updated 2:28 PM CEST, May 24, 2023

Hope fading for Holding's 'Tax Fairness for Americans Abroad Act'

Rep. George Holding, at an event in London in April Rep. George Holding, at an event in London in April

The Tax Fairness for Americans Abroad Act, a bill introduced into the U.S. House of Representatives at the end of last December by Republican Congressman George Holding,  now seems unlikely ever to become law, some observers and supporters of the proposed legislation say. 

As reported, Rep. Holding formally unveiled his at-that-point-much-anticipated bill, HR 7358, last Dec. 20, with just hours to go before most of the U.S. was due to close down for the Christmas holiday. 

But according to a report in the Raleigh News & Observer yesterday, Rep. Holding's options for remaining in Washington much longer now appear to be in doubt, after it emerged that the voting district in North Carolina that he represents – and which he won by a margin of 51.3% to 45.8% in 2018 – has been redrawn, with the result that he is now representing what the News & Observer described as a "Democratic-leaning" district.

And Rep. Holding, the report added, said he was disinclined to challenge another Republican merely to stay in office. 

"The districts around me are very ably represented. I wouldn't run against a colleague in one of my neighboring districts," the News & Observer quoted the Congressman as saying, in an online article with the headline "George Holding, whose district now leans Democratic, won't run vs. GOP incumbent".  

The news will come as a blow to many individual American expats as well as organizations that lobby on behalf of them, as Rep. Holding's bill was one of the only major efforts in years by a Congressional lawmaker to help them  – and it seemed, some said, to have at least a chance of passing. 

Rep. Holding's bill, the so-called TFFAAA, doesn't call for a complete replacement of the U.S. system of citizenship-based taxation (CBT) by a residence-based tax (RBT) regime, which the rest of the world except for Eritrea uses, and which most experts say would largely eliminate most of the financial and tax issues expatriate Americans struggle with.

However, groups like the American Citizens Abroad have said they saw the bill as a significant step in the right direction, and urged their members to support it, as did a number of expat Republican groups.  

Earlier this year Rep. Holding, whose wife is originally from the UK, met with Republican supporters to discuss the bill in London, and his legislative aid, Matt Stross, spoke about the bill via a video link on May 8 with Republicans Overseas supporters in Athens.

Later that month growing numbers of American expats said they were beginning to think that the Democrats might actually be about to produce a key supporter for Rep. Holding's bill, after representatives from the Democrats Abroad said that they were in discussions with Virginia Rep. Don Beyer on a range of issues of concern to American expats. The Democrats Abroad is the Democratic Party's official overseas organization, for American citizens living either temporarily or permanently outside of the U.S.

At the time, the announcement of a pending meeting with Rep. Beyer seemed potentially significant, as he is a former U.S. ambassador to Switzerland and Liechtenstein, a 2013 recipient of an American Citizens Abroad (ACA) award for services to American expatriates, a member of the House Americans Abroad Caucus and, perhaps most crucially, a member of the House Ways & Means Committee, where Rep. Holding had said he needed at least one Democratic supporter.

A few weeks later, on June 18, the ACA posted on its website a webcast that featured Stross, Holding's legislative aid, on the subject of the legislation, in which he mentioned in passing the upcoming talks with Rep. Beyer's staff.

In the end, however, Rep. Beyer never came forward to express his support for Holding's bill, nor did any other House Democrats, and by late summer, talk of the TFFAAA began to fade.

In September, the ACA launched a major online campaign  that it said was aimed at encouraging U.S. lawmakers to hold hearings this fall on the “wide range of tax compliance issues” currently affecting Americans resident overseas – including the Tax Fairness for Americans Abroad Act. But even as it did, the Republicans Overseas, a Republican party affiliate, seemed to go quiet on the matter, and its normally-outspoken vice chairman and chief executive, Solomon Yue, shifted his focus to lobbying on behalf of Hong Kong's democracy protesters, an issue that, as a naturalized American from mainland China, he feels passionately about. 

Also in September, Democratic Congresswoman Carolyn Maloney, who represents a New York City district and who heads up the Americans Abroad Caucus in Congress, announced she was re-introducing two bills aimed at helping American expats, with fellow Democrat Rep. Beyer named as her co-sponsor.  

A spokesperson for her office said at the time that she couldn't co-sponsor Rep. Holding's bill because she wasn't on the House Ways & Means Committee, and noted that he had said that this was what he needed. 

Rep. Maloney's bills consisted of a bill similar to the "Same Country Exemption" that the American Citizens Abroad has been calling for since 2015, and  the so-called Commission on Americans Living Abroad Act of 2019 (H.R. 4363), which provided for the creation of an "Executive Commission" that would be comprised of a 10-member bipartisan panel, which would be tasked with "examin[ing] the concerns of U.S. citizens living and working abroad."

'Territorial tax for individuals' 

As written last December, when Rep. Holding submitted it, H.R. 7358 called for the U.S. to transition to a system that would provide "territoriality for individuals," a form of a residence-based taxation. 

Under Rep. Holding's proposal, American citizens resident abroad would be able to elect to be taxed on the basis of their residency, rather than their citizenship. However, those who wished to continue to be taxed as U.S. citizens would be allowed to do so.

Those supportive of the legislation, including the Congressman himself, said it would enable Americans to become more competitive in the international job market, and freer than they are now to pursue opportunities outside of the U.S.

'Still hope'

Some observers said there was still a chance that Rep. Holding's bill could be resubmitted and signed into law before he left Congress, if in fact that were even inevitable; and even if it were, another member of Congress might be found to sponsor it in his place. 

"I don't understand this to mean that he isn't running for Congress again, or that his career in politics is over," said Toronto-based lawyer and expat tax campaigner John Richardson. 

"I read it narrowly – that he has no intention of challenging a fellow Republican in 2020.  That doesn't mean he couldn't run in 2022, or even run for a Senate seat instead.

"So, although this may not sound like ideal news for Americans abroad, I don't think it should be seen as the end of the road for the Tax Fairness for Americans Abroad Act either.

"On the other hand, it remains unclear why the Democrats refuse to go public in their support for this."  

On Thursday, most of those asked to comment on this matter declined, including Rep. Holding's office, Rep. Beyer's office, the Democrats Abroad and the American Citizens Abroad.

However, on Friday, Republicans Overseas chairman and chief executive Yue indicated the "Plan B" was that Rep. Holding would re-introduce his bill in 2020, even if he had to do so without Rep. Beyer as co-sponsor. 

"It's very sad to see that speaker [of the House of Representatives Nancy] Pelosi  was recently able to pass the Hong Kong Human Rights and Democracy Act, on a 417–1 bipartisan vote,  for 7.4 million Hong Kongers, while 9 million overseas Americans can't even get a single Democrat Congressional representative to co-sponsor Congressman Holding's Tax Fairness For Americans Abroad Act," he added.

According to its website, the American Citizens Abroad is still encouraging Americans overseas who are interested in "Tax Fairness for Americans Abroad," as it calls its campaign launched in September, to contact their Congressional representatives to urge them to hold hearings on the tax issues facing American expats, and to call for residence-based taxation to replace the current citizenship-based regime. More information on this can be found by clicking  here.

Editor's note: This article was updated on Friday, Dec. 12, to include comments from Republicans Overseas chairman and CEO Solomon Yue.