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. Last Updated: 07/27/2016

Clinton Budget Threatens Expats' Tax Status

The mere mention that U.S. President Bill Clinton is considering the elimination of a partial exemption on taxes for Americans living abroad drew an angry response from Moscow's American business community Thursday.

Peter Charow, executive director of the American Chamber of Commerce, said the chamber may launch a letter-writing campaign lobbying key lawmakers to oppose repeal of the exclusion on taxation of the first $70,000 of earned income. Charow said he will be visiting Washington next week and will speak to legislators about the issue.

"On the face of it, this is totally absurd," said Charow, adding that expatriate interests are especially vulnerable in Washington because there is no strong constituency supporting them. "The administration is taking advantage of expatriates ... We maintain the [tax exemption] level should be raised."

As part of the current budget battle with the Republican-controlled Congress, the Clinton administration has released a proposed budget that includes repealing the exclusion.

However, a Capitol Hill official said it is doubtful that the repeal will be part of the budget presented to Congress. The budget being proposed by the Republican majority does not remove the exemption.

"Having American expatriates abroad is good for America. It would just be crazy to eliminate the exemption," Scott Brenner, spokesman for the powerful House Ways and Means Committee, said in a telephone interview from Washington. "I don't see this passing the House. I don't think even Clinton people strongly support this."

All tax legislation must go through the Ways and Means Committee.

Brenner said whatever shape the budget compromise takes, it will take months of hearings and votes in both houses of Congress before it could be enacted.

The United States is one of the few countries that subjects its citizens to taxes on their earned income even when they are not residing in the country.

To qualify for the $70,000 exclusion, a U.S. citizen must live in a foreign country or remain outside the United States for at least 330 in any 365 day period.