updated 8:44 AM CET, Jan 28, 2023

Bloomberg again speaks out on behalf of expats, with 'A Letter to Janet Yellen'

U.S. Treasury Building, Washingon, D.C. U.S. Treasury Building, Washingon, D.C.

Bloomberg, the major global media organization based in New York, has once again published a strongly-worded opinion piece calling for action on behalf of America's expatriates that  it calls "A Letter From 9 Million U.S. Expats to Janet Yellen."

Janet Yellen

Among the other major publications to publish the Bloomberg opinion piece on the day it came out – yesterday, Dec. 11– was The Washington Post,  unofficially known as the hometown newspaper of the U.S. president and Congress.

Yellen, pictured left, is an American economist, academic, and former chair of the Federal Reserve, who has been named by U.S. president-elect Joe Biden as his choice to be his Treasury secretary when he takes office next year. 

The article explains how the U.S. Treasury could solve many of the problems expats are struggling with by making just a few relatively simple fixes to the way expats are expected to file and pay taxes on their income. 

As the Bloomberg writer, Andreas Kluth, acknowledges in his piece, the strategy is spelled out in a paper recently authored by Toronto-based U.S. citizenship lawyer John Richardson, Paris-based attorney and U.S. taxpayer rights campaigner Laura Snyder, and Australia-based university lecturer and FixtheTaxTreaty.org founder Karen Alpert.

(As reported, this 18-page paper, entitled "A Simple Regulatory Fix for Citizenship Taxation," makes the same point Kluth is making – that the Treasury could fix many of the problems expat Americans struggle with, and that it could do so relatively simply and easily.) 

Kluth is the author of at least two other recent Bloomberg opinion pieces that forcefully called attention to American expats' plight: The first, headed "Stop Treating American Expats Like Tax Cheats", was published on Nov. 26, 2019, a few days before Thanksgiving last year; and the second was published on Aug. 31 of this year, headed "U.S. Expats Can't Renounce their Citizenship Fast Enough."

This second piece explained that contrary to what some media reports around that time had been giving as the reasons for a record spike in U.S. citizenship renunciation numbers, the prosaic truth of the matter was that U.S. expats are simply tired of having to struggle with the current American expat financial reporting regime.

Both these pieces were also picked up by The Washington Post.  

Kluth is a member of Bloomberg's editorial board and previously editor-in-chief of Handelsblatt Global a writer for the Economist, according to the Bloomberg website. He is also a dual U.S./German citizen who has "lived and worked in London, Hong Kong, California and Berlin", according to his LinkedIn profile, which also shows him as currently living in the "Berlin area" of Germany.

'Dear Janet...'

Kluth's most recent piece is written as a letter to Yellen by an expat – (as Kluth himself is, being a dual citizen) – which begins, "Dear Janet Yellen: Congratulations! You’re probably the next Treasury secretary of the U.S.

"That’ll throw you into daunting policy cauldrons – from financing America’s massive deficits to managing China and taming the tax code. With so much in your inbox, we urge you not to forget about one large group of Americans: us.

"We’re U.S. expats, and there are 9 million of us. If we were a state, we’d be the eleventh-largest. And we’re suffering from a problem that you can fix."

Kluth then goes on to spell out in detail, for the benefit of the future U.S. Treasury secretary, a range of the most problematic issues facing her country's expats, including the "accidental Americans" phenomenon, the problems inherent in America's unique citizenship-based taxation ("OK, Eritrea also taxes its diaspora, but that’s not exactly the same thing"), the myth that expats live abroad to avoid U.S. taxes, and the problem of too many experts not fully understanding the range of "complex annual bank and asset reporting requirements" expats currently struggle with.

"Many of us can’t lead normal financial lives because we’re snared in two incompatible tax systems simultaneously," he continues.

"We can’t invest or save for retirement like our neighbors or other Americans, because either the U.S. or our country of residence won’t recognize the other nation’s financial products and rules. We can’t even open bank or brokerage accounts, because financial institutions won’t take us.

"Many of us escape by renouncing our U.S. citizenship. But the U.S. has been making that more expensive and difficult in recent years. And most of us would hate to give up our nationality anyway.

"If we had representation in Congress as a bloc, this problem would have been solved long ago. But we don’t. Instead, we vote in the U.S. state where we lived most recently. And our representatives and senators don’t think listening to our concerns can help them get re-elected.

"So while a legislative fix is our preferred option, we’re not holding our breaths."

Yellen, though, as Treasury secretary, will be in a position to actually do something, Kluth continues.

"There are simple tweaks you could make that would cost the U.S. nothing in lost revenue, save you a packet in enforcement expense and make our lives easier.

"The options are laid out in an essay I commend to everyone on your staff: “A Simple Regulatory Fix for Citizenship Taxation.” 

Kluth concludes: "Our proposal – as laid out in detail by Richardson, Alpert and Snyder – is that you introduce a new category of taxpayers, in addition to the many you already have. It could be called 'qualified nonresidents,' and would include U.S. citizens who live permanently in another country and pay taxes there as though they were its nationals.

"These qualified nonresidents would be exempt from filing returns to the IRS and FinCEN, and from paying taxes on any income that’s not sourced in the U.S.

"They already don’t owe anything, so the revenue loss would be close to zero. Moreover, the IRS could divert its own resources from this complex and unprofitable enforcement area to others that are more worthwhile.

"This change would align American taxation of individuals with the systems of all other developed countries. It would free us expats to live, earn, save and invest as other people do. And whenever any of us move back to the U.S., we’re yours again.

"Never would it have cost so little to help so many with such negligible fuss. Please consider it."

To read Kluth's piece in full on Bloomberg's website, click here.