Dear overseas American community:

In addition to the advice given below and in order to support Section 911, I request that everyone send a letter to Rep. Bill Archer, Chairman of the House Ways and Means Committee, thanking him for championing the foreign earned income exclusion once again and urging him to "stay the course" in support of Section 911 in the important weeks ahead. Mr. Archer will be retiring from Congress next year, so there is very good reason to believe that the current lobbying campaign will be our best chance to increase Section 911 for many years to come. Let's not miss this opportunity!

Thank you in advance for your support. If American communities around the world lend their weight to this campaign in the weeks ahead, I'm confident that we will win!

Best Regards,

David Hamod

TO: Friends of Section 911 Tax Exclusion
FR: David Hamod, Executive Director, Section 911 Coalition
RE: Washington Needs to Hear From You!

In early August 1999, as you may be aware, Congress voted to increase the Section 911 foreign earned income exclusion to $95,000 by the year 2007.

If this increase becomes law, it would represent a major step forward for Americans working abroad and U.S. companies operating in foreign markets.

In the weeks ahead, the White House is expected to veto the $792 billion tax relief package passed by Congress (H.R. 2488, the Financial Freedom Act of 1999). If the bill is vetoed, Congressional Republicans, Congressional Democrats, and representatives of the Clinton Administration will try to negotiate a new tax cut package that is acceptable to everyone. If such negotiations take place, no one knows which provisions of H.R. 2488 will survive and which ones will be jettisoned.

It is CRITICAL that Americans abroad weigh into this debate ASAP in support of Section 911. Our message: No matter what a final tax cut package may look like, it is vital that it include the Section 911 provision passed by the House and Senate (part of H.R. 2488) on August 5. High-level discussions about the tax cut package are expected to continue well into September and perhaps October, so please "keep the heat" on your elected representatives in Washington for as long as it takes to win this crucial Section 911 battle.

The Section 911 Coalition, in case you've never worked with us before, consists of business organizations, non-profit entities, and companies that have come together in recent years to call attention to the importance of the foreign earned income exclusion. The Coalition has some 75 members, including representatives of more than 75 American chambers of commerce overseas and numerous American and international schools abroad. (A list of the Coalition's Board of Directors is attached at the end of this e-mail message.) The Coalition is strictly bipartisan - Republicans Abroad (RA) and Democrats Abroad (DA) both serve on the Board - and we exist for one reason only: to promote the foreign earned income exclusion and its salutary effects on the U.S. economy, America's national interests, U.S. international competitiveness, and American jobs.

As you prepare your faxes/e-mails/calls/letters for Congress and the Clinton Administration, please remember that all too many policymakers in Washington still regard Americans abroad as "fat cats" living "high on the hog" overseas and looking for hefty "tax breaks" to support their lavish lifestyles. It's hard to believe, but that is the perception of many government officials here in Washington, especially those who rarely travel outside the United States. It's incumbent on you, Americans abroad, to set the record straight.

This Action Alert is divided into the following sections:

I. POINTERS AND RESOURCES FOR GETTING YOUR MESSAGE ACROSS

Targets: Please contact EVERYONE on the lists below. (I know that there are a lot of names listed, but each one of these policymakers is very important.) In addition, of course, please contact: 1) your own Member of the House of Representatives (i.e.- the Congressional District in which you vote); 2) your own Senators (each State has two); 3) any Members of Congress with whom you and your employer have special ties. (Members of Congress tend to sit up and take notice when a local company starts talking about jobs, jobs, jobs at stake in the District or State.) If you are a Republican writing to a Republican Member of Congress, say so! If you are a Democrat writing to Democratic Members of Congress, say so! Above all, emphasize the BIPARTISAN support for this small but vital provision of the tax code.

Talking Points: Please see sections V (An Overview) and VI (Recent Legislative Developments) near the end of this e-mail message. These should contain most everything you may need to advocate for Section 911.

Resources: To get more information on a SENATOR, contact: www.senate.gov/ or call the Capitol switchboard at (202) 224-3121. To get more information on a REPRESENTATIVE, contact: www.house.gov/ or call the Capitol switchboard at (202) 225-3121. (If you don't recall which Congressional District is yours, provide your home zip code to the Capitol operator, and s/he can tell you.)

