living in the states but the economy was
    really bad in the late 80's, early 90's and as I had the possibility to
    get higher education in Europe for free, and I took the opportunity and
    have been living and working in Belgium ever since.

    Why are these details important? I mention them to convey to you how
    important my ties to America are, how important my memories and my
    American identity are even though I have been living already many years
    in Belgium.

    Why are they important? Because there isn't a month that goes by that I
    don't consider renouncing my American citizenship. As I write this
    statement for the committee, there are tears are welling in my eyes. I
    don't want to renounce my American citizenship; it would be like losing
    a part of myself. For those of you living and working in the States
    this may seem like an extreme measure, but living as a U.S. citizen
    outside of the U.S. is like having a ``Sword of Damocles'' over your
    head constantly. There is a Bible verse which says ``A man cannot slave
    for two masters'' and that is how I often feel being subject to two
    sets of tax laws.

    Let me give you some examples of what we have to deal with:

          Because of the strict requirements that the U.S. places on
    financial institutions when they have American clients, many banks
    refuse American customers. This makes it very difficult for American's
    to even open a bank account.

           I work at a Belgian bank which, fortunately, still accepts
    American customers. My bank requires that my pay is deposited on my
    account at the bank where I work. What happens to me the day that the
    bank decides it no longer accepts American clients? I don't know what
    will happen but I fear that it could lead to me losing my job which I
    have had for over 20 years.

          When filing your taxes when living abroad. The amounts are based
    on a conversion of your local currency to the dollar. What happens if,
    for example, the Euro-Dollar exchange rate changes in an extreme way? I
    already pay 55% of my salary to the country in which I live and I can't
    afford to pay, on top of local taxes, taxes to the U.S. just because an
    exchange rate changed, yet this is a real possibility.

          The U.S. regulations make it much more difficult to invest. Not
    only are Americans refused by financial institutions, but it is
    complicated to navigate the U.S. regulations and tax laws for stock
    market and other investments.

          Foreign pension plans can also be affected by the U.S. tax laws

    U.S. taxes are extremely complex, and even more so for persons living
    outside of the U.S. We don't have easy access to U.S. tax advice and
    those that can do U.S. taxes are often horribly expensive.

    I always do my best to fill in my U.S. taxes and FBAR as accurately as
    possible and on time. Even so, I live in fear of making a mistake or
    that there will be a misunderstanding. The fines for making a mistake
    on your FBAR declaration are potentially very severe and the
    instructions are not sufficiently clear in some cases. These are just a
    few the stresses which haunt Americans living abroad.

          Note: If the goal of the FBAR is to prevent tax fraud, please
    set the lower limit for filing an FBAR to something realistic like
    300,000 or 500,000 dollars instead of the 10,000-dollar limit. This is
    just creating unnecessary risk (fines for unintentional errors) and
    stress for Americans living outside the U.S. who are working as
    employees in companies.

    As an employee in a Belgian company, with no financial ties to the U.S.
    it seems unfair to be under 2 sets of tax laws. Why is it that just
    about no other country in the world has a world-wide citizen tax? I
    believe that there is only one other country (N. Korea?) that has a
    citizen tax law.

    I urge the Committee to listen to the voices of U.S. citizens living
    abroad when considering any further changes to U.S. international tax
    law. I don't want to have to renounce my U.S. citizenship as so many
    thousands of others have done due to the tax and FBAR filing
    requirements for U.S. citizens. I am going to wait on the result of
    this committee before making my decision. Please show us you care about
    our situation.

    Sincerely,

    David Rosalia

                                     ______

                        Letter Submitted by Joshua Rowe
    I am a proud citizen of the United States of America. I live outside
    the United States in Israel where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or live my life without interference from the
    Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Laura Rueckert
    To whom it may concern:

    The U.S. is the only advanced country that taxes its citizens on their
    world-wide income when those citizens live, work and pay tax in another
    country. I not only pay taxes in Germany where I live but I also file a
    tax return to the IRS every year. Declaring non-U.S. income on IRS
    forms is very complicated. Hiring tax return preparers that understand
    the U.S. tax system as well as the German tax system can be very
    expensive, which makes meeting U.S. tax obligations a serious financial
    burden even if no tax is owed.

    I'm an ordinary American. I moved to Germany to live with my German
    husband. Neither I nor my family are at all wealthy, in fact, I only
    work part-time so I can have more time for my children. We don't have
    room in our household budget to spend on tax return preparers, and we
    certainly cannot afford to be double-taxed.

    I looked back at my tax records and have been submitting my tax forms
    from Germany since the 1990s. All those years of me doing the work,
    trying to get everything right. All those years of government workers,
    paid for by U.S. taxes, checking my tax returns. In all that time, I
    have never owed any U.S. taxes. It's all been a huge waste of time and
    money for everyone involved. It's not even possible for me to do my
    American taxes electronically, since the free electronic tax software
    never includes the forms required for expats. So I also waste money on
    postage.

    I value my American citizenship. I pay attention to U.S. politics as
    much if not more than the average citizen and I vote in every election
    for which I'm eligible. But I don't think it's fair that ordinary,
    working class Americans like me, making a living and paying tax abroad,
    are subject to inordinately complex and sometimes punitive U.S. tax
    filing, especially knowing other countries do not do this.

    The current law is costly, punishing, and unfair, and it is causing
    some Americans abroad to consider renouncing U.S. citizenship. I hope
    that shocks you because it shocks and saddens me.

    I am asking the Senate Finance Committee to hold hearings on Americans
    abroad and U.S. taxation. I encourage you to invite testimony from
    experts who can provide an accurate profile of the Americans abroad
    community and describe the burden that U.S. tax filing places upon us.
    I urge you to also explore the implications of a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation.

    Thank you.

    Laura Rueckert

                                     ______

                        Letter Submitted by Dieter Runge
    I am a proud citizen of the United States of America. I live outside
    the United States in Australia where I am a tax resident and where I am
    subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high-income taxes. I also pay additional kinds of taxes to my country
    of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    NOT immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They most certainly
    don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Matthew Russo
    I am a citizen of the United States of America. I live outside the
    United States in Germany where I am a tax resident and where I am
    subject to full taxation.

    Unintended consequences of current tax laws prevent me, and colleagues
    like me, from investing savings in the S&P 500 index, or any Mutual
    Fund, or any ETF.

    A simple example:

          A U.S.-listed S&P 500 fund/ETF cannot be sold directly to me, an
    EU resident

          An equivalent S&P 500 fund/ETF listed in Ireland can be sold to
    me, but is then punitively taxed by the U.S. as a PFIC

    We are voters, and we are taxpayers, and we are deserving of your
    consideration when drafting laws that impact our investment
    opportunities and our retirement planning.

    I ask that you please consult knowledgeable people who can help prevent
    unwanted negative impact on American expats when reviewing tax law.

    Many thanks for your time and attention.

                                     ______

                      Letter Submitted by Beau Jon Sackett
    I am a proud citizen of the United States of America. I also am an
    emigrant from America, living outside the United States in British
    Columbia, Canada, where I am a tax resident and where I am subject to
    full taxation.

    Like many fellow U.S. ex-pats, a job brought me to Canada decades ago,
    and family has kept me here independently of what happened on that
    original job front. I long ago realized that although I will always
    love America, I am living permanently abroad. I am a ``middle class''--
    meaning I've always earned ``middling'' income here in Canada--tax
    resident of Canada, required to organize my financial and retirement
    planning here. But I've always have been subject to extra-territorial
    U.S. taxation. For the record, I have filed my 1040 dutifully with the
    IRS each year since I've been here. But, U.S. lawmakers in 2010
    apparently thought I was a FATCAT, along with the other 9M-or-so U.S.
    ex-pats somewhere on Earth (per a U.S. Treasury guesstimate at the
    time), and thus deserved to be punished financially for it, passing a
    law to that effect. Fortunately, previous to 2015, I had a Canadian job
    earning a Canadian $$ income, and thus could take advantage of Form
    2555 ``Foreign Earned Income Exclusion'', to reduce my U.S. tax burden
    to $0 every April while I was employed. To add extra context, I always
    have had zero income from the U.S. for all those decades. That made my
    yearly IRS interactions fairly simple. Insulting, and violating, but
    simple. However now I'm retired, and no longer have Earned Income, so
    my U.S.-taxation life has gotten more complicated, even as my income
    has gone down. I'm not eligible for any U.S. pension income at all.

    Prior to my retirement in 2015, I discovered that it is almost
    impossible for a middle-class ex-pat person to do any retirement
    planning, because of the inherent difficulties in trying to satisfy two
    different tax jurisdictions at once. If my net worth really did have
    the number of zeros on it that the typical ``U.S. homelander'' thinks
    we ``overseas tax cheats'' (FATCATs) enjoy, my retirement planning
    options would have increased dramatically. But the number of retirement
    planners, conversant in both Canadian and U.S. taxation laws, is very
    close to zero for middle class types like me.

    Just to emphasize that last point, U.S. tax laws applied to long-term
    middle class ex-pats make it impossible to plan for a retirement in
    either country. Members of both my Canadian family(ies), and my U.S.
    family(ies), are subjected only to a single federal tax jurisdiction,
    whereas ex-pats like me are subjected to two, often contradictory in
    their details. That means Canadians can plan for a Canadian retirement
    if they want to, and Americans can plan for an American retirement. But
    ex-pats like me can't plan effectively for a retirement in either
    country. As a very pertinent example, Canadians use their principal
    residence as a major part of their retirement planning, because capital
    gains here are tax-free; they ``pay'' for that exemption by not being
    able to deduct mortgage interest from Canadian income taxes each year.
    U.S. citizens can't make their principal residence play such a
    prominent role, because probably U.S. tax laws regarding mortgage
    interest and capital gains are the opposite. U.S. ex-pats have the
    worst of both worlds, being subjected simultaneously to both types of
    taxes.

    Let me add a little extra context to this. I've voted Absentee in
    Presidential elections for years, first as an absentee voter in Texas,
    and more recently as one in Washington State, where my USAF-vet son now
    lives, because I've listed his WA address as mine. In neither case
    would it be possible for my federal Representative or Senator to
    represent me in any non-trivial way. My son, even though he was born in
    Canada, doesn't face any of these problems in planning his U.S.
    retirement , because Canada doesn't penalize her ex-pat citizens the
    same way as does the U.S.

    I do not live ``offshore.'' I do live in Canada where I pay very high
    income taxes. I also pay additional kinds of taxes here. To illustrate,
    people who calculate ``Tax Freedom Days'' in both countries always find
    that the Canadian Tax Freedom Day comes around 6 weeks after one
    calculated for the U.S.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation in U.S.$ on my C$ income, even though I am a fully taxable on
    that income in Canada where I reside, and even though I don't live in
    the United States. There is no other advanced country in the world that
    imposes such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th, based on what I've learned from friends who've observed the
    proceedings and who also oppose this type of taxation.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not a FATCA(T), by any means. I also am not GILTI of
    anything. I ask only to be able to carry on my life without
    interference from the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    And, as noted above, please don't believe that foreign tax rules and/or
    the Foreign Earned Income Exclusion solve these problems. They don't!
    Neither does the U.S. Foreign Tax Credit, at least when it comes to the
    sale of a principal residence.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.
    But we can't anyone to listen, because we effectively are being taxed
    without representation.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Reza Salari
    I am a proud citizen of the United States of America. I live outside
    the United States in the United Kingdom where I am a tax resident and
    where I am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

    Sincerely,

    Reza Salari

                                     ______

                       Letter Submitted by Greg Schroeder
    Hello, I am a proud citizen of the United States of America. I live
    outside the United States in the UK where I am a tax resident and where
    I am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally, the U.S. extraterritorial tax regime makes it difficult
    for me to save, invest, participate in pension plans and generally
    behave in a financially responsible way. This is because all of these
    essential activities are taking place in my country of residence and
    not in the United States. My retirement investments are foreign to the
    United States, but local to me. In addition, the United States impose
    taxes on things (for example sale of principal residence) when my
    country of residence does not. Because I am required to live my life
    with the USD as my functional currency, I am subject to ``fake income''
    on nothing but changes in the exchange rate. As a tax resident of both
    the United States and my country of residence, I get the worst of both
    tax systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Many thanks,

    Greg Schroeder

                                     ______

                        Letter Submitted by Linda Scurr
    I am a proud citizen of the United States of America. I live outside
    the United States in England where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Yes, I love America. But we never know
    where life will take us. I moved from America to England many years
    ago. I long ago realized that although I will always love America, I am
    living permanently abroad--my life and family are here. I am a tax
    resident of my country of residence. I am required to organize my
    financial and retirement planning in that country. The problem I have
    is that the U.S. tax laws make it very difficult for me to live the
    same kind of life that my friends and neighbours live. They are subject
    to only one tax system. As a U.S. citizen, I am subject to the tax
    system where I live as well as the U.S. tax system. Those systems are
    generally not compatible. Most attempts at responsible financial/
    retirement planning where I live are frustrated by the need to comply
    with U.S. tax laws. This is very unfair. How can the United States
    impose taxation on the non-U.S. income and assets of a person who is a
    tax resident of another country--with no economic connection to the
    United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

    1.  The hearing focused on U.S. multinational corporations. But here is
    the reality: U.S. tax rules treat individuals living outside the United
    States, the same way they treat U.S. multinationals doing business
    outside the United States. Although, I am a flesh and blood individual
    person, not a single participant recognized how individuals are
    affected by these rules. Yet, the focus of the hearing was supposed to
    be about individuals. How did this happen?

    2.  I was shocked that there was no witness who had personal experience
    with a company or individual running a business with interests outside
    the USA. This is ridiculous. I respectfully suggest that subsequent
    hearings include witnesses who have experienced running businesses
    outside the United States and/or actually living outside the United
    States.

    3.  Subsequent hearings should deal with the reality on the ground and
    not the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less of an
    American. But it does mean that I am subject to the laws of the country
    where I live. I ask only to be able to carry on my life without
    interference from the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. In addition, it is very costly for me to submit yearly U.S.
    tax returns because it is a very complicated process involving
    specialist tax firms who charge significant fees.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you.

                                     ______

                        Letter Submitted by Lisa Senior
    I am a citizen of the United States of America and, after marrying a
    British national, have lived in England where I am a tax resident and
    where I am subject to full taxation.

    Having lived in the UK for nearly 18 years, I obtained my British
    citizenship several years ago as I strongly believe in the importance
    of voting. However, as a dual citizen, I am subject to the tax system
    where I live and the U.S. tax system. As the UK and Eritrea are the
    only countries in the world obliging their citizens to report their
    foreign-earned income, not only is this system unfair, it is also a
    burden on the U.S. tax authorities and we citizens living abroad.
    Equally unfair is children born to U.S. citizens abroad and who
    obtained U.S. passports are also obliged to complete tax returns when
    they are not even earning an income in their home country, nor earned
    any income in the U.S.!

    Let me be clear about the negative impact of this archaic tax system:

    1.  It penalizes U.S. citizens from opening bank accounts, making
    investments and holding personal pension funds offered by banks. How
    can we be responsible savers and investors when we are rejected by
    viable savings institutions who do not want to deal with U.S. law
    requiring them to report? How can we ensure financial security for our
    families?

    2.  International tax accountancy firms specializing in reporting
    foreign-earned incomes and FBARs to the IRS for U.S. citizens charge
    hundreds of British pounds (minimum #800 for those who didn't realize
    they had to file in the first place) to essentially report zero
    payments to the IRS.

    3.  The administrative headache to report annual earnings for the
    January-December calendar year when other countries have different
    financial years as well as the time wasted by IRS officials to process
    these forms (which many result in zero revenue for the Treasury) is an
    unnecessary burden.

    4.  Though U.S. citizens living abroad are encouraged to use one of the
    IRS' Free File programs to file online, we are unable to do so as they
    will not accept a foreign telephone number and address, thereby
    blocking you at the first step of registration. Worryingly, sensitive
    financial information needs to go by overseas post.

    5.  Not only do we have to report our foreign-earned income, we are
    also subjected to reporting our financial assets (even joint accounts
    shared with a foreign-born spouse) with the Treasury Department. This
    is intrusive as well as a security risk every time this information is
    submitted.

    6.  There have been many Americans who have given up their U.S.
    citizenship because of the stress and aggravation of having to declare
    U.S. taxes, when often there was nothing to declare. Does America truly
    want to punish its citizens?

    Currently my only economic connection to the United States is with
    pension funds and some savings established prior to leaving the U.S.
    Because I have family in the U.S., these accounts are important for
    visits there. Also, accounts were established for my children in the
    U.S. so their grandparents can contribute money in the event they chose
    to study or travel there.

    I understand the following occurred regarding the recent hearing on
    March 25th:

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Not a single participant recognized
    how individuals are affected by these rules.

        2.  No witnesses who have experienced running businesses outside
    the United States and/or actually living outside the United States were
    present to state their personal experience. How could you give a fair
    assessment?

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world and move towards a residence-
    based taxation system. I urge you to consider the negative impact of
    our current system and bring relief to thousands of Americans abroad
    who want to do the right thing, yet feel as if they are being penalized
    for it.

        Thank you for your consideration in the matter.

                                     ______

                    Letter Submitted by Hussnain Qamar Shah
    I am a citizen of the United States of America. I live outside the
    United States in Pakistan where I am a tax resident and where I am
    subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay income
    taxes. It is my country of residence. Yet, because I am a U.S. citizen,
    I am subject to the U.S. extraterritorial tax regime, which means the
    United States imposes taxation on my non-U.S. income even though I am a
    fully taxable on that income in the country where I reside, and do not
    live in the United States. There is no other advanced country in the
    world that imposes such extraterritorial taxation.

    For many years, Americans abroad have been attempting to get both
    Treasury and Congress to address this issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    The roughly 9 million Americans abroad will be able to sleep more
    easily each night.

                                     ______

                        Letter Submitted by Donna Shearn
    I am a proud citizen of the United States of America. I live outside
    the United States in London, UK where I am a tax resident and where I
    am subject to full taxation.

    I am an emigrant from America. I moved from America many years ago to
    take a job in the Netherlands with an American pharmaceutical company.
    It was there that I met my British husband and moved back to the UK
    with him a few years later. We bought a house, got married and started
    a family in London. I long ago realized that although I will always
    love America and still have family and friends there, I am living
    permanently abroad. My kids were born here and consider the UK their
    home.

    I am a tax resident of my country of residence. I am required to
    organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I cannot stress enough how much of a burden it is to comply with U.S.
    tax laws. It's time consuming, expensive and stressful. I've been fined
    for bureaucratic errors that weren't my fault. I've been refused bank
    accounts from banks that don't want to deal with the reporting
    requirements for their American customers. My kids are worried about
    their own U.S. tax burdens. I do not live ``offshore''. I do live in a
    country where I pay very high income taxes. I also pay additional kinds
    of taxes (example VAT) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Maciej Sikora
    I am a proud citizen of the United States of America. I live outside
    the United States in Germany where I am a tax resident and where I am
    subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1. The hearing focused on U.S. multinational corporations. But here
    is the reality: U.S. tax rules treat individuals living outside the
    United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2. I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    another country. It doesn't make me less American. But, it means I am
    subject to laws of the country where I live. I am not GILTI of
    anything. I ask only to be able to carry on my life without
    interference from the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                     Letter Submitted by Sophia Silverstein
    I am a proud citizen of the United States of America. I live outside
    the United States in Bet Shemesh, Israel where I am a tax resident and
    where I am subject to full taxation.

    I am an American expat. I am temporarily living outside the United
    States for reasons of work and career advancement. When I first moved
    abroad I learned a lot. I learned that other countries have well
    developed tax systems that require payment of a wide range of taxes. I
    can tell you that I pay a lot of taxes. I can also tell you that the
    U.S. tax system treats my non-U.S. income and assets very unfairly. The
    fact that I am temporarily living abroad doesn't mean that I don't have
    to plan for retirement.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Gregg Singer
    I am a proud citizen of the United States, and a veteran of the U.S.
    Navy. I now live outside the U.S. in the United Kingdom, with my wife
    and two (U.S. citizen) daughters. We are UK residents, and subject to
    the full tax regime of the UK.

    At this point, I live outside America for the long term. My wife grew
    up in the UK, and the is our family's home now. My parents, sister, and
    extended family remain in the U.S., and I'll have strong links to the
    U.S. forever.

    As a tax resident of the UK but also a U.S. citizen, I have to organize
    my financial and retirement planning, and save for my children's
    future, all while trying to meet the demands of two different tax
    systems--one which is designed to tax UK residents living in the UK and
    not paying tax anywhere else, and another which is really designed to
    tax U.S. residents living in the U.S., but also applies to U.S.
    citizens wherever they live.

