The early 30 year-old lady’s answer surprised me. I was in Singapore, a first world country with a 1% unemployment rate, one of the lowest crime rates in the world and a growing economy. This was my trip to see how some of the Asian countries were doing while the U.S. languished.
The lady across the table from me was a South American who worked for a North American company located in Singapore. Her salary was about 200,000 USD a year plus housing expenses. That is more than four times above the American average. My question to her was, “Of the approximately 100 people in your office here in Singapore, how many are American?”
“None,” she answered immediately. “We have Australians, English, Colombian, Chileans, French and about 50% are from Singapore.
“It’s an American company,” I said. “Why no Americans? With what you make it does not seem to be about cheap labor.”
“Americans can’t afford it,” she said.
I spoke with another person who worked for a British company. Their office employed 150 people from six different countries, but no Americans. Similar stories were told to me by people in France and other first world countries. It was explained to me the problem is American taxes. The United States is the only first-world country to tax their citizens who work abroad. Yes, there is a deduction, but it doesn’t help enough when you have to live in countries with high costs of living.
The tenth edition of the book “Living in Singapore,” specifically points out why it is unadvisable for Americans to work there. It concludes with the statement of, “…American expats who are also awarded full housing benefits, the tax costs can be staggering considering full Singapore taxes must also be paid.”
The latest figures that I could find showed that in just the first quarter of 2009 that over 500 Americans renounced their citizenship just because of the double taxation. That amount in just the first three months more than doubled all of 2008. It is estimated that as the American economy continues to not support jobs that thousands of Americans are taking work abroad and renouncing their citizenship to make enough money.
In the U.S.A. we have many people from other countries come to work. They then send their earned American dollars back to their home country. One report stated that people from India sent $55 billion USD back to their country in 2009. According to a Wall Street Journal article, Latin Americans send as much as $69 Billion annually back to their homelands.
The question is that with unemployment high in the U.S.A. does our country and our workers benefit more from being one of the few countries to double tax its citizens working abroad, or would we be more ahead to make it advantageous for our workers to take high paying jobs abroad? The American Citizens Abroad organization believes that ending the double taxation will strengthen the American economy as many expats start businesses promoting American products.
I’m sure there are arguments for both sides. One for maintaining the taxation is that it keeps Americans from hiding money. However given the economy, the unemployment rate and the fact that we are almost the only country in the world with double taxation, it seems that this should be something to look into and consider changing. Shouldn’t Americans be given an equal chance in the world market for jobs?