Recent report in the BNA Daily Tax Report on the just released Spring 2009 Statistics of Income Bulletin from the IRS announces that Asia eclipsed Europe in 2006 as the continent where US taxpayers had the highest amount of foreign earned income. The $14.7 billion of foreign earned income in Asia represents a 29.1% real dollar growth over 2001. Though the increase in income in Iraq from $0 in 2001 to $1.8 billion 2006 drove a lot of this increase, foreign earned income in China also made a contribution to growth with a real increase of 110.2% to $1.7 billion. With regards to China, this must mean one of five things:
1) US citizens working in China earned 110.2% more in 2006 than in 2001;
2) There were 110.2% more US citizens working in China in 2006 than in 2001;
3) There were less US citizens working in China in 2006 than in 2001, and they earned proportionally more than 110.2% in 2006 than in 2001;
4) There were more US citizens working in China in 2006 than in 2001, and they earned more per capita in 2006 than 2001; or
5) There were more US citizens working in China in 2006 than in 2001, and they earned less per capita in 2006 than 2001.
If we assume that the number of US citizens working in China increased during this time, then we can eliminate 1-3. I'm going to pick number 4 for bubbalicious reasons (as 2001 was a year after one bubble burst and 2006 was the year in which another burst) and because I can't find good data on the number of US citizens living in China in 2006 and 2001 which would give us the correct answer.
It should be noted that foreign earned income refers to income earned by US citizens performing personal services in foreign countries.
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