Ed Ou/AP
Rep. Charles B. Rangel, D-N.Y.

HEART Act Has Unintended Outcome for Legal Immigrants

July 18, 2008 08:54 AM
by Anne Szustek
The finances of repatriating Green-card holders are subject to a law steeped in patriotism, yet these legal U.S. residents are under taxation without representation.

30-Second Summary

The Heroes Earnings Assistance and Relief Tax Act, commonly known by its acronym HEART, passed Congress May 22 and was signed into law by President George W. Bush on June 17. The bill guarantees $2 billion in tax relief for members of the U.S. military and their families, including spouses who have not yet received immigrant visas.

Rep. Nancy Boyda, D-Kan., came out in strong favor of the bill on the House floor in November: “Let’s permanently and finally end the Soldier Tax.”

The HEART Act requires employees of U.S. government contractors operating overseas shell companies to pay Medicare and Social Security taxes. “The provision alone is expected to raise $840 million over a 10-year period,” reports Stars and Stripes.

The rule also goes after Americans who renounce their citizenship in a bid to escape the watch of the Internal Revenue Service. But it also ensnares a benign group lacking a vote.

The worldwide financial holdings of those holding green cards for eight of the past 15 years who move back to their countries of citizenship are liable to taxation under the HEART act.

Condé Nast Portfolio points out, “That includes…like…a share of a relative’s business in Bangalore, or a great-grandmother’s pearls kept in a London flat.”

Repatriation entails giving up U.S. permanent residency. The law is only to affect those grossing more than $139,000 a year, but could dissuade employers from searching out foreign talent, or placing foreigners on long-term temporary visas, which prevent spouses from taking up legal employment.

Headline Link: ‘The (Tax) Law of Unintended Consequences’

Video: ‘Rep. Boyda on Ending the Soldier Tax’

Background: The Heroes Earnings Assistance and Relief Tax Act

Reference: Text of the HEART Act


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