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OPINION: Unfair tax policies for Americans abroad must change

Americans living in Europe face myriad tax and financial complications due to the US policy of citizenship-based taxation. Brandon Mitchener, executive director of the campaign group Tax Fairness for Americans Abroad, explains why the system needs to change.

Published: 9 August 2024 14:52 CEST

OPINION: Unfair tax policies for Americans abroad must change

The replica Statue of Liberty with the Eiffel Tower in the background, in Paris - symbol of the long ties between France and the USA. Photo by Miguel MEDINA / AFP

Imagine being financially penalised simply because you chose to live your life abroad. Unable to open a bank account or save for retirement. Exposed to draconian penalties for not telling Uncle Sam about all your “foreign” (ie local) financial accounts. Having to declare income to a country in which you do not live. This is the harsh reality for millions of American citizens who face outdated and discriminatory tax policies.

As certain provisions of the 2017 US tax reform legislation near their expiration, the time has arrived to correct this injustice.

A new global campaign, Tax Fairness for Americans Abroad (TFFAA), is dedicated to ending the unfair treatment of US citizens abroad. Our mission is clear: replace the antiquated Citizenship-Based Taxation (CBT) with Residence-Based Taxation (RBT), a system adopted by almost every other country in the world.

TFFAA speaks for an estimated 9 million Americans living outside the US, many of whom have lived abroad for years or even permanently. Our organisation is non-partisan and supports both ordinary Americans and “accidental” Americans – those born in the US or to American parents but who have lived most of their lives abroad. TFFAA is a new organisation, and our board includes well-known figures from the expatriate American community.

TFFAA aims to collect and share expatriate Americans’ experiences with CBT and lobby for changes in US laws and regulations. We will call on Congress and the US Treasury to ensure Americans abroad are treated fairly and not as second-class citizens simply because they live outside the US.

Contrary to popular belief, the majority of the estimated 9 million Americans living abroad are ordinary citizens, neither richer nor poorer on average than those in the US. They move abroad for various reasons, such as studying, working, love, or retirement. Many were born or grew up abroad and may not even speak English.

The tax and financial discrimination against Americans abroad stems from the 19th Century CBT policy of taxing Americans on their worldwide income, even if they already pay taxes in their country of residence.

This policy is complex and burdensome, requiring expatriates to navigate both US tax laws and those of their host country, often resulting in high compliance costs and the need for expensive professional tax advice, typically for little or no US tax liability.

Furthermore, non-US financial institutions often discriminate against Americans due to unique compliance requirements imposed by laws such as the Foreign Account Tax Compliance Act (FATCA) and the Report of Foreign Bank and Financial Accounts (FBAR).

These laws demand excessive and tedious reporting, coupled with harsh penalties for non-compliance, which should not apply to accounts in expatriates’ countries of residence. For long-term American residents abroad, even US bank and savings accounts are considered “foreign” financial accounts.

In light of the impending tax reform debates expected in 2025, TFFAA has hired Brownstein Hyatt Farber Schreck, one of Washington’s largest lobbying firms, to maximise our chances of success. This partnership will enable TFFAA to formalise legislative proposals and identify key policymakers to support these crucial policy changes. Our approach will be tailored and adapt to the evolving political landscape and policy frameworks.

It is time to reform the US tax system to reflect the realities of a globalised world and ensure that all Americans, regardless of where they live, are treated with fairness and respect.

If you would like to find out more, or would like to make a financial contribution to TFFAA’s work, head to the group’s website at www.taxfairnessabroad.org

You can also share your views (on this or any other topic) with the US government via this White House survey for Americans abroad

Member comments

Anonymous - 11 August 2024 at 21:22 CEST

It’s not that hard, or that tedious. And the US provides credit for the foreign tax paid.
It’s really not that hard. Americans who don’t like filing US taxes can always rescind their US citizenship.
And then, as Andrew Henderson says, “go where you are treated best” (watch the Nomad Capitalist to learn more).
Anonymous - 12 August 2024 at 17:47 CEST

I renounced years ago to be able to avoid US taxation without representation. It was awful and I’m so glad it’s over.
Anonymous - 12 August 2024 at 17:58 CEST

The US forms are clear, concise, and easy to complete. No need to pay anyone to do it for you. The Franco/American tax treaty provides very favourable terms for US citizens in France with US pensions and investment income fully exempt from French taxation. No need to change it at all.
Anonymous - 13 August 2024 at 04:31 CEST

I agree with Jack. You have the freedom to choose where you live. You are paying for the privilege. Decide where you live and follow the rules.

