Roger Conklin, a frequent contributor at Isaac Brock, has just had a letter published in the Wall Street Journal. I have been off the grid for a few days, so maybe it has been posted somewhere. If I missed it, I apologize, but thought I would pull out out for headline attention.
Territorial Tax: Whose Money Is It?
Nicole Tichon’s July 30 letter says that in many countries, with territorial tax systems that don’t tax corporate earnings when remitted back home, “unemployment is at record levels.”
This ignores the indisputable fact that Germany, a territorial tax country where wage levels are higher than in the U.S. and which has the highest job-creating 12-month trade surplus in the world of $248.5 billion, has its record lowest unemployment rate in 21 years. Germany exports 7.9 times more per capita of its products to China, priced higher than ours, than does the U.S., and Germany has balanced trade with China. Germany is actively recruiting qualified foreign workers to fill German manufacturing job vacancies that are going begging.
Unlike what only the U.S. does, Germany doesn’t subject its citizens living abroad to German income tax on top of the tax they pay their host countries, so Germans relocate abroad and capture foreign markets. Americans, unable to survive this double taxation, stay home, and the U.S. continues to lose export market share.
Compare this with the “fruits” of the U.S. world-wide corporate and citizenship-based personal tax systems, which are a $721.8 billion 12-month world-trade deficit (60% of the world’s total) and $315 billion trade deficit with China. By replacing our world-wide corporate and citizenship-based taxation with the territorial system of most of all other civilized nations, we would not only level the competitive playing field for U.S. corporations and our citizens we could create millions of new American jobs producing for export. This would also eliminate most of the tax-haven problem.
Palmetto Bay, Fla.
A version of this article appeared August 8, 2013, on page A12 in the U.S. edition of The Wall Street Journal, with the headline: Territorial Tax: Whose Money Is It?.
It should be made retroactive. But of course it will not pass. They will probably come up with more FBAR.
I still see people touting the FairTax system which is neither fair nor solves any of the current problems that we face.
1. The Fairtax system still ends up taxing people who don’t use the “benefits” that homelanders use, so we are still paying tax without representation.
2. The Fairtax system still doesn’t alleviate the taxation penalties nor the penalties for “failure to file”.
The only resolution to this is “resident taxation” with an abject apology for “government sponsored theft” by the United States Government and the IRS and elimination of all failure to file penalties to every single person affected by this.
Roger is right.
Go to Germany it’s apparent its economy has been very successful. The infrastructure is in much better shape vs the US. US infrastructure is falling to bits.
The US will never learn.
When you believe you’re already the best, there’s never room for improvement. It won’t be too long before we hear homelanders say they’ve brought freedom to the world at their expense, so it’s now time for the world to pay up.
I’m sure they’re already saying that.
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I’ve seen a few homelanders actually post such a thing in the commentary section on certain news sites, but not lately. I guess it’s because I now just stay away from the American ones in general.
congrats and thanks for Roger to have gotten this in.
congratulations to Roger Conklin for the excellent publicity on problems US expats face with CBT. USG may not change but they cant’ say they weren;t warned as renunciations will continue to skyrocket in spite of the restrictions around doing so growing more and more onerous.
One day those boneheads in Washington are going to wake up and realize that Roger had it right all along. But by then it will probably be too late because the American Diaspora will already be wiped out by the “toxic trio” of CBT, FATCA and FBAR.
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“Toxic trio”, that’s really good.
I doubt they have the intelligence to figure it out.