The Economic Recovery Tax Act of 1981 (ERTA) contains significant provisions liberalizing the taxation of American citizens living abroad. These changes mark the completion of Congress' four year turnabout in its taxation policy towards expatriate Americans, and reflect a Congressional desire to resolve the conflicting objectives involved: tax equity, revenue requirements, trade and export promotion, and simplification of tax returns. The ERTA changes are the result of Congress' recent emphasis on the promotion of trade and exports. Congress concluded that a substantial exclusion of the foreign earned income of expatriate Americans is necessary to encourage more Americans to work abroad. Congress expects that a larger number of American citizens abroad will lead to increased American trade and exports.
John A. Papahronis,
Taxation of Americans Abroad Under the ERTA: An Unnecessary Windfall,
Nw. J. Int'l L. & Bus.