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Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

TAX REPORT: Tax Hike Hits Home For Americans Abroad

  • Summary: A change in tax law will hurt American expatriates working in countries such as Russia, Hong Kong and Singapore, where income tax is relatively low and housing costs are high. The new law removes a housing exclusion/deduction for costs over $11,536 per year, and those who earn over $82,400 will now face much higher U.S. income tax. Workers in countries with higher taxes will be less affected, as foreign income tax outlays can be used to offset U.S. tax liability; many European countries fit this definition. While many individuals will feel the brunt of the change, many corporations that guarantee overseas employees tax-equalization benefits (ensure they pay no more tax than they would in the U.S.) will as well. Investment banks such as Merrill Lynch and Credit Suisse, equipment maker Caterpillar, and oil giants such as ExxonMobil and Chevron could see new liabilites as a result of the new law, which will be effective retroactively to Jan. 1, 2006.
Source: New Tax Law Will Hurt Some Americans Working Abroad - And Their Employers