I live overseas.
It's astounding what the Republican Congress is doing, unchecked. Few people appreciate how bad the tax policy is, that is coming out of our Congress.
Here's a great example.
For years, the Republicans have cried about "hidden taxes", "retroactive taxes" or taxes that do not make economic sense.
Charles Grassley, Republican of Iowa and head of the Senate Finance Committee, has been a ringleader in this chorus. These guys want to stand for fairness and low taxes.
But you know what?? The 108th Congress has been one of the worst offenders, the worst set of hypocrites, on tax policy.
Exhibit A is something called the "Tax Increase Prevention and Reconciliation Act of 2005", that was passed in the shadows of a Washington night on May 11, 2006, and signed by Bush on May 17.
Allegedly, this tax act prevents tax increases and reduces taxes.
However, if you are an American who lives and works OVERSEAS, this act was actually a tax INCREASE!!
Furthermore, it did nothing to solve the problem of the Alternative Minimum Tax, which is essentially a tax on the North to fund dubious federal government spending in the South and West. (I.e., "the red states")
Charles Grassley had a real problem with Section 911 of the Code, called the "foreign earned income exclusion".
What the exclusion does, is allow an American working overseas to exclude $80,000 of income from AMERICAN taxes, if they are out of the country for 330 days in a 365 day period. Additionally, there was an exemption of a liberal housing amount (kind of like how minimansions back home get that nice mortgage interest deduction.)
So if you made the equivalent of $90,000 overseas, you could exclude $80,000, and only have to work with $10,000 when it came time to file U.S. taxes. (You MUST file whereever you are in the world.)
Grassley has opposed this exclusion as a "big giveaway". He says it is not "fair" if someone overseas is getting this exclusion. His reasoning is that the overall taxes paid by an American overseas should be "economically equivalent" to if that American were still at home.
To this end, GRASSLEY RADICALLY CHANGED THE TAX RATES IMPOSED ON PEOPLE WHO LIVE OUTSIDE OF THE UNITED STATES! Income that used to be taxed at 10%, suddenly became taxed at 25%! And retroactively to January 1, 2006!!! (No room for tax planning.)
Companies are already telling their people overseas to tighten their belts or, I guess, return to the "homeland". (Or give up their passports, I suppose . . . )
Senator Grassley has never lived outside the United States. He gets national health care and a big fat pension---things most Americans do not have. (Talk about "economical equivalence." His primary role in the Congress is to deliver fat benefit checks to his fat farmer community back in Iowa. People who basically thump the Bible rather than read it.
Millions of people, Americans, overseas did their tax planning this year based off the tax law as it stood, before Grassley inserted an amendment to a conference bill in the middle of night, last May. And surprise of surprises, since Grassley did not like the Foreign Earned Income Exclusion, many expatriates ended up with HUGE, retroactive tax bills!! (That's expatRIATES, not "expatriots", by the way.)
For overseas Americans, TIPRA was a tax INCREASE, not a tax prevention.
Moreover, TIPRA did nothing to SOLVE the Alternative Minimum Tax problem (which can also hit expatriates). It merely delayed the fix. Grassley and his ilk should not be patting their backs for this. They still intend to tax NEW JERSEY in order to pay for IOWA, (while expecting to make overseas expatriates make up the difference.)
The modern Republicans are perhaps the biggest frauds ever perpetrated on the American public. They talk a talk, but their walk is frankly one of a different species.
We can't all vote in Iowa, or get their fat farm checks and other pork.
BUT BY VOTING DEMOCRAT FOR SENATE, WE CAN GET RID OF GRASSLEY.
No Republican Senate, no Charles Grassley and his midnight tax-hike antics.
Any American living overseas should do their best to get rid of Grassley. Vote for your Democrat candidate for Senate, and let's get Grassley out of chairing the Finance Committee.
We can't send him back with those buckets of your tax money that he has sent to his HOME state of Iowa, but we can stick him in a position in the Senate where he is just a crank mouthing off in the corner, about who HE thinks is unfairly "getting".
Not sitting in a seat of power and responsibility.