    These two systems mostly make sense on their own, but when you mash the
    two of them together, they don't always get along. Investments that are
    ``common sense'' for either UK residents or U.S. citizens can be
    subject to punitive taxes and penalties. As a simple example, my UK
    counterparts can open an Individual Savings Account and invest in
    boring, sensible index funds--if I do that, I'll be punished by the
    IRS's Passive Foreign Investment Company regime.

    I do my best to navigate the two systems, and I pay all the tax that I
    owe, to both countries. My salary is in a 60% tax bracket in the UK--
    I'm not trying to dodge taxes, but just want them to be fair.

    I would like to make two general observations about the hearing on
    March 25.

        1.  The hearing focused on U.S. multinational corporations. I fully
    accept that there are challenges with ensuring that multinational
    corporations pay their fair share of taxes. But, I am not a
    multinational corporation, I'm just a husband and father trying to
    provide for my family and save for the future. It does not seem that
    there was any recognition of how the U.S. tax rules impact
    individuals--taxpayers, voters, citizens--like me.

        2.  There was also a distinct lack of witnesses with personal
    experience of living and paying taxes outside the U.S. This is
    madness--the experiences of actually living outside the U.S. need to be
    represented, not just in theory but in practice.

    In general, the U.S. citizenship-based tax regime throws up challenges
    at every opportunity for me to save for the future, in a sensible,
    responsible, frankly boring way. I recently put together a high-level
    overview to give guidance to Americans living in the UK and wanting to
    save to retirement--even at an extremely summarized level, that was 30+
    pages of dense information, trying to make sense of tax treaties, PFIC
    rules, and so on, as well as the UK's similar interests in ensuring
    that its taxpayers do not evade tax using non-UK accounts.

    The existing system is not impossible to navigate, but it is highly
    complex, with many, many grey areas where people risk committing a
    crime just because the rules are unclear and they want to save for
    their future. And even if Americans abroad follow all the rules to the
    best of their understanding, they often can't invest in the simplest,
    lowest cost ways of saving for retirement. Rules like the Foreign Tax
    Credit and Foreign Earned Income Exclusion help, but these are
    extremely complicated themselves and don't fix the underlying problems,
    just mitigate the worst injustices.

    The end result is a system that is still unjust--Americans abroad are
    hampered in their ability to save for the future and take care of their
    families, and must spend much more time and money trying to follow the
    rules than their counterparts, either U.S. citizens living in the U.S.,
    or their neighbors living abroad as non-U.S. citizens.

    The time has come to stop putting band-aids on this system, and to take
    the simple, fair route--end citizenship-based taxation and adopt the
    residence-based system of the rest of the world.

    Thank you for your time, and God bless America!

                                     ______

                         Letter Submitted by Jesse Sit
    I am a proud citizen of the United States of America. I live outside
    the United States in Canada where I am a tax resident and where I am
    subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                         Letter Submitted by Eric Snow
    I am a proud citizen of the United States of America. I live outside
    the United States in Israel where I am a tax resident and where I am
    subject to full taxation.

    I am an American expat. I am temporarily living outside the United
    States for reasons of work and career advancement. When I first moved
    abroad I learned a lot. I learned that other countries have well
    developed tax systems that require payment of a wide range of taxes. I
    can tell you that I pay a lot of taxes. I can also tell you that the
    U.S. tax system treats my non-U.S. income and assets very unfairly. The
    fact that I am temporarily living abroad doesn't mean that I don't have
    to plan for retirement.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am fully taxed on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                      Letter Submitted by Jennifer Sproul
    I am a proud citizen of the United States of America. I live outside
    the United States in the United Kingdom where I am a tax resident and
    where I am subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States the same way they treat U.S. multinationals doing
    business outside the United States. Although I am a flesh and blood
    individual, not a single participant recognized how individuals are
    affected by these rules. Yet the focus of the hearing was supposed to
    be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality rather than theory.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American. But
    it does mean that I am subject to the laws of the country where I live.
    I am not GILTI of anything. I ask only to be able to carry on my small
    business and/or my life without interference from the Internal Revenue
    Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things like the
    sale of principal residence when my country of residence does not. My
    country of residence instead taxes me when I BUY the property. Because
    I am required to live my life with the USD as my functional currency, I
    am subject to tax on both sale and buying--essentially taxed on ``fake
    income'' on nothing but changes in the exchange rate. As a tax resident
    of both the United States and my country of residence, I get the worst
    of both tax systems. What one giveth, the other taketh. I had to take
    myself of the mortgage with my husband. I am now a second class citizen
    due to being American.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                     Letter Submitted by Justin St. Pierre
    Hi, I am a proud citizen of the United States of America, living in
    Australia. where I am a tax resident and where I am subject to full
    taxation.

    I run a small business in the country where I live. My business is not
    a multinational corporation and all of its income is domestic to the
    country where I live. However, because I am a U.S. citizen, the U.S.
    tax code treats me the same as Apple or Google. If I use a local
    business structure that's treated as a corporation under U.S. tax law,
    then I'm forced to fill in the same form 5471 as Apple must complete
    for each foreign subsidiary--translating all of my business records
    into U.S. dollars even though I do no business in that currency. My
    business is subject to GILTI even though I have no intangible income.
    How can I compete with my neighbours who are not U.S. citizens and who
    have only one tax system to deal with?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Regards,

    Justin St. Pierre

                                     ______

                        Letter Submitted by Lauren Stark
    I am a proud American citizen. I live in the UK, where I am a tax
    resident subject to full taxation up to 45% of my income and a variety
    of other local taxes such as ``stamp duty'' up to 10% of the purchase
    price of a home. At the same time, I am also subject to U.S. tax law,
    which has often incompatible tax policies. I have decided to write this
    letter to inform the Senate of the burdens U.S. tax law poses to
    families like mine, as I feel middle-class American families residing
    abroad are being overlooked by our U.S. representatives.

    Like many Americans abroad, I was transferred overseas to work for a
    multi-national company as an opportunity to grow my career. I expected
    to stay 2-3 years. But along the way, I fell in love and got married,
    in my case to a French and British national also living in London. Now
    7 years later I am making the UK my permanent residence. We are a young
    couple with similar goals and ambitions to peers in the U.S. and other
    countries. We are trying to buy our first home, start a family, and
    save for retirement. One day, I hope to leave the corporate word to
    start my own business. However, I am finding that the U.S.
    extraterritorial tax regime, which treats me like a multi-national
    company rather than a middle-class citizen paying local taxes in my
    country of residence, poses a threat to realizing my dreams. There is
    no other advanced country in the world that imposes such
    extraterritorial taxation.

    Each of the examples I shared above--buying a home, saving for
    retirement, and starting a small business are made extremely
    challenging by the extraterritorial tax regime. Take buying a home, for
    example. Like most couples we'll take out a mortgage from a bank to
    fund our purchase. When we do this, we'll be subject to taxes on
    exchange rate fluctuations on the mortgage value; as the U.S. dollar
    sees gains or losses against the GBP, we'll pay tax on phantom
    ``gains'' as income. Taxes related to buying/selling the home are also
    not directly comparable, with UK charging a large tax on the day one
    buys the home that can't be credited against U.S. taxes that may be
    applied to the home later (say on gain from the sale). Saving for our
    future is also proving challenging. I am unable to invest in local
    mutual funds and ETFs, as these are deemed PFICs by the U.S. and thus
    subject to high rates of taxation. Because of FACTA, many banks won't
    even consider serving American citizens. While UK and U.S. have a tax
    treaty, the rules for pensions also are very confusing, adding anxiety
    for me to take full advantage of tax-deferred retirement savings
    options offered by my company that will be crucial for my future. As
    mentioned, I also hope to start my own business someday. While I don't
    yet have first-hand experience, I understand speaking to other
    Americans entrepreneurs abroad that is very complex for an American
    citizen to start a small business when they do not reside in the U.S. I
    already spend thousands of dollars a year on tax support, and I'm even
    worried about making a change in industry or career (or even taking a
    step back to start a family) that would result in me not being to cover
    the extra costs associated with being an American citizen and place
    burden for funding these costs on my husband.

    You might think that the foreign tax credits U.S. offer solve these
    issues, but sadly not. The foreign tax credits we receive are
    insufficient to address the headwinds posed by U.S. extraterritorial
    taxes because they don't consider the different tax structures. All of
    the taxes we might pay to the U.S. are above the taxes we already pay
    to UK, which is already a nation with fairly high taxes. And the
    complexity of the tax systems mean we have outgoing costs whether we
    own taxes to the U.S. or not, as in the form of expensive fees for
    professional tax support.

    I am concerned that the hearing on March 25 did not include
    perspectives of American expatriate families subject to
    extraterritorial taxation. Please understand that any and all changes
    to the taxation of U.S. corporations will have a huge impact on the
    U.S. taxation of U.S. individual citizens living outside the United
    States and running small businesses outside the United States. Instead,
    the hearing focused on U.S. multinational corporations. But here is the
    reality: U.S. tax rules treat individuals living outside the United
    States the same way they treat U.S. multinationals doing business
    outside the United States. I respectfully suggest that subsequent
    hearings include witnesses who have experienced living outside of the
    U.S., having a family outside of the U.S., and running businesses
    outside the United States.

    I am not a ``mini-multinational.'' I am a person and ``dual-national''
    living in my country of residence. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I ask only to be able to carry out my life and provide for my
    family without the burdens of reconciling and paying to two complex and
    non-complementary tax systems. The extraterritorial tax regime for
    individuals and small businesses is extremely unjust. For many years,
    Americans abroad have been attempting to get Congress to address these
    issues. The time has come for the United States to abandon its
    extraterritorial tax regime and join the rest of the world in adopting
    a system of residence-based taxation.

    Thank you for your consideration,

    Lauren Stark

                                     ______

                    Letter Submitted by Bouqui Stautmeister
    Dear Senate Committee,

    I am a proud citizen of the United States of America. I live outside
    the United States in Switzerland, where I am a tax resident and where I
    am subject to full taxation.

    I love America. But we never know where life will take us. I moved from
    America many years ago to follow the other love of my life: my husband.
    I long ago realized that although I will always love and miss America,
    I am probably going to be residing abroad permanently. I am a tax
    resident of Switzerland. I am required to organize my financial and
    retirement planning in that country. The problem I have is that the
    U.S. tax laws make it very difficult for me to live the same kind of
    life that my friends and neighbors live. You see, they are subject to
    only one tax system. As a U.S. citizen, I am subject to the tax system
    where I live as well as the U.S. tax system. Those systems are
    generally not compatible. Most attempts at responsible financial/
    retirement planning where I live are frustrated by the need to comply
    with U.S. tax laws. How can this be fair? How can the United States
    impose taxation on the non-U.S. income and assets of a person who is a
    tax resident of another country--with no economic connection to the
    United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes to my country
    of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. I respectfully suggest that subsequent
    hearings include witnesses who have experienced running businesses
    outside the United States and/or actually living outside the United
    States.

    As a general principle: Please understand that all changes to the
    taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally, the U.S. extraterritorial tax regime makes it difficult
    for me to save, invest, participate in pension plans and generally
    behave in a financially responsible way. This is because all of these
    essential activities are taking place in my country of residence and
    not in the United States. My retirement investments are foreign to the
    United States, but local to me. In addition, the United States impose
    taxes on things when my country of residence does not. Because I am
    required to live my life with the USD as my functional currency, I am
    subject to ``fake income'' on nothing but changes in the exchange rate.
    As a tax resident of both the United States and my country of
    residence, I get the worst of both tax systems. What one giveth, the
    other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! This is
    extremely unjust.

    I am subject to the laws of the country where I live. I ask only to be
    able to carry on my life according to the taxation laws of the country
    where I live.

    For many years, Americans abroad have been attempting to get both
    Treasury and Congress to address these issues. The time has come for
    the U.S. to abandon its extraterritorial tax regime and join the rest
    of the world in adopting a system of residence-based taxation.

    Thank you for your consideration and God bless the United States of
    America!

    Best regards,

    Bouqui Stautmeister

                                     ______

                         Letter Submitted by Rick Stemm
    I am a citizen of the United States of America. I live outside the
    United States in New Zealand, where I am a tax resident and where I am
    subject to full taxation.

    I am an American expat. I came to New Zealand for work and am staying
    for at least the next few years. I pay my fair share of taxes here, but
    at least I see the value I am getting for them, and can follow an easy
    and fair system to pay them. Conversely, the U.S. tax system treats my
    non-U.S. income and assets very unfairly. I jump through a lot of hoops
    to pay a lot of money, and it is very difficult to determine proper
    filing, with extremely harsh penalties for not.

    Did you know that if I fail to fill out a non-obvious form listing my
    money in a foreign bank account, the penalty is HALF the money in that
    account? We would not have known this without working with an expert,
    who is excellent but expensive. The U.S. tax system is extremely
    punishing to expats.

    Because I am a U.S. citizen, I am subject to the U.S. extraterritorial
    tax regime, which means the United States imposes taxation on my non-
    U.S. income even though I am a fully taxable on that income already in
    New Zealand. There is no other advanced country in the world that
    imposes such extraterritorial taxation. This may seem exaggerated, but
    in truth every tax expert we talked to in New Zealand was quick to
    point out that, and I quote ``The U.S. has the most draconian tax
    system for expats in the world.'' Is that what we want to be the world
    leader in?

    Please understand that any and all changes to the taxation of U.S.
    corporations will have a huge impact on the taxation of U.S. individual
    citizens living outside the United States and running small businesses
    outside the United States. Individuals are not immune to the effects of
    raising the U.S. corporate income tax rate and/or doubling the GILTI
    tax.

    More generally, the U.S. extraterritorial tax regime makes it difficult
    for me to save, invest, participate in pension plans, and generally
    behave in a financially responsible way. As a tax resident of both the
    United States and New Zealand, I get the worst of both tax systems.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.
    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    I love living in New Zealand, but am also proud to be an American, and
    try to represent the best of our country here. Please don't punish me
    for that. Thank you for listening.

                                     ______

                      Letter Submitted by Shawn D. Stocker
    I am a proud citizen of the United States of America. I live outside
    the United States in Spain where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. I love America. But, we never know where
    life will take us. I moved from America 13 years ago. Although the days
    sometimes go slowly, the years go quickly. I long ago realized that
    although I will always love America, I am living permanently abroad. I
    am a tax resident of my country of residence. I am required to organize
    my financial and retirement planning in that country. The problem I
    have is that the U.S. tax laws make it very difficult for me to live
    the same kind of life that my friends and neighbours live. You see,
    they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (for example a
    31% social security tax and a 21% VAT) to the Spanish Government.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of adoptive residence. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    work and my life without interference from the Internal Revenue Code of
    the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                 Stop Extraterritorial American Taxation (SEAT)

                              3 impasse Beausejour

                             78600 Le Mesnil le Roi

                                     France

                                info@seatnow.org

     About SEAT--Education To Facilitate Change

    Stop Extraterritorial American Taxation (SEAT) is an independent,
    nonpartisan organization with no affiliation with the tax compliance
    industry. The mission of SEAT is to provide an educational platform for
    individuals, policymakers, governments, academics, and professionals
    about the terrible effects of U.S. extraterritorial taxation. The
    imposition of U.S. taxation on the residents of other countries damages
    the lives of the affected individuals and siphons capital from the
    economies of other nations while eroding their sovereignty.

    While SEAT is created under the laws of France (Law of 1901), it is an
    international organization.

    http://www.seatnow.org

     Submission From SEAT

    Please accept this as our submission with respect to the subject of the
    March 25, 2021 Senate Finance Hearing: ``How U.S. International Tax
    Policy Impacts American Workers, Jobs, and Investment.''

     The Witnesses--Some General Comments

    First, it was disappointing that the Committee failed to include any
    witnesses who actually ``live the experience'' (corporations or
    individuals) of carrying on business outside the United States.

    Second, the language of some of the witnesses could hardly be described
    as reasonable or objective. Of particular note was the constant use of
    the emotively laden term ``offshore'' to describe the activities of
    U.S. companies who carry on business activities outside the United
    States. (The word ``offshore'' has generally a negative connotation.
    https://www.quora.com/Does-the-word-offshore-gives-outsourcing-a-bad
    -name).

    The fact is that companies based in the United States may have business
    operations that take place outside the United States, for the purpose
    of selling into markets outside the United States and for the purpose
    of earning profits outside the United States. The term ``offshore''
    suggests that U.S. companies are carrying on activities outside the
    United States for the purpose of avoiding U.S. taxation.

     The form of the business activity: Directly or through a foreign
                        corporation

    In some cases, U.S. companies carry on business outside the United
    States as a U.S. corporation. In other cases, U.S. corporations may
    create a subsidiary foreign corporation. GILTI income exists only in
    the context of carrying on business through a foreign corporation that
    is controlled by one or more U.S. Persons. Therefore, the discussion of
    GILTI at its core, is a discussion of how the United States should
    impose taxation on non-U.S. companies, earning non-U.S. profits, earned
    outside the United States.

     The Nature of GILTI Income

    The title of the hearing suggests a focus on how the effects of U.S.
    International Tax Policy Impacts American Workers, Jobs and Investment.
    The focus was to be on the effects on individual Americans. Yet, the
    hearing itself was a referendum on the 2017 TCJA in general, and the
    GILTI provisions found in Internal Revenue Code 951A in particular.
    Although not articulated by any of the witnesses, it is important to
    understand that S. 951A is part of the Subpart F regime. Subpart F,
    created in 1962, is a set of rules designed to attribute income earned
    by foreign corporations to the individual shareholders of the
    corporation. Under applicable circumstances, income earned by the
    corporation, is attributed to the shareholder, when the shareholder has
    not received a distribution from the corporation. To put it another
    way: the shareholder pays tax on income at the time it is earned by the
    corporation and before that income is distributed to the shareholder.
    These rules apply whether the income is ever distributed to the
    shareholder.

    It was disappointing that not a single witness described the GILTI
    rules in a way that drew attention to the fact that GILTI income is
    earned by a separate corporate entity and is not earned directly by the
    U.S. shareholder. The failure to acknowledge this left the impression
    that the issue was whether there should be a preferential tax rate on
    foreign income earned by U.S. multinational corporations. The
    discussion should have clarified that the discussion was really about
    how the United States could impose U.S. taxes on the non-U.S. profits
    of foreign corporations (by taxing the shareholder instead of the
    company). (The United States has no jurisdiction for--and treaties
    prevent--the United States imposing direct taxation on non-U.S.
    corporations.)

    In short, the nature of GILTI income is that: the U.S. shareholders of
    certain non-U.S. corporations are required to pay U.S. tax on the
    profits earned by those corporations, when they have not received
    income from that corporation. Rather than enhancing the understanding
    of that basic principle, the witnesses obscured that principle.

     The Two Kinds of Shareholders Subject to GILTI (Corporate and
                        Individual)

    The GILTI tax applies to the ``U.S. shareholders'' of controlled
    foreign corporations. It imposes tax obligations on those shareholders.
    Both individuals and corporations can be ``U.S. Shareholders'' of CFCs.
    The hearing did not contain a single acknowledgement that individuals
    (the presumed beneficiaries of the hearing), could (as a result of the
    GILTI rules) be forced to pay personal tax on income earned by a
    corporation. The hearing focused completely on corporate shareholders
    of foreign corporations and not individual shareholders. Shouldn't the
    reality of individual shareholders have rated at least a ``mention'' in
    the discussion?

    Individuals matter. The issue is and should have been (as was implied
    by the title of the hearing) how international taxation impacts
    individuals. The fiscal status of corporations affects individuals
    indirectly. But, international tax provisions like GILTI have a direct
    affect on individuals.

     The Two Kinds of Individuals Subject to GILTI (Resident Americans and
                        Americans Abroad)

    As evidenced by the content of the hearing, the U.S. tax system has
    special rules (generally punitive) for income streams and reporting of
    assets that are foreign to the United States. One clear example of the
    taxation of foreign income is the Subpart F regime (income received by
    U.S. shareholders of non-U.S. corporations which includes GILTI). An
    example of reporting would be the Form 5471 seeking information about
    both the corporation and the shareholders of affected non-U.S.
    corporations. When applied to ``individuals'' (who are shareholders of
    CFCs) both the treatment of profits earned by the CFC and the reporting
    of information about the CFC are generally punitive. (Would you like to
    pay tax on income earned by a corporation but was never distributed to
    you?) The effects on individuals who are resident in the U.S. are very
    different from the effects on Americans abroad who are also tax
    residents of other countries.

