The annual decline was about $70 billion. Companies are writing off billions in A.I. investments, taking advantage of tax cuts that President Trump signed into law.

© Haiyun Jiang/The New York Times

For many Americans overseas, the scariest day this month is not Halloween, but October 15—the final extended deadline for filing income tax returns with the Internal Revenue Service (IRS).  

An estimated 3.3 million U.S. citizens live abroad, although the number is likely an undercount because the government doesn't keep a comprehensive list or require Americans overseas to register their residence. Still, American citizens and resident aliens living abroad must pay U.S. income taxes and comply with domestic tax filing requirements, regardless of where they live or work. They must also complete the dizzying process of reporting any foreign bank accounts, assets, and financial interests in foreign institutions. 

When filing their income tax returns, most Americans living abroad have zero tax liability. In its 2025 Annual Report to Congress, the Taxpayer Advocate Service—an independent organization within the IRS that helps people navigate tax problems—found that for Americans overseas, "the percent of individual international tax returns reporting no tax liability is significantly higher than domestic taxpayers." Yet, the agency reports that the filing process is "complex, overlapping, and punitive." The report says failure to comply results in "harsh and disproportionate penalties…even when taxpayers make good-faith mistakes or owe no U.S. tax."

The U.S. income tax rate is low compared to other high-income countries, so Americans living overseas typically pay more in local taxes than they would here. Still, Brandon Mitchener, executive director at Tax Fairness for Americans Abroad, tells Reason that Americans living outside the U.S. are often oblivious to their income tax obligations, assuming they're exempt because they already pay taxes in their country of residence. He says that complex U.S. tax laws and financial regulations force many Americans living overseas to request an extension to October 15. 

The date also coincides with the final deadline for the Foreign Account Tax Compliance Act (FATCA) and the Report of Foreign Bank and Financial Accounts (FBAR)—regulations that require Americans with foreign financial assets above a certain threshold to declare the value of their assets to the IRS or Treasury Department. 

Under FATCA, Americans living overseas with foreign financial assets exceeding $200,000 at year-end or more than $300,000 at any point during the year must declare their assets when filing their income tax return. The law also requires foreign financial institutions to report information about U.S. account holders directly to the IRS. Originally enacted to catch Americans overseas engaged in tax evasion or other criminal financial activity, it has instead made American citizenship an impediment for expatriates looking to save or invest money outside the U.S.

"Because of FATCA, many foreign financial institutions shun American clients," Mitchener says. This includes Trade Republic, a German digital bank and online brokerage firm that doesn't accept U.S. citizens living abroad, a category of people it tellingly describes as "FATCA customers."

"Some charge a premium for banking-while-American," he adds, while some have "even de-banked American clients." The latter is a very real concern for Madison Berry, an American living in the Netherlands. She tells Reason she's "a little bit worried" that her European bank will one day "come back and be like, 'Oh, you're a U.S. citizen. We're gonna close your account.'"

This "reduces choice and raises the cost and complexity of everyday financial products for Americans abroad, from basic savings accounts to mortgages and retirement savings," Mitchener says, creating problems unique to America and Eritrea, the only two countries that tax citizens living outside their borders. 

Compounding matters, Americans with foreign financial accounts exceeding $10,000 must file an FBAR with the Treasury Department's Financial Crimes Enforcement Network, even though the form duplicates much of the same information already reported through FATCA. The reporting requirements make investing or saving money abroad prohibitive for Americans and foreign financial institutions, with foreign banks opting to close existing accounts or outright denying Americans the opportunity to open a bank account, according to a 2019 report by the Government Accountability Office. Seven years later, little has changed. The IRS itself admits that its systems and functions are "inaccessible to or incompatible with the needs of taxpayers living abroad, creating unnecessary barriers to compliance." 

Berry says figuring out her tax obligations and reporting requirements has left her "in a financial limbo." "I seriously considered renouncing my U.S. citizenship as part of the process just to make life easier." She's not alone. 

Several Americans living overseas who spoke to Reason on condition of anonymity said they were also considering renouncing their U.S. citizenship rather than deal with the onerous annual tax filing process. One American living in Ireland who owns and operates a U.S.-based business says she uses a remote desktop and virtual private network to access her financial institutions to avoid scrutiny. 

