Impending United States Tax Legislation that directly affect Americans outside the United States may be placing the Foreign Earned Income Exclusion (FEIE Section 911 of US Internal Revenue Code) that has assisted in minimising the double taxation impact of working and living abroad for US citizens - against the competitive tax cost efficiency of living in the United States - up on the chopping block again.The American Jobs Act 2011, highlighted in President Obama's “Buffett Rule” speeches, focuses on helping domestic Americans get back to work. H.R. 1265, the “Stop Tax Haven Abuse 2011” has a primary focus based on its name.Revenues will need to be raised to offset these programmes, and “it is currently thought by some members of Congress that elimination of Foreign Earned Income Exclusion would generate additional tax revenues”, according to the non-profit American Citizens Abroad Executive Director, Marylouise Serrato.Ms. Serrato further stated in the ACA letter to the U.S. Super Committee of Twelve Lawmakersthat www.aca.ch/joomla/images/pdfs/comm12.pdf“ACA (American Citizens Abroad) strongly encourages the Committee of 12 to maintain and even reinforce the Foreign Earned Income Exclusion as it is essential for Americans working overseas to represent United States national interests.The lessons of history demonstrate the danger of eliminating the Foreign Earned Income Exclusion.Eliminating the FEIE today would destroy the network of Americans representing U.S. interests in areas such as the Middle East, Hong Kong and Singapore all fast growing markets, vital to the development of U.S. exports. Congress must not repeat the mistake made in the late 1970s when FEIE was eliminated with the Foreign Earned Income Act of 1978 (P.: 95-615).As a consequence, tens of thousands of Americans overseas were forced to return home and some market positions were permanently lost.Americans could not survive economically.This led to major protests by business and special GAO and President's Export Council reports, all testifying that US tax policy was hindering US exports, that Americans working abroad were vital to US interests and that the United States should not impair the competitiveness of its citizens overseas through misguided U.S. tax measures.In 1981, Congress recognized its mistake and reinstated the FEIE with the Economic Recovery Tax Act of 1981.”As an international tax and financial planner, I note that if the Foreign Earned Income Exclusion is eliminated, those Americans abroad compensated in the middle manager to executive level range, for example, would see a significant increase in personal taxes on the loss of the exclusion alone, without even beginning to calculate the effect of increased tax liabilities on their overall financial plan. See Estimated Tax calculations below.Americans abroad (United States citizens and green card holders) working and living outside the US are already subject to very expensive tax filing requirements, in addition to which, they must report on all of their financial accounts and financial interests at foreign banks, foreign pensions, foreign life insurance, annuities, foreign mutual funds and investment holding companies, foreign corporations, and foreign trusts.Non-compliance with these US Internal Revenue Service mandates can result in heavy individual penalties.In the next two years, more onerous complex mandates under FATCA (the Foreign Accounts Tax Compliance Act) to report their foreign assets to US Internal Revenue Service will be initiated.Ordinary average US citizens, green card holders and their families living their lives every day outside the United States are experiencing first-hand the aversion of foreign financial institutions to continue to provide them with financial services with arbitrary notices to close their foreign accounts, and summarily dismissed as clients of foreign financial institutions. Imagine being a 75-year old widow receiving an account termination letter after a banking relationship of more than say forty years?Where does she go? What can she do? How is she going to manage her financial affairs?Americans working and living abroad many of whom have been outside the United States most of their lives are finding it (almost) impossible to open a financial account (relationship) (of any kind) in the United States of America.Foreign financial institutions and investment houses will no longer assist them in accumulating a retirement pension, providing their families with catastrophic life insurance, or estate plans. Anecdotally, foreign investors in capital ventures are avoiding US investors, too.Americans and their personal financial profiles are now just too complicated and represent liability exposure foreign firms would prefer to avoid, since the alternatives are fraught with expensive US IRS compliance prerequisites.The website ACA-American Citizens Abroad www.americansabroad.org released a press statement this week addressing their campaign to repeal the Foreign Earned Income Exclusion.Those wanting to write or call the Super Committee of Twelve Lawmakers, please see the entire release on the website at http://www.aca.ch/joomla/images/pdfs/comm12.pdfAmerican Citizens Abroad www.americansabroad.org need Americans living and working abroad who have been able to take advantage of the Foreign Earned Income Exclusion to support the ACA with financial contributions for the upcoming ACA lobbying effort on “Preserving and Enhancing the Foreign Earned Income Exclusion” for the approximately seven million Americans living and working outside the United States.American Citizens Abroad (ACA), the voice of Americans overseas, is a non-profit, non-partisan, all-volunteer organization that represents the interests of Americans living and working outside the US to the Executive Branch of the US Government, the US Congress, and the US Federal Judiciary to insure that Americans overseas are treated with equality and fairness.General Estimated Overview of Tax Calculations for US citizens and green card holders that are in compliance with their annual US Individual Income Tax Returns:Single Taxpayer, Senior Executive, claiming the full FEIE of $91,500 (based on 2010 rate) will see his/her income tax liability on the exclusion alone (now at zero tax) increase to an estimated $16,000 USD+/- in tax year 2011 if the foreign earned income exclusion is eliminated effective January 1, 2011.Married Filing Jointly Taxpayers, middle manager category, each claiming the full foreign earned income exclusion of $91,500 (based on 2010 rate) will see their income tax liability on the exclusion alone (now at Zero tax) increase to an estimated $36,000 +/-USD in tax year 2011.Assumes both Single Taxpayer and Married Filing Jointly Taxpayer are not including any additional income and are taking the standard deduction and personal exemptions.If the taxpayer's entire tax financial reportable profile were included the results will be different.Martha Harris Myron CPA CFP® (USA) TEP is a professional member of the American Citizens Abroad Professional Tax Advisory council. For further information, call 441 296 3528 or email me at mmyron[AT]patterson-partners.com.