Which taxpayer would have better results using the foreign earned income exclusion instead of the foreign tax credit? Alene. She works in the Netherlands and pays taxes at a higher rate than the U.S. tax on the same income. James. He works in Japan and earns significantly more than the annual exclusion. Mariana. Thirty percent of her income earned in Spain is considered earned; the other seventy percent is investment income. Nicholas. He works in South Korea and pays taxes at a lower rate than the U.S. tax on the same income