The absolute and relative dysfunction of the U.S. tax system:
Forget Zimbabwe, U.S. Tax System Ranks At Bottom, Just Better Than Portugal http://t.co/87r8TAPtU8 as per Robert Wood
— U.S. Citizen Abroad (@USCitizenAbroad) September 16, 2014
U.S. Tax System Ranks 94th Out Of 100 — Right Below Zimbabwe http://t.co/q8FXRqTGJa the higher the number the worse the ranking!
— U.S. Citizen Abroad (@USCitizenAbroad) September 16, 2014
The absolute immorality of the way it treats U.S. citizens abroad
USG receives perfect score on tax immoriality index 4 stealing from disabled children's protected disability account http://t.co/7jMlaJ1MRk
— U.S. Citizen Abroad (@USCitizenAbroad) September 16, 2014
Who are the beneficiaries of the U.S. tax system and why it is difficult to change – A message from 1976
Milton Friedman: The imprediments to U.S. tax reform are Congress and the Compliance Condors https://t.co/5qJQ84VxNL – See 5:00 mark #PFIC
— U.S. Citizen Abroad (@USCitizenAbroad) September 15, 2014
I came across this by accident. It has been many years since I read Mr. Friedmans’s Free To Choose – but I remember it as one of the best economics books I have ever read.
The book was turned into a Television series. It can be watched here.
Professor Friedman was not well liked by those on the “left” of the political spectrum. Politics aside, I recommend this short video where he explains his views of “why tax reform is impossible”. Or to put it another way:
Who can possibly have a vested interest in retaining a tax system that is so inefficient, archaic and frankly stupid?
It’s Congress and the Compliance Condors Stupid!
Leaving aside the income tax and corporate tax, it is puzzling why the United States does not have a Value Added Tax or VAT. (After all, the truth is that the “Land of the free” never saw a tax it didn’t like.) Furthermore, a VAT would ensure that tax is actually paid on behalf of people who live in the country – that is the people who use government services. (Under the present system those rugged – “A mans got to do, what a mans got to do” homelanders – are supported by a small number of taxpayers.)
The problem with a VAT is that it is simple, can be administered by anybody, can be understood by anybody, is color blind, party blind, citizenship blind, national origin blind, disability blind, sex blind, is a consistent source of revenue for the government, is not susceptible to fancy tax planning and is related to the purpose of taxation:
Which is exactly why – “That Great Citadel of Freedom of Justice” – The United States of America (AKA “Form Nation”) – would have no use for it. After all, how can one bury “evil” in a value added tax? How can Congressmen do “political favors” for people without a complex Tax Code?
As Professor Friedman notes an incomprehensible tax code is bad for everybody.
This obvious principle can be demonstrated by:
“The Tale Of The Two Stacks”
The complexity of the U.S. tax code resulted in the:
– Suicide of this “Stack“; and
– the attempt to hide legislative evil by claiming that it’s nothing but a myth by this Stack.
But, U.S. tax damage to Americans Abroad is not a myth!
Epilogue:
Critics may note that this video was from 1976 and that there was U.S. tax reform in 1986. I agree that there was tax reform in 1986. But, I would also argue that it did NOT result in overall tax simplification. For example, the 1986 tax “reforms” introduced the PFIC, which we know was discovered by the IRS and unleashed on Americans Abroad as part of the FBAR Fundraiser beginning in 2009.
The total budget exceeds the sum of it’s total revenues less exemptions made for political reasons. Makes sense. Mr Friedman’s speech could have been given last night. Even his eyeglasses would be considered hipster cool today. Where is he now?
Dead.
Milton Friedman died in 2006.
Listening to his speech, it’s even more apparent to me that Congress will never scrap CBT because it’s not politically profitable for them.
Perhaps Democrats Abroad and the ACA should listen to Milton. They ought to be working to challenging FATCA and foreign courts and denounce FATCA on their homepages.
Congress won’t change.
So cool! But what jumped out at me the most was that he said the tax rate would have to be fixated in the constitution. Otherwise it would be open to revision after revision.
Anyone who has watched Dr Milton Friedman or read, with interest, any of his writing knows all they need to know about finance and taxation and shouldn’t be reading this!
I forgot where I saw it, but I saw some “IRS catch-up” ?provisions? on a tax preparer’s website. Anyway, you have to sign off on something or another stating that it was not willful. If the tax owed is less than $1.500/year, then no problem. If you have to declare a bank that is being investigated, you are screwed even more so. Maybe this is old news?
I object to this last part. What if some law-abiding [very unlucky] US-person had more than 100k in a bank in Switzerland, legally – not hiding anything? How about they remove the requirement for even filing – in the first place – if you make less than 100k/year– overseas!!
Reason why is simple:
https://lh6.googleusercontent.com/-dI1laPA6XXE/VB1MTVEjnmI/AAAAAAAACa0/srWXPG3ayLE/w583-h856-no/AmericanHomelander.jpg
Rand Paul’s push to audit the Fed is making some people nervous:
http://www.forbes.com/sites/norbertmichel/2015/02/09/the-fed-is-nervous-and-maybe-thats-a-good-thing/