Etiquette: All letters should be addressed to "The Honorable [name]." Letters going to the Senate begin: "Dear Senator [name]." Letters going to the House begin: "Dear Representative [name]." Policymakers do not respond well to "form" letters, so please PERSONALIZE your letters. (FYI, on Capitol Hill, one personalized letter equates to 300 form letters.) Some ideas for PERSONALIZING: cite what the Section 911 exclusion means to you and your family, what it's like to be an "unofficial ambassador" of the USA living and working abroad, why it's important for Washington to be more receptive to overseas Americans and the U.S.-based jobs that they create, and so on.

If you are mailing a letter from overseas, the zip code for the Senate is 20510 and for the House of Representatives is 20515. Because time is so short, I recommend that you FAX your correspondence to Washington. It stands a much better chance of being read than e-mail does.

E-mail Etiquette: E-mails are cheaper and faster than faxes or "snail mail," but they just don't have the same impact on the reader as something typed out on letterhead. If you send e-mails, DO NOT send one message to multiple offices (i.e.- do not put multiple offices in the address box) and DO NOT FORWARD the same message to multiple offices. Please take time to send individual letters to each office. Some Congressional offices ask people to send e-mail messages through the Web site address, and these are often accessible to constituents only. Your e-mail address probably does not indicate what foreign country you are residing in, so I encourage you to spell that out in your message as well.

Once again: We recommend faxes over e-mails simply because they tend to get noticed faster and better.

Finally, please ask each of your friends and associates to contact TEN additional Americans abroad to help us "spread the word" about this unique opportunity. We want to generate a large volume of correspondence as quickly as possible.

Thanks!

II. CLINTON ADMINISTRATION

William J. Clinton President of the United States
T: +1 (202) 456-1414 F: +1 (202) 456-2461 or 456-2883
E: president@whitehouse.gov

Albert Gore, Jr. Vice President of the United States
T: +1 (202) 456-2326 F: +1 (202) 456-7044
E: vice-president@whitehouse.gov

Lawrence Summers U.S. Secretary of the Treasury
T: +1 (202) 622-1100 F: +1 (202) 622-0073
E: neal.comstock@do.treas.gov

Stuart Eizenstat Deputy Secretary of the Treasury
T: +1 (202) 622-1080 F: +1 (202) 622-0073
E: stuart.eizenstat@do.treas.gov

William Daley U.S. Secretary of Commerce
T: +1 (202) 482-2112 F: +1 (202) 482-2741
E: wdaley@doc.gov

SENATE:

Sen. Trent Lott (R-MS) Senate Majority Leader
T: +1 (202) 224-3135 F: +1 (202) 224-4639
E: senatorlott@lott.senate.gov

Sen. William Roth (R-DE) Chairman Senate Finance Committee
T: +1 202-224-2441 F: +1 202-224-5920
E: comments@roth.senate.gov

Sen. John Chafee (R-RI) Member, Senate Finance Committee
T: +1 202-224-2921 F: +1 202-228-2853
E: senator_chafee@chafee.senate.gov

HOUSE:

Rep. Dennis Hastert (R-IL-14th) Speaker of the House
T: +1 202-225-0600 (Speaker) or 225-2976 (personal)
F: +1 202-225-7733 (Speaker) or 225-0697 (personal)
E: speaker@mail.house.gov OR dhastert@mail.house.gov

Rep. Bill Archer (R-TX-7th) Chairman House Ways and Means Committee
T: +1 202-225-2571 F: +1 202-225-4381
E: (for constituents only)

PLEASE NOTE: Since Rep. Bill Archer is THE reason that an increase in Section 911 is now under consideration, I urge EVERYONE to send Chairman Archer a short thank you letter for getting us this far. At the same time, please encourage him to "hold the line" and "stand his ground" in support of Section 911 in the weeks ahead. Archer's continued willingness to go to bat for Americans abroad will be essential if we are to succeed.

IV. CONGRESSIONAL DEMOCRATS

SENATE:

Sen. Tom Daschle (D-SD) Senate Minority Leader
T: +1 (202) 224-5556 F: +1 (202) 224-7895
E: tom_daschle@daschle.senate.gov

Sen. Daniel Patrick Moynihan (D-NY) Ranking Minority Member Senate Finance Committee
T: +1 202-224-4451 F: +1 202-228-0406
E: senator@dpm.senate.gov

Sen. Jay Rockefeller (D-WV) Member, Senate Finance Committee
T: +1 (202) 224-6472 F: +1 (202) 224-7665
E: senator@rockefeller.senate.gov

