Former U.S. President and Republican presidential candidate Donald Trump has promised to lower taxes for Americans living abroad.
According to the Wall Street Journal (WSJ) on the 9th (local time), Trump stated in a statement sent to the outlet, "I support ending double taxation on Americans living overseas."
The United States operates a system that taxes Americans on their worldwide income regardless of their residence or where the income is generated. This contrasts with most major countries, which tax based on residency. WSJ noted, "The U.S. is the only major country with such a system," adding, "Basically, an American living in Paris owes taxes to both France and the U.S."
Ahead of the November presidential election, Trump, who has been previewing the so-called 'Trumpnomics 2.0,' has already announced various tax-cut promises, including an additional 15% corporate tax cut, exemptions on overtime and tips, and Social Security (old-age pension) tax exemptions. By targeting the specific demographic of Americans living abroad, analysts suggest he is aiming to win the votes of a relatively overlooked voter group in the election. As of 2022, about 4.4 million Americans live overseas, with approximately 2.8 million of them being eligible voters aged 18 or older.
A source said, "The Trump campaign hopes this proposal will attract many voters, especially those residing in Israel." Trump himself emphasized in the statement, "Americans living abroad, your vote is more important than ever."
Solomon Yoo, CEO of Overseas Republicans, a group representing Republicans living abroad, supported Trump’s policy, saying, "'America First' as advocated by Trump also means Americans come first regardless of residence. It’s a big first step." The group has long demanded the introduction of residency-based taxation (RBT), which does not tax income earned abroad, citing issues such as double taxation caused by the current Foreign Account Tax Compliance Act (FATCA).
However, WSJ pointed out that it remains unclear what exactly Trump meant by "double taxation" in his statement. The Trump campaign did not specify what concrete measures the former president would pursue if elected. There are concerns that broad tax code revisions could open opportunities for wealthy Americans to move abroad while retaining U.S. citizenship and avoid some taxes.
Moreover, not everyone agrees that Americans abroad face excessive tax burdens or that U.S. regulations are overly stringent. Michael Cush, a law professor at the University of Notre Dame, told WSJ, "They voluntarily maintain their ties with the U.S. If we switch to a residency-based taxation system, we need to deeply consider for a long time what social integration consequences will arise and what our country will look like." He added that safeguards would be necessary to prevent abuses, such as restrictions on residents of low-tax countries.
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