|US citizens living and working in the Gulf region have been urged by business groups and tax experts there to take action against the proposed repeal of the Foreign Earned Income Exclusion provided for under Section 911 of the US tax code.
US taxpayers qualify for so-called Section 911 exemption (which allows them to exclude the first $80,000 of foreign earned wages from their gross income when assessing their taxes) when they have lived outside of the United States for one complete tax year, or 330 days in twelve months.
However, research by the Congressional Budget Office has found that many consider this tax break gives employees based overseas an unfair advantage against their domestic colleagues, and the Joint Committee on Taxation has estimated that repealing the law would generate $34 billion in extra revenue over the next ten years, which would help to offset the cost of President Bush's tax cutting package.
Speaking to Gulf News Online on Monday, Dubai-based US tax attorney, Virginia La Torre Jecker warned that:
'If the foreign income exclusion is repealed, or even reduced, the impact will be strongly felt not only by individual US citizens working abroad, but also upon US residents who will suffer economic consequences of curtailed US exports and services abroad, and upon the US economy as whole.'
She went on to urge US workers in the Gulf and at home to write to their Senators and Congressmen opposing a repeal of the exclusion, and suggested that employers with American employees in the region provide a prototype letter for their workers to use.
The Gulf News Online report revealed that the Saudi American Forum has already put this suggestion into practice, and has created a draft letter for the use of overseas American workers.
Ms La Torre Jecker concluded by observing that:
'What US lawmakers proposing the repeal need to recognise is that, in these difficult times, the US economy and relations with Middle Eastern nations cannot afford the consequences of such an ill-considered action.'