World’s Highest Corporate Tax Rate Hurts U.S. Economically

Under a simplified “territorial” system, governments would see gains that would offset most, if not all, short-term reductions to tax revenue. Moreover, the long-term gains caused by increased economic activity and decreased compliance costs would dwarf any immediate losses.

World’s Highest Corporate Tax Rate Hurts U.S. Economically

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11 thoughts on “World’s Highest Corporate Tax Rate Hurts U.S. Economically

  1. @omg
    Good find.
    I know the article is referring to the corporate tax structure in the US but the author might just be easy to convince that citizenship taxation on any level is not a good thing. I refer to the following quote from the article: “Under a simplified ‘territorial’ system, governments would see gains that would offset most, if not all, short term reductions to tax revenue.”
    I couldn’t help but wonder if the author of the article might like to get a bunch of emails from ‘Brockers’.

  2. I know the Republicans are inclined to switch to the territorial tax system for businesses. If they win the election we could see a swift move to go territorial.

    The only way I see them getting rid of citizenship based taxation in the near future is if some very rich people are funding their campaigns who would benefit from eliminating it. In America anything is possible.

  3. Or they could eliminate citizenship based taxation because they suddenly realize it’s destroying their ability to export.

  4. Take a look at the end of the British Empire, especially the “finances” and you will see many similarities with the current situation in the US.

  5. Good to see more articles covering this subject…

    This is on the same theme as the Accounting Today story labeled an April Fools joke…

    http://isaacbrocksociety.com/2012/03/30/an-early-april-fools-joke/

    My comment there still holds..

    It is a good April fools joke, but of course it is no joke. I am sure we have been number one in tax complexity and number pages of Tax Statutes (which is around 73,000 pages) for quite a long time. When it comes to numbers of pages for an income tax filing, 57,000 pages reported to be GEs filing, that certainly should make us proud. We’re NUMBER ONE, WE’RE NUMBER ONE…

    What would be interesting, and I am sure more difficult to do, would be to see a Country by Country comparison on an “effective rate” basis. In spite of our high tax table rate, we know that the percent of tax collected as compared to GNP is at all time lows, so something isn’t adding up right. I have to believe that a lot of that has to do with credits, exemptions, deductions, adjustments, special provisions, loopholes, etc, etc, etc..

  6. @omg

    Citizenship-based taxation has been a convenient blunt-instrument of choice for generations of U.S. Presidents. Don’t think much is likely to change there. Let’s go back a mere 51 years for a little peek, shall we?

    http://www.taxhistory.org/thp/readings.nsf/ArtWeb/2B727964C0A28BE5852571690051FD23?OpenDocument

    President John F. Kennedy’s Special Message to the Congress on Taxation, April 20th, 1961:

    III. TAX TREATMENT OF FOREIGN INCOME

    3. Taxation of American Citizens Abroad. It is no more justifiable to provide tax exemptions for individuals living in the developed countries than it is to provide tax inducements for capital investment there. Nor should we permit totally unjustified tax benefits to be obtained by those Americans whose choice of residence is dictated primarily by their desire to minimize taxes.
    I, therefore, recommend:

    –that the total tax exemption now accorded the earned income of American citizens residing abroad be completely terminated for those residing in economically advanced countries;

    –that this exemption for earned income be limited to $20,000 for those residing in the less developed countries; and

    –that the exemption of $20,000 of earned income now accorded those citizens who stay (but do not reside) abroad for 17 out of 18 months also be completely terminated for those living or traveling in the economically advanced countries.

    4. Estate Tax on Property Located Abroad. I recommend that the exclusion from the estate tax accorded real property situated abroad be terminated. With the adoption several years ago of the credit for foreign taxes under the estate tax, there is no justification for the continued exemption of such property.

    5. Allowance for Foreign Tax on Dividends. Finally, the method by which the credit for foreign income taxes is computed in the case of dividends involves a double allowance for foreign income taxes and should be corrected.

    These proposals, along with more detailed and technical changes needed to improve the taxation of foreign income, are expected to reduce substantially our balance of payments deficit and to increase revenues by at least $250 million per year.

    What goes around…

  7. The United States should change their name to Hotel Guantanamo. There’s no way out.

  8. @omghesstillanamerican

    Re:”The only way I see them getting rid of citizenship based taxation in the near future is if some very rich people are funding their campaigns who would benefit from eliminating it. In America anything is possible.”

    Your comment is right on point. That is how things get done in DC… Money lobbies for the change, and the politician needing ever more money for their campaign responds…

    http://isaacbrocksociety.com/2012/04/03/take-the-money-and-run-for-office/

  9. I have a secret fantasy that some billionaires are buying our way out of Hotel Guantanamo.

    Continuing on with the fantasy I imagine that a Supreme Court rules FBAR and FATCA and half of the other stuff the IRS does unconstitutional. Just Me gets all his money back from the IRS.

    Then we all wake up from our nightmare. The End.

  10. The US isn’t going to change. For example, the ACA may mean well with there Repeal Fatca campaign, but it will be largely ineffective.

    Ex-pats are the whipping boys of US politics. Dual citizens have to stand up and fight for their rights in their own countries. There are viable citizenship issues that have to be considered. Does not a citizen of their own country have the right to live there and not be harassed by a foreign tax authority (the IRS) if they have no financial connections with the US (or only minor ones)?

    Why don’t the 5 countries just come out and tell the US….OK we’re give you a hand maybe…with US citizens, residing in the US, with bank data, but hands off our own citizens residing in their own country. Let’s end the “lip service” for fear of offending the US.

    Unless the rest of the world decides the insanity of citizenship-based taxation is the way to go, the rest of the world should impose residence-based taxation on the US for reporting purposes…that’s were it starts…that’s where it ends.

    At the end of the day what is the US going to do about it? Start a trade war on the world for small beer in tax revenue? Now that would be insane.

    Let’s not forget Canada, the UK, Sweden and other countries took US draft dodgers during Vietnam War. The US did not isolate the countries that were the receiptants, but I suppose money is far more important than spilt blood.

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