    Both individuals and corporations are subject to the Subpart F regime
    and GILTI. It is shocking that certain provisions of the Internal
    Revenue Code treat individual shareholders of CFCs more punitively than
    corporate shareholders of CFCs. The worst treatment is reserved for
    individual Americans abroad, who are entrepreneurs, carrying on
    business through a corporation in the country where they live. For
    Americans abroad, their small business corporations, which are foreign
    to the United States, are local to them. ``Offshoring'' applied to
    these U.S. Shareholders is particularly inaccurate. Such is the effect
    of the uniquely American penchant for defining tax residency in terms
    of ``who you are'' (citizenship) rather than ``where you live and
    consume services'' (residence).

     About ``citizenship-based taxation''--The U.S. extraterritorial tax
                        regime

    The United States has the following three distinct tax regimes:

        1.  Source--like all countries: All income sourced to the United
    States is subject to U.S. taxation on U.S. source income (regardless of
    the ``tax residence'' or citizenship of the taxpayer);
        2.  Residence--like all countries: All individuals who are resident
    in the United States are subject to U.S. tax on their worldwide income;
    and
        3.  Extra-territorial tax regime--unique to the United States: The
    United States imposes worldwide taxation on the non-U.S. source income
    of certain individuals, who are tax residents of other countries and do
    not reside in the United States. This includes U.S. citizens living
    outside the United States.

    Americans abroad are generally in the third category and are subject to
    the extra-territorial tax regime. They are subject to worldwide
    taxation by both the United States and their country of residence.
    Americans abroad do not as a general principle benefit significantly
    from tax treaties. This is because, all U.S. tax treaties contain a
    ``saving clause'' designed to ensure that Americans abroad are in
    effect subject to double taxation.

     Who Are Americans Abroad?

    The short answer is that Americans abroad are U.S. citizens living
    outside the United States in other countries. They run the whole
    circumstantial and economic spectrum of humanity. They include the
    poorest of the poor. They include some wealthy people. They include a
    large number of middle-class people. They include the employed, the
    self-employed and they include the unemployed. They include individuals
    who run small businesses in their country of residence. Some of these
    small businesses are run through corporate structures in the country
    where they reside and are tax residents.

    Although Americans abroad are Americans who live in other countries,
    they are not and do not view themselves as ``living offshore''!

     Americans Abroad--Small Business Corporations and the Extra-
                        territorial Tax Regime

    Different countries have different tax systems. Tax systems have
    different purposes. These purposes include: generating revenue for
    governments, distributing benefits to taxpayers and creating incentives
    for responsible retirement and financial planning.

    In some countries (Canada for example) small business corporations play
    the role of being private pension plans for self-employed individuals
    (who are not otherwise eligible for pensions). Generally speaking, this
    is because tax laws (as they do in Canada) allow for the deferral of
    limited income inside those corporations. Notably these ``Canadian
    Controlled Private Corporations'' ``cannot be controlled by one or more
    nonresident persons'' (guaranteeing that their tax benefits are enjoyed
    overwhelmingly by residents of Canada). (See https://www.canada.ca/en/
    revenue-agency/services/tax/businesses/topics/corporations/type-
    corporation.html#ccpc).

     The 2017 TCJA and Americans Abroad With Small Business Corporations

    The 2017 TCJA added both the S. 965 Transition Tax and S. 951A GILTI
    provisions to the existing Subpart F Regime.

    Punishment for their past: The S. 965 Transition Tax imposed a
    retroactive tax on earnings which (1) were not previously subject to
    U.S. taxation and (2) were never distributed to shareholders. In simple
    terms, S. 965 imposed real taxation on past income that had never been
    received by shareholders.

    Hindering their future: The S. 951A GILTI rules were designed to
    prevent the future use of small business corporations to defer income.

    The effect of these two provisions was and continues to be devastating
    for dual U.S. Canada citizens living in Canada (and other countries).
    The transition tax confiscated a significant part of their retirement
    savings. The GILTI provisions dramatically increased the difficulty of
    individuals making use of existing and well understood retirement
    planning opportunities available to other Canadians.

    (In fact, the Transition Tax was so devastating that it spawned the
    ``Transition Tax'' lawsuit organized by Israel based U.S. tax lawyer
    Monte Silver. https://www.courtlistener.com/recap/
    gov.uscourts.dcd.203770/gov.uscourts.dcd.203770.29.
    0.pdf)

    At a minimum, it's clear that U.S. International Tax provisions, always
    discussed in the context of multi-national corporations, have had and
    continue to have seismic impacts on individual U.S. citizens living
    outside the United States. The hearing included a discussion of both
    raising the U.S. corporate tax rate (28%) and doubling the GILTI tax.

    Either of these proposals would--for different reasons--be very
    damaging to individual Americans abroad. The increase in the U.S.
    corporate rate to 28% would mean that the ``high tax GILTI kickout''
    rate would increase from 18.9% to 25.2%. In other words, raising the
    corporate rate would mean that income currently excluded from the
    definition of GILTI income, would now be included as GILTI income. It
    is likely that doubling the tax rate on GILTI income would result from
    doubling the amount of income subject to the GILTI tax. Each of these
    proposals will independently have a very bad tax and compliance result
    for Americans abroad. Tragically this was not considered as part of the
    discussion in the hearing.

    The bottom line is: any discussion of tax reform for corporations will
    affect Americans abroad. Think of it this way: every individual
    American abroad is treated as though he/she were a mini-multinational.

     Congressional Indifference to How Corporate Tax Provisions Impact
                        Individuals

    The U.S. tax code, coupled with the indifference of Congress and
    Treasury to Americans abroad, has created a regime where every U.S.
    citizen living outside the United States is treated as though he/she
    were a ``mini-multinational.'' Surely, these consequences could not
    have been intentional.

     The Taxation of Americans Abroad in General

    Americans abroad are subject to the third pillar of U.S. taxation--The
    Extraterritorial Tax Regime. Because their income and assets are
    foreign to the United States (although local to them) they are subject
    to more punitive taxation than are their friends and family who are
    U.S. residents. As counter-intuitive as it may be, when U.S. citizens
    live outside the United States, they are subject to the
    extraterritorial tax regime--a regime that is more punitive than the
    (``residence'' system applied to U.S. Residents). This results from a
    combination of (1) their assets and income being foreign to the United
    States coupled with (2) the fact that they are also tax residents of
    other countries.

    Furthermore, Americans abroad are increasingly subject to real taxation
    on deemed income that they have never received. Examples include:
    transition tax, GILTI, Subpart F generally, fake income created by
    exchange rate fluctuations and U.S. taxation of income that is not
    taxable in their country of residence (such as the sale of a principal
    residence). The complexity, cost and unfairness has led to a situation
    where more and more Americans abroad are being forced to renounce their
    U.S. citizenship in order to survive. To be clear, Americans abroad are
    not renouncing U.S. citizenship because they want to. They are
    renouncing U.S. citizenship because they have to.

     The History of Tax Reform and Americans Abroad

    FATCA became law on March 18, 2010. A primary effect of FATCA was to
    increase awareness of the U.S. extraterritorial tax regime.
    Specifically, the imposition of U.S. worldwide taxation on the non-U.S.
    income of individuals who are tax residents of other countries and do
    not live in the United States. As a result, Americans abroad have
    worked very hard to have a voice in tax reform. To date Americans
    abroad have been completely ignored. The time has come for Congress to
    end the extraterritorial tax regime (employed only by America) and
    transition to a system of taxation based on only ``residency'' and
    ``source'' (employed by the rest of the world). This is commonly called
    transitioning to a system of ``residency-based taxation''.

    Over the decade since FATCA was enacted, Americans abroad have
    repeatedly pleaded with Congress to fix the extraterritorial aspects of
    the U.S. tax system. These pleas have included:
    2013--House Ways and Means Committee on Tax Reform
    Americans abroad made at least 224 submissions to the House Ways and
    Means Committee about tax reform.

    https://www.box.com/v/citizenshiptaxation/folder/3414062298
    2015--Senate Finance Committee
    Americans abroad made at least 267 Submissions to the International Tax
    Committee to the Senate Finance Committee.

    https://www.box.com/v/citizenshiptaxation/folder/3414083388

    The 2015 Senate Finance Committee Report did not address the concerns
    of Americans abroad. The lobbying of Americans abroad was recognized on
    page 80 in (literally) the very last paragraph of the report.

            ``F. Overseas Americans

            According to working group submissions, there are currently 7.6
            million American citizens living outside of the United States.
            Of the 347 submissions made to the international working group,
            nearly three-quarters dealt with the international taxation of
            individuals, mainly focusing on citizenship-based taxation, the
            Foreign Account Tax Compliance Act (FATCA), and the Report of
            Foreign Bank and Financial Accounts (FBAR).

            While the co-chairs were not able to produce a comprehensive
            plan to overhaul the taxation of individual Americans living
            overseas within the time-constraints placed on the working
            group, the co-chairs urge the Chairman and Ranking Member to
            carefully consider the concerns articulated in the submissions
            moving forward.''

    https://www.finance.senate.gov/imo/media/doc/
    The%20International%20Tax%20
    Bipartisan%20Tax%20Working%20Group%20Report.pdf
    2017--Tax Cuts and Jobs Act
    Residence-based taxation for Americans abroad was reported to have been
    considered by Chairman Brady in the days leading up to the TCJA. As
    reported by the Financial Times on October 25, 2017.

    https://www.ft.com/content/4909d804-b9a1-11e7-8c12-5661783e5589

    Unfortunately, residence-based taxation did not come to pass in 2017.
    In fact, Americans abroad were subjected to the Transition Tax and
    GILTI making a bad situation far worse. The necessity of transitioning
    to residence-based taxation was acknowledged by Representative George
    Holding after the 2017 TCJA was signed into law:

            REPRESENTATIVE GEORGE HOLDING: * * * As companies begin to see
            the benefits of this new territorial system, I look forward to
            continue to work with the Chairman to explore ways to move
            towards a residency-based taxation system to ensure that
            American citizens have a level playing field around the globe
            as well.

            * * * CHAIRMAN KEVIN BRADY: Mr. Holding, I want to thank you
            for your leadership on this issue. In particular, about
            international competitiveness for our workers. So, residence
            based taxation is an idea we should continue to explore. We'll
            continue to work on this issue with you as leadership, and with
            that I yield back.

    https://www.c-span.org/video/?c4692161/user-clip-congressman-holdings-
    comment-rbt
    2018--Representative Holding's Tax Fairness for Americans Abroad Act
    As described by ``American Citizens Abroad'':

            Congressman Holding Introduces ``Tax Fairness For Americans
            Abroad Act of 2018 (H.R. 7358)''--A Residency-Based Taxation
            Bill

            On December 20, 2018 Congressman Holding (Republican-North
            Carolina), a member of the influential House Ways and Means
            Committee, introduced a tax bill that is a critical first step
            toward transitioning from the current citizenship-based
            taxation system to a system that provides residence-based
            taxation for individuals--sometimes referred to as territorial
            tax for individuals. By taking this first step toward ending
            the onerous burdens of citizenship-based taxation, Americans
            will become more competitive in the international job market
            and free to pursue opportunities around the world. Compliancy
            costs and the burden of exposure to double taxation will be
            significantly reduced, and tax fairness will be restored for
            U.S. citizens living and working overseas.

    https://www.americansabroad.org/tax-fairness-act-rbt/
    2021--Congress Is Again Considering Tax Reform
    Clearly the March 25, 2021 hearings were part of a larger and
    continuing discussion of the reform and evolution of the U.S. system of
    International Tax. The International Tax System includes the taxation
    of individuals generally and of Americans abroad specifically.

    It is imperative that attention be given to the plight of Americans
    abroad. Renunciations of U.S. citizenship are rising. Americans are not
    renouncing U.S. citizenship because they want to. They are renouncing
    U.S. citizenship because they are forced to choose between compliance
    with U.S. tax laws and being able to engage in responsible and
    necessary financial planning for themselves and their families. It is
    time for Congress to lead and correct this injustice.

    SEAT joins other groups in requesting that Congress end the
    extraterritorial tax regime (citizenship-based taxation) and join the
    international standard of residence-based taxation.

     A request to participate in the ongoing hearings

    U.S. international tax rules continue to have a huge impact on the
    lives of INDIVIDUAL U.S. citizens who live in the United States and
    abroad. A consideration of how U.S. tax rules apply to individuals
    generally and to Americans abroad in particular is long overdue.

    Americans abroad can be valuable as witnesses in further hearings.
    Although the views of academics and tax policy analysts have value,
    they do not live the day-to-day application of these rules. It's time
    for Americans abroad to be directly included in the discussion.

    Respectfully submitted by . . .

    Stop Extraterritorial American Taxation (SEAT) Board Members
    (info@seatnow.org):

    Dr. Laura Snyder (President)
    Dr. Karen Alpert
    Suzanne Herman
    David Johnstone
    Keith Redmond
    John Richardson

                                     ______

                        Letter Submitted by Greg Swanson
    I am a U.S. citizen living in Switzerland where I am a tax resident and
    where I am subject to full taxation. I have lived abroad for over three
    decades.

    I am an emigrant from America. I came to Europe on the advice of former
    Governor George Nigh (OK) in 1986. At that time, he expressed the value
    to the U.S. of citizens gaining knowledge abroad. I followed his advice
    and since then, I can say that I participated in selling billions of
    dollars of U.S. goods and services in other countries. The U.S. has
    benefited from me living abroad. Unfortunately, the U.S. is one of the
    few countries in the world that does not value its citizens abroad.

    I do not see my citizenship as a tangible item that gives me benefits.
    I see my citizenship as my identity and an expression of loyalty to my
    country. That is why I was proud when both of my kids received U.S.
    passports, even though they were born abroad.

    However, the last few years, reality has taken hold. Even though my
    family lives normal lives, you refer to everything to do with us as
    ``offshore.'' You ignore my family's situation completely, however,
    seem to want to extend the punitive tax laws that impact us. I do not
    live ``offshore.'' My local bank is not a Foreign Financial
    Institution, it is my local bank. I live in a country where I pay very
    high-income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I, unlike any other nationality, am
    subject to the U.S. extraterritorial tax regime, which means the United
    States imposes taxation on my non-U.S. income even though I am a fully
    taxable on that income in the country where I reside.

    I would like to make the following general observations about the
    hearing on March 25th.

        1.  It was purposeful that this committee focused only on U.S.
    multinational corporations, while ignoring individual citizens.
        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA.
        3.  There seems to be no one in your committee that can testify to
    the situation of American citizens that live abroad.
        4.  There is no interest how U.S. tax policy, privacy violations,
    and punitive threats on our local banks have devastating impacts on the
    competitiveness and financial health of normal income Americans that
    live abroad. As one bank employee told me, ``because you are American,
    we are forced to sew a Star of David on your jacket.''

    Please note:

          My wife is considered by you to be a ``non-resident-alien,''
    even though she has never lived in the U.S. and lives in her homeland.
    This is dehumanizing a person that has nothing to do with the USA, just
    because they married an American.
          Because a growing number of people in other countries are
    becoming more informed about the U.S. tax policies on Americans abroad,
    and the potential of sucking up a spouse into the U.S. tax system, even
    our children face discrimination in dating and relationships. Never
    marry an American.
          You consider my local business as a Controlled Foreign
    Corporation which makes it impossible to compete against local
    competitors from any other nationality. I am not Google. Small
    businesses in the U.S. would not be able to survive under the weight of
    regulations that you place on us. You fail to recognize that we have
    another (local) system to manage. We do not operate in U.S. Dollars.
    You do not differentiate between very large multi-national companies
    and small local businesses.
          Your overreach discourages local people or entities in working
    together with us, simply because of the international tax policies and
    the threat of exposure to risk. Who knows what you will do next?
          Your obsession with ``foreign'' (actually, our local) bank
    accounts has directly kept me from receiving a promotion where I would
    have non-beneficial signature authority.

    Not only does this hamper my ability to live, compete, and retire, it
    hurts the future of my children.

    Your Committee ignoring these topics is just one more in a long-
    standing snub of this group of millions of Americans.

    I do not believe that Congress will correct these problems that would
    put Americans abroad on the same playing field of every other
    nationality. I do not believe that the Congress will ever understand
    the impact of these policies and how they hurt citizens, nor do I
    believe that there is interest.

    My request is that this committee discusses openly about warning
    America's young people not to consider a career abroad because the U.S.
    Government sees everything to do with Americans abroad as ``foreign,''
    evasion, or other criminal or non-patriotic activity. In other words,
    it is your obligation to warn young Americans never to move abroad
    because people that live abroad are subject to your punishment.

    American multi-national companies already favor hiring any other
    nationality than American for overseas positions because of the
    complexity and cost that the Congress' policies have caused. This
    destroys opportunities for jobs and international experience, putting
    young Americans at a disadvantage on the world's stage.

    Some, like myself may slip through and end up living abroad without
    knowing how your policies are aimed. I would like you to fix that and
    be fair to young people growing up in the U.S. Apparently, unlike Gov.
    Nigh, the bi-partisan U.S. Congress sees no value of having citizens
    abroad. Please be open about this fact.

    Sincerely,

    Greg Swanson

                                     ______

                   Letter Submitted by Nicholas S. Sylvester
    I am a citizen of the United States of America. I live outside the
    United States in Denmark where I am a tax resident and where I am
    subject to full taxation.

    I run a small business in the country where I live. My business is not
    a multinational corporation and all of its income is domestic to the
    country where I live. However, because I am a U.S. citizen, the U.S.
    tax code treats me the same as Apple or Google. If I use a local
    business structure that's treated as a corporation under U.S. tax law,
    then I'm forced to fill in the same form 5471 as Apple must complete
    for each foreign subsidiary--translating all of my business records
    into U.S. dollars even though I do no business in that currency. My
    business is subject to GILTI even though I have no intangible income.
    How can I compete with my neighbours who are not U.S. citizens and who
    have only one tax system to deal with?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                       Letter Submitted by Amanda Tallen
    I am a proud citizen of the United States of America. I live outside
    the United States in New Zealand where I am a tax resident and where I
    am subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Brendan Taylor
    I am a proud citizen of the United States of America. I live outside
    the United States in the United Kingdom where I am a tax resident and
    where I am subject to full taxation.

    I left America when I was 10 years old and have now permanently lived
    abroad for over 35 years. I love America but it is no longer my home.

    I am a tax resident of my country of residence. I am required to
    organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    Completing my U.S. tax return each year takes a considerable amount of
    time and expense when I am already fully taxed in the UK by the UK
    government.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Best regards,

    Brendan Taylor

                                     ______

                      Letter Submitted by Tony Temperante
    I am a proud citizen of the United States of America. I live outside
    the United States in the Czech Republic where I am a tax resident and
    where I am subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Why do you hate Americans who live abroad?

    We are free, walking, talking, American Ambassadors! We are deploying
    softpower every single day and in turn we have to sacrifice the chance
    of: Buying houses, saving for retirement, decline job offers, and tell
    our children they can't own their own business--even if it's only an
    ice cream shop!

    God bless the United States of America!

                                     ______

                        Letter Submitted by Albert Terry
    I am a proud citizen of the United States of America. I live outside
    the United States in Malaysia where I am a tax resident and where I am
    subject to full taxation.

    I am temporarily living outside the United States for reasons of work
    and career advancement. I can tell you that I have and will pay a lot
    of taxes. I can also tell you that the U.S. tax system treats my non-
    U.S. income and assets very unfairly. The fact that I am temporarily
    living abroad doesn't mean that I don't have to plan for retirement.

    I do not live ``offshore.'' I do live in a country where I pay high
    income taxes. I also pay additional kinds of taxes (example VAT) to my
    country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two observations about the hearing on March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! I respectfully suggest
    that subsequent hearings include witnesses who have experienced running
    businesses outside the United States and/or actually living outside the
    United States. To put it another way: Subsequent hearings should deal
    with the reality on the ground and not the theory in the cloud.

    I am not a ``mini-multinational.'' I am living in my country of
    residence to earn a living. It doesn't make me less American. But, it
    does mean that I am subject to the laws of the country where I live. I
    am not GILTI of anything. I ask only to be able to carry on my life
    without interference from the Internal Revenue Code of the United
    States while living abroad.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States.
    Individuals are not immune to the effects of raising the U.S. corporate
    income tax rate and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Travis J. Todd
    Dear Honorable Sirs and Madams,

    My name is Travis Todd. I am an American citizen who has been living in
    Berlin Germany since 2007. Here are the quick facts for those of you
    with little time. Below is my longer story with flavor and context.

