Saturday, May 27, 2006

No New Taxes...

...except on people who are not very influential.

It was publicized pretty well, when the Administration increased taxes on teenagers.  This has been discussed elsewhere, so I won't go into it very much.  I just learned, however, that there has been another tax increase, again affecting Americans who have little influence.  And like the one that affects teenagers saving for college, this one could have serious negative consequences.
U.S. tax law sends expatriates reeling
By Keith Bradsher and David Cay Johnston
The New York Times

FRIDAY, MAY 26, 2006

HONG KONG The sudden, and retroactive, imposition by the U.S. Congress last week of much higher taxes on Americans living abroad has left individuals and companies scrambling to regroup, while many executives and entrepreneurs assert that the move could backfire by hurting U.S. business interests at home and abroad.
The $69 billion tax cut signed into law May 17 raises taxes on Americans living overseas by $2.1 billion over the coming decade. [...]
To put this in perspective, consider that the additional revenue represents the cost of only a two weeks of fighting the war in Iraq (which does not include reconstruction costs).  If it hurts international trade, it obviously wouldn't be worth it.  

Note that this increase is not only a violation of one of Bush's campaign pledges, but it also increases the complexity of the tax code:
Last year the law allowed most overseas Americans to exclude $80,000 of foreign earned income from income taxed in the United States. The new law adjusts the exclusion for inflation to $82,400, but it raises taxes by adding complex new provisions on how the exclusion is calculated. 
Oddly, this article shows up on the International Herald Tribune site, but not on the New York Times website, despite the fact that it was written by NYT reporters.