The U.S. embassy in Abu D habi has complained to Washington about it. A company in Dubai has lost 22 American employees because of it. And an adviser to the ruler of Sharjah predicts it will hit U.S. exports to oil-rich Arab states.
From Kuwait to Qatar American officials and businessmen in the gulf are clammering for relief - for both personal and professional reasons - from heavier U.S. income taxes.
"Americans don't come here for the good of their health or to enjoy the cultural scene," said a U.S. diplomat in Abu D habi, the sun-scorched, culturally-barren capital of the United Arab Emirates.
"They come here to make money."
But since Congress slapped new taxes on American living abroad many expatriates in the Middle East claim they would be better off back home.
Some have already packed their bags, thereby depleting the American sales force in one of the fastest growing, most keenly competitive markets of the world.
Many U.S. firms in the gulf are replacing Americans with Europeans because, as their tax responsibilities are minimal, they do not demand such high salaries.
Some American companies with large operations in the Middle East are getting round the problem by commuting employees across the Atlantic.
"It's cheaper to keep a driller and his family back home and fly him out to work two months out of three," said an executive of an American oil company.
But small firms with one or two man sales and consultant operations in the gulf are not able to do this.
The result, U.S. officials say, is that the American sales drive in the Middle East, where more than $7 billion worth of American goods and services were purchased last year, is being blunted.
"And the Europeans and Japanese are taking advantage of the situation," a U.S. diplomat in Kuwait said.