Cross posted from RenounceUScitizenship.
The discussion of “territorial tax” begins at about the 27 minute mark.
Biden: It’s called a territorial tax, which the experts have looked at, and they acknowledge it will create 800,000 new jobs — all of them overseas, all of them.
I couldn’t believe my ears. There he was, doing the “warm up” speech to introduce Obama. In a stunning display of ignorance, Joe Biden:
1. Ridiculed the idea of “territorial taxation” and;
2. Suggested that “territorial taxation” will do nothing but create jobs offshore.
A number of people took note of Biden’s opposition to territorial tax.
This is great news! It increases the chances that “territorial taxation” will be an issue in the campaign. Furthermore, it opens the door to it becoming a topic in the one and only “vice presidential” debate. Paul Ryan supports “territorial taxation”.
In other words Biden is affirming that it is sound policy for the U.S. to tax the profits that U.S. companies earn overseas. It’s as though he believes that U.S. companies are the property of the U.S. government. But, why not? U.S. citizens (according to the U.S.) are the property of the U.S. government. Certainly, as go U.S. companies, so go U.S. citizens.
In an earlier post I argued that U.S. taxation of profits earned outside the U.S. (“worldwide taxation”), causes severe economic damage to the U.S. The U.S. has by far the highest corporate taxes in the world. By far! “Worldwide taxation” creates disincentives to companies bringing their profits back to the U.S. (“repatriating” profits) Imagine if all of this money could be brought back to the U.S. and put to good economic use. Who knows, maybe the government would be encouraged to do so much spending. But, nobody explains this better than Dan Mitchell.
The Obama Biden ticket is seriously out of touch with economic reality!
Watch the Biden video in its entirety. If you are like me, you won’t believe what you are seeing!
I have never heard of a government tax that actually created any private sector job, but such would seem to be the logical inference to make from his statement. Maybe V.P. Biden doesnt’ know it but the U.S. is the only country that taxes its citizens and corporations on money that they earn outside of U.S. jurisdictional limits and the U.S. has been losing jobs for years now.
It is obvious that his opposition to territorial taxation means that he, just like Paul Ryan and the other Republican members of the Bowles/Simpson committee, is also opposed to the Simpson/Bowles plan that America go to a territorial tax system of its corporations.
Not really surprising to say the least. Has the Romney camp ever made a statement about their opinion on this issue as it relates to individuals? In either case I don’t think that this will be a major election issue since it simply does not concern the vast majority of voters.
*I agree with you both that he’s full of propaganda. We’re the least of his concerns…:'(
@Don Pomodoro- What’s that Mr. Pomodoro? Individuals you say. Uh, we don’t know anything about that. What we do know is that all people are just so tickled pink to be associated with America that they are more than happy to do whatever it takes to please the government. Let me repeat myself and say once again that, a person will gladly do whatever it takes to be counted a part of America.(LOL)
All well and good, speaking of what worked when you were a boy. Come into the present. This is a global world and the US and its citizenship taxation is neither good for the US economy or the World’s economies and neither for any Americans inside or outside the boundaries of the US. Fanning the fires of American exceptionalism — not realism.
Build a big tall fence all around the USA and everyone stay in those boundaries — the message.
*Can anyone tell us at what point in the speech he addresses the tax issue? I don’t feel like listening to 38:30 minutes of this. Many thanks!
@Northern Shrike- 27:27
@recalcitrantexpat: Thank you for the reference
@all I think we may be talking apples and oranges here. Let me restrict my comments to Canada. Canada has a residence based tax system. That means that a resident of Canada pays taxes to the Government of Canada on his/her global income, i.e. including income from abroad, such as investments. Canada has tax treaties with many countries so as to prevent double taxation. It is not clear that “territorial taxation” is meant to be the same as residence based tax; it is raised solely in the context of corporate taxes. There is currently a lot of controversy over devices used by US corporations (e.g. the “double Irish” and the “Dutch sandwich”) which result in companies like Google, Microsoft, Apple, etc. piling up mounds of cash abroad which they want to bring back to the US without paying US corporate income tax. Anyway…as I said, it may be apples and oranges…
Please understand, I am not defending or making a case for Biden!
