Be careful what you wish for, the old saying goes. You might actually get it.

Those members of the community who believe that expatriates take all the best jobs, drive up the cost of housing and are generally over-paid and over-here might find out how much they miss them if a tax proposal passed by the US Senate last week actually becomes law.

American expatriates do not currently pay tax on the first $80,000 of their income if they work overseas. This provision recognises that Americans abroad pay tax on their income in the country in which they are living. This is also true of Bermuda, where they pay up to five percent of their income in payroll tax.

The US is unusual in requiring Americans abroad to pay tax on anything above $80,000. Most countries do not tax their overseas nationals at all.

Now the US Senate, keen to make up for lost tax revenues as a result of a proposed cut in the US dividend tax, see the exemption as a new way of raising revenue.

And in the current mood in Washington, DC, it is easy for demagogues to see Americans living in Bermuda and elsewhere as "tax dodgers" along with companies that do business in the US but are incorporated elsewhere.

For the US, this move is short-sighted and unwise. Most American expatriates intend to return home one day, and send much of their earnings back beforehand. At the same time, Americans abroad can be useful ambassadors for their country. This move would drive Americans home, cutting foreign exchange earnings and making the US more insular than ever.

For Bermuda, the consequences could be even worse. The Bermuda insurance market is largely built on American and British expertise who have come to the Island to take advantage of its infrastructure, sensible regulatory structure, location and tax advantages.

It would be foolish to deny that American individuals are attracted to the Island by lower tax rates, but it is worth noting that their incomes are also higher than they would be in the US to account for the Island's higher cost of living.

If the exemption on income was removed, there would be far less reason for Americans to come to the Island. That would not necessarily mean that the Island would have fewer expatriates - international companies could recruit more from Britain, Canada and elsewhere to make up for the shortfall - but it could damage the international sector in the meantime. That in turn would damage the whole economy which is now heavily dependent on international companies.

The Bermuda market is not anti-American. Indeed, it bailed out the US insurance sector after the September 11, 2001 terrorist attacks and has since helped to lessen the effects of the insurance shortages in everything from terrorism coverage to executive liability.

The number of Americans affected by this move - and it could affect Bermudians with dual citizenship too - in Bermuda is dwarfed by the number of American expatriates around the world. But it is vital that US taxpayers here make their voices heard in Washington, and soon.