          Yearly, I pay on average one month's salary ($3,000-5,000) to
    just prepare my U.S. taxes.
          I have had two bank accounts closed in the last two years due to
    the banks not willing to serve U.S. customers because of FATCA
    regulations
          I cannot save for mine or my family's future:
              I have no access to investment opportunities in
    Germany (stocks, mutual funds, etc.) due to FATCA regulations
              I have no access to U.S. investment companies
    (E*Trade, Charles Schwab) because I am a foreign resident
              I have trouble opening retirement or insurance
    accounts due to U.S. tax policies
          I cannot get a bank loan to buy anything in Germany, let alone a
    house due to my status as a U.S. citizen
          I have had to turn down jobs or ownership in companies due to my
    status as U.S. Citizen
          The impact of U.S. tax laws like FATCA cause me and my family
    large amount of ongoing stress due to ongoing costs of compliance and
    the uncertainty of whether or not we will lose our bank accounts
          I support the aim of FATCA to stop wealthy people and companies
    from hiding funds outside the U.S., but they are hurting average
    families drastically and need to be fixed.

    I moved here to be with my German wife. I'm not a millionaire. I'm an
    entrepreneur who has tried to start a few small technology companies
    here with various degrees of success and large degrees of failure.

    Part of the American ethos that I brought to Berlin was that failure is
    a stepping stone to growth. Only through learning from your mistakes
    can you pull yourself up by your bootstraps and make better choices
    next time. In Germany, that undeniable American optimism is a bit of a
    foreign concept culturally. And that culture is mirrored in the
    government and laws. Opening and closing companies in Germany is a
    bureaucratic nightmare, especially when they're a failure! The laws
    punish the founders of failed businesses, putting illogical hurdles in
    front of entrepreneurs who are already so burnt out from trying to save
    a business that they swear off never starting another.

    Now imagine yourself in my shoes. You'd just been put through the
    ringer by the German authorities when you shut down your startup, not
    to mention going through the emotional toil of letting your team go,
    not paying yourself for months and just when you think you're out of
    the woods and can move on, you have to file your U.S. taxes, reporting
    all the financials of a company that barely saw the light of day. This
    costs hundreds of dollars, and you haven't been paid in six months.
    Talk about being kicked while you're down.

    This is just one example of how being American in Germany is painful,
    stressful, and frustrating due to U.S. tax laws. I could also talk
    about being shut out of all financial investment instruments or loans
    by banks who don't want to comply with FATCA. I could explain the
    painful way we need to report the FBAR documentation by a metric that
    German banks don't provide. But even writing this is making me
    exhausted and depressed and making me question why I still have a U.S.
    passport, so I'll focus instead on the solutions.

    There are three ways to fix these issues. Some are easier logically but
    more complicated politically. I get that. But here's my pitch:

        1.  End citizen-based taxation. This one is pretty simple and fixes
    most the problems. No other developed nation in the world does this to
    their citizens. It's a relic of the Civil War. Seriously. Look it up.
    Politically I'm not really sure who would be opposed to it.
        2.  Fix FATCA. I think forcing U.S. corporations to repatriate
    offshore money to the U.S. is a great idea. But you nuked the city
    instead of sending in a tactical team. I get its hard to repeal
    legislation, but it's not hard to fix it. Especially when it means
    saving the livelihoods of average Americans, even if they don't live in
    the U.S.
        3.  Enfranchise us. This is a long shot but we have no
    representation in congress. Not really. The congressman who represents
    me in my voting district in Maryland doesn't care about me. He's never
    returned a letter. Why not give us a congressperson? Maybe one of DC's.
    It's not as crazy as it sounds because it's bipartisan, being that it
    takes absentee votes away from all states.

    I hope that helps add to your discussion. It's a hard topic, I know,
    but you're all smart people and I hope you'll hear the call for help
    from the nine million of us abroad. I'm happy to help in any way, by
    providing more context or out-of-the-box thinking. My undeniable
    American optimism isn't quite crushed yet!

    Sincerely,

    Travis Jefferson Todd

                                     ______

                      Letter Submitted by Kathleen Torpie
    I would like to begin by making three general observations about the
    hearing on March 25, 2021.

        1.  The hearing focused on U.S. multinational corporations. But the
    reality is that U.S. tax rules treat individuals living outside the
    United States, the same way they treat U.S. multinationals doing
    business outside the United States. The hearing failed to address the
    negative impact on individual citizens, of a Citizen Based Taxation
    system that fails to distinguish between millions of American citizens
    who legitimately live permanently in a country other than the USA (who
    may or may not own a small business providing local goods or services)
    and the small number of very rich U.S. individuals--and U.S. multi
    national corporations--who have located outside of the U.S. for tax
    purposes.

        2.  There was no witness who had personal experience with a company
    or individual running a business with interests outside the USA. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States.

        3.  The assumption appeared to be that the only reason that anyone
    lives or has a business outside of the United States (including a small
    localised business such as a cafe) is to avoid U.S. tax.

    An examination of ``How U.S. International Tax Policy Impacts American
    Workers, Jobs, and Investment'' must, in all fairness, take into
    consideration how U.S. International Tax Policy Impacts Individual
    American citizens who have legitimately made their home in another
    country where they are full time tax residents.

    Please listen, and respond to, Americans such as myself who are
    unfairly burdened by a taxation policy that should be focused on the
    dozens of U.S. Multi Nationals such as those who paid no federal tax in
    2020. This (below) is where the problem lies. It is where the solution
    should be focused.

            ``Twenty-six of the companies listed, including FedEx, Duke
            Energy and Nike, were able to avoid paying any federal income
            tax for the last 3 years even though they reported a combined
            income of $77 billion. Many also received millions of dollars
            in tax rebates.''
    (https://www.nytimes.com/2021/04/02/business/economy/zero-corporate-
    tax.html)

    I am a single, 74 year old, retired U.S. citizen with no offspring. I
    have lived in New Zealand as a tax resident for more than 40 years. My
    only family (my surviving siblings, their children and grandchildren)
    remain in the USA.

    I understand and agree with a need to prevent wealthy Americans, who
    are resident in the USA from ``laundering'' their financial assets by
    hiding them in foreign accounts for tax purposes. As permanent
    residents, they are benefitting from tax funded services and should pay
    for that. Every other country in the world (except Eretria) sets taxes
    based on residency as the accepted norm.

          I did not settle in New Zealand for tax reasons. (In fact, at
    the time, the wages were far lower in New Zealand than in the U.S. and
    the lowest tax rates in New Zealand were quite a bit higher than in the
    U.S.)
          I have bank accounts in New Zealand_like every other New
    Zealander_because this is where I live. Not because I am hiding
    anything.
          My savings are spread across multiple banks in New Zealand
    solely because bank deposits in New Zealand are NOT guaranteed (by the
    banks or by the government) This makes reporting to the IRS even more
    time consuming and expensive

    I also understand the need to prevent large U.S. multi national
    corporations from ``offshoring''.

          I am not a multi national or controlled foreign corporation
    providing goods or services outside of the jurisdiction in which it
    exists. I am a ``dual-national'' living in my country of second
    citizenship. It doesn't make me less American. But, it does mean that I
    am subject to the laws of the country where I live. I am not GILTI of
    anything.

    It also makes sense for U.S. citizens temporarily working in another
    country (e.g., on a work visa) to pay U.S. tax on that income past a
    certain legislated earned income level.

          I am not working temporarily in New Zealand. I live here.
    Permanently.

    Yet every year I am required to report my financial assets to the U.S.
    Office of Financial Crimes Enforcement, as if I was a criminal, and to
    navigate the complexities of two very different tax systems in order to
    calculate and pay my tax each year. It is true that there are many
    ``ExPat Tax Services'' for American citizens living abroad. They are
    generally well versed in U.S. tax obligations but not in how those
    obligations fit together with tax regulations, procedures, terminology,
    timelines, etc. of the country in which the expat lives and pays taxes.
    Nor do they have specific knowledge of the various Tax Treaties the
    U.S. has signed with other countries. Particularly not for a small
    country like New Zealand. Accounting fees can cost more than the tax
    owed.

    Having different tax years, different types of taxable income,
    different methods of reporting income, different rates of taxation,
    changing currency exchange rates for each piece of income, different
    Tax Treaty agreements for different countries, and different
    regulations about which rates to use for reporting... makes for an
    unreasonably complex accounting challenge that is expensive, extremely
    stressful, and an unfair burden on millions of Americans living
    overseas (some of whom are American citizens only by accident of
    birth).

    The bottom line is this (whether or not one is a small business owner):
    The U.S. extraterritorial tax regime makes it difficult for me--and
    others like me-- to save, invest, participate in pension plans and
    generally behave in a financially responsible way.

    For example, Retirement investments may be ``foreign'' to the United
    States, but local to me. ``The U.S. tax code categorizes non-U.S.
    registered mutual funds as Passive Foreign Investment Companies
    (PFICs). PFICs are taxed very punitively by the U.S. Furthermore, each
    PFIC must be reported annually on U.S. tax form 8621, which requires
    complex accounting and is very time consuming to complete. (Why
    Americans Should Never Own Shares in a Non-U.S. Incorporated Mutual
    fund, https://thunfinancial.com.) If, as an American citizen living
    permanently in New Zealand, I had invested in the New Zealand Kiwi
    Saver retirement investment plan, as a U.S. citizen I would (like so
    many other Americans living in New Zealand) have found myself faced
    with punitive PFIC taxation on my Kiwi Saver fund, and unable to exit
    the Kiwi Saver plan until I reached the age of 65.

    If an American citizen living permanently in New Zealand chooses
    instead to save for the future by investing in the U.S. stock market,
    and if the total lifetime cost of investment exceeds $50,000 NZD, they
    face the even more draconian New Zealand FIF (Foreign Investment Fund)
    tax. They would be obliged to pay to New Zealand an annual tax on the
    lesser of ``deemed dividends'' set at 5% of the value in NZD on April
    1st (as if anyone is earning 5% dividends!) or on any increase in value
    in NZD between April 1st and March 31st. This arbitrary amount is taxed
    regardless of whether or not there was any actual realised gain made!
    If there is a decrease in value, no FIF tax is owed for the year, but
    there is no carry over loss. When those same shares are eventually sold
    and a gain is actually realised, the American citizen would pay U.S.
    capital gains tax in addition to the FIF tax paid to New Zealand.

    If the U.S. citizen had already invested more than the equivalent of
    $50,000 NZD when FIF legislation came into effect in 2007, unlike other
    New Zealand investors who held foreign shares, they could not exit the
    U.S. stock market without losing a significant amount of their savings
    to U.S. capital gains tax on the lifetime of the investment.
    Nonresident aliens invested in the U.S. stock market, however, are not
    subject to U.S. capital gains tax. It is presumed that the capital
    gains would be taxed in country of residence. New Zealand has no such
    capital gains tax.

    So, how is an American citizen, who lives permanently in New Zealand,
    supposed to responsibly save for his or her future when laws are in
    place in BOTH the U.S. and New Zealand that unfairly penalise
    investments that are foreign to one country or to the other? Because I
    am required to live my life with the USD as my functional currency, I
    am subject to tax on ``fake income''--on nothing but changes in the
    exchange rate. As a tax resident of both the United States and New
    Zealand, I get the worst of both tax systems. The same is true for
    American citizens living in other countries all over the world.

    There is a treaty in place between the U.S. and each of her ``Treaty
    Partners'' that is supposed to protect against such inequitable,
    punitive double tax treatment from taking place. In my experience it
    does not.

    MY RECOMMENDATION IS AS FOLLOWS:

    As long as an individual U.S. citizen has verified legal Permanent
    Resident Status or Citizenship Status in another country and remains a
    tax resident domiciled in that country, they should be fully exempt
    from U.S. citizen based reporting and taxation.

    Kathleen Torpie

                                     ______

                     Letter Submitted by Kathleen Toussaint
    I am a proud citizen of the United States of America. I live outside
    the United States in France where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my 0inancial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very dif0icult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a 0lesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                    Letter Submitted by Thomas Louis Trog II
    To: Chairman Wyden and Ranking Member Crapo:

    Thank you for your willingness to convene a full committee hearing and
    to consider the situations of everyday, Americans who live and work
    abroad. I look forward to a positive development on this subject of
    international tax requirements for Americans living abroad.

    I am an ordinary American who moved away from the U.S. to meet the
    woman I am presently with, a woman that was born and raised in
    Singapore Moving back to the United States doesn't make a lot of sense
    since the immigration process is burdensome and expensive and my
    Singaporean wife has established a good career for herself here.

    The fact that the United States is the only developed country to tax
    its citizens on their world-wide income when those citizens live, work,
    and pay taxes in another country, is hard for me to understand. I pay
    taxes in Singapore, where I am a permanent resident, and have lived
    since 2007. On top of that, I also file a tax return with the IRS every
    year. Filing my U.S. tax return with the IRS is complicated and can be
    expensive. Because the amount of money that I earn each year in
    Singapore has not generally reached the level where I owe U.S. taxes,
    this means the expense and burden for meeting my U.S. tax obligations
    are high even though I may not owe taxes.

    The way that the current laws are structured puts American abroad in a
    situation where they have to navigate a costly, punishing, and unfair
    tax system. The people who have moved here from Europe and Australia
    have told me over the years how much less complicated their tax
    responsibility is and I can't help but wonder why the USA can't follow
    the example set by other 1st world developed countries when it comes to
    their citizens living abroad.

    My wife and I are not wealthy. As I sit here writing this I am one week
    into unemployment as my past employer has decided to close the business
    I was employed by. I do not have room in my budget to hire accountants
    or a specialized tax preparer, much less to be double taxed in both the
    U.S. and Singapore.

    As a result of U.S. tax policy towards individual citizens living
    abroad, I have been told by other Americans that opening bank accounts
    and entering into financing arrangements can be complicated and I may
    even be denied due to my U.S. citizenship.

    Thankfully, I am not a person that has a desire to open multiple bank
    accounts and take up multiple loans. I live within my means, however,
    If I wanted to start a business and obtain some start up financing,
    something I am considering doing, I recognize this will be more
    challenging due to my citizenship. U.S. tax policies are hurting
    individual, middle class taxpayers like me who live abroad. People like
    me, and other Americans that I am in contact with in Singapore in no
    way resemble the mythical wealthy American ``living large'' overseas.

    I value my American citizenship. I pay close attention to American
    politics. I am active in organizations that aim to raise the political
    awareness of American voters living overseas. I vote in all of the
    elections for which I am eligible. Having said all of that, I believe
    that the United States has a regressive, backwards approach to
    international taxes--hurting individual middle-class citizens and
    unfairly benefitting corporations who shield their earnings overseas. I
    do not think it is fair that an ordinary, everyday American like me,
    making my living abroad, should be subject to these complex and
    (sometimes) punitive U.S. tax filing requirements.

    I request that the Senate Finance Committee hold hearings concerning
    the way that Americans abroad are impacted by the state of U.S.
    taxation. I encourage you to invite testimony from experts who can
    provide an accurate profile of the community of Americans who live
    abroad and describe the burden that U.S. tax filing places upon us. I
    urge you to explore, examine the data on, and support a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation.

    Thank you for your kind consideration.

    Thomas Louis Trog II

                                     ______

                         Letter Submitted by Dan Truong
    I am a proud citizen of the United States of America. I live outside
    the United States in Australia where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                        Letter Submitted by Mark Turner
    Dear Senators,

    I am a citizen of the USA, born and raised in California. I moved to
    Europe when I was 40 years old, together with my Danish wife, to be
    near her elderly parents and to give our son a taste of his mother's
    culture.

    Now 16 years later we have built a life here and have no expectation of
    returning permanently to the USA.

    I am now a citizen and full-time resident of Denmark, where I am
    subject to taxation of my worldwide income at rates far exceeding those
    of the USA (up to 55%), plus VAT of 25% on all goods and services,
    including food. These are taxes that most Americans would find
    egregious. Yet things function well and polls consistently show that
    the Danish people are among the happiest in the world.

    However, one thing separates me from the average Dane: I am still
    liable to the USA for taxes on my worldwide income. And because the
    U.S. tax system does not recognize the rules or exemptions of other
    countries, I was frequently double taxed until I took steps to avoid
    this.

    Regardless of whether any taxes were owed, the filing obligations for
    expatriate citizens are so extensive, and the penalties for mistakes so
    high, that I was forced to pay roughly $1200 every year to a U.S. tax
    advisor, even when I owed no tax.

    In addition to the tax issues, FATCA has made it impossible for people
    like myself and our son to have a mortgage in our own name, or to have
    a brokerage account here. This is because the banks and brokers do not
    want to deal with Americans due to the harsh penalties if they make
    mistake in their FATCA reporting.

    Because of these realities, I was advised to close my small business
    and put all my financial assets in my wife's name only. Now I work for
    a salary instead of being self employed, because salary is the only
    type of income that non-residents are allowed to deduct from their U.S.
    taxes. How does this help create entrepreneurs? It only hurts them.

    I love my wife and I'm not afraid that she will divorce me and try to
    take it all, but if she should die before me, I am up a creek.
    Obviously this is not a choice that all expat Americans can make, and
    certainly not one they should be forced into by bad tax policy.

    I hope the Committee is well aware by now that there is no other
    democracy in the world that imposes such extraterritorial taxation. And
    on top that, the extraterritorial imposition of FATCA on the citizens
    of other countries, is truly egregious.

    I would like to make two general observations about the hearing on
    March 25.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one. I respectfully suggest
    that subsequent hearings include witnesses such as myself who have
    experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``multinational'' or a corporation. I am a dual-national
    living in my country of second citizenship. It doesn't make me less
    American. But, it does mean that I am subject to the laws of the
    country where I live. I am not GILTI of anything. I ask only to be able
    to carry on my small business and to live my life without interference
    from the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    fluctuations in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! I will be
    happy to elaborate on this and other issues if the Committee is
    inclined to hear more.

    For many years, Americans abroad have been attempting to get both
    Treasury and Congress to address these issues, with no result. The time
    has come for the United States to abandon its extraterritorial tax
    regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you and God bless the United States of America.

    Sincerely,

    Mark Turner

                                     ______

                    Letter Submitted by Melissa Tustin-Gore
    I am a citizen of the United States of America who believes that it is
    unbelievably wrong that the U.S. is one of two countries in the world
    that taxes its non-resident citizens.

    I live abroad and have done so since I graduated university. I do not
    have intentions on returning to the U.S. in the near future apart from
    occasional short visits to see my family. I do not understand why I
    will be required for the rest of my life to report my foreign income
    and balances in foreign bank accounts when I do not reside in the U.S..

    Currently this situation does not impact me too greatly. I am still in
    the beginnings of my career have never made over the income required
    for double taxation. My main inconvenience is navigating the
    complicated U.S. tax system to ensure that I do not end up with an
    unexpected $10,000 fine. However, it will have a greater impact my life
    going forward. This policy makes it difficult for me to invest and to
    consider buying property. It also means that if I am some day in a more
    financially lucrative position, I'll have to make career choices around
    the fact I am a U.S. citizen. This also has baring over my personal
    life, as if I decided to marry someone, I would then also have to
    report their income as well.

    Although I am not yet at a stage in which I qualify for a second
    citizenship, it is something I am considering in the future. At this
    point I could consider renouncing my U.S. citizenship, except that
    there are firm obstacles to that. It is roughly five-times as expensive
    to renounce U.S. citizenship than it is to in other highly developed
    countries. Renouncing my citizenship could affect my ability to visit
    my family, and I do not wish to do so.

    I am in total agreement with the need to crack down on extremely wealth
    individuals who are hiding money overseas. In fact, a great deal of my
    work is centered around reporting on corruption and the fight against
    it. But the vast majority of the 9 million U.S. citizens who live
    abroad are normal, non-billionares. Whether they decided to move abroad
    themselves, where born in the U.S. but barely lived there or inherited
    citizenship from a parent, it is unfair to tax them while also not
    giving them any representation to speak out against this.

    The hearing on 25 March focused on U.S. multinational corporations, not
    the 9 million individuals who live outside the U.S. but are still
    subjected to filing tax returns every year. No one in that meeting
    recognised how ordinary people and families are impacted by this
    policy, even though the hearing was supposed to focus on individuals.
    We have no representation yet are still being taxed, which I do believe
    was a policy that the United States was not particularly fond of as a
    British colony. Now the 21st century irony is that I chose to move to
    the United Kingdom of my own free will and the United States gets to
    tax me with no oversight.

    Please consider how real, average U.S. citizens have been impacted by
    this policy. Working people cannot save for retirement using their own
    local schemes. Our incomes in the eyes of the IRS could dramatically
    vary depending on fluctuations in the exchange rate that does not
    change the reality of our living conditions in the countries we live
    in. Families who sell their homes get taxed on their property. Small
    business owners are subject to regulations in two countries, even if
    they're only operating in one. And everyone is still required to file
    confusing paperwork or locate an international tax specialist in our
    country. We should not be punished because we do not live in the United
    States despite holding the passport.

