[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 
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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

                        [email protected]

                      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: [email protected]

               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: [email protected]

                                                      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.

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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

                      [email protected]

                    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 
[email protected]) or the undersigned with any questions 
about the information and recommendations provided herein.

Sincerely,

Julia Bryan
Global Chair
+1 (843) 628-2280
[email protected]

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 [email protected].
    \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 [email protected].
---------------------------------------------------------------------------

               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 [email protected] or 
[email protected].

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

                            [email protected]

 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
([email protected]):

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\
---------------------------------------------------------------------------
    \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.'' ).
---------------------------------------------------------------------------
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.''
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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, 
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \34\ See Hodge, ``5 Observations on Janet Yellen's Recent 
Confirmation Testimony,'' Tax Foundation (1/22/21).
    \35\ See id.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \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

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