As seen in
the New York Times:
In an effort to raise revenues, tax writers in Congress added
a last-minute provision that retroactively increased taxes for Americans
living abroad. But the sudden imposition of new taxes has surprised overseas
taxpayers, and it has employers concerned about the added cost.The increase for Americans abroad was added at the last minute to the $69
billion tax cut legislation that was signed last week. Americans living
overseas paid almost $3.5 billion in United States income taxes in 2001, the
latest year for which data is available, according to the Internal Revenue
Service.[...]While the move will have limited effect on Americans living in countries
with high tax rates - European countries, for example - those living in low
tax jurisdictions with high housing costs - like Bermuda, the Middle East,
Singapore and Hong Kong - will be hit hardest, partners at two major
accounting firms said.Over all, the bill raises taxes on overseas Americans by about 6 percent,
but most individuals will pay nothing more, while others will see their
taxes quadruple.[...][R]ough calculations showed that a married couple paid $300,000, of which
$20,000 was a housing allowance, would see their income tax bill rise by
about $20,000 and their employer’s cost by about $40,000. Most countries
exempt their citizens overseas from income taxes, so the law will give
companies an incentive to hire Australians, Britons, Canadians and other
nationalities for whom they do not have to pay additional
taxes.
I guess my dream of working for a couple of years in Bermuda just became a
bit more expensive and less likely.