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04/02/2008

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Dear Friends,

You may have already seen this article below. It is well worth reading and contemplating.

Attached also are two other documents that pertain to the newly formed Alliance for a Competitive Tax Policy.  The organizers are hoping that other overseas American organizations will join forces with them in this endeavor.

One thing that we should all keep in mind is that while the DeMint-Meeks proposal goes a long way toward solving the problem of some overseas Americans, but it, alas, does nothing to help U.S. retirees abroad who do not gain any benefit from the foreign earned income exclusion and who therefore will be just as much out in the cold as we are today.

Let’s join forces with these people and robustly reinforce this argument by urging a total repeal of double taxation and full reintegration of all the American Diaspora members back onto a truly equitable and fully level playing field for everyone of every nationality all over the world.

Take care.

east-7984196-v1-pr__actp_launch.doc
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apcap_letter_to_congress_for_launch_event.doc
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U.S. Expats Fight Their Soaring Tax Burden

By Brian Knowlton, IHT, Wednesday, April 2, 2008

WASHINGTON: Tami Overby, a 20-year-resident of Seoul, is as much the face of the United States abroad as anyone could be. She drives an American car, uses a Motorola phone, purchases American appliances, eats at McDonald's, drinks Diet Cokes - and even rides a Harley-Davidson motorcycle. She brags about all these things to her Korean friends.

She is also the president of the American Chamber of Commerce in Korea, the face of American business there - which makes it all the more surprising that her board of directors recently had a rather anguished discussion, as she describes it, about replacing her with a local hire.

The reason: a change in the American tax code two years ago that has raised considerably the tax burden facing many American expatriates - and which, in turn, often makes it more expensive for U.S. companies operating abroad to keep Americans on their payrolls.

"It makes absolutely no sense," said Senator Jim DeMint, Republican of South Carolina, of a system that makes the United States the sole developed country to tax income earned by its citizens abroad.

He is sponsoring legislation to remove the limit - currently $82,400 - on the amount of foreign-earned income exempt from taxation.

"Why put Americans at a disadvantage in a globally competitive economy?" he said.

Overby can put a precise number on that disadvantage. She said her yearly tax bill rose by $28,604, most of which her employer had to absorb - "and I'm fully taxed in Korea."

That amount, Overby said Monday, is just $3,000 or so above the average hit that Americans have taken in places like Seoul, Hong Kong and Singapore, where sky-high housing expenses are often paid for by employers.

Overby was in Washington as part of a newly formed coalition, the Alliance for a Competitive Tax Policy. The group, which opposes the double taxation of Americans living abroad, comprises several American Chambers of Commerce in Asia and the Asia-Pacific Council of American Chambers of Commerce.

Her own tenuous position, Overby said, illustrates how severe the problem is for American companies, especially with a change in 2006 that subjected a larger part of expats' housing reimbursements to taxation.

While a few American Chambers of Commerce, notably in South Asia, are already headed by non-Americans, she sees the pressure on her employer as dire and symptomatic.

Not only have Americans working for big multinationals been hit, Overby said, but so have some English teachers, professors, entrepreneurs and missionaries.

A few Americans have even renounced their citizenship because of soaring tax bills.

"For everyone last year, it was a huge, unexpected shock," Overby said.

Whether the legislation backed by DeMint, and a similar bill in the House sponsored by Representative Gregory Meeks, Democrat of New York, stand much chance to draw attention in a year when the Congress faces an array of enormous economic crises remains unclear.

"If Congress can't fix this," DeMint said, then its prospects for dealing with its larger economic challenges "seem rather dismal."