According to its website, the Association of Americans Resident Overseas (AARO – pronounced “arrow”), founded in Paris in 1973, is a support group that “has worked to change laws and policies to ensure that Americans abroad receive the same benefits and protection as citizens in the U.S.”
Andy Coyne, AARO Board Member and Vice President for GCC & Middle East, is originally from Hilton Head Island, South Carolina and is an attorney practicing law with Baker & McKenzie in Riyadh, Saudi Arabia, where he lives with his wife and three children. Andy has previously lived abroad in Madrid, Amsterdam, Buenos Aires and Paris, and he participates in AARO’s advocacy work in Washington, D.C. Andy graciously took time out of his busy schedule to talk about AARO with My American Market. This comes at a good time, as we are the middle of U.S. tax season.
Could you tell me about yourself and how you became involved with AARO?
Before moving to my current position in Riyadh, I lived for six years in Paris practicing law. Previously I studied abroad in high school in Spain, completed a college internship in Argentina and later studied Law at American University in Washington D.C. After that, I received my LLM Post-Law Degree from the University of Amsterdam, Netherlands. My career has been in law, but I have also worked in banking (Crédit Agricole in Paris). I first visited France when I was 13 years old, and I speak French and Spanish. I am learning a little Arabic here in Saudi Arabia, but most of my clients speak English and/or French.
I first got involved with AARO in Paris and have enjoyed lobbying and advocating on behalf of American expats in Washington D.C. ever since. In fact, I will soon be in D.C. to lobby as part of an annual trip called Overseas Americans Week, taking place April 19 to 23.
What are the top issues on AARO’s agenda when lobbying?
The main priorities include voting rights, citizenship, Social Security, taxation, and representation in the government. Americans can vote from abroad if they are registered (which can be done in person, by mail or email, depending on their home state’s procedures), but since American citizens abroad are not counted every ten years in the U.S. Census, there is no way of representing them proportionately in the House of Representatives according to their states. We are working on improving this situation.
Another priority is taxation. Overseas Americans have the right to the Foreign Earned Income Exclusion (FEIE), Section 911 of the U.S. Tax Code. This year, the FEIE has a ceiling of $91,400, meaning that there is no tax to pay to the U.S. at this income level or below. In the past, income earned above this threshold resulted in paying the difference, so that if you made the equivalent of $100,000, your declared income would be $8,600 ($100,000-$91,400),which would result in no taxes to pay because that is in the lowest tax bracket. Now that Congress has increased taxes in recent years, you pay tax on that $8,600 at the rate applicable to the bracket of $91,400-$100,000. The FEIE, originally introduced in 1962, was not systematically pegged to inflation before (although the income ceiling increased a few times). Now it takes inflation into account, so that the amount increases every year; had this been the FEIE policy since its inception, the current ceiling would be at around $250,000.
In addition to FEIE, an advantage for Americans living in some countries is the ability to deduct the taxes they pay locally from U.S. taxes; this happens when there is a double taxation treaty between two countries (France and the U.S. have this). But this is not the reality, as the American government does not always count as tax what U.S. citizens pay to their local governments. For example, Americans in France have to pay as much as 28% of their income in charges sociales (payroll deductions), most of which is not considered a valid tax by the U.S. government. In Sweden, the effect of the treaty is more favorable for Americans, because payroll deductions by the Swedish government are considered valid taxes.
Thus Americans in France pay more than those in Sweden, all because of an unjust legal tax code system that is bad for the American economy. Indeed, our trade competitors do not have this situation. The U.S. is the only industrialized nation that taxes its citizens overseas; I believe we are joined only by North Korea and Eritrea. So when a German company wants to launch in a new market, they can send a German who won’t be subject to double taxation. U.S. businesses and citizens suffer as a result. This is a main area of focus for AARO advocacy efforts in Washington. For more on double taxation, you can read this piece in the Wall Street Journal.
As for banking services, U.S. banks are increasingly imposing regulations upon local banks in foreign countries, which are starting to reject Americans who would like to open up bank accounts there. Many expatriates are further undermined by these same U.S. banks that are shutting the accounts of Americans who are resident abroad. You can read more about our main topics on the right-hand side menu of our home page under “AARO Issues”.
Does Congress listen? What developments or improvements have occurred with AARO’s advocacy efforts?
When AARO goes to D.C., it is a combination of offense and defense. For taxation, one objective is to increase the cap on the FEIE from $91,400 to a more significant amount, or to remove the cap altogether so that all income overseas excluded.
Another side of our work is to prevent things from getting worse, and AARO has made progress in this regard. Most recently, legislation has been introduced that has not been passed yet, that would improve the situation for FEIE. In the Senate, Jim DeMitt (R-South Carolina) has proposed taking the cap off FEIE and in the House Rep. Gregory Meeks (D-New York) has supported a similar position.
Since AARO is bipartisan, when we go to D.C. we meet with whomever we need to meet with on particular issues. There is an Americans Abroad Caucus, not an official committee but rather an informal group of House members particularly interested in issues affecting Americans abroad. This took several years to form and is chaired by Caroline Maloney (D-New York), and Joe Wilson (R-South Carolina) who inform Congress about what AARO does. The best way you can help out is to write to your Congressmen and Congresswomen to support AARO issues and join the Caucus. More information can be found here, including model letters:
How many Americans live abroad? In France? How is that calculated?
It is difficult to give an exact number, as the U.S. Census conducted every ten years excludes Americans overseas. In 2002, the U.S. Census Bureau conducted a test, and subsequently in 2004, 2006 and 2008 in selected countries, concluding that not enough responses were generated to make it worth the effort. But their promotion and advertising was not sufficient enough to ensure a good turnout. You can read more about Census information here.
The current estimate of Americans abroad is anywhere between 5 and 7 million. Tourists abroad temporarily are not included, and Consulates look at how many people are registered in databases, coming in and using their services. This, combined with consular reports of births of U.S. citizens abroad and estimates from Embassies, give us an overall estimate for a country.
According to an estimation done in 2005, there are about 100,000 Americans residing in France, with anywhere from 60,000 to 70,000 in Paris and 30,000 to 40,000 in other parts of the country. The lowest estimate is around 70,000 in France, however.
The problem is that this information is not made public. The American community in Paris is quite cohesive and active, but not as cohesive in UK and Ireland. AARO started in the 1970s, when American residents abroad started working together on issues of citizenship of children overseas, with the topics evolving over time.
Now that it is tax season for Americans, what advice can you give to US expats living abroad? How should they proceed?
The best advice I could give would be to get a private accountant who takes care of your taxes, someone you can trust who perhaps speaks English too. You would be well advised to consult these websites:
– The IRS website (for much information including foreign exchange rate averages)
– Other helpful websites for Americans abroad can be found here.