Sen. Max Baucus (D-MT) Member, Senate Finance Committee
T: +1 202-224-2651 F: +1 202-228-3687
E: max@baucus.senate.gov

Sen. John Breaux (D-LA) Member, Senate Finance Committee
T: +1 202-224-2643 F: +1 202-228-2577
E: senator@breaux.senate.gov

HOUSE:

Rep. Richard Gephardt (D-MO-3rd) House Minority Leader
T: +1 (202) 225-0100 F: +1 (202) 225-7414
E: gephardt@mail.house.gov

Rep. Charles Rangel (D-NY-15th) Ranking Minority Member House Ways and Means Committee
T: +1 202-225-4365 F: +1 202-225-0816
E: rangel@mail.house.gov

V. SECTION 911: AN OVERVIEW

* By their very presence overseas, U.S. citizens help to promote America's national interests. This is true of ALL Americans living and working abroad -- whether they are representatives of major U.S. corporations, cultural or religious institutions, service providers, educators, entrepreneurs, heads of charitable organizations, homemakers, or retirees. These "unofficial ambassadors" of the United States foster a positive image of the USA throughout the world while also contributing to our nation's economic and cultural well-being at home.

* The Section 911 foreign earned income exclusion is vital to the USA because it: 1) Helps to make Americans working abroad more competitive against foreign nationals; 2) Makes U.S. companies more competitive in their bids on overseas projects; 3) Helps to put Americans "into the field" overseas, where they promote U.S. goods and services, repatriate much of their earnings to the USA, pave the way for future growth of U.S. export opportunities, and create hundreds of thousands of jobs in the United States. U.S. citizens abroad traditionally BUY American, SELL American, SPECIFY American, HIRE American, and CREATE OPPORTUNITIES for other Americans overseas.

The bottom line: AMERICANS ABROAD = U.S. EXPORTS = U.S. JOBS.

* The USA is the only major industrial nation that taxes its citizens on the income they earn while working abroad. None of America's major trade competitors do this because they understand the importance of having their workers and companies become well established in foreign markets. Regrettably, America's tax policy is out of step with the rest of the world, and this puts U.S. companies and Americans working overseas at a significant disadvantage when competing against other nations. The United States should tax Americans based not on CITIZENSHIP, but on RESIDENCY -- as almost every other nation in the world does.

* Ideally, in order to give American workers an equal footing in the global marketplace, the United States should emulate our trade competitors and remove all limitations on the Section 911 exclusion. Reinstating the unlimited exclusion would be a forward-looking measure and would do more to move the United States toward a consistent foreign trade surplus than would many other proposals under consideration by Congress. However, removing the cap on the Section 911 exclusion is not very realistic at a time when Congress is grappling with so many other budgetary considerations. With this in mind, the Section 911 Coalition endorses the $95,000 interim measure spelled out in H.R. 2488, the Financial Freedom Act of 1999. This step would help to restore some value to the exclusion that has been eroded over the years as a result of inflation.

* Americans working abroad must pay U.S. income tax on income, benefits, allowances, and overseas adjustments. To compensate for this, companies employing U.S. citizens overseas must pay these American workers more than they would pay other nationals who are comparably qualified. Many employers are not willing to take on this additional burden -- even if the American is more productive and has better professional qualifications. To make matters worse, the overseas employer must also compensate for the American's income tax on many non-salary, quality-of-life items that are taxed as income: reimbursement for the cost of children's schooling, cost-of-living allowances, home leave, emergency travel, and other necessary and often expensive aspects of living overseas. As a result, many overseas employers are replacing U.S. citizens with less expensive foreign nationals because these employers simply aren't prepared to cover the additional tax burden to "Hire American."

* In 1995, the Section 911 Coalition commissioned two of the most comprehensive studies ever undertaken on the foreign earned income exclusion. According to Price Waterhouse and international economists at the Johns Hopkins University: 1) Compensation costs are a significant factor in the ability of firms to compete in overseas markets, particularly for small & medium-sized firms. 2) Without Section 911, U.S. companies would be less competitive against foreign companies whose governments do not tax their citizens' overseas earned income. 3) Sourcing decisions regarding the procurement of goods for overseas projects are heavily affected by one's citizenship. (I.e.- Americans much prefer to "Buy American.") 4) Without the Section 911 exclusion, U.S. firms as a whole would have to reduce employment of American workers, often replacing them with third country nationals who source goods from their home countries. 5) In 1995, elimination of Section 911 would have resulted in a $8.7 billion drop in U.S. exports. Based on 1995 Commerce Department estimates of jobs created by $1 billion in exports (16,532 jobs), ending the exclusion would have resulted in a loss of nearly 150,000 U.S.-based jobs. [These figures do not include service-related jobs or indirect employment, which would likely double the number of jobs lost.] 6) The tax incentive arising from Section 911 represents a larger share of compensation of LOW income than of HIGH income Americans abroad.