    Sincerely,

    Melissa Tustin-Gore

                                     ______

                      Letter Submitted by Dr. Bryan Tuten
    I am a proud citizen of the United States of America. I live outside
    the United States permanently in Australia where I am a tax resident
    and where I am subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1. The hearing focused on U.S. multinational corporations. But here
    is the reality: U.S. tax rules treat individuals living outside the
    United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2. I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of residence permanently. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    life without interference from the Internal Revenue Code of the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. Many banking institutions in Australia will not allow
    me to invest with them as its considered too risky for them to take on
    an American client due to the long reach of the IRS via FACTA. This is
    because all of these essential activities are taking place in my
    country of residence and not in the United States. My retirement
    investments are foreign to the United States, but local to me. In
    addition, the United States impose taxes on things (for example sale of
    principal residence) when my country of residence does not. Because I
    am required to live my life with the USD as my functional currency, I
    am subject to ``fake income'' on nothing but changes in the exchange
    rate. As a tax resident of both the United States and my country of
    residence, I get the worst of both tax systems.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    I am one of over 9 million Americans that this system affects, the time
    has come for the United States to abandon its extraterritorial tax
    regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

    Very sincerely and patriotically yours,

    Dr. Bryan Tuten

                                     ______

              Chamber of Commerce of the United States of America

                               1615 H Street, NW

                           Washington, DC 20062-2000

                                  202-463-5406

    Caroline L. Harris
    vice president, tax policy
    & economic development
    chief tax policy counsel
    economic policy division

                                 April 6, 2021

    The Honorable Ron Wyden             The Honorable Mike Crapo
    Chair                               Ranking Member
    U.S. Senate                         U.S. Senate
    Committee on Finance                Committee on Finance
    Washington, DC 20515                Washington, DC 20515

    Dear Chairman Wyden and Ranking Member Crapo:

        The U.S. Chamber of Commerce writes regarding the hearing on March
    25, 2021 titled ``How U.S. International Tax Policy Impacts American
    Workers, Jobs, and Investment.'' We submit this letter for the record
    to explain why changes to the corporate rate and the international tax
    code will hurt competitiveness and are not practical policy proposals.

    I. Corporate Tax Rate

        The Chamber believes that preserving our competitive corporate tax
    rate enables American businesses to compete successfully in the global
    economy, attracts foreign investment to the United States, increases
    capital for investment, and drives job creation in the United
    States.\1\
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        \1\ See report of the Committee on Ways and Means, House of
    Representatives, on H.R. 1, (11/13/17) (noting that lowering the
    corporate tax rate ``ensure(s) domestic corporations remain globally
    competitive with their counterparts domiciled in the United States'
    largest international competitors . . . contributes to making the
    United States an attractive location for foreign corporations to invest
    . . . [and] means corporations will have more resources to invest in
    growing their businesses and creating jobs.'' ).
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    A. Base Broadening
        As a cursory matter, the Chamber notes that to achieve the
    corporate tax rate reduction to 21%, American businesses are subject to
    certain tax increases to help offset the cost of rate reduction. As
    such, the damage of raising the corporate tax rate would be compounded
    as American companies would face both a higher rate as well as the tax
    increases that paid for that rate reduction.

        In the 2017 Tax Cuts and Jobs Act (TCJA), businesses understood
    that certain base broadeners, such as less favorable interest
    deductibility rules, more limited use of net operating loss rules,
    immediate taxation of foreign earnings, and various industry specific
    tax hikes, were used to offset the cost of reducing the corporate tax
    rate.\2\ Prior to tax reform, these were tax expenditures that helped
    mitigate the high statutory corporate tax rate, thereby reducing
    companies' effective tax rates, i.e., helping level the playing field
    with the corporate tax rates in other countries. As a result, the 2017
    tax reform was truly reform, not simply tax cuts. As Ranking Member
    Crapo said at the Committee's March 16th hearing, ``the statutory
    corporate income tax rate is critical to the United States'
    competitiveness in the global market.''
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        \2\ See Joint Committee on Taxation, JCX-67-17: ``Estimated Budget
    Effects of the Conference Agreement for H.R. 1, The Tax Cuts and Jobs
    Act,'' (12/18/17).

        Absent a rate reduction, these broadeners would have raised
    businesses' taxes. A broader base can be justified, if it is coupled
    with a lower rate. Otherwise it is a tax increase. Further, comparing
    the rate on the current base to the old rate on the old base is not an
    apples-to-apples comparison. A higher rate than 21% on the current base
    is much more damaging than it would have been under the old base.
    B. Harm of an Increased Corporate Rate
        While the economy is beginning to recover, that recovery is still
    nascent. While some industries and sectors have done well, the majority
    of the business community is still reeling from this economic downturn.
    The Biden Administration clearly recognizes this continued economic
    stress given the recent enactment of a $1.9 trillion rescue bill. The
    Chamber believes that raising the corporate rate would derail the
    continuing road to economic recovery since higher corporate income
    taxes harm economic growth and, ultimately, hurt workers.

        Democrats and Republicans agree that an economic downturn is not
    the time to raise taxes. As President Obama has noted, ``The last thing
    you want to do is raise taxes in the middle of a recession.''\3\ Former
    Finance Committee Chairman Grassley (R-Iowa) recently noted that, ``I
    think it would be a big mistake to raise taxes on individuals and
    businesses as they struggle through an economic recovery and
    pandemic.''\4\
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        \3\ See Interview with MSNBC's Chuck Todd, (8/5/09).
        \4\ See The Hill, (1/19/21).

        Further, the OECD has concluded that corporate income taxes are the
    most harmful for economic growth, and thus pose a serious threat to our
    ongoing work toward recovery.\5\ Taxes are one of many costs of doing
    business. Thus, tax increases increase the cost of capital, meaning
    less capital can be created. In other words, higher corporate taxes
    reduce the long run capital stock and the long run size of the
    economy.\6\ Smaller capital stock curtails worker productivity, and
    this lower productivity leads to lesser output, which over time, can
    lower wages.\7\
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        \5\ See OECD, ``Tax and Economic Growth Economics Department
    Working Paper No. 620,'' (7/11/08). See also Tax Foundation, ``The
    Benefits of Cutting the Corporate Income Tax Rate,'' (8/14/18).
        \6\ See also Tax Foundation, ``The Benefits of Cutting the
    Corporate Income Tax Rate,'' (8/14/18).
        \7\ Id.

        It is important to understand who is harmed by increased corporate
    income taxes. The incidence, or burden, of corporate taxes falls
    heavily on workers. High corporate tax rates divert investment away
    from the corporate sector, both to other sectors as well as to foreign
    countries with lower taxes. As a result, this curtails investment that
    would raise the productivity of American workers and increase those
    workers' real wages.\8\ The nonpartisan Joint Committee on Taxation has
    estimated that 25% of the corporate income tax is borne by workers.\9\
    More recent estimates have concluded that ``that labor bears between
    50% and 100% of the burden of the corporate income tax, with 70% or
    higher the most likely outcome.''\10\ While that data spans a wide
    range, what is unquestionable is that some consequential portion of
    corporate income taxes is ultimately borne by the workforce.
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        \8\ See Desai, ``A Better Way to Tax U.S. Businesses,'' Harvard
    Business Review (July-Aug. 2012).
        \9\ See Joint Committee on Taxation (JCT), ``Modeling the
    Distribution of Taxes on Business Income,'' JCX-14-13 (10/16/13).
        \10\ See Tax Foundation, ``Labor Bears Much of the Cost of the
    Corporate Tax,'' (10/24/17).

        In addition to studies on the impact of a possible rate increase on
    workers, the Tax Foundation has worked to quantify the impact of
    permanently raising the corporate rate by 1 percentage point to 22%,
    estimating that such increase would reduce long-run GDP by over $56
    billion. The smaller economy would result in a 0.5 percent decrease in
    capital stock, 0.18 percent decrease in wages, and 44,500 fewer full-
    time equivalent jobs. Raising the rate to 25% would reduce GDP by more
    than $220 billion and result in 175,700 fewer jobs.\11\
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        \11\ See Tax Foundation, ``Proposed Corporate Rate Hike Would
    Damage Economic Output,'' (8/23/18).

        Compounding the harm to growth, raising the corporate tax rate
    would make our tax system less competitive. The current U.S. combined
    statutory corporate tax rate is 25.9% (21% federal corporate income tax
    rate plus a 4.9% average state corporate income tax rate).\12\ This
    current 25.9% rate is still above the worldwide average combined
    corporate income tax rate, measured across 177 jurisdictions, of
    23.85%, and OECD countries average combined corporate tax rate of
    23.5%.\13\ Raising the 21% rate to 28% would give the United States the
    highest combined corporate tax rate in the OECD.\14\ Further, on the
    Tax Foundation's International Tax Competitiveness Index (ITCI), the
    United States ranks 21st out of 36 countries on overall
    competitiveness, a jump from the 28th ranking prior to tax reform, and
    19th on corporate taxes, up from 35th before tax reform.\15\ Raising
    the 21% rate to 28% would cause the United States to drop from 21st to
    30th on overall competitiveness, a position even lower than before tax
    reform.\16\ Raising the rate would also cause the U.S. corporate tax
    rank to fall from 19th to 33rd.
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        \12\ See Tax Foundation, ``The United States' Corporate Income Tax
    Rate is Now More in Line with Those Levied by Other Major Nations'' (2/
    12/18).
        \13\ See Tax Foundation, ``Corporate Tax Rates around the World,
    2020'' (12/9/20).
        \14\ Id.
        \15\ See Tax Foundation, ``How Would Biden's Tax Plan Change the
    Competitiveness of the U.S. Tax Code?'' (10/19/20).
        \16\ Id.

        The harm of a higher corporate rate does not stop there. Raising
    the corporate rate makes the United States a less attractive place to
    locate corporate headquarters and invest profits. A higher corporate
    tax rate would discourage investment of profits within our borders,
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    sending much needed capital--and the jobs that come with it--elsewhere.

        When the corporate rate increases, it results in higher tax bills
    for American companies as compared to their foreign counterparts. In
    the years prior to tax reform, to mitigate the damage of the high
    corporate tax rate some companies merged with a foreign company to
    benefit from the lower tax rate of the foreign country; in other words,
    these companies ``inverted'' to remain competitive. Lowering the
    corporate rate in tax reform made the United States a significantly
    more attractive place to be headquartered, virtually eliminating
    corporate inversion transactions.\17\ Since raising the rate to 28%
    would once again subject American companies to the highest combined
    corporate tax rate in the OECD, these companies would see higher rates
    than foreign companies located overseas in many of our major trading
    partners.\18\ American companies once again could have to invert to
    remain competitive, potentially taking valuable jobs and capital
    investment with them.
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        \17\ See Institute for Policy Innovation, ``Whatever Happened to
    Corporate Inversions?,'' (8/12/20).
        \18\ See Prepared Floor Remarks by U.S. Senator Chuck Grassley of
    Iowa, Chairman, Senate Finance Committee, (9/22/20).
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    II. International Tax Provisions

    A. A Brief History
        The 2017 TCJA significantly overhauled the U.S. international tax
    code. Prior to the 2017 TCJA, the U.S. system of international tax
    system was antiquated and uncompetitive. The United States employed a
    worldwide system of taxation, under which American multinational
    companies:

          Were taxed here on their U.S. profits (just like domestic
    companies),
          Were taxed abroad on their foreign profits, and
          Then taxed again when those foreign profits were brought back
    home.

    Thus, foreign earnings of American companies risked double taxation.

        By contrast, virtually all foreign countries employed a territorial
    system of taxation, under which foreign multinational companies:

          Paid taxes on their home country profits in their home country,
    and
          Paid taxes on their foreign profits in the foreign country, but
          Those foreign profits were not taxed a second time when they
    were brought home.

    Thus, the double taxation of foreign profits was avoided.

        To offset the advantage of a territorial tax system and help level
    the playing field between American companies and their foreign
    competitors, the United States employed a system of tax credits and tax
    deferral. Deferral allowed American companies to delay paying that
    second layer of tax on foreign earnings until that income was
    repatriated. While deferral was a necessary mechanism to mitigate the
    double taxation faced by American companies operating globally,
    concerns arose that in some instances, deferral allowed companies to
    delay tax on overseas earnings indefinitely, thus eroding the U.S. tax
    base. Recognizing the many shortcomings of the U.S. international tax
    system, the 2017 TCJA overhauled many aspects of this system, seeking
    to improve American competitiveness while protecting the U.S. tax base.
    B. The 2017 TCJA Overhaul
        TCJA moved the U.S. tax system more towards the territorial systems
    employed by other foreign countries, but, as explained below, resulted
    in a system that remains moored in between a worldwide and territorial
    system. TCJA resulted in three new international provisions that worked
    in tandem to balance the need for global competitiveness with the need
    for anti-base erosion protections.

        The first category of income is known as Foreign-Derived Intangible
    Income (FDII). Under FDII, income that is deemed (under a formula) to
    be generated from using intangibles to serve foreign markets enjoys a
    reduced effective tax rate of 13.125% (16.4% after 2025). In
    conjunction with GILTI (see below) FDII removes the disincentive for
    American C Corporations to migrate intangible assets offshore, and
    encourages them to develop and retain intellectual property (and the
    associated revenue streams) in the United States.

        The second and third categories of income (Global Intangible Low
    Taxed Income (GILTI) and Base Erosion and Anti-abuse Tax (BEAT))
    operate as minimum taxes and serve to protect against base erosion.

          Absent GILTI, active foreign income earned through a foreign
    subsidiary would not be currently taxable in the United States. GILTI
    provides a deemed income inclusion such that this income is currently
    taxable in the United States. GILTI seeks to reduce the incentive to
    shift profits outside the United States. However, GILTI is also one of
    the provisions in our code that pulls the system further from a pure
    territorial system and back towards a worldwide one. American companies
    can deduct 50% of GILTI (37.5% after 2025), and the remaining amount is
    taxed at the 21% corporate rate; thus, GILTI is taxed at an effective
    rate of 10.5% (13.125% after 2025). Taking the 20% haircut on GILTI
    foreign tax credits into account, the global effective tax rate on
    GILTI is 13.125% (16.4% after 2025).
          The BEAT is an additional tax imposed on certain multinationals
    (both U.S. multinationals, and domestic subsidiaries of foreign
    multinationals) that make certain payments to foreign affiliates. It
    seeks to address concerns about earnings stripping transactions which
    ``strip'' income taxable in the United States into lower tax
    jurisdictions. In 2018, BEAT was calculated at 5%; from 2019 to 2024,
    10%; and beginning after 2025, 12.5%; it applies to companies with more
    than $500 million in total revenues and total related-party cross-
    border payments that exceed 3% (or 2% for some financial companies) of
    deductions.
    C. Goals
        In the Macroeconomic Analysis of the TCJA, the JCT stated that,
    ``The proposals affecting taxation of foreign activity are expected to
    reduce the incentives for this `profit-shifting' activity, thus
    resulting in an increase in the U.S. tax base.''\19\ Kimberly Clausing,
    Deputy Assistant Secretary for Tax Analysis in Treasury's Office for
    Tax Policy, has noted that ``TCJA should be commended for providing
    some limits on tax avoidance through the GILTI and the BEAT,''\20\ and
    estimated that the new rules will result in a 20% decrease in profit
    shifting.\21\
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        \19\ See Joint Committee on Taxation, ``Macroeconomic Analysis of
    the Conference Agreement for H.R. 1, the Tax Cuts and Jobs Act,'' (JCX-
    69-17) (12/22/2017) at 6.
        \20\ See Clausing, ``Taxing Multinational Companies in the 21st
    Century,`` at 275.
        \21\ See id. at 274. See also Prepared Floor Remarks by U.S.
    Senator Chuck Grassley of Iowa, Chairman, Senate Finance Committee,
    ``Grassley on Joe Biden's Business Tax Proposals,'' (9/22/2020).
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    D. Is the Updated International Tax System Working?
        In a recent article examining trends in U.S. cross-border M&A
    transactions post-TCJA, the author examined the 2018-2019 increase in
    cross-border mergers and acquisitions, saying that ``while a range of
    factors likely affects the volume of outbound and inbound M&A in any
    year, the data support the notion that the 2017 tax reform legislation
    improved the attractiveness of the United States as the tax domicile
    for multinational enterprises.''\22\ The most recent data on U.S.
    multinational activities for the first year after the TCJA, indicates
    the TCJA contributed to positive economic impacts:\23\
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        \22\ See Andrew Lyon, ``Insights on Trends in U.S. Cross-Border M&A
    Transactions After the Tax Cuts and Jobs Act,'' Tax Notes (10/26/2020).
        \23\ See Bureau of Economic Analysis, ``BEA: Activities of U.S.
    Multinational Enterprises, 2018,'' (7/21/20).

          U.S. parent corporations grew faster than their majority owned
    foreign affiliates (MOFAs in 2018 for several measures of their
    activities, including employment, value added, expenditures for
    property, plant, and equipment (PP&E), and research and development
    expenditures (R&D).
          This contrasts with the long-term trend of MOFA activities
    growth outpacing that of U.S. parents.
          In 2018, U.S. parent corporations experienced above-average
    growth rates for these measures, while MOFAs grew at below-average
    rates.

    III. Proposed Changes to the Tax Code

        In March 2021, President Biden unveiled the American Jobs Plan,
    which laudably sought to modernize America's crumbling infrastructure,
    but which unfortunately failed to include long term, sustainable
    funding mechanisms; instead, the proposal contained anti-growth and
    anti-competitive changes to business tax provisions.
    A. The Fair Share Fig Leaf
        Pervasive in both the American Jobs Plan and the Biden campaign
    proposal is the notion that certain taxpayers are not paying their
    ``fair share.'' Since the early days of the 2020 election cycle, the
    President has stated that he ``will require corporations. . . . to
    finally pay their fair share.''\24\ A Biden spokesperson recently
    indicated that ``[f]or permanent policies that incur ongoing costs, the
    president is committed to paying for them by asking . . . corporations
    to pay their fair share.''\25\
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        \24\ See Joe Biden for President: Official Campaign Website: ``A
    Tale of Two Tax Policies: Trump Rewards Wealth, Biden Rewards Work''
    (10/19/2020).
        \25\ See Financial Times, ``Corporate U.S. urges Biden to avoid
    raising taxes to fund infrastructure,'' (2/21/2021).

        Fairness is deeply ingrained in the human psyche, so it has
    resonance when politicians raise it. The problem for setting policy is
    fairness is in the eye of the beholder; it has no objective meaning
    that we can debate. What it really means when invoked as President
    Biden has raised it is ``more''--he wants corporations to pay more.
    Before diving into what corporations pay now and whether they should
    pay more, it is important to note that as one considers the concept of
    fairness, there exists a strong and widely accepted argument that
    corporations should not pay tax at all because doing so makes it harder
    for us to reach a fair distribution of the tax burden. That is because
    corporations do not bear the burden of the corporate tax; money for the
    payment of corporate taxes comes out of the pockets of the
    corporations' stakeholders. Those stakeholders are impacted in various
    ways \26\--shareholders see lower returns on investment, workers see
    lower wages and fewer jobs, and customers see higher prices. When we
    tax at the corporate level, we obscure how the money is really coming
    from these groups. That's not ``fair'' because obscuring where tax
    dollars are coming from makes it harder for us to determine who is
    paying how much of our tax burden.
    ---------------------------------------------------------------------------
        \26\ See Tax Foundation, ``How Lower Corporate Tax Rates Lead to
    Higher Worker Wages'' (5/16/2019).

        It is particularly unfair because some studies find that the
    corporate tax falls heavily on workers, which results in suppressed
    wages.\27\ Other studies find it falls heavily on shareholders,\28\ who
    now make up a majority of Americans.\29\ These are retirees and those
    saving for retirement or other purposes. So, when President Biden or
    others want to raise taxes, they are in fact raising taxes on workers
    and Americans' savings.
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        \27\ See discussion at I., B., above.
        \28\ See National Tax Journal, ``Distributing the Corporate Income
    Tax: Revised U.S. Treasury Methodology,'' (March 2013).
        \29\ See Gallup, ``What Percentage of Americans Owns Stock?'' (9/
    13/2019).

        As it is, corporations pay huge amounts of tax--and remember that
    is already coming out of workers and retirement savers pockets. Last
    month, the Congressional Budget Office put out its annual report on
    ``The Budget and Economic Outlook 2021 to 2031.'' In 2020, corporate
    income taxes generated $212 billion in revenue; they are estimated to
    generate $393 billion by the year 2031. As a percentage of gross
    domestic product (GDP), in 2020, corporate income taxes were 1% of GDP,
    projected to rise to 1.3% of GDP by 2031.\30\ Historically,\31\ this is
    not far out of line with what corporations have paid. In the last
    decade they have averaged 1.5% of GDP.
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        \30\ See Congressional Budget Office, ``The Budget and Economic
    Outlook: 2021 to 2031,'' (February 2021).
        \31\ See Office of Management and Budget ``Historical Tables.''

