Last month, Vladimir V. Putin hugged his newly minted fellow Russian citizen, the actor Gerard Depardieu, posing for cameras at the Black Sea port of Sochi. “I adore your country,” Mr. Depardieu gushed — especially its 13 percent flat tax on personal income.
Sochi may not be St. Tropez, but it does have winter temperatures in the 60s and even palm trees. Mr. Putin’s deputy prime minister confidently predicted a “mass migration of wealthy Europeans to Russia.”
Here in the United States, the three-time Masters champion Phil Mickelson recently walked off the 18th hole at Humana Challenge and said he might move from California because the state increased its top income tax rate to 13.3 percent from 10.3 percent.
“Hey Phil,” Gov. Rick Perry of Texas wrote in a Twitter message, “Texas is home to liberty and low taxes … we would love to have you as well!!” Tiger Woods later said that he had left California for Florida for just that reason years ago. Mr. Mickelson can “vote with his Gulfstream,” a Wall Street Journal editorial noted, and warned California to “expect a continued migration.”
Read more at the NYTs Times here.
I haven’t read it yet, but the Economist has a special section on tax havens this month, and the editorial at least points the finger squarely at the US — Delaware in particular — as one of the most offending jurisdictions. And it goes after the Americans for “shameful” hypocrisy in asking other “tax havens” to clean up their act while doing nothing in its own back yard.
I’m still hopeful that when FATCA begets DATCA, the Americans will come to their senses. I won’t hold my breath, though.
@Arrow…
I think this is the one you are talking about? From the Print edition…
The missing $20 trillion
@Just Me
That’s it — I’ll get it read after supper tonight.
Just talked to a former employee of the CIBC. He thinks FATCA is a good idea and will not have an impact on ordinary Canadians. He believes that if American corporations paid there fair share of taxes, the U.S. would not be in this mess. Does he know something I or us at Brock do not know?
Finally , my daughter has seen the light and will contact the consulate in Montreal about renouncing.
@small,
If the U.S. introduced even a 6% VAT tax like most of the developed world, they would wipe out their deficit.
Their corporate tax rates are higher than Canada’s corporate rates.
@small
Just ask him what “Fair Share” is? Definitions please. I hate that meme. It can be anything you want.
There is a strong case that could be made that at a Corporate level there should not be taxation, but no one wants so hear that argument. And given how the Corporate pay structure now favors it’s officers with BIG bonuses, and how the power of the stock holder is very much limited, and with stock options, grants and over the top pay packages with big Executive payouts even for failure, I understand why there is little sympathy for Corporations.
Instead, we create a complicated tax system that means no Corporation that is multinational pays the tax table rate, and the politicians the world over can bestow favors by creating specialized rules and loop holes for their favorite Corporate sponsor to help fund their re-elections. Then Corporations, like GE have big specialized tax departments full of attorneys and CPS which is a profit center, to assure that they don’t pay one time more than legally required and file tax submissions thousands of pages thick. Nothing fair about that waste of productive energy either. 🙂
So it goes.
@small,
re ; “He thinks FATCA is a good idea and will not have an impact on ordinary Canadians”
What did he define as an ‘ordinary Canadian’?
Only those born in Canada of only Canadian parents?
Does that mean that those born duals, or those born in the US but naturalized in Canada aren’t ‘ordinary Canadians’? Or those born dual in the US of Canadian parents aren’t either?
He probably doesn’t know that many of the people he thinks of as ‘ordinary’ Canadians are either duals, expats, or married to, or child of a US person. Or border babies. Or current and ex-greencard holders. And some snowbirds.
There are so many, but it just doesn’t come up a lot, so our numbers aren’t really noticed. Next time, you can mention that it is greater than 1 million in Canada, PLUS their spouses, and children with joint household accounts, RESPs, etc.
US Corporate tax rate is highest in the OECD. That means that any multi national will make absolutely sure that their US tax bill is zero.
I had a $200 milllion Project at a famous Swedish Company, whose usage was 95% for the European market (as were most others). However, these Projects were billed evenly via transfer pricing to the US division. Then, the US division had to run its own Projects with its own budget to develop what it needed.
The US division never reported a profit in 30 years. No one would report a profit in a 35% tax country when they could report it in the 22% tax country instead.
In comparison to USA, every country is a tax haven.
@arrow…
While you are reading The Economist, you might read this one too…
Automatic response
The way to make exchange of tax information work.
