Monday, May 14, 2012

Study Shows That The New Tax Rules May Hurt the Economy By Martin Lukac

The Center for Freedom and Prosperity Foundation has released a research study that indicates Section 911 may hurt the economy. The research paper examines the taxation of Americans living and working abroad. "Making Section 911 Universal is Good Economic Policy and Good Tax Policy" author Dr. Yesim Yilmaz found that imposing a second layer of tax on overseas Americans isn't good tax policy at all.
Dr. Yilmaz points out that double-taxation hurts the American economy and employment. He says the solution is to make Section 911 universal to remove the double-taxation of foreign earned income. This has been proposed by Senator Jim DeMint in his legislation, the Working American Competitiveness Act.
"In a competitive global economy, the United States cannot afford to impose discriminatory taxes on American workers and American companies," says Daniel Mitchel of The Heritage Foundation. "The CF&P Foundation's new study shows how double-taxing overseas Americans is anti-competitive."
The Tax Increase Prevention and Reconciliation Act of 2005, signed on May 17, is a pro-growth legislation, says the study, but it significantly impacts the tax burden of American citizens who live overseas.
"A last-minute amendment attached to the bill has curtailed -- and for some expatriates, effectively eliminated -- Section 911 benefits, which allow US workers abroad to protect a portion of their overseas compensation from being hit by a second layer of taxation by the Internal Revenue Service," said the study.
The amendment "requires expatriates to stack their residual income on top of the excluded amount before determining the rate at which they ought to pay taxes."
The amendment also makes housing benefits fully taxable by the IRS.
The study says that one study shows that the near-elimination of the housing allowance will reduce US exports by $2.5 billion. It is expected to place 25,000 people into the unemployed world.
Martin Lukac represents RateTake Refinance Rate mortgage marketplace. RateTake matches consumers with multiple lenders offering low Refinance Rates from our network of accredited lenders.