American entrepreneurs and investors who live abroad already face a steep regulatory hill because the United States taxes its citizens on worldwide income. The outcome of the 2024 presidential election is unlikely to remove that fundamental disadvantage, but the two leading candidates could shape how onerous the rules become.
Citizenship‑based taxation stays in place
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No candidate is proposing to end the U.S. citizenship‑based tax system.
- Both Trump and Biden have avoided any serious discussion of abolishing the requirement that U.S. citizens file annual tax returns, regardless of where they reside.
- The only relief available to expatriates is the Foreign Earned Income Exclusion (FEIE) and foreign tax credits, which can lower the effective tax rate but do not eliminate the filing obligation.
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Political rationale:
- Trump’s “America First” stance favors bringing citizens back to the U.S. tax base rather than encouraging them to stay abroad.
- Even progressive voices such as Bernie Sanders have hinted that the system is unfair, but no concrete legislative effort has materialised.
FATCA reporting continues
- Foreign Account Tax Compliance Act (FATCA) obliges foreign banks to report U.S. account holders to the IRS.
- The compliance burden falls on both the banks and the account holders, leading to occasional account closures or mortgage complications for U.S. expatriates.
- Neither administration has shown momentum to repeal or substantially reform FATCA, so the reporting requirement is expected to persist.
Global minimum tax and corporate rates
| Issue | Current Trump‑era rule | Potential Biden change |
|---|---|---|
| Minimum personal tax on foreign income | Roughly 14 % (low double‑digits) after the 2017 Tax Cuts and Jobs Act | Biden is likely to raise the minimum rate, aligning with a broader push for a higher global minimum tax |
| Corporate tax rate | 21 % (set by the 2017 reform) | Biden has signalled a return to about 28 % for corporations |
| Top personal income tax rate | ~37 % (effective after the 2017 cuts) | Biden plans to increase the top bracket to ≈40 % |
| Social‑Security/Medicare caps | Caps remain; Biden may remove them, increasing contributions for high‑earning self‑employed individuals | — |
The net effect is that, regardless of who wins, U.S. entrepreneurs abroad will likely pay more either through higher domestic rates or through a higher minimum tax on foreign earnings.
Compliance complexity and cost
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Offshore structures are increasingly intricate.
- A typical multi‑million‑dollar online business may need legal and accounting teams in three jurisdictions, costing $50‑$60 k per year just for compliance.
- The paperwork burden can be overwhelming: multiple bank accounts, frequent reporting, and the need to monitor changes in both U.S. and host‑country tax law.
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Potential Biden impact:
- Biden’s agenda includes new filing forms and tighter reporting requirements, which could add to the administrative load for expatriates.
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Potential Trump impact:
- While Trump had the opportunity to simplify the system, no substantive reforms have emerged; the status quo is expected to continue.
Practical considerations for U.S. entrepreneurs overseas
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Assess the true tax burden:
- Calculate the combined effect of FEIE, foreign tax credits, and any applicable minimum tax.
- Compare the U.S. tax liability with the host‑country rate to determine whether the U.S. filing adds a significant cost.
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Plan for compliance costs:
- Budget for professional services (legal, accounting, tax advisory) that can handle multi‑jurisdictional reporting.
- Factor in the risk of bank account closures or mortgage complications stemming from FATCA reporting.
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Monitor policy signals:
- Keep an eye on legislative proposals related to the global minimum tax, corporate tax rates, and any changes to the FEIE thresholds.
- Even incremental adjustments can shift the balance between staying abroad versus repatriating.
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Consider alternative residency options:
- Some entrepreneurs choose to obtain a second passport or residency in jurisdictions with zero or low personal income tax (e.g., UAE, Monaco).
- While this does not eliminate U.S. filing obligations, it can reduce the overall tax exposure and simplify local compliance.
In summary, the upcoming election is unlikely to dismantle the core framework of U.S. citizenship‑based taxation or FATCA. Both Trump and Biden appear poised to maintain, if not increase, the tax and reporting obligations for Americans living abroad. The decisive factor for entrepreneurs will be how they manage the complexity and cost of compliance while navigating evolving corporate and personal tax rates.