* Real world experience shows that Section 911 is especially important to small and medium-sized enterprises (SMEs) operating in overseas markets because: 1) SMEs, when trying to gain a foothold abroad, are more likely than large companies (many with an established overseas presence already) to draw on U.S.-based personnel to penetrate foreign markets; 2) SMEs, because they lack the world-class name recognition that might provide them with open access to foreign customers, traditionally rely very heavily on Americans overseas to specify and purchase their products; 3) SMEs are, by necessity, much more sensitive to individual cost elements and the financial bottom line. Without Section 911, relatively few SMEs could afford to hire Americans to fill overseas slots.

VI. SECTION 911: RECENT LEGISLATIVE DEVELOPMENTS

* Two years ago, under the Taxpayer Relief Act of 1997, Congress and the Clinton Administration agreed to increase the Section 911 foreign earned income exclusion by $2,000 per year for five years. The current exclusion is $74,000, and this will level off at $80,000 in 2002. Beginning in 2008, the $80,000 exclusion will be adjusted for inflation for that year and all subsequent years.

* We are very grateful for the increase in 1997, but the Section 911 exclusion continues to lose ground to inflation. According to a June 1999 study by PricewaterhouseCoopers, the current exclusion, in real dollars, is 45 percent below its level in 1983 (when it was $80,000 in nominal dollars and $134,197 in 1999/real dollars). The value of the exclusion is projected to continue falling after 1999 and is expected to stabilize in the year 2007 at approximately $65,150 in 1999 dollars. Looked at from a "purchasing power" point of view, the value of the exclusion will have plummeted in real dollars from $134,197 (1983) to $65,150 (2007), a devastating loss of nearly $70,000 in 1999 dollars. Put another way, the exclusion was $80,000 in 1983, and it will again be $80,000 in 2008 - 25 years later. As we all know, the dollar today just doesn't buy what it did a quarter of a century ago.

* In mid-July 1999, the House Ways and Means Committee introduced H.R. 2488, the Financial Freedom Act of 1999. The Ways and Means Chairman, Rep. Bill Archer (R-TX), has been the most steadfast supporter of Section 911 in Congress for the past 20 years. Thanks to Archer, H.R. 2488 calls for an increase in the Section 911 exclusion in increments of $3,000 per year beginning in 2003. The exclusion would top out at $95,000 in the year 2007 and, beginning in 2008, Section 911 would be indexed for inflation. The estimated revenue effect (i.e.- cost to the U.S. Treasury) of this increase amounts to $729 million through the year 2009. If it becomes law, the proposal would be effective after December 31, 1999.

* In early August, the Senate agreed to support the House provision to increase the Section 911 exclusion to $95,000 by 2007. Days later, on August 5, the Senate and the House approved the $792 billion tax relief package (H.R. 2488), which contains the Section 911 provision. The bill is expected to be sent to President Clinton in late August or early September, and Clinton has said that he plans to veto it. If the bill is vetoed, Congressional Republicans, Congressional Democrats, and representatives of the Administration will try to come up with a new tax relief package that is acceptable to everyone. If such negotiations take place, no one knows which provisions of H.R. 2488 will survive and which ones will be jettisoned. It is critical that Americans abroad weigh into this debate ASAP in support of Section 911.

VII. SECTION 911 COALITION BOARD OF DIRECTORS

American Business Council of the Gulf Countries (ABCGC)
American Express
Asia Pacific Council of American Chambers of Commerce (APCAC)
Association of American Chambers of Commerce in Latin America (AACCLA)
Caltex Petroleum Corporation
Caterpillar Inc.
Cummins Engine Company, Inc.
Deloitte & Touche LLP
Democrats Abroad
European Council of American Chambers of Commerce (ECACC)
Fluor Corporation
International Engineering & Construction Industries Council
International Schools Services
Middle East Policy Council
National Constructors Association
Occidental Petroleum Corporation
Parsons Corporation
Republicans Abroad
Small Business Exporters Association
Stone & Webster, Inc.
U.S. Chamber of Commerce
United Technologies