A Message to VP Joe: Global minimum tax (whatever that means) – Making it a reality

Gotta love that Joe Biden. Well, at least he’s honest. Barack and Joe believe that they can tax the world into prosperity. What a novel idea? A “Global Tax”. I can’t figure out what he means, but he seems to be talking about it in the context of corporations.  That said, I’m quite certain that Biden doesn’t know what he means either.

So, let’s think about this. What could a “global minimum tax” mean? What could it mean? Well, since he did not say an “American minimum tax”, a “global” tax must mean that activities outside the U.S. should pay tax to the U.S.  – a form of  “tribute to the U.S.” Or maybe it just means that all countries in the world should pay a minimum tax to the U.S.  Now that the U.S. has demonstrated its willingness to tax and terrorize U.S. citizens abroad, then  the next step should be to tax and terrorize other countries. Think about it. This would appeal to the average American – a definite vote getter in November. Somewhere between a third and half of Americans don’t pay tax. Why not?  It’s because they are Americans – you know, more American Exceptionalism. Therefore, from an American perspective, it is “right, just and equitable” that the rest of the world should pay tax to the U.S. That is the logical consequence of “American Exceptionalism“.

Now, that we know it’s the right thing to do, the question is how to achieve it. Two methods come to mind.

Method 1: Tax Persons – “I breathe therefore I am!”

The Implementation: Amend the IRC to so that it no longer taxes “U.S. persons”. Why not just tax “persons” on their worldwide income.

Although this would be the collective “wet dream” of Obama, Biden, Geithner, and Levin, it probably wouldn’t work. The U.S. can’t even get its own citizens to pay tax. Not even Secretary Geithner pays all his taxes. Although, the IRS trumpets the success of its OVDI shakedown, the reality is that a very small percentage of people outside the U.S. are tax compliant. Furthermore, what does the U.S. government do to extract “tribute” from those who have no income? The answer is simple – FBAR! We know that a very small percentage of people file FBARs. That’s the beauty of the FBAR. The fewer the number of people who file, the more valuable it becomes as a source of revenue. Remember, the only truly valuable FBAR is the unfiled FBAR. Congress should require  all “persons” to file an FBAR. Although this makes economic sense, it would require that FBARs be translated into all the world’s languages. Congress would have to authorize  this increase in spending.  (Correction: this cost could conceivably passed on to the foreign government – as a contribution to American Exceptionalism.)

Method 2: Tax Governments – The solemn obligations of all nations is to pay “tribute” to the U.S.

Now this one is interesting. In fact it is already being done. It’s just that good old Joe and Barack, don’t realize that this mechanism has been in place for years. Furthermore, this does NOT require amending any existing legislation!

The Implementation: Think back to ancient times –  the Trojan Horse methodology. How? Send U.S. citizens to live in other countries. Encourage them to become dual citizens. For example, Congress could authorize a U.S. tax holiday for the first five  years of your dual citizenship. The tax holiday would obviously mean that tax and information returns would not be required. However, in order to claim the benefits of the holiday, U.S. citizens would be required to file an annual form that the IRS never told anybody about. Failure to file the form (which nobody knows about anyway) would generate draconian penalties. Then send the IRS in to collect those penalties. (Any of this sound familiar?) This would have the effect of bankrupting dual citizens and forcing the host government to pay for these citizens. In other words (and this is what poor Joe needs to understand): the very fact that a U.S. citizen resides outside the United States means that the government of the host country will have to pay “tribute” to the United States. One commentator noted that:

Under FATCA and citizenship based taxation the U.S. is actually colonizing the world through its expats.

You say this couldn’t happen?

In what has also been described in a post by Petros, here is a  about Barclay’s Bank in England and it’s U.S. born Chief Executive. It is a story  about the usual problem that comes with having an employee who must pay U.S. taxes (why would any company hire one?). The bank agreed to pay all of Mr. Diamond’s U.S. tax liability. The shareholders are justifiably upset. Here, in a nutshell, is the reason for the uproar:

Barclarys boss Bob Diamond will receive millions of pounds on top of his lavish pay and bonus package to cover his tax bills.

