In this blog, we discuss how the results of the US Presidential Election are likely to affect US expats.
Before we get started, we’ve written these blogs about moving to and living in Israel which you may enjoy.
What to do when you get kicked out of your US brokerage account
Can one use a US Power of Attorney in Israel, (and vice versa)?
Checklist for moving to Israel
Financial planning for US citizens living abroad
Selling a house in Israel as a US citizen
Why US Expats should look before they leap into a Roth 401k
Compliance with reporting of foreign assets: tips for US expats to avoid stress
What expats need to know about Brokerage Accounts for non-US residents
And now let’s get into the blog!
The US ex-pat vote
According to ABC News Australia, there are apparently just 4.4 million eligible US voters overseas, and only eight percent typically voted in 2020 (Bennett, 2024). This is insignificant relative to the total 161 million registered US voters. In following, there is no expat lobby, and expat issues are largely ignored.
However, owing to the electoral college system, where the winner takes all delegates in each state (except Nebraska and Maine), it seems that not all votes are created equal. Voters registered in the battleground states, where polls show tight races, have more influence on the election outcome. The states in play include Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania, and Wisconsin. Overseas voters are registered in their state of last residence, and your votes are typically counted last – so there is a case to be made that a few expats could decide the election.
Investments
This chart from Richard Bernstein Advisors (RBA) shows that until now, the party affiliation of the President did not matter that much. Not all is lost when the other unfavored candidate or incumbent wins.
History shows that investors reaped double-digit annualized returns under every President except one in the last 45 years.
This chart shows S&P 500 annualized returns by Presidential time in office for each of the last eight Presidents. The S&P 500 had a negative compounded return only during Former President George W. Bush’s term, which was called the “Lost Decade in Equities.”
RBA also notes that asset class and sector returns have not been correlated to presidential party affiliation – we quote:
“Two recent and rather ironic examples help explain why investors might want to ignore Presidential politics when setting asset allocation. President Obama was considered by some to be bad for business, but Small Cap stocks performed well during his 8 years. Similarly, EM Equities outperformed domestically-focused US Small Caps despite President Trump’s MAGA theme.” (Richard Bernstein Advisors, 2024)
Other areas of focus
We have scanned the internet, YouTube and other media outlets and have found very little in the way of the candidates relating to expat issues. The Center for US Voters Abroad Turnout Project has engaged Julia Louis Dreyfus of Seinfeld and VEEP fame to urge expats to vote (Center for US Voters, 2024). This effort is most likely aligned with the Democratic Party.
On the Republican side, former President Trump did mention in general terms that he would end double taxation. Double taxation can be largely avoided now through prudent planning and understanding the provisions of the current US tax treaties with other countries.
Few people end up paying double tax. However, Uncle Sam taxes worldwide income, and mandates the filing of an annual US tax return even if US taxes are not due. This takes time and costs money. Fines are levied for not filing on time. There are many US citizens, some of whom have never lived in the US, that may be in violation of the filing requirements. This is a source of concern and even trepidation for many.
We believe that a more effective election promise from either party would be to reduce the filing requirements for many expats who do not owe any taxes in the US. This has not been addressed. There are CPAs who specialize in amnesty programs; if relevant, please reach out to us for more information.
Here in Israel, a major issue is the payment of US social security tax by US citizens who are business owners or “Atzmaiim.” Employees and salaried workers are exempt. Once again there are ways to get around this. Some other countries have “totalization” agreements, where one pays only to one social security system, but not in Israel. Once again, we will see if these issues are addressed by the incoming administraton, but we do not expect it to be a high priority item.
In Conclusion
The US election has quite a few important implications for US expats. If you have questions about how this may impact you, please reach out.
We are expat financial advisors located in Israel and the US, serving expats globally.
If you are moving to Israel or another country and don’t know where to start when it comes to the financial side of things, or hold US or foreign assets and need help figuring out your retirement as an expat, please contact us.
Have questions about retiring in Israel? We’re having a series of webinars on this topic. We’re also publishing blogs on this subject.
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Sources
ABC News Australia. (2024, October 15th.) Why expat voters are getting so much attention in the 2024 US election. [Video.] YouTube. https://www.youtube.com/watch?app=desktop&v=2U5Tj2Li3jM
Bennett, Lachlan. (9 October, 2024). ABC News. Asia News Week. Why overseas voters are getting so much attention in the 2024 US election. https://www.abc.net.au/news/2024-10-10/us-overseas-voters-under-the-microscope-election-trump-harris/104449064
Center for US Voters Abroad Turnout Project. [Facebook page]. Facebook. Retrieved on November 4, 2024 from https://www.facebook.com/CenterForUSVotersAbroadTurnoutProject
Richard Bernstein Advisors. (17 September, 2024). Fade the Election.
Disclaimer
Nardis Advisors LLC (“Nardis”) is a Registered Investment Advisory Firm regulated by the U.S Securities and Exchange Commission in accordance and compliance with applicable securities laws and regulations. Registration does not imply a certain level of skill or training. Nardis does not render or offer to render personalized investment advice through this medium. The information provided herein is for informational purposes only and does not constitute financial, investment or legal advice. Investment advice can only be rendered after delivery of the Firm’s disclosure statement (Form ADV Part 2) and execution of an investment advisory agreement between the client and Nardis.
