The deficit in the U.S. balance of trade has been the focus of major initiatives to improve Government export promotion programs and to identify and correct Government disincentives to exports. To adequately promote and service U.S. products and operations in foreign countries, U.S. companies employ a large force of U.S. citizens abroad. There is widespread concern that tax provisions are proving a disincentive to the employment of U.S. citizens abroad and, therefore, are adversely affecting exports. A GAO survey of a group of major U.S. companies having substantial operations abroad revealed that U.S. taxes were an important factor in reducing the number of Americans employed overseas. The tax laws do not fully relieve the companies' employees from taxes on income reflecting the excessive costs of living and working abroad. Companies generally reimburse overseas employees for their additional tax burden, making Americans more costly than citizens of competing countries, who are generally not taxed by their home countries. The complexity of the new tax laws makes compliance difficult and expensive. The congressional intent in passing the Foreign Earned Income Act was to create greater equity between people working abroad and at home and to provide benefits for the U.S. economy by encouraging Americans to work in hardship areas. In practice, the law falls far short of its goal of providing equity and runs counter to the general goal of simplifying U.S. tax returns. The deductions for cost of living, housing, schooling expenses, and home leave transportation do not appear to reduce income earned abroad by the actual costs of these items. The Act fails to consider other costs, the most significant of which is the tax on the tax reimbursement designed to compensate employees for the excess taxes, both U.S. and foreign, that are incurred as a result of working overseas.