@Just Me — thanks, I did read that piece too. On the whole, I was disappointed with the Economist take-out — it covers the tax haven issue, chastises the US for refusing to clean up its own act, but completely misses two key (and related) points in my mind:
1. FATCA is creating a compliance hell for ordinary, non-tax-evading US citizens (and Persons) who have to file all this bizarre paperwork and hire expensive accountants to make sure they don’t make mistakes, and;
2. The root of all this upset is the US insistence on a citizenship-based tax policy — the Economist doesn’t even mention this, and as a journalist I find that unforgivable. I will send them a letter.
Corporations are far more successful at “fleeing” taxes than individuals. Corporations FLEE taxes while individuals get FLEECED.
http://www.blacklistednews.com/Abolish_The_Income_Tax%3A_You_Won’t_Believe_Who_Is_Getting_Away_With_Paying_Zero_Taxes_While_The_Middle_Class_Gets_Hammered/24316/0/38/38/Y/M.html
@Arrow…
You will enjoy this…
You Blew It! The Economist Magazine Attacks Tax Havens
This possibly has been posted before. Located this document on the internet called “The Face of Overseas Americans” by Prof. A. von Koppenfels, Director of Migration Studies at Kent University, Brussels. Following is an excerpt from it on the income of Americans abroad:
“There also remains a widespread impression of Americans overseas living in the proverbial
lap of luxury. Again, while there are certainly very wealthy individuals living overseas, the majority
of overseas Americans are not. One-third of my survey respondents had an after-tax annual
household income of under $50,000, and just under one-quarter more than $100,000. Some twelve
percent preferred not to divulge income information. Even so, the distribution of income shows that
overseas Americans are not uniformly wealthy. There is a great deal of variation on the basis of
country; in countries such as Mexico and Costa Rica, Americans are often of fairly modest means,
having retired there so as to be able to retire in more comfort on a limited income than in the higher-
cost United States. Other Americans in Mexico are the US-born children of Mexican migrants, since
returned to Mexico. Of the three primary sites of my research, Berlin had Americans of the most
modest means, with nearly half (43.9%) having a household income of under $50,000, and one-
quarter below $30,000. Many artists have moved to Berlin, as have others, drawn by an ability to live
cheaply (23.4% of respondents in Germany work in arts or entertainment). London had the most
well-to-do Americans among my survey respondents, with nearly twenty percent of respondents
earning more than $200,000 per year. London is also the city with the highest rate of intra-company
transferees, lawyers and those working in the financial industry (9.6% of respondents in the UK work
in the financial or insurance industry). Nonetheless, there are many other Americans in London,
including students, who are living under very modest circumstances, and working hard to make ends
meet.
Particularly with respect to income, it is important to note that those with the highest income
are the most visible; as one of my interviewees, a short-term intra-company transferee in London,
noted, “you’re probably spending more money than you should but … you have a little extra because your company gave you a stipend and … it’s almost like you know that you are here for a limited
time period so you want to do everything you can to enjoy [it].” For longer-term overseas residents,
the situation is somewhat different, as Paula put it: “[my parents] still kind of look at it like I live in
Disneyland. … my apartment isn’t a tourist attraction, it’s my life.” Paula owns a small two-
bedroom apartment in Berlin, and rents out her second bedroom to tourists in order to help pay the
mortgage. The diversity of Americans with respect to income, again, is significant.”
http://americansabroad.org/files/8613/5972/6757/acapiecejan2013.pdf
In 1938 the German government needed additional revenue and decreed that Jews with net assets of more than RM 5,000 were to pay 20% as a special fee to the government. The plan was to raise RM 1 billion from this special Jewish asset fee, or about 6% of that year’s governmental budget, and Jews were to pay this special fee in four quarterly payments. However, the German government soon discovered that Jews were not as wealthy as generally assumed and the 20% did not bring in the planned RM 1 billion. As a result, a fifth installment of 5% (for a total of 25%) was added to reach the goal.
Wikipedia, citing research by German historian, Götz Aly, said that in Hamburg only 16% of the Jewish population paid the fee and concludes “The widely-held view of the “riches of the Jews” proved to be only a legend.”
https://de.wikipedia.org/wiki/Judenverm%C3%B6gensabgabe
A scan of a Judenvermögenabgabe fee filing is at this link:
http://www.landesarchiv-bw.de/web/juedische_steuerakten_entdeckt/52895
@Innocente
So shameful. Sometimes one loses all faith in human beings.
The point of the above was to show that the Jews’ pockets weren’t as deep as the Nazis had hoped – their wealth was partly a myth. Similarly, the popular image of Americans abroad is that they are uniformly wealthy, which has led various administrations and Congresses to pick their pocket to fill in budget gaps. Just another myth.
@Innocente
Well another point here is that governments can pick out minorities and exploit them if they are unable to defend themselves.