@Northern Shrike, You are right. Although I am not defending Joe Biden either, and I think territorial taxation would be a good idea, people are confusing things. Worldwide taxation is NOT a rare practice around the world, it’s the norm.
@recalcitrantexpat,
the U.S. is the only country that taxes its citizens and corporations on money that they earn outside of U.S. jurisdictional limits
This is not true, and Grover Norquist is exaggerating when he claims this. Most countries do tax resident corporations on worldwide profits and resident individuals on worldwide income. However, some countries allow various exclusions of foreign earnings of corporations in some cases. Even the US allows an exclusion, on the condition that the earnings are not repatriated to the US. (This sounds illogical to me, the companies get a tax break for NOT reinvesting in the US. In other countries, the conditions for exclusion of foreign income are more reasonable and don’t have to do with repatriation of earnings.)
The difference is that the US is the only country that taxes worldwide income of individuals solely because they are citizens, regardless of their country of residence. Eritrea also taxes nonresident citizens but at a lower tax rate than residents; France taxes its citizens who reside in Monaco as residents of France; and Spain taxes its citizens who move from Spain to a tax haven as residents of Spain for the first five years after they move there. Cuba, North Korea, the Philippines and Saudi Arabia tax resident citizens and resident foreigners differently, but they do not tax nonresidents on worldwide income, regardless of their citizenship. Other than these cases, no country or territory uses citizenship to define taxation. The US tax code is an anomaly because it is riddled with references to “citizens” everywhere.
Summary: territorial vs. worldwide taxation is not the same as residential vs. citizenship taxation.
*Thank you, Shadow Raider. Far better put than I. Just a note on your comment:
Even the US allows an exclusion, on the condition that the earnings are not repatriated to the US. (This sounds illogical to me, the companies get a tax break for NOT reinvesting in the US. In other countries, the conditions for exclusion of foreign income are more reasonable and don’t have to do with repatriation of earnings.)
I think the way the US would explain it is that foreign earnings are taxed at the point that they are repatriated. It sounds less illogical that way.
Again, thanks.
@Shadow Raider- You are right. I misspoke. Even in Canada we are taxed on our world wide income but only if you are deemed a resident of Canada. None resident Canadians are not taxed at all and as a consequence their investment options in their country of residence are not restricted by the Canadian Revenue Agency.
I do believe though that the terms resident based taxation and territorial taxation are often used as synonyms.
@Northern Shrike- to understand that illogical position you would have to understand the perverse logic of the minds of U.S. politicians. It seems rather sad to say but in order for the corporations to not be taxed on their foreign profits they had to appear to offer the politicians a chance to grant them an exclusion. The politicians were glad to do this but they never considered that they were harming America. The important thing to the politician was the maintenance of the government’s right to tax all income earned anywhere in the world even if tax has already been paid on that income.
Basically the government promised to not tax money as long as it was kept out of the country and instead put to work abroad. I agree with the corporations though when they say that a dollar should only be taxed once.
America is a ship of fools.
@Nothern Shrike,
Thanks for your clarification because I was too readily concluding territorial taxation = resident-based taxation without my brain stopping to hear Biden wasn’t saying “resident-based” taxation. I am not clear on the nuances of territorial taxaton — I wonder if those giving the rousing ovation really were? I’ll have to learn more.
*Those guys are only talking about business taxes. There is no hope for change re individual taxes.
*On the 26th of August, I had asked Romney why individuals are excluded from territorial taxation. Yesterday, I got a response which summarizes what is mentioned here, but it doesn’t say if individuals are excluded from territorial taxation or why.
Thus, I’m still planning on writing in Ron Paul on the ballot. At the going rate, this will be the first time that I voted without voting for any candidate listed. Nevertheless, I’ll keep on reading the news:
Why Obama’s tax attack on Romney will backfire
http://money.msn.com/politics/post.aspx?post=6645b7a9-8e1d-4e81-8c8c-7aef994ece2e
Yet, still no mention of individuals 🙁
@swisspinoy,
See new post: https://isaacbrocksociety.ca/2012/09/07/the-americans-in-switzerland-working-group-report-on-abuses-sent-to-members-of-congress-obama-administration/ and my comment: