Former President Trump of the United States expressed his support for avoiding double taxation on American citizens living abroad, indicating his efforts to win support from overseas voters.
According to The Wall Street Journal, Trump stated in a statement to the media, “I support ending double taxation on overseas Americans.”
The United States has an unusual system of taxing its citizens’ total income, regardless of where they earn their money or where they reside. The U.S. is the only major country with this rule, as other countries generally tax based on residency.
Despite the U.S. tax laws containing provisions to alleviate double taxation, American citizens residing in Paris, for example, may be obligated to pay taxes to both France and the U.S., while French citizens living in New York typically do not owe any taxes to France for income earned in the U.S.
Trump’s proposed policy could potentially alleviate this unique burden for overseas Americans, especially high-income individuals with substantial investments, who not only pay taxes where they reside but also to the U.S. on their global income.
The exact meaning of the double taxation mentioned by Trump is unclear, and his campaign officials have not provided further details.
Advocates of such policies have long been striving to shift U.S. tax policy from citizenship-based taxation to residency-based taxation.
Solomon Yue, CEO of the advocacy group Republicans Overseas, stated, “American First also means American citizens first, no matter where they reside,” praising Trump’s support for tax reduction for overseas Americans as a “huge first step.”
According to the latest statistics from the Federal Voting Assistance Program established by the U.S. Department of Defense, in 2022, there were approximately 4.4 million American citizens living abroad, with around 2.8 million of them aged 18 or older, eligible to vote in their previous state of residence.
In his statement to The Wall Street Journal, Trump emphasized, “American citizens living abroad, your vote is more important than ever before.”
There are some restrictions on the taxation of overseas Americans by the U.S. They are not required to pay taxes to the U.S. on the first $126,500 earned in their income, and there are exceptions regarding housing expenses.
They may also receive tax credits for certain payments made to foreign governments, so they only need to pay taxes to the U.S. if the U.S. tax is higher than the local tax. However, high-income individuals, those with investment income, or retirement income may still have to pay taxes to the U.S. in addition to their foreign residence tax obligations.