|Senate Republicans seeking to meet President Bush's call for a big tax cut on corporate dividends are eyeing a list of potential tax increases in other areas, including elimination of a break enjoyed by U.S. citizens working abroad.
Congressional leaders are searching for new sources of revenue that could offset the loss of money from Bush's tax-cut proposal. The House of Representatives has agreed on tax cuts totaling $550 billion over 10 years. But the Senate, where moderate Republicans worry more about federal deficits, has agreed to limit the overall cost of the cuts to $350 billion — an amount too small to include Bush's plan to end taxes on dividends.
Axing the popular income-tax exclusion enjoyed by millions of Americans overseas would raise $34 billion over 10 years, according to Congress' Joint Committee on Taxation. It would stir opposition among expatriates and U.S. companies doing business overseas.
Individuals living abroad can exclude up to $80,000 of income a year, and couples can exclude $160,000.