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Travel warnings for Americans in France and vice versa

Most countries offer some travel advice for their citizens, and the US and France are no exception – although both countries stress the “friendly relations” between the two nations, they offer advice for Americans travelling to France, or French people travelling to the US.

People with a good knowledge of both countries might think that some of the warnings are rather harsh, and paint an exaggerated picture of the country, but here is the official advice.

Risks in France

The US State Department says that “relations between the United States and France are active and friendly”, but the country was still placed on the second level of out of the four ‘travel advisory levels’, this means that Americans should “exercise increased caution” when visiting.

The state department country page for France – which was last updated in September 2024 – notes that this is “due to terrorism and civil unrest”.

Terrorism

US authorities warn that “terrorist groups continue plotting possible attacks in France”.

“Terrorists may attack with little or no warning, targeting tourist locations, transportation hubs, markets/shopping malls, local government facilities, hotels, clubs, restaurants, places of worship, parks, major sporting and cultural events, educational institutions, airports, and other public areas,” the warn.

This is a fair advisory. In November 2015, France experienced its most deadly coordinated terrorist attack, where 130 people were killed, including 90 at the Bataclan concert hall. ISIS eventually claimed responsibility.

Recent attacks include the stabbing of three people in Paris 15th arrondissement in December 2023 by a man with psychiatric issues, as well as the murder of three Kurdish activists in Paris in October 2023, and notably the stabbing of a teacher in northern France by a man with ties to Islamist extremism.

The US government also warns that: “French police and military routinely patrol public spaces. You should expect security inspections (to include purses, bags, and backpacks) at the entrance to large public venues and businesses.”

Protests and strikes

Strikes and demonstrations in the streets are just a part of daily life in France, but the US government urges its citizens to take them seriously or better yet, avoid them altogether.

This piece of advice might invite some mockery from the French. Strikes and protests are so common in France that they can be pretty tricky to avoid entirely, especially if you live here.

Still, US authorities warn that “demonstrations can be unpredictable”, and that “French authorities may use chemical agents [tear gas] and water cannons to disperse crowds”.

While it’s true that trouble can flare up at protests, this tends to be from a small minority, usually at the end of the demo and not directed at uninvolved passers-by. Marches are often concentrated in the big cities, especially Paris, with routes published in advance so that you can stay away.

Strikes can certainly be disruptive, but it’s worth remembering that they usually delay and disrupt travel, rather than halting it altogether.

The US Embassy in France advises keeping an eye on local media (like The Local France) for updates. We couldn’t agree more – you can find our strike section here.

Crime

US authorities warn that “the majority of crimes directed against foreign visitors, including US citizens, involve pick-pocketing (passports, phones, cash, credit cards), vehicle and residential break-ins, bicycle theft, and other forms of theft.”

Pickpocketing can certainly be a problem, especially in Paris where you will regularly hear announcements on the Metro saying: “Des pickpockets peuvent être présents en station ou à bord des trains” (Pickpockets may be present at the station or on trains).

The advice is common sense – keep an eye on your belongings and lock up valuables.

The US Embassy in France also warns that visitors should be aware of ‘date-rape’ drugs, which are present in France. As such, you should “be cautious in bars and clubs where alcohol is served, and do not leave your drink unattended or accept a drink from strangers, as they may have slipped drugs into the drink.”

Travelling with a disability

Even though Paris hosted the Paralympic Games in 2024, accessibility in the capital – and the country at large – remains poor.

US authorities note that French law does prohibit discrimination against people with disabilities, but travellers with disabilities should “expect accessibility to be limited in public transportation and general infrastructure” adding: “Visitors to France should expect accessibility to be limited in public transportation (subway, specifically), lodging, communication/information, and general infrastructure.

“Getting around French cities can be challenging for those with mobility issues. Many sidewalks are narrow and uneven, and cobblestone streets make access difficult, though major tourist sites generally have better facilities.”

While there have been efforts to improve accessibility – and leaders of the Paris region recently signed onto a plan that would make the Paris Metro system fully accessible in the next 20 years, the capital city is still a long way from being easy to get around for those with disabilities.

French drivers and public transport

Aggressive drivers are a common complaint from foreigners in France, especially those in rural areas.

US authorities seem to agree (at least a little bit). They warn that “lane markings and sign placements may not be clear. Drivers should be prepared to make last-minute manoeuvers” and that “right-of-way rules differ from those in the United States.”

While French drivers might be used to the busyness on the roads, especially in cities, with motorcycles and mopeds interweaving in traffic, Americans should be cautious.

“Bicycles, motorcycles, scooters, and electric skateboards are prevalent on streets, crosswalks and sometimes sidewalks. They have legal priority and often do not respect traffic signals,” the Embassy warns.

