There are two recent articles that are calling attention to the need for tax code “rebuilding” or “trimming” or “pruning” or “you pick a term”. One in the Financial Times and one at the Wallstreet Journal. Is this the beginning of a chorus for real tax code change that could include a move to a Territorial system?… dah, I don’t think so either, but something to keep ones eye on.
I have tweeted references to them here…
Larry Summers-Tax Code needs rebuilding. With 72,536 pages, you think so? If pigs could fly, shred and start over! on.ft.com/zhFlgx
— Marvin Van Horn (@FATCA_Fallout) February 27, 2012
and
Tangled #Tax Code Primed for Pruning?Maybe it is time tree & stump removal, then replanting. Read comments too. on.wsj.com/xS4wJk
— Marvin Van Horn (@FATCA_Fallout) February 27, 2012
I don’t think that the tax code can ever be reformed because it is a very useful election tool for any one seeking office. But if it was reformed I don’t think that the U.S. would ever implement Territorial Taxation, because it is just as much viewed as being unAmerican as is a national health care system. Citizenship taxation is one of the things that makes for American exceptionalism.
It is a part of American exceptionalism that America has the “right” to tax the economies of other nations. Probably the only thing that could make America back off from citizenship based taxation would be if the nations of the world refused to allow U.S. residents to immigrate to their countries. Of course FATCA may make that step unnecessary since it will drive many Americans back to the U.S.
I think that the other nations of the world could make a very cogent argument for the fact that U.S. citizenship based taxation is a threat to their economies and an act of U.S. colonialism.
I remember reading once that the genius of U.S. imperialism lays in the fact that it isn’t burdened by the possession of physical land but is instead exercised its corporations. Now you can add citizenship based taxation and FATCA to that list.
@recalcitrantexpat
Good comment!
The only people I feel more sorry for than American expatriates is Americans living in the US.
Obama Tax Proposals Could Drive Businesses to Canada
“So, Canada cuts its corporate tax rate to 15 percent, lower for small business,” he said. “The U.S. proposes 28 percent, one assumes to remain competitive. Where will border-based business activity reside? Oh, Canada!”
http://www.accountingtoday.com/news/Obama-Business-Tax-Reform-Proposals-Canada-61816-1.html
@omghe’sstillanamerican
Thanks for drawing my attention to that story. Hadn’t been on Accounting Today today… 🙂
https://twitter.com/#!/FBAR_Compliant/status/174237575987470336
@OMG
Sounds like a second Ireland to me. Other EU countries always complain about Ireland’s corporate tax rate of 12.5%, but lots of tech companies are certainly located there still even after the crisis has hit. For example, everytime I see something from Microsoft its always “Made in Ireland”. I would expect lots of companies to migrate to Canada for the exact same reason.
http://en.wikipedia.org/wiki/File:Income_Taxes_By_Country.svg
A corporate tax rate of 28% would be competitive with regards to Japan and on line with most of the larger EU countries, but if next door is so much more attractive wouldn’t seem like it would make much of a difference really!
OK, here’s my idea for a new piece of US legislation: “The Mandatory, Publicly-Posted Tax Legislation Cost-Benefit Analysis Bill of 2012”. Anyone coming up with global economy-destroying brainstorms like FATCA would first have to publish a detailed cost-benefit analysis showing precisely how much revenue and/or cost savings the authors expect to see over, say, the next ten years of implementation. Other geopolitical factors such as damage to international goodwill would also have to be factored-in. At least there would be some baseline measurement for performance that either reinforces the bill’s author’s position or provides ammunition for the opposition. Accountability, in a word – something that seems to have completely disappeared from American government.
Deckard1138 said: “Other geopolitical factors such as damage to international goodwill would also have to be factored-in.”
Asking that of the US is like asking an alligator to think about it’s public image before eating everything it sees.
@Deckard1138
Great Idea, as right now even when Congressman ask the IRS to justify DATCA on the basis of a Cost/Benefit analysis, they just get ignored…
http://waysandmeans.house.gov/UploadedFiles/Letter_on_NRA_taxation_final.pdf
http://posey.house.gov/UploadedFiles/IRS-DelegationLetter-March3-2011.pdf
http://cticompliance.com/assets/pdf/FATCA_LUETKEMEYER.pdf
http://freedomandprosperity.org/2012/letters/second-letter-to-secretary-geithner-on-irs-reporting-regulation/