        Even if recent trends are lower than the recent past, there is good
    reason. We recently lowered taxes for everyone--families, small
    businesses, and corporations. The reduction in the corporate tax rate
    was a vital part of tax reform because, prior to its enactment, U.S.
    corporations were getting trounced in the global market. The United
    States had the highest corporate tax rate among developed countries and
    essentially remained the only major developed country that still taxed
    our corporations on their foreign profit--exporting our high tax rate
    around the world. This was hurting American workers by suppressing job
    creation and wage growth. To get back to competitiveness and alleviate
    the pressure on workers, we had to reduce the corporate tax rate. There
    is strong evidence that the corporate cuts had the desired effect in
    the last few years.\32\ U.S. businesses were performing strongly in the
    years after tax reform, before the COVID-19 pandemic, and creating jobs
    a strong clip. Workers' wages were also rising sharply before the
    pandemic, especially for the least-skilled workers.\33\
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        \32\ See Bureau of Economic Analysis, ``BEA: Activities of U.S.
    Multinational Enterprises, 2018,'' (7/21/2020).
        \33\ See Curtis Dubay, ``Supply and Demand Drives Higher Wages for
    Lower Paid Workers,'' (1/21/2020).

        Corporate taxes also were bound to fall in 2020 (and even in the
    next few years) because we are the midst of a global pandemic. COVID-19
    wreaked havoc on the economy. While some businesses made more and will
    pay more in taxes this year, the overwhelming majority of businesses
    had well below normal income, so they are not only going to owe less
    tax, but also may receive refunds related to what they can carryback.
    That is how the system works. The year the global economy went into a
    freefall because of a pandemic is not the year to point to business
    receipts to make any point about tax policy. It's an anomaly--an all-
    time record anomaly. This outlier event will suppress corporate tax
    receipts for several years to come. Those favoring ``a fair share'' for
    corporations should not get away with citing the data in these years to
    support their argument for higher taxes. Further, as the economy works
    ---------------------------------------------------------------------------
    to recover, we should not threaten that recovery with a tax hike.

        The reality is that while talking about ``fair share'' may seem
    like a good soundbite to some politicians, in these recent
    conversations, it's simply a euphemism for raising taxes. And when the
    corporate tax rate is the tax you want to raise, the result is lower
    returns on investment for shareholders, lower wages and fewer jobs for
    workers, and higher prices for consumers. If that is what those in
    favor of ``fair share'' had in mind, they should be more direct and say
    that American workers, retirees, and investors need a tax hike during a
    global pandemic rather than use the fig leaf of ``fair share'' for
    their policies.
    B. Specific Proposals
    1. Corporate Tax Rate
        The recent American Jobs Plan proposal, like the Biden campaign
    platform, seeks to raise the corporate rate to 28%. The harm of this
    proposal is detailed in I., B., above. This proposal, along with the
    GILTI proposals below, also seeks to stop the purported ``race to the
    bottom'' among corporate tax rates by urging all countries to adopt a
    global minimum tax. As the Tax Foundation recently noted, the ``race to
    the bottom in global corporate tax rates is a myth. The race might be
    to the middle 20s, but it is not to zero.''\34\ As further noted,
    ``while many critics believe that the TCJA cut the corporate rate too
    far, the reduction was barely enough to make our overall rate
    competitive with the global average.''\35\
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        \34\ See Hodge, ``5 Observations on Janet Yellen's Recent
    Confirmation Testimony,'' Tax Foundation (1/22/21).
        \35\ See id.
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    2. International Provisions
                a. GILTI
        The proposal suggested changes to GILTI provisions, including
    increasing the GILTI rate and shifting from an aggregate to a country
    by country calculation. Since most foreign countries do not levy a
    minimum tax on foreign earnings, even at half the corporate tax rate as
    in the United States, GILTI is actually part of our current tax code
    that remains an anomaly compared to other foreign countries.\36\ As
    Secretary Janet Yellen noted in QFRs after testifying before the Senate
    Finance Committee, ``[M]ost other headquarters' jurisdictions impose no
    tax on the foreign earnings of their domestically headquartered
    multinationals.''\37\ As such, the mere existence of GILTI creates an
    uneven playing field for American companies vis-a-vis those
    headquartered in other foreign countries.
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        \36\ While the OECD continues discussion about a global minimum
    tax, the OECD Secretariat has clearly stated that such rules ``would be
    more permissive than GILTI, depending also on their final design,''
    noting that such rules could consider ``the carry-forward of losses and
    excess taxes, a broader definition of covered taxes and a carveout
    based on a broader range of tangible assets and payroll . . .'' and
    could forego the GILTI regime's ``threshold limitations and
    incorporate[ion of] expense allocation rules in the calculation of
    foreign tax credits.'' The Secretariat also noted that a lower
    effective tax rate than GILTI could be considered. See ``OECD/G20
    Inclusive Framework on BEPS Addressing the Tax Challenges Arising from
    the Digitalisation of the Economy,'' (10/9/2020) at 22.
        \37\ See United States Senate Committee on Finance Hearing to
    Consider the Anticipated Nomination of the Honorable Janet L. Yellen to
    Secretary of the Treasury, Follow-up Questions for the Record for Hon.
    Janet L. Yellen (1/19/2021), at 19.

        To preserve the competitiveness of American companies, it is
    imperative that we prevent these uncompetitive changes to GILTI. The
    intent of GILTI was evident from the start of the tax reform process,
    ---------------------------------------------------------------------------
    when the Unified Framework clearly stated:

            To prevent companies from shifting profits to tax havens, the
            framework includes rules to protect the U.S. tax base by taxing
            at a reduced rate and on a global basis the foreign profits of
            U.S. multinational corporations. The committees will
            incorporate rules to level the playing field between U.S.-
            headquartered parent companies and foreign-headquartered parent
            companies.\38\
    ---------------------------------------------------------------------------
        \38\ See U.S. Treasury Department Press Release, ``Unified
    Framework for Fixing Our Broken Tax Code,'' (9/27/2017) at 9 (emphasis
    added).

        Further, GILTI works effectively as a global minimum tax to deter
    profit shifting overseas. An increased GILTI tax rate would reduce
    American companies' competitiveness versus foreign companies. Through
    2025, the effective GILTI tax rate is 10.5%, half of the 21% corporate
    tax rate (the effective rate is 13.125% taking the foreign tax credit
    haircut into account), ensuring overseas profits are subject to a
    minimum level of taxation, but not at a rate so high as to bring back
    that competitive disadvantage American companies faced before tax
    reform. The decision to tax GILTI at half the corporate tax rate was
    well considered. In contemplating the appropriate rate for GILTI, the
    Senate Budget Committee stated that it ``recognizes that taxing that
    income at the full U.S. corporate tax rate may hurt the competitive
    position of U.S. corporations relative to their foreign counterparts,
    and has decided to tax that income at a reduced rate (with a portion of
    foreign tax credits available to offset U.S. tax).''\39\
    ---------------------------------------------------------------------------
        \39\ See Committee on the Budget, United States Senate,
    ``Reconciliation Recommendations Pursuant to H. Con. Res. 71,'' (S.
    Prt. 115-20) at 370.

        Further, calculating GILTI on an aggregate (or global) basis helps
    balance base erosion concerns with the need to level the playing field.
    Policymakers intentionally choose to employ an aggregate calculation
    for GILTI, recognizing that because of the ``integrated nature of
    modern supply chains,'' ``it is more appropriate to look at a
    multinational enterprise's foreign operations on an aggregate basis,
    rather than by entity or by country.''\40\ GILTI prevents base erosion
    and by using a global approach, does so in a manner that minimizes the
    risk of double taxation while lessening compliance and administrative
    burdens.\41\
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        \40\ See ``Report of the Committee on Ways and Means, House of
    Representatives, on H.R. 1,'' (H.R. Rept. 115-409) at 389.
        \41\ See OECD, ``Public consultation document Global Anti-Base
    Erosion Proposal (``GloBE'')--Pillar Two,'' (11/8/2019) (noting that
    any multilateral set of rules to address the digitalization of the
    economy should ``achieve these objectives consistent with principles of
    design simplicity that will minimise compliance and administration
    costs and the risk of double taxation.'').
    ---------------------------------------------------------------------------
                b. Other International Provisions
        Other proposals included in the American Jobs Plan purport to seek
    to end inversions, a problem that has not existed since TCJA reformed
    our tax code and made it globally competitive.\42\ Proposals in both
    the Biden campaign and American Jobs Plan also seek to encourage
    onshoring, perhaps similar to the domestic manufacturing deduction that
    was eliminated in TCJA. And while encouraging domestic manufacturing is
    commendable, these proposals are unfortunately paired with flawed
    proposals that punish companies who operate overseas, where 95% of
    consumers are located and where 90% of goods and services produced in
    those foreign markets are sold into those foreign markets.\43\
    Likewise, the American Jobs Plan would eliminate FDII and modify BEAT
    with little explanation for how that would operate but which would
    unquestionably knock the balance between competitiveness and anti-base
    erosion protection carefully sought in TCJA.
    ---------------------------------------------------------------------------
        \42\ See I., A., above.
        \43\ See U.S. Bureau of Economic Analysis, Worldwide Activities of
    U.S. Multinational Enterprises: Preliminary 2018 Statistics, Majority
    Owned Foreign Affiliates, Table II.E 9.
    ---------------------------------------------------------------------------
    3. Other Provisions
        The final piece of both the Biden campaign and American Jobs Plan
    proposal seeks a minimum tax on large corporations' book income. This
    would undercut the benefit of many provisions in the code, from those
    which seek to help workers, such as the work opportunity tax credit
    (WOTC), to those that seek to benefit distressed communities, such as
    opportunity zone (OZ) provisions. This provision seems to operate in
    the same manner as the corporate alternative minimum tax (AMT) which
    was repealed in the TCJA precisely because it undercut the value of
    provisions such as R&D incentives in the tax code.

    Conclusion

        The Chamber expects a continuing discussion of these and other tax
    proposals in the coming weeks and months and for the many reasons
    articulated above, we strongly discourage Congress from enacting these
    proposals which have harmful impact to growth and competitiveness. We
    thank you for considering our feedback and welcome answering any
    questions on these issues.

                Sincerely,

                Caroline L. Harris

                                     ______

                    Letter Submitted by Philip van der Ploeg
    I am a citizen of the United States of America. I live outside the
    United States in the Netherlands where I am a tax resident and where I
    am subject to full taxation. I left the U.S. at age one and never
    returned as a resident. Now I'm 50 Years old.

    You see I am an ``accidental American''. I was born in 1970 in Ames,
    Iowa (please Mr Chuck Grassley, we met in 2017, can you do something
    for persons born in your state and living abroad?) in America. But, me
    and my Dutch parents and two Dutch sisters moved to Germany one Year
    after my birth. I don't remember ever living in America. My only
    experience of America is from a few visits as a tourist. Yet, (at first
    I couldn't believe this could be possible) I am required to file U.S.
    tax returns and perhaps one day pay tax on my non-U.S. income to
    America. But, it gets worse. I am also required to file complex
    information returns describing the details of my finances to America. I
    can't even understand the forms. How can this be? What is the reason
    for this? No other country does this! Of course, I am proud to be an
    American. Who wouldn't be? But, I have no idea how to comply with the
    rules imposed on me. Also, I can't afford the expensive consultants.
    What am I supposed to do? Renounce my U.S. citizenship? I can't even
    afford the U.S.$2350 renunciation fee to do so. I simply don't know
    what to do and I can't deal with the stress. Furthermore I have to file
    FBAR. I'm treated as potential criminal. I'm not avoiding paying taxes.
    I pay tax in the country I live and in the country I work (since 1974
    I'm living in the Netherlands). And not only my bank accounts I have to
    file to the U.S. Also the bank accounts of my two children (14 and 16
    Years old).

    I do not live ``offshore.'' I do live in the Netherlands where I pay
    very high income taxes. I also pay additional kinds of taxes (example
    VAT) to my country of residence.

    I've chosen to comply with U.S. tax rules although in my opinion they
    are unfair. But the alternative is a risk of not having a bank account
    in the Netherlands anymore. Dutch citizens with a second American
    citizenship are treated differently from other Dutch citizens only
    because they were born in the U.S.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                     Letter Submitted by Thomas van Haaren
    The U.S. is the only advanced country that taxes its citizens on their
    world-wide income when those citizens live, work and pay tax in another
    country. I not only pay taxes in France where I live but I also file a
    tax return to the IRS every year. Declaring non-U.S. income on IRS
    forms is very complicated. Hiring tax return preparers that understand
    the U.S. tax system as well as the French tax system can be very
    expensive, which makes meeting U.S. tax obligations a serious financial
    burden even if no tax is owed.

    I'm an ordinary American. I moved to France to be with my partner. My
    family are not wealthy. We don't have room in our household budget to
    spend on tax return preparers, and we certainly cannot afford to be
    double-taxed.

    It's also a struggle to invest for my family's future in investment
    products overseas or consider creating a business with my partner. We
    even struggled to get a loan for our dream house because of the bank's
    reluctance to deal with ``U.S. Persons.''

    I value my American citizenship. I pay attention to U.S. politics as
    much if not more than the average citizen and I vote in every election
    for which I'm eligible. But I don't think it's fair that ordinary,
    working class Americans like me, making a living and paying tax abroad,
    are subject to inordinately complex and sometimes punitive U.S. tax
    filing.

    The current law is costly, punishing, and unfair, and it is causing
    some Americans abroad to consider renouncing U.S. citizenship. I hope
    that shocks you because it shocks me.

    I am asking the Senate Finance Committee to hold hearings on Americans
    abroad and U.S. taxation. I encourage you to invite testimony from
    experts who can provide an accurate profile of the Americans abroad
    community and describe the burden that U.S. tax filing places upon us.
    I urge you to also explore the implications of a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation.

    Thank you.

    Thomas van Haaren

                                     ______

                   Letter Submitted by Dominik Van Opdenbosch
    Overwhelmingly, the hearing on ``How U.S. International Tax Policy
    Impacts American Workers, Jobs, and Investment'' focused on
    corporations and other business entities. Individuals, in particular
    American citizens residing outside the United States, are almost always
    ignored.

    These American workers try to make their living in a foreign country
    due to various reasons: Serving in the military, being sent abroad by
    American companies, or settling down for family. These Americans,
    serving as ambassadors of the United States, are obeying the local law
    and are subject to taxation in their country of residence. Often these
    are high-tax countries like Germany, where I currently reside.

    Yet, these Americans are also subject to the U.S. extraterritorial tax
    regime, which means the United States imposes taxation on their non-
    U.S. income. There is no other advanced country in the world that
    imposes such extraterritorial taxation.

    I would like to make three main observations linked to the hearing on
    March 25th.

        1.  The hearing solely focused on the taxation of U.S.
    multinational corporations. The title implied that the hearing would be
    focused on the impact of international tax policy on American Workers,
    Jobs, and their Investment. So how does any change in taxation affect
    individual Americans? It is obvious that any change in the U.S. tax
    code concerning international taxation first and foremost affects
    American workers trying to make their living abroad.

        2.  I thought a hearing would be about covering every aspect of a
    topic. I did not see any witness or person on the panel that shared any
    personal experience with either living outside the U.S. or running a
    business at least partially situated outside the U.S.

        3.  There was a discussion on how U.S. companies have to compete on
    a global scale with other multi-national companies from other
    countries. When talking about these companies, they have quite some
    options how to compete. An individual American trying to open a small
    local store or restaurant abroad also has to compete with local
    businesses. He is currently subject to two tax systems but actually can
    not afford to do so. Alone the filing requirements and costs puts him
    into a considerable disadvantage compared to local businesses.

    Please understand that all changes to the taxation of U.S. corporations
    will have a huge impact on the U.S. taxation of U.S. individual
    citizens living outside the United States and running small businesses
    outside the United States. Individuals are not immune to the effects of
    raising the U.S. corporate income tax rate and/or doubling the GILTI
    tax.

    More generally (whether one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States but local to
    me. The tax systems are usually mutually incompatible. There is no
    assistance from the IRS on how to translate specifics of foreign taxes
    into the U.S. tax code. That usually requires hiring costly expat tax
    advisors even for very simple tax filings.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! Take PFIC as
    an example: I followed my local (from U.S. perspective foreign)
    investment advisor and bought some ETFs from the money I earned solely
    here in Germany. I later found that they are subject to double
    taxation. There are many more examples: I could not volunteer as a
    treasurer of a local non-profit charity organization due to FBAR/FACTA
    implications. As a tax resident of both the United States and my
    country of residence, I get the worst of both tax systems.

    This is extremely unjust. For many years, Americans abroad feel like
    second-class citizens and have been attempting to get both Treasury and
    Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    I hope you find this statement valuable. I belief it helps to
    understand and address the issues of million American workers around
    the world.

                                     ______

                      Letter Submitted by Janyce Veenstra
    I am no longer a proud citizen of the United States of America. Since
    my childhood, I live outside the United States in The Netherlands where
    I am a tax resident and where I am subject to full Dutch taxation.

    You see I am an ``accidental American''. I was born in America. But, I
    was removed from America when I was 8 years old. I grew up in my
    parents' home country and thus mine, The Netherlands. I have no family
    in the U.S., no assets in the U.S. Yet, (at first I couldn't believe
    this could be possible) I am required to file U.S. tax returns and pay
    tax on my non-U.S. income to America. Everything in my life is non-
    U.S.! But, it gets worse. I am also required to file complex
    information returns describing the details of my Dutch finances to
    America. I can't even understand the American forms. How can this be?
    What is the reason for this? No other country does this! No one ever
    informed my family, not the IRS, not the Dutch IRS. Nobody! How can the
    U.S. impose its extraterritorial law of citizenship based taxation on
    people not even being made aware of it by the U.S. government? Why
    don't you get a letter at birth in the U.S. f.e. together with your
    birth certificate, stating your future rest of your life tax compliance
    to the U.S. no matter where you live and also pay tax on the globe? Do
    you have any idea how guilty my elderly mother feels? Subjecting her
    child to this Kafkaesk U.S. tax system? I would have renounced in a
    heartbeat when I turned 18. I'm 57 now. I have no idea how to comply
    with the rules imposed on me. Also, I can't afford the expensive
    consultants. What am I supposed to do? Renounce my U.S. citizenship? I
    can't even afford the U.S.$2350 renunciation fee to do so. I simply
    don't know what to do and I can't deal with the stress.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence. Not one of my Dutch bank accounts are
    foreign to me, but suddenly because I'm being identified as a so-called
    U.S. person (FATCA) and I'm being severely discriminated against and
    treated as a second class citizen. The U.S. is making my life
    miserable.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of premier citizenship. I am subject to the laws of the
    country where I live. I am not GILTI of anything. I ask only to be able
    to carry on my small business and/or my life without interference from
    the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                     Letter Submitted by Dr. James Wagstaff
    To: Chairman Wyden and Ranking Member Crapo:

    Thank you for your willingness to convene a full committee hearing and
    to consider the situations of everyday, Americans who live and work
    abroad. I would like to add my voice to those of others regarding the
    important discussion on international tax reform.

    I am an ordinary American who moved away from the U.S. to work
    internationally for Dell Technologies and Hewlett Packard many years
    ago. During that time, I met and married my wife. Around that time, my
    wife and I decided to continue living and working in Singapore because
    our work and careers had, by then, become established here.

    The fact that the United States is the only developed country to tax
    its citizens on their world-wide income when those citizens live, work,
    and pay taxes in another country, has always been a source of
    bewilderment to me. I pay taxes in Singapore, where I am a permanent
    resident, and have lived for nearly 15 years. On top of that, I also
    file a tax return with the IRS every year. Filing my U.S. tax return
    with the IRS is complicated and expensive. Because the amount of money
    that I earn each year in Singapore has not generally reached the level
    where I owe U.S. taxes, this means the expense and burden for meeting
    my U.S. tax obligations are high even though I may not owe taxes.

    The way that the current laws are structured puts American abroad in a
    situation where they have to navigate a costly, punishing, and unfair
    tax system. My colleagues from other developed countries like
    Australia, Canada, New Zealand, Sweden, Denmark, France, the United
    Kingdom, et al., are baffled at the way that Americans abroad are
    treated in the U.S. tax system. To them the U.S. tax system is
    laughable for being so myopic. To me it is embarrassing, hurtful, and
    maddening because it is so bad for the American ``brand.''

    My wife and I are not wealthy. We now operate a small business in
    Singapore, and I am also an educator here. We do not have room in our
    budget to hire accountants or a specialized tax preparer, much less to
    be double taxed in both the U.S. and Singapore.