They also extend their road-related recommendations for pedestrians, saying they “should be cautious and aware of traffic even when they have a green walking signal since this is no guarantee against aggressive drivers.”

“Do not assume cars will stop for pedestrians on a crosswalk.”

Flying a drone

During the Olympic Games, the former French PM, Gabriel Attal, said that six drones were intercepted a day, but most of these were simply from “tourists wanting to take pictures”.

Those unlucky tourists found themselves under arrest, because the use of drones and drone footage is highly regulated in France.

The US Embassy warns visitors that “it is against the law in France to operate drones over public spaces (including museums, parks, streets) in urban areas and near airports, military bases, prisons, nuclear plants, and large gatherings such as outdoor concerts and parades.”

Failing to follow these rules can lead to hefty fines and even imprisonment. Thankfully, The Local has a helpful guide on what you need to know about flying a drone in France.

Risks in the United States

But travel warnings go both ways, and France has its own tips for US-bound French citizens.

Weather warnings

Americans can probably agree with the first piece of advice on France’s France’s recommendations page for travellers headed to the US.

It starts off with detailed advice about natural disasters, including hurricanes, tornadoes, volcanoes, forest fires and flooding. They list the radio channels that give weather updates for states on the Gulf of Mexico, where hurricanes are common.

Dangerous US cities

French authorities start off by saying “the United States is one of the safest countries in the world” – but then include a section on the cities and areas where tourists should exercise heightened caution.

The cities listed include nearly all large American metropolitan areas, from Los Angeles and San Francisco, to Chicago and Detroit, and east-coast cities like Boston, New York City, Washington DC, Baltimore and Philadelphia.

To be fair to the French, the warning is not a blanket advisory to avoid these places. Instead, French authorities dive into the specific neighbourhoods that ought to be avoided at nighttime, as well as the types of crime that are common.

For example, they warn that in San Francisco, families should avoid certain streets in the centre of the city, notably the Tenderloin district known for open-air drug use.

They also note an “increase in car-jackings in most large American cities, involving violence and threats, sometimes with weapons.” US news outlets have also reported on this.

Interacting with police

The French advice for dealing with police is to “not to make false statements, not to raise your voice, and to avoid brusque or aggressive gestures.”

This advice is likely related to the issue of police brutality and officer-involved shootings in the United States (although of course police violence is also present in France).

Avoid opioids

The opioid crisis has been an ongoing issue in the United States, and French authorities are aware of it. Overdose rates have tripled in the past decade in the United States, and the presence of fentanyl has played a large role in that.

French authorities warn that ‘classic drugs’ (ie cocaine and heroin) are increasingly cut with synthetic opioids, such as fentanyl, and that fentanyl “can be present in counterfeit medications, such as Xanax or oxycodone.”

They warn that “if you need pain medication, you should go to your local pharmacy and purchase an FDA-approved medication. Under no circumstances should you accept any pills that you do not buy from a pharmacy.”

No tolerance for jokes

When travelling by airplane, French authorities advise that people “answer the questions asked by employees seriously and precisely and to avoid making jokes about the contents of your baggage, as any ambiguous attitude could result in very serious problems with the security services (which could lead to incarceration).”

They also warn that “security measures taken by airlines, at the request of the American authorities, are likely to extend the time required for checks. It is recommended to make the necessary arrangements to get to the airport well in advance”.

On the topic of humour, French authorities recommend “[adopting] reserved attitude towards people of the opposite sex. Complaints of sexual harassment can also be made against minors.”

Better to leave your pick-up lines at home, Frenchies.

Prudish dress

In previous versions of the French advice page, visitors were warned that topless bathing is strictly forbidden in the US, even for little girls.

They seem to have dropped this line in the 2024 version, they did warn that “children, including babies, must wear a swimming costume (changing an infant or breast-feeding in public can be shocking in some places).”

Still, they did say Americans are “very tolerant” when it comes to dress. A backhanded compliment? Who can say . . .

Don’t freak out about guns

In their general advice, French authorities say: “In many states, the possession of firearms is authorised and commonplace. Visitors should therefore remain calm and composed in all circumstances.”

Expensive healthcare

Under the health section, French authorities gave a warning that Americans know all-too-well: “Medical infrastructure in the United States is excellent, but very expensive.”

As such, they recommend French visitors take out a travel health insurance plan to cover all medical expenses, warning that “under no circumstances will these costs be covered by the local French embassy or consulate general.”

What do you think of these warnings? Do you agree or disagree? Let us know in the comments below.

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