Salam: No taxes for Americans abroad

Reihan Salam

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Kai Ryssdal: There was a brief moment of agreement on tax policy over the weekend: House Minority Leader John Boehner said he'd vote to let Bush-era tax cuts on rich Americans expire, as the White House would like, if that was the only way to save tax cuts for the middle class. Senate Republicans said today they will agree to no such thing, so we're back to more of the same, with the mid-term elections looming.

Commentator Reihan Salam has another part of the tax code he wishes would get some attention.


Reihan Salam: Hundreds of thousands of Americans have left home to serve as ambassadors of American capitalism. Many are corporate employees working for big multinationals. Others are hungry entrepreneurs looking to profit from white-hot economic growth in countries like China, India and Brazil. They spread the gospel of the profit motive, and they also help drive what scholars call "brain circulation," which benefits the U.S. economy.

Consider the Indian-American immigrant who goes back home to his native Bangalore to launch a tech start-up. He takes his Silicon Valley know-how to the old country, but he also brings back knowledge about the growing Indian market to the U.S. by keeping in touch with old colleagues. That helps U.S. firms and Indian firms profit from each other's success.

But the problem is that the U.S. is the only industrialized country that taxes its citizens on income earned abroad. That means successful American expats have to pay taxes to the IRS on top of taxes to their country of residence. Complex new regulations are making matters worse.

This has led a tiny trickle of expats to actually renounce their citizenship or their green cards. We're in danger of losing some of our most talented citizens for good.

We ought to encourage Americans to work abroad, not punish them for it. At the very least, we should stop taxing expats for income earned in their country of residence.

The truth is that all Americans profit from having a large U.S. diaspora sprinkled across the globe. They spread ideas, but they also find ideas and use them to jumpstart new trends. Think of all the cuisines and movies and technologies we'd miss out on without them.

Many will say "good riddance" -- who needs these economic Benedict Arnolds? But that's a short-sighted view that will leave all Americans worse off.

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