    You are likely aware that the way that U.S. tax laws are structured
    today have meant that some Americans abroad are considering renouncing
    their citizenship. I am acquainted with a number of people who have
    this mindset. Does that surprise you? It does not surprise me because I
    have had to deal with this unfair system for too many years and I can
    see why some working-class Americans who work abroad may feel as if
    they have no choice but to give up their American citizenship. In my
    experience, this situation is brought on by the shocking and shameful
    state of the approach that the United States has chosen to take, either
    through poorly formed policy or ignorance, towards individual Americans
    living abroad.

    As a result of U.S. tax policy towards individual citizens living
    abroad, I have, over the years, been denied the ability to open bank
    accounts, seek out other financial services, enter into financing
    agreements such as loans, and even apply for credit. It is my direct
    experience that U.S. tax policies are hurting individual, middle class
    taxpayers like me who live abroad. People like me, and other Americans
    that I am in contact with in Singapore and other parts of the world, in
    no way resemble the mythical wealthy American ``living large''
    overseas. This mythical individual seems, in my estimation, to be the
    type of person that certain policy makers have used as a ``strawman''
    when attempting to justify these, and other, unnecessarily punitive
    means of applying the U.S. tax code to individuals living and working
    abroad.

    I value my American citizenship. I pay close attention to American
    politics. I am active in organizations that aim to raise the political
    awareness of American voters living overseas. I vote in all of the
    elections for which I am eligible. Having said all of that, I believe
    that the United States has a regressive, backwards approach to
    international taxes--hurting individual middle-class citizens and
    unfairly benefitting corporations who shield their earnings overseas. I
    do not think it is fair that an ordinary, everyday American like me,
    making my living abroad, should be subject to these complex and
    (sometimes) punitive U.S. tax filing requirements.

    I request that the Senate Finance Committee hold hearings concerning
    the way that Americans abroad are impacted by the state of U.S.
    taxation. I encourage you to invite testimony from experts who can
    provide an accurate profile of the community of Americans who live
    abroad and describe the burden that U.S. tax filing places upon us.
    Find out the real situation and hear the stories of real Americans
    abroad rather than having policy continue to be influenced by
    apocryphal stereotypes of wealthy Americans living in tax havens. I
    urge you to explore, examine the data on, and support a switch from our
    current system of Citizenship Based Taxation to Residency Based
    Taxation.

    Thank you for your kind consideration.

    Dr. James Wagstaff

                                     ______

                        Letter Submitted by Megan Wallek
    I am a proud citizen of the United States of America. I live outside
    the United States in Australia where I am a tax resident and where I am
    subject to full taxation.

    I am an emigrant from America. I moved from America nearly four years
    ago and recently obtained permanent residency in Australia. While I
    miss America and my family and friends there, my husband and I have
    made the decision to remain living permanently abroad. I am a tax
    resident of Australia. I am required to organize my financial and
    retirement planning in that country.

    The problem I have is that the U.S. tax laws make it very difficult for
    me to live the same kind of life that my friends and neighbours live.
    You see, they are subject to only one tax system. As a U.S. citizen, I
    am subject to the tax system where I live and the U.S. tax system.
    Those systems are generally not compatible. Most attempts at
    responsible financial/retirement planning where I live are frustrated
    by the need to comply with U.S. tax laws. How can this be fair? How can
    the United States impose taxation on the non-U.S. income and assets of
    a person who is a tax resident of another country--with no economic
    connection to the United States?

    I do live in a country where I pay very high income taxes. I also pay
    additional kinds of taxes (example VAT) to my country of residence.
    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living
    abroad. It doesn't make me less American. But, it does mean that I am
    subject to the laws of the country where I live. I ask only to be able
    to carry on my small business and/or my life without interference from
    the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

                                     ______

                        Letter Submitted by Lars Wallen
    I am a proud citizen of the United States of America. I live outside
    the United States in Sweden where I am a tax resident and where I am
    subject to full taxation. Sweden is known for its high income taxes, so
    the reason for my immigration has nothing to do with avoiding taxation.
    In fact, no one immigrates to Sweden to avoid taxation.

    I am an emigrant from America. Sure I love America. But, we never know
    where life will take us. I moved from America many years ago. Although
    the days sometimes go slowly, the years go quickly. I long ago realized
    that although I will always love America, I am living permanently
    abroad. I am a tax resident of my country of residence. I am required
    to organize my financial and retirement planning in that country. The
    problem I have is that the U.S. tax laws make it very difficult for me
    to live the same kind of life that my friends and neighbours live. You
    see, they are subject to only one tax system. As a U.S. citizen, I am
    subject to the tax system where I live and the U.S. tax system. Those
    systems are generally not compatible. Most attempts at responsible
    financial/retirement planning where I live are frustrated by the need
    to comply with U.S. tax laws. How can this be fair? How can the United
    States impose taxation on the non-U.S. income and assets of a person
    who is a tax resident of another country--with no economic connection
    to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. Sweden is known for its high income taxes, so the
    reason for my immigration has nothing to do with avoiding taxation. In
    fact, no one immigrates to Sweden to avoid taxation. I also pay
    additional kinds of taxes (example VAT) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                       Letter Submitted by Ronald Walther
    I am a proud citizen of the United States of America. I live outside
    the United States in Germany where I am a tax resident and where I am
    subject to full taxation.

    You see I am an ``accidental American''. I was born in the USA. But,
    apparently I was removed from America as kid with only basic English
    education at the time the Vietnam war was just over together with my
    German parents. My only experience of America is from television,
    movies and the occasional American tourist I meet. Yet, (at first I
    couldn't believe this could be possible) I am required to file U.S. tax
    returns and pay tax on my non-U.S. income to America.

    But, it gets worse. I am also required to file complex information
    returns describing the details of my finances to the U.S. It is
    impossible to understand the forms, as English is a foreign language
    for me. How can this be? What is the reason for this? No other
    civilized country does this! Of course, I am still proud to be an
    American. I had to hire expensive consultants in order to fulfill these
    obligations, that cost me way over 2000 U.S.$ for 0 (Zero) tax due. In
    addition to these very high costs I'm discriminated against by German
    Banks and other financial providers that refuse to offer services to
    me. Just this fact alone is quite dangerous for me. It can make me
    homeless if I'm not able to pay a rent or my loans.

    What am I supposed to do? Renounce my U.S. citizenship? I've learned
    that this will cost me 2350 U.S.$ ``fee'' (I consider this as a fine)
    plus thousands more for the preparation of really complex special tax
    forms. It gives me the impression, that I am punished for something.

          Was it a wrong thing to do, as kid to follow one's parents to
    their homeland?
          Was it a wrong thing to do to take care of my elderly mom the
    last 25 years in Germany?
          Is the USA considering me as a kind of property, that is
    punished for leaving with nothing in his hands?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of primary citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the U.S.$ as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                     Letter Submitted by Denise Mary Welsh
    I was born outside the United States, in London, England. My parents
    emigrated to Canada when I was 3 months old, and then emigrated to the
    United States when I was about 4 years old. I returned to the United
    Kingdom in 1976, and continued to live in the United Kingdom, where I
    am a tax resident and where I am subject to full taxation.

    With family members still living in the United States, I travel there
    for holidays and family events. I enjoy the freedom to travel to
    America that U.S. citizenship gives me and accept that I have a tax
    filing duty as a result of my U.S. nationality. This said, having lived
    in the United Kingdom for many years, I am finding it increasingly
    difficult to understand how to comply with U.S. tax filing.

    I would prefer not to renounce my U.S. citizenship, however, I am in a
    position where continuing to maintain my U.S. nationality is becoming
    uncomfortably expensive. I shall soon be paying four-figure sums in GB
    Pounds per annum to comply, as I have realised that my position
    requires that I work with specialist international tax consultants.

    Tax compliance requirements seem to have become much more onerous over
    the last few years. In the 1980s, I was the only one of my UK-resident
    American friends who was filing U.S. tax returns. None of us had known
    that we had to file and I only found out from a British acquaintance
    who got a job as an intern at Ernst & Young. Now accounting and filing
    requirements have become expensive and difficult on both sides of the
    Atlantic.

    For example, in 2008, after inheriting U.S. stock portfolios from my
    father (a naturalised U.S. citizen, born in India), I was researching
    ways to best manage the funds and considered bringing the accounts to a
    UK investing house. I was told by an executive at a UK branch of HSBC
    bank that I was not entitled to open a UK bank account, nor legally
    entitled to a UK pension, after having worked for the UK Civil Service
    for several years. Current U.S. tax legislation is creating impossible
    situations for expats with any U.S. connection.

    Although I am not a ``high-earner,'' I will be paying high consultancy
    fees to simply meet U.S. filing requirements. This is the case even
    though I rarely owe any U.S. tax. It seems as though the United States'
    system of extraterritorial taxation and regulation is being wielded
    punitively against private individuals of modest means who choose to
    live in other countries. My opinion is that the United States would do
    well to review its system of extraterritorial taxation and regulation.

    Apart from it being an income stream, is hard to understand why the
    United States aims to impose taxation on individuals with little to no
    U.S. income. I live in a country with a comprehensive taxation system,
    requiring payment of a wide range of taxes. While I pay a fair amount
    of tax in the United Kingdom, the U.S. tax system treats my non-U.S.
    income and assets unfairly. It is difficult, if not impossible, to be a
    tax resident of more than one country.

    I do not live ``offshore,'' nor do I live an ``offshore'' lifestyle. I
    live in a country where tax rates are higher than in the United States.
    I am also subject to additional kinds of taxes such as VAT. Yet,
    because I am also a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime. As a result, the United States scrutinises
    my non-U.S. income for potential gain, even though I am fully taxable
    on that income in the United Kingdom. This applies even though I do not
    live in the United States. There is no other advanced country in the
    world that imposes such extraterritorial taxation.

    I would like to make two general points regarding the hearing on March
    25th.

        1.  Reports indicate that the hearing focused on U.S. multinational
    corporations. But here is the reality: U.S. tax rules treat individuals
    living outside the United States in the same way they treat U.S.
    multinationals doing business outside the United States. While I am a
    private individual on a limited income, I gather that no participant in
    the hearing recognized how private individuals are affected by these
    rules. Yet, the focus of the hearing was supposed to be about
    individuals.

        2.  I also understand that no witness participating in the hearing
    actually had personal experience with a company or as an individual
    running a business with interests outside the USA. I would like to
    suggest that subsequent hearings should include witnesses who have
    experienced running businesses outside the United States or have
    actually been resident outside the United States. Subsequent hearings
    should deal with the reality on the ground and not what looks good on
    paper.

    I am not a ``mini-multinational.'' I am a ``dual U.S./UK national''
    living in my country of birth and primary citizenship. I am subject to
    the tax laws of the United Kingdom. I am not GILTI of anything. Having
    entered the retirement phase, I wish to carry on my life without undue
    intrusion from the Internal Revenue Code of the United States.

    It is important to understand that changes to the taxation of U.S.
    corporations will impact on the U.S. taxation of U.S. individual
    citizens living and/or running small businesses outside the United
    States. Individuals are not immune to the effects of raising the U.S.
    corporate income tax rate or increasing the GILTI tax.

    Beyond the costs of tax preparation and filing, the U.S.
    extraterritorial tax regime presents me with challenges in terms of
    saving, investing, and participating in pension plans. It is difficult
    to act in financially astute and responsible ways because the majority
    of these essential activities are taking place in the United Kingdom
    and not in the United States. Several of my savings investments are
    held in the United Kingdom. Of greater concern, the United States
    imposes taxes on things (for example the sale of one's principal
    residence) when the United Kingdom does not. In this regard, Capital
    Gains tax on my principal UK residence--of which, I and my UK-resident
    American friends have only recently become aware--is reason enough to
    consider renunciation.

    As a tax resident of both the United States and the UK, I am caught
    between both tax systems. It is appropriate to pay fair taxes, ``giving
    unto Caesar what is Caesar's'' and this consideration is not about tax
    avoidance. However, it is difficult to meet the requirements of both
    taxation systems and even with a tax treaty between the United Kingdom
    and the United States in place, it feels like I am being squeezed in
    the middle.

    And please don't assume that foreign tax credit rules and/or the
    Foreign Earned Income Exclusion solve these problems. They are not
    enough!

    American extraterritorial taxation is unfounded and unjust. For many
    years, Americans abroad have been attempting to get both Treasury and
    Congress to address these issues. My strong opinion is that it is time
    for the United States to abandon its extraterritorial tax regime and
    join the rest of the world in adopting a system of residence-based
    taxation.

    Thank you for your attention.

    Kind regards,

    Denise Welsh

                                     ______

                       Letter Submitted by Claudia Wicki
    Dear Committee,

    I am a proud citizen of the United States of America. I live outside
    the United States in Zurich Switzerland for over 25 years as I married
    a Swiss. I am a tax resident and I am subject to full taxation here. I
    do not live ``offshore.'' I live in Switzerland where I pay income
    taxes, VAT taxes and other types of taxes.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income (unemployment compensation and
    retirement savings) even though I am a fully taxable on that income in
    the country where I reside, and do not live in the United States. There
    is no other advanced country in the world that imposes such
    extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25, 2021.

        1.  The hearing focused on U.S. multinational corporations. The
    U.S. tax rules treat individuals living outside the United States the
    same way they treat U.S. multinationals doing business outside the
    United States. Although, I am an individual person (not a corporation),
    not a single participant in the hearing recognized how individuals are
    affected by these rules. Yet, the focus of the hearing was supposed to
    be about individuals. How did this happen?

        2.  I was surprised to learn that there was no witness who had
    personal experience with a company or an individual running a business
    with interests outside the USA. Not a single one. This is astonishing!
    I respectfully suggest that subsequent hearings include witnesses who
    have experience running businesses outside the United States or
    actually living outside the United States. In other words, subsequent
    hearings should deal with real circumstances and issues on the ground
    for Americans living abroad and not based only on theory and simply
    local, U.S. experience.

    I am not a ``mini-multinational corporation'', I am a ``dual-national''
    living in my country of second citizenship. I am an American and I am
    subject to the laws of the country where I live. I am not GILTI of
    anything. I ask only to be able to carry on my life without being
    penalized by the Internal Revenue Code of the United States.

    Please understand that any and all changes to the taxation of U.S.
    corporations will have a huge impact on the U.S. taxation of U.S.
    individual citizens living outside the United States and running small
    businesses outside the United States. Individuals are not immune to the
    effects of raising the U.S. corporate income tax rate and/or doubling
    the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to bank, save,
    invest, participate in pension plans and generally behave in a
    financially responsible way. This is because these essential activities
    are taking place in my country of residence and not in the United
    States. My retirement investments here are foreign to the United
    States, but local to me. In addition, the United States impose taxes on
    things (for example sale of principal residence). As a tax resident of
    both the United States and my country of residence, I am subject to
    effects of both tax systems.

    And please do not believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! As a retiree,
    I don't qualify for these.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.
    Residency based taxation (RBT) has been lingering in the House and Ways
    Committee for decades. As the folks at American Citizens Abroad in
    Washington. www.americansabroad.org/americans-abroad-caucus/

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you for your attention to this very serious matter and God bless
    the United States of America.

                                     ______

                   Letter Submitted by Susan Pierce Williams
    I am a proud citizen of the United States of America. I live outside
    the United States in the United Kingdom where I am a tax resident and
    where I am subject to full taxation. I do not live here for any
    offshore/ money laundering purpose; rather I married a British citizen
    and settled in the UK in 1981. We are both retired and have never had a
    lot of money. I am a retired social worker and my husband was a Vicar
    (clergyman) in the Anglican Church. When working, our income never
    exceeded $80,000 before any taxes.

    I am an emigrant from America and have always been proud to have a U.S.
    Passport. Until recently, I understood that the U.S. community abroad
    served a sort of soft diplomacy role which was helpful to the United
    States. Recently, however, trying to live as an ordinary person outside
    of the United States has become a lot more difficult, and I no longer
    get the impression that we are valued in any way by America. Banking
    services are becoming harder to come by, both in the non-U.S. country,
    due to all the FATCA regulations, and also within the USA. It is pretty
    impossible to open a bank account in the USA when you do not live
    there.

    Also not possible to open an IRS account, social security account, or
    even to file U.S. taxes online without a cellphone registered to a U.S.
    address! And of course, toll free telephone numbers are not ``free''
    when you are calling from outside of the United States.

    I long ago realized that although I will always love America, I am
    living permanently abroad. I am a tax resident of my country of
    residence. I am required to organize my financial and retirement
    planning in that country. The problem I have is that the U.S. tax laws
    make it very difficult for me to live the same kind of life that my
    friends and neighbours live. You see, they are subject to only one tax
    system. As a U.S. citizen, I am subject to the tax system where I live
    and the U.S. tax system. Those systems are generally not compatible.
    Most attempts at responsible financial/retirement planning where I live
    are frustrated by the need to comply with U.S. tax laws. How can this
    be fair? How can the United States impose taxation on the non-U.S.
    income and assets of a person who is a tax resident of another
    country--with no economic connection to the United States?

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence. Virtually all of these taxes are not
    recognised as such by the IRS. For example, there is a tax levied on
    the value of your property which is paid to the local government to
    help fund services (police, roads, etc etc). For some reason this is
    not deemed to be a ``property tax.'' There is also a Sales Tax levied
    on all goods; across most of Europe this rate is 20%--similarly, this
    is not deemed to be a Sales Tax by the IRS. I could go on, and on.

    Because I am a U.S. citizen, I am subject to the U.S. extraterritorial
    tax regime, which means the United States imposes taxation on my non-
    U.S. income even though I am a fully taxable on that income, in the
    country where I reside and do not live in the United States. There is
    no other advanced country in the world that imposes such
    extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    For the first time in my life overseas, I have been thinking about
    renunciation, which is such a very emotionally laden thought. So far I
    have been able to hold onto my UK bank account, although many others
    living in Europe are having their accounts closed, and mortgages
    stopped etc etc. Already here in the UK it is no longer possible for me
    to make many common investments (e.g., Mutual Funds). Once financial
    institutions find out you are American, they do not want to deal with
    you because of the draconian penalties imposed by the USA if they set a
    foot wrong in reporting the accounts located outside the U.S. to the
    U.S. Treasury. It's become a nightmare. And of course I am not allowed
    to make any investments in the U.S. either.

    If banking services become closed to me in any country, then my hand
    will be forced and I will very sadly be forced to renounce my U.S.
    nationality simply to survive.

    I just want to live a normal life, like my family inside the United
    States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't! Once you are
    retired, for example, NONE of your income is eligible for the FEIE.

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    I really hope the U.S. takes the sensible step of moving to Residence
    Based Taxation before it is too late for us.

    Thanks for listening.

    Regards,

    Susan Pierce Williams

                                     ______

                        Letter Submitted by Lisa Willner
    I am a proud citizen of the United States of America. I live outside
    the United States in England, the UK, where I am a tax resident and
    where I am subject to full taxation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income, in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or my life without interference from the Internal
    Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God bless the United States of America!

                                     ______

                      Letter Submitted by Genelle Windsor
    I am a citizen of the United States of America. I live outside the
    United States in France where I am a tax resident and where I am
    subject to worldwide taxation. I worked in the United Kingdom before I
    retired.

    CBT (Citizen-Based Taxation)

          In many cases, a dual U.S./UK tax accountant has to be engaged
    to complete the U.S. tax return because of the complicated rules for
    U.S. citizens living outside of the United States. The cost can be very
    high because of the expertise required. The accountant with the lowest
    price that I found was $1,100 for one year's simple tax return. Some
    accountants can charge as much as $3,000 for one return. I was able to
    do the FBAR myself, or the cost would have been more. In many cases,
    the final result is that $0.00 tax is owed. This is because there can
    be tax treaties with the U.S. and the country of residence. Also, the
    U.S. citizens living outside the U.S. often pay higher taxes (this is
    especially true for Europe) in the country where they reside than they
    would in the U.S., so those taxes are deductible so tax won't be paid
    twice on the same income. The IRS has to process the paperwork and I
    have to pay a very large amount to prove that I didn't owe any tax.
    This costs the IRS money to process and does not put any money into the
    treasury. I am retired and cannot afford to pay for an expensive tax
    accountant every year. If I do not pay for the expensive tax
    accountant, I take the risk of making a mistake that may incur a
    $10,000 penalty. This could be as simple as checking the wrong box on a
    form or putting my account information in the wrong section on a form.
    This also causes much anxiety that all of the money I have saved for
    retirement could be taken in penalties because of a simple
    unintentional mistake.