Another tells Reason she's considering renouncing her citizenship because America's tax system is "predatory in how complicated it is and how much responsibility it puts on ordinary people to figure everything out themselves."

The post Why Some Americans Living Abroad Would Rather Renounce Their Citizenship Than File Taxes appeared first on Reason Magazine.

The Republican congressman who hopes to be the next governor of Michigan has a plan to help American businesses hurt by President Donald Trump's tariffs.

Is he proposing to abolish those tariffs? Hahahaha, oh please. 

Instead, Rep. John James (R–Mich.) has introduced a bill that would use some tariff revenue to offset the economic harm being caused by…the tariffs.

James' proposal, the Tariff Relief for American Development and Employment Act of 2026, would create a new tariff relief fund to be accessed by American businesses that "demonstrate actual tariff-related economic injury."

"Michigan is disproportionally affected by the trade war, so it's reasonable to use tariff revenue to reduce the effect on Michigan businesses and workers," James said in a statement announcing the legislation.

To qualify for the money, businesses would also have to pledge to maintain existing production and employment levels. The bill instructs the Treasury Department, which would administer the fund, to give priority to businesses with larger numbers of American workers and those that avoid layoffs and boost worker pay.

In other words: Pay the tariffs first, then do a bunch of paperwork and cross your fingers that the bureaucrats at the Treasury decide that you qualify for reimbursement. And in the meantime, don't cut production or lay off workers—things a business might naturally do in response to a new tax burden—or the federal overseers might not favor you.

"You guys remember when Republicans used to criticize Democrats for imposing costly, convoluted taxes and then giving some Americans their own money back?" asks Scott Lincicome, vice president for general economics at the Cato Institute, in response to James' proposal. Indeed.

For that matter, remember when Republicans understood that concentrating more economic decision-making power in Washington wasn't the way to help American businesses? This bill requires businesses to jump through a series of hoops—a process that will add more costs and complexity on top of the tariffs—and creates more incentives for executives to work harder at currying favor in Washington rather than succeeding in the marketplace.

The fact that James is running for governor in Michigan—and trailing in the polls—likely sheds some light on his motivations here.

This does not seem like a bill meant for Congress to seriously consider or pass. In all likelihood, it exists solely so James can tell voters in Michigan that he's trying to ease the pain caused by Trump's tariffs—which are deeply unpopular and increasingly seem to be strangling the GOP's prospects in the midterms.

In Michigan, manufacturing employment has declined since April 2025, when Trump launched his second-term tariffs on what the White House dubbed "Liberation Day." Meanwhile, Michigan households have paid more than $23 billion in tariff-related costs since January 2025, according to a tracker maintained by the National Taxpayers Union Foundation.

By acknowledging that the tariffs are hurting businesses in Michigan, James becomes the latest Republican to openly break with the president over his signature policy. Former congressman Mike Rogers, who is running for Senate in Michigan, has TV ads calling for an end to what he calls the "tariff war."

It is good that Republicans are finally admitting the reality of the tariffs. Study after study has shown that the import taxes are imposing costs on American businesses and consumers. Last week, the New York Federal Reserve concluded that the average price of 67 common household goods would have fallen over the past year, if not for the tariffs. Instead, those prices increased by about 3 percent.

Fixing that requires repealing Trump's tariffs, rather than constructing a new labyrinthine process for funneling some of the tariff money back to certain businesses.

James' bill is a deeply silly proposal, but there's also something quite pathetic about this. James is, after all, a member of Congress. You know, the branch of government that the U.S. Constitution vests with control over trade and tariffs. You don't need to build a bureaucratic Rube Goldberg machine to "reduce the effect [of tariffs] on Michigan businesses and workers."

You just have to do your constitutionally appointed job and tell the president that he can't unilaterally raise taxes on Americans whenever the mood strikes.

The post Michigan Congressman Proposes Using Tariff Revenue for Tariff Relief Fund appeared first on Reason Magazine.

Every year, the Indonesian government forgoes taxes it could collect. Through tax holidays, rate cuts and exemptions, it courts investment while easing the burden on households and small businesses. Economists call this “tax expenditure” because giving up revenue is another way of spending public money. The Ministry of Finance expects it to reach 564 trillion […]

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