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Center for Freedom and Prosperity Foundation For Immediate Release CF&P Foundation Study Documents Benefits of May 25, 2005 (Washington, DC) – The Center for Freedom and Prosperity Foundation today released a Prosperitas study, entitled "Territorial Taxation for Overseas Americans: Section 911 Should Be Unlimited, Not Curtailed." The paper explains that Americans living and working overseas are at a competitive disadvantage with workers from other nations since they are taxed twice on their income. The United States is the only industrialized nation that taxes labor income outside its borders. "This CF&P Foundation study is a comprehensive review of how best to make Americans more competitive overseas. This is a critically important issue since some politicians on Capitol Hill want to eliminate Section 911," said Andrew Quinlan, president of the CF&P Foundation. "This study," he added, "explains why it is foolish to double-tax Americans working abroad and even more foolish for the Congress to try to eliminate the policy – Section 911 – that tries to mitigate some of the damage." Heritage Foundation Senior Fellow Daniel Mitchell, the author of the study, stated, "We live in a global economy, and this increases the importance of good tax policy. Sadly, America's onerous worldwide tax system undermines the ability of American workers and companies to compete around the world. All pro-growth tax reforms such as the flat tax would shift to a territorial tax system, meaning there no longer would be any extra-territorial taxation by the IRS. Policy makers could take a big step toward tax reform by making Section 911 universal." Veronique de Rugy of the American Enterprise Institute said, "Even though I am a French citizen living and working in the United States, the French government does not double-tax me on my American income. This is the right tax policy, so it is rather ironic that the United States has a more oppressive approach than the tax-loving French." Executive Summary of Study: "The United States is among the tiny handful of nations that imposes double-taxation on the labor income that individuals earn in other nations - even if the U.S. citizen is a full-time resident of the foreign jurisdiction. Yet since the "foreign-source" income of U.S. citizens already is subject to all applicable taxes that exist in other jurisdictions, an additional layer of U.S. tax is double-taxation - thus violating one of the most important principles of good tax policy. Almost every other country in the world taxes only income earned inside national borders - the common-sense principle of "territorial taxation." American legislators have tried to mitigate the adverse impact of worldwide taxation by allowing workers to protect annual earnings up to $80,000 from double-taxation. This policy, known as the Section 911 exclusion, is a small step in the right direction. Ideally, the U.S. government should not be taxing any income earned abroad - just as foreign governments should not be taxing any income earned in America. If policy makers created a level playing field by making Section 911 universal, more Americans could find jobs in the global economy, U.S. companies would become more internationally competitive, and U.S. exports would substantially increase." Link to full paper: Link to PDF version of paper:
For additional comments: Andrew Quinlan can be reached at 202-285-0244, quinlan@freedomandprosperity.org ###
Center for Freedom and Prosperity Foundation
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