          Many countries in the world have tax free retirement savings
    plans to encourage workers to put away money for retirement. Then when
    the money is withdrawn after the employee stops working, it is taxed.
    With CBT (Citizen-Based Taxation) U.S. citizens living outside of the
    U.S. do not always get this benefit in their country of residence
    unless there is a specific tax treaty with the U.S.. The retirement
    savings can be taxed when put into a retirement account that is outside
    the U.S., even though the retirement account is in the country of
    residence of the U.S. citizen. U.S. citizens living outside of the U.S.
    can put money into U.S. retirement accounts in dollars. This is not
    practical because money has to be transferred from a Foreign currency
    to put into dollars, then when the U.S. citizen retires, the money has
    to be transferred back to the currency where the U.S. citizen resides
    and these transfers incur losses.

          Taxes are paid in exchange for services to the tax payer. One of
    these services is Medicare. However, since Medicare is residency based,
    a U.S. citizen living outside of the U.S. can pay taxes to the IRS, but
    not receive the service. In addition to this, the U.S. citizen who is a
    resident of another country must pay for health care in the country of
    residence.

    FATCA

    The FATCA legislation requires banks outside of the U.S. to report the
    accounts and holdings of U.S. citizens. U.S. citizens also have to fill
    out yearly FBAR reports and report their bank accounts on the yearly
    tax returns.

    This legislation is causing the most serious issues for U.S. citizens
    living outside the U.S. In Europe, many banks will not take Americans
    as customers because they do not want to pay the high fines if they
    report incorrectly to the U.S. treasury. In many cases, the European
    banks are even closing the bank accounts of American customers who have
    been customers for many years and in some cases without warning. To
    protect myself against this, I keep accounts in two banks where I live.
    If one closes my account, at least I have a backup to transfer the
    money from the closed account.

    Some banks in the U.S. are also closing accounts for U.S. citizens who
    do not have a U.S. address. Many are retired and have their social
    security deposited in the account in the U.S. The dollars can be used
    while visiting the U.S. Otherwise, the dollars from social security
    would have to be deposited into an account in the country of residence.
    The exchange rate would be on the date the money was transferred. Then
    if the U.S. citizen traveled to the U.S., he would have to exchange the
    currency back to U.S. dollars, losing again on the exchange.

    The U.S. tax law includes CBT (citizen-based taxation), so U.S.
    citizens living outside of the U.S. have to report and file tax returns
    no matter where they live. Then they have to complete tax returns in
    their country of residence and pay taxes in their country of residence
    on worldwide income. Most of the countries in the world today have RBT
    (residency-based taxation). I have always diligently filled out FBAR
    forms and U.S. tax returns and have kept copies through the years.
    Previously, I was able to complete the forms myself without engaging
    the help of an international (U.S./United Kingdom/Europe) tax
    accountant. However, in the past few years the rules and forms have
    become so complicated that it is difficult for an American living
    outside the United States to complete them properly.

    I would like the hearing to consider the impact the legislation
    concerning corporations is having on individual U.S. citizens living
    outside of the United States. Consider the anxiety of not being able to
    open a bank account where you reside and having to pay an expensive tax
    accountant on a fixed retirement income.

    The world is becoming more interrelated than in past generations. The
    CBT (Citizen-Based Taxation) was created in a world where people did
    not move to other countries as much as they do today. The law has not
    caught up with the way ordinary people live their lives in the 21st
    century. It is time that the U.S. considers changing to RBT (Residenc-
    Based Taxation) which has been adopted by most countries in the world.

                                     ______

                      Letter Submitted by Anthony Winiski
    Dear Honorable Members of the Senate Committee on Finance,

    I am a proud citizen (age 64) of the United States of America. I live
    outside the United States in Austria, where I am a tax resident and
    where I am subject to full taxation. I am writing with regard to the
    hearing of your committee, which took place on March 25, so that my
    comments can become part of the official record.

    For the record and to show that Americans abroad are real persons with
    real life stories and struggles, here are some of my personal details.
    I was born in New York City (in Queens County on Long Island to be more
    specific). I grew up and went to school in this area and later attended
    the State University of NY at Stony Brook on Long Island, where I
    earned a Bachelor's and a Ph.D. degree in biology. After that I moved
    to Baltimore, Maryland, where I worked as a postdoctoral research
    fellow at a research institute of the Carnegie Institution for Science.
    While in Maryland I met a woman, a foreign citizen from Europe, who was
    then working for the National Institutes of Health in Bethesda,
    Maryland as a postdoctoral research fellow. Well, as it turned out, we
    fell in love, and I followed her back to Europe, where we got married
    and settled in Vienna, Austria. That was 31 years and 3 kids ago. So I
    left the U.S. because of love and not to evade paying taxes. And, by
    the way, taxes are higher in Austria than in the U.S. Even though I
    love America and travel to the U.S. to visit family and friends, I am a
    permanent resident of Austria and I expect to reside here for the rest
    of my life.

    I understand that the hearing of your committee, which took place on
    March 25, did not address how individual Americans living abroad are
    affected by the current U.S. tax and reporting regulations. This is
    unfortunate considering that the U.S. achieved greatness by emphasizing
    and supporting individual rights and concerns. Needless to say, it is
    not easy to be subject to two generally incompatible tax systems, and
    this has made financial and retirement planning very, very difficult.
    There are banks in Austria that refuse to do business with Americans
    (even with Americans living in the country) because of the
    complications surrounding FATCA reporting. It's hard to hear from an
    Austrian bank that, because I'm an American, they don't do business
    with my kind (i.e., refuse to offer financial products other than basic
    checking and savings accounts). The term ``my kind'' was not used, but
    that was the feeling I got. And, even with banks that do accept U.S.
    clients, owning securities, like mutual funds and non-U.S.-domiciled
    Exchange-Traded Funds (ETFs), would result in punitive taxation and
    reporting because the U.S. tax code regards non-U.S. registered mutual
    funds and ETFs as ``Passive Foreign Investment Companies'' (PFICs). As
    if all this wasn't difficult enough, it's even harder to find out that
    U.S. financial institutions won't allow me (even as a U.S. citizen!) to
    buy securities, like ETFs, because of a European Union regulation,
    known as Markets in Financial Instruments Directive II (MiFiD II).

    I could go on about further difficulties involved in being a U.S.
    citizen living abroad subject to extraterritorial taxation, such as the
    complicated tax and reporting requirements and that the tax preparer's
    fee often ends up being higher than the net tax owed to the U.S.
    Instead I would like to look forward to a future, where a different
    and, in my opinion, better relationship exists between the U.S.
    government and its citizens living abroad. We are often referred to as
    expatriates or ``expats.'' I personally do not like this term because
    of the connotation that we are somehow ex-Americans or Americans that
    have turned their backs on the U.S. We are very much American. We are
    something like the outermost, extraterritorial appendages of the U.S.,
    something like the fingers and toes of the U.S. that extend beyond its
    borders. And extraterritorial, citizenship-based taxation is an unfair
    and unwise burden to place on these appendages.

    If a U.S. citizen is a bona fide, legal, tax-paying resident of another
    country, then that person should be fully exempt from U.S. citizenship-
    based tax reporting, and tax-paying obligations. Such non-resident U.S.
    citizens should pay tax only on U.S. source income (both earned and
    passive), just like Non-Resident Aliens (NRAs). This would not only be
    fairer to Americans living abroad, but proposals show that such
    residence-based taxation could be made revenue neutral to the federal
    government. I suspect that it could generate even more tax revenue for
    the U.S. For example, I have U.S. source passive income, and I pay a
    27.5 % flat tax to Austria on this income minus any U.S. tax. Were
    there to be residence-based taxation with myself being taxed as an NRA,
    the U.S. would actually receive more, not less, tax revenue. And my
    case may not be uncommon considering that many Americans live in
    countries with high tax rates. Compared to other countries, the U.S.
    has a more efficient financial system and with better insurance
    coverage for investments, like bank deposits. So, residence-based
    taxation together with the U.S. persuading the European Union to exempt
    U.S. citizens from MiFiD II (or the U.S. persuading U.S. financial
    institutions to comply with MiFiD II) would make it easier and more
    attractive for Americans abroad to invest their money in the U.S.
    resulting in increased tax revenue from U.S.-sourced income. So, an
    effective strategy moving forward would replace the current punitive
    and restrictive measures with those supporting Americans abroad and
    making them feel welcome.

    And a sense of being supported, welcome and recognized is very
    important for Americans abroad. Individual Americans living abroad and
    their concerns may appear small or be imperceptible to the eyes of
    Congress because we live at the very periphery, the extraterritorial
    periphery, of the Great American Nation. But please remember that all
    great things, be they mountains or nations, are threatened by erosion
    at the periphery. Please do not let erosion at the periphery undermine
    the Great American Nation. The current situation of unfair and
    burdensome extraterritorial taxation and reporting is contributing to
    this erosion at the American periphery. The ever increasing numbers of
    Americans abroad relinquishing their U.S. citizenship is the most
    obvious manifestation of this erosion. The invisible but real loss of a
    sense of inner connection to the U.S. is also serious because of the
    inherent role Americans abroad play as unofficial ambassadors, who,
    while remaining Americans, are integrated into the societies and
    cultures in which they live and work. No official ambassador or
    diplomat can achieve and embody such a high level of cross-national and
    cross-cultural interaction as the citizens of one country living in
    another country. And these interactions and the value they create for
    the U.S. are diminished if U.S. citizens abroad are restricted in doing
    simple things, like financial and retirement planning or running a
    small business.

    So, to conclude. I would like to strongly recommend that the U.S. move
    from extraterritorial, citizenship-based taxation to residence-based
    taxation like all other developed countries. I firmly believe this
    would bring enormous benefits to both the U.S. and its citizens abroad.

    Sincerely,

    Anthony Winiski

                                     ______

                        Letter Submitted by Tia Workman
    I am a natural-born citizen of the United States of America. I
    currently live outside the United States in New Zealand where I am a
    tax resident and where I am subject to full taxation.

    I am an American expat. I am temporarily living outside the United
    States for reasons of work and career advancement. When I first moved
    abroad, one of the things I learned was that other countries have
    better developed tax systems that require payment of a wide range of
    taxes. I pay a lot of taxes. I can also tell you that the U.S. tax
    system treats my non-U.S. income and assets very unfairly. The fact
    that I am temporarily living abroad doesn't mean that I don't have to
    plan for retirement.

    I do not live ``offshore.'' I do live in a country where I pay high
    income taxes. I also pay additional taxes to my country of residence.

    Because I am a U.S. citizen, I am subject to the U.S. extraterritorial
    tax regime, which means the United States imposes taxation on my non-
    U.S. income even though I am fully taxable on that income, in the
    country where I reside, and do not live in the United States. No other
    advanced country does this.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. I am a real, singular person, not a
    single participant recognized how individuals are affected by these
    rules. The focus of the hearing was supposed to be about individuals.

        2.  I was incredibly disappointed that there was no witness who had
    personal experience with a company or individual running a business
    with interests outside the USA. I respectfully suggest that subsequent
    hearings include witnesses who have experienced running businesses
    outside the United States and/or actually living outside the United
    States. Subsequent hearings should deal with the reality on the ground
    and not the theory in the cloud.

    Residing outside of the states doesn't make me less American. But, it
    does mean that I am subject to the laws of the country where I live. I
    ask only to be able to carry on my life without being unfairly taxed by
    the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States.

    Personally, the U.S. extraterritorial tax regime makes it difficult for
    me to save, invest, participate in pension plans and generally behave
    in a financially responsible way. Many of these essential activities
    are taking place in my country of residence and not in the United
    States. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and New Zealand, I get the worst of both tax systems.

    Thank you for your time.

    Tia Workman

                                     ______

                       Letter Submitted by Tracy Wulfers
    I am a proud citizen of the United States of America. I live outside
    the United States in Finland where I am a tax resident and where I am
    subject to full taxation.

    I run a small business in the country where I live. My business is not
    a multinational corporation and all of its income is domestic to the
    country where I live. However, because I am a U.S. citizen, the U.S.
    tax code treats me the same as Apple or Google. If I use a local
    business structure that's treated as a corporation under U.S. tax law,
    then I'm forced to fill in the same form 5471 as Apple must complete
    for each foreign subsidiary--translating all of my business records
    into U.S. dollars even though I do no business in that currency. My
    business is subject to GILTI even though I have no intangible income.
    It is incredibly confusing, stressful and expensive to be in
    compliance!

    I do not live ``offshore.'' I do live in a country where I pay very
    high income taxes. I also pay additional kinds of taxes (example VAT)
    to my country of residence. And my country of residence, Finland, is
    not a tax haven! We pay high taxes here to ensure a social welfare
    system for all residents. I believe in paying my fair share of taxes.
    And I support the Senate in creating a better and fairer tax system
    that will collect more taxes from corporations. But a fairer tax system
    must also include being fair to the 7-9 million normal Americans like
    me that happen to live and work overseas, and are already responsible
    for paying taxes to our countries of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

        3.  There is a clear difference between ``residence-based'' and
    ``citizenship-based'' tax systems. But during the hearing, these two
    terms were treated as interchangeable. This could not be further from
    the truth! The USA is the only modern country to tax on citizenship! If
    the USA where to adopt international norms, and only tax individuals
    based on their country of residence, then all of the unintended
    consequences from these corporate tax laws would be automatically
    solved.

    I am not a ``mini-multinational.'' I am a ``single-national'' who
    happens to be a resident of a foreign country. It doesn't make me less
    American. But, it does mean that I am subject to the laws of the
    country where I live. I am not GILTI of anything. I ask only to be able
    to carry on my small business and/or my life without interference from
    the Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    Thank you very much for your consideration, and I hope that you will
    craft a tax law that is fair and just for American citizens no matter
    where they live.

    Respectfully,

    Tracy Wulfers

                                     ______

                    Letter Submitted by Edward F. Wundheiler
    I am a proud citizen of the United States of America. I live outside
    the United States in Brazil where I am a tax resident and where I am
    subject to full taxation.

    You see I am an ``accidental American''. Since I inherit my citizenship
    my only experience of America is from television, movies and the
    occasional American tourist I meet. Yet, (at first I couldn't believe
    this could be possible) I am required to file U.S. tax returns and pay
    tax on my non-U.S. income to America. But, it gets worse. I am also
    required to file complex information returns describing the details of
    my finances to America and do not get any benefit from that. I can't
    even understand the forms. How can this be? What is the reason for
    this? No other country does this! Of course, I am proud to be an
    American. Who wouldn't be? But, I have no idea how to comply with the
    rules imposed on me.

    Also, I can't open a regular bank account or investment in a U.S. Bank
    to avoid the burdens to keep my things in the country where I live. In
    addition, I cannot contribute to SSN in U.S. by living overseas from my
    own pocket to get a potential benefit in the future. I cannot have a
    U.S. credit card among many other things . . . Isn't that ridiculous?
    Have rules to control everything you have in a different country but
    don't have any incentives or rules to facilitate bringing part of my
    economic life to the U.S. without the need to be a U.S. resident--it is
    a Kafkian situation.

    I do not live ``offshore.'' I do live in a country where I pay very
    high-income taxes. I also pay additional kinds of taxes (example VAT,
    SSN taxes, etc) to my country of residence.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    my life without interference from the Internal Revenue Code of the
    United States, or at least facilitate for every American expatriate to
    open a regular bank account in U.S., carry U.S. credit cards, U.S.
    credit ratings, open brokerage and investment accounts in U.S.,
    contribute to SSN even though living overseas.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for me to save, invest,
    participate in pension plans and generally behave in a financially
    responsible way. This is because all of these essential activities are
    taking place in my country of residence and not in the United States.
    My retirement investments are foreign to the United States, but local
    to me. In addition, the United States impose taxes on things (for
    example sale of principal residence) when my country of residence does
    not. Because I am required to live my life with the USD as my
    functional currency, I am subject to ``fake income'' on nothing but
    changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    The time has come for the United States to abandon its extraterritorial
    tax regime and join the rest of the world in adopting a system of
    residence-based taxation.

    God Bless the United States of America!

                                     ______

                      Letter Submitted by Elizabeth Zitzow
    Dear Sirs and Madams,

    I am a citizen of the United States of America. I live outside the
    United States in the United Kingdom where I am a tax resident and where
    I am subject to full taxation. I prepare tax returns for about 350
    Americans who like me live abroad.

    To do so, I run a small business in the UK where I live. My business is
    not a multinational corporation and all of its income is domestic to
    the country where I live. However, because I am a U.S. citizen, the
    U.S. tax code treats me the same as Apple or Google. If I use a local
    business structure that's treated as a corporation under U.S. tax law,
    then I'm forced to fill in the same form 5471 as Apple must complete
    for each foreign subsidiary--translating all of my business records
    into U.S. dollars even though I do no business in that currency. My
    business is subject to GILTI even though I have no intangible income.
    How can I compete with my neighbours who are not U.S. citizens and who
    have only one tax system to deal with?

    My clients are likewise in the same boat.

    I had to convert my business to being treated as a Disregarded Entity,
    but not all my clients have been able to do so.

    Much of this letter will be from a template, but this paragraph is
    written in my own hand. There is no exception for low profit small
    businesses owned by one person such as myself. Now, what do I care? I'm
    a tax professional. I can do this. But I charge $3,000 a year to do
    this for others. It costs a lot for me keep my staff to run my
    business. I'd be broke if I was only charging $2,500. That's a lot of
    money for people to pay because they own a business that makes what a
    typical small one man LLC stateside makes. They can't use TurboTax;
    it's way too arcane. They can't use stateside tax preparers; they won't
    be comfortable with the 5471s let alone be able to read British tax
    returns (hint: don't even bother. They've got other books that are far
    more detailed and comprehensive from which I get my figures).

    There should be an exemption for filing GILTI, FBAR, and Transition Tax
    when the gross income (before deductions) is less than $200,000 and
    they live in a country that has a tax treaty with the U.S.

    My clients and I live in a country where we pay very high income taxes.
    We also pay VAT, Business Rates, and Council Tax in the UK on top of
    income taxes.

    Yet, because I am a U.S. citizen, I am subject to the U.S.
    extraterritorial tax regime, which means the United States imposes
    taxation on my non-U.S. income even though I am a fully taxable on that
    income in the country where I reside, and do not live in the United
    States. There is no other advanced country in the world that imposes
    such extraterritorial taxation.

    I would like to make two general observations about the hearing on
    March 25th.

        1.  The hearing focused on U.S. multinational corporations. But
    here is the reality: U.S. tax rules treat individuals living outside
    the United States, the same way they treat U.S. multinationals doing
    business outside the United States. Although, I am a flesh and blood
    individual person, not a single participant recognized how individuals
    are affected by these rules. Yet, the focus of the hearing was supposed
    to be about individuals. How did this happen?

        2.  I was shocked that there was no witness who had personal
    experience with a company or individual running a business with
    interests outside the USA. Not a single one! This is crazy. I
    respectfully suggest that subsequent hearings include witnesses who
    have experienced running businesses outside the United States and/or
    actually living outside the United States. To put it another way:
    Subsequent hearings should deal with the reality on the ground and not
    the theory in the cloud.

    I volunteer to be that spokesperson. I represent not just my 350
    clients. I am also a member of The Association of Independent
    Expatriate Tax Practitioners (AIETP) in the UK. With 85 members, we
    handle an estimated 12,000 U.S. tax returns each year.

    I am not a ``mini-multinational.'' I am a ``dual-national'' living in
    my country of second citizenship. It doesn't make me less American.
    But, it does mean that I am subject to the laws of the country where I
    live. I am not GILTI of anything. I ask only to be able to carry on my
    small business and/or life my life without interference from the
    Internal Revenue Code of the United States.

    As a general principle: Please understand that any and all changes to
    the taxation of U.S. corporations will have a huge impact on the U.S.
    taxation of U.S. individual citizens living outside the United States
    and running small businesses outside the United States. Individuals are
    not immune to the effects of raising the U.S. corporate income tax rate
    and/or doubling the GILTI tax.

    More generally (whether or not one is a small business owner), the U.S.
    extraterritorial tax regime makes it difficult for my clients and me to
    save, invest, participate in pension plans and generally behave in a
    financially responsible way. This is because all of these essential
    activities are taking place in my country of residence and not in the
    United States. My retirement investments are foreign to the United
    States, but local to me. In addition, the United States impose taxes on
    things (for example sale of principal residence) when my country of
    residence does not. Because I am required to live my life with the USD
    as my functional currency, I am subject to ``fake income'' on nothing
    but changes in the exchange rate. As a tax resident of both the United
    States and my country of residence, I get the worst of both tax
    systems. What one giveth, the other taketh.

    And please don't believe that foreign tax rules and/or the Foreign
    Earned Income Exclusion solve these problems. They don't!

    This is extremely unjust. For many years, Americans abroad have been
    attempting to get both Treasury and Congress to address these issues.

    Very Sincerely Yours,

    Elizabeth Zitzow