The bank has been savaged for writing a ‘blank cheque’ to its controversial American-born chief executive.

Shareholders were already outraged that Barclays covered a £5.75million tax bill run up by Mr Diamond last year, lifting his pay package to almost £27million.

But now it has emerged that the bank has made an open-ended commitment to meet his payments to U.S. tax authorities for as long as he remains in his post.

Barclays said the initial so-called ‘tax equalisation’ payment was made because its boss is taxed twice on the same profits and income.

Mr Diamond relocated from New York to London at the start of last year when he was promoted to chief executive, but he remains a U.S citizen and so is taxed by both countries.

The bank had tried to fend off criticism by claiming the payment was a one-off – but yesterday it confirmed that it would continue to pay Mr Diamond’s tax bill indefinitely, after the Daily Mail spotted statements to that effect in the small print of its 286-page annual report.

Labour Treasury spokesman Chris Leslie said: ‘This staggering payment to Bob Diamond won’t impress other staff at Barclays, never mind the wider public at a time when everyone is being asked to pay their fair share to cover losses as a result of the banking crisis.’

I highly recommend this article and particularly the comments. How about these two comments (just to whet your appetite)?

With regard to Bob Diamond as a US citizen, I read on the internet.that he advises Boris Johnson, who still may be a US citizen as well (he was born in NYC), so they’re probably in the same boat. Is Mayor of London having his salary subsidised by the UK to pay the US taxes as well – as Boris would be legally obliged to do so? Hey….Bob if your reading this get Boris to lobby the US government against FATCA legislation – you know what I mean. I think the UK taxpayer should no be subsidising Bob Diamond’s pay because the US taxes him – please go back to Holyoke or Concord ! You’re too expensive as a US citizen.

This case hightlights the citizenship-based taxation non-sense of the US government. All those who are dual US citizens google FATCA to see how this is progressing. Essential the UK has lost this tax revenue to the US government. For example, £5.75M would fund approxiamately 190 teachers in the UK. Why should the US government take this money, when if tables had been turned and a UK citizen goes to America to run a bank the UK government would receive ZERO tax. The US is robbing the UK of tax revenue and this government does nothing about it.

Message to Joe:  The way to a “global minimum tax” is to send U.S. citizens to colonize the world.

Message to Barack: Do you remember Senator Obama’s promises to U.S. citizens abroad? You were so so right. They are important!

Advice: Renounce U.S. citizenship and rejoice!

Need help making the decision: Here is a “Top Ten List Of Reasons To Renounce U.S. Citizenship“.

Message to Congress: Abolish citizenship-based taxation and repeal FATCA.

Prediction: It won’t be long before U.S. citizens are banned from entering any other country.

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5 thoughts on “A Message to VP Joe: Global minimum tax (whatever that means) – Making it a reality

  1. @renouncecitizenship- an out prohibition of U.S. citizen immigration is probably what will have to happen. The other thing that will have to happen is for other countries to stop allowing U.S. citizens to become citizens unless they first renounce their U.S. citizenship.

    If America refuses to acknowledge the dual citizenship of its citizens then other countries must not allow this U.S. farce to be played out on their soil. Barclays should tell Mr. Diamond to take a hike and tell him why. He is too expensive for and his presence is nothing more than robbery of the British people. There is no reason why the British people should have to foot the tax bill for an American. It is a most inefficient way to staff a bank.

  2. @renouncecitizenship- when V.P. Biden talks about a “global minimum tax” I believe that he is referring to a tax that would be applied to U.S. headquartered corporations. What he doesn’t acknowledge is the fact that a global minimum tax on U.S. corporations would just mean that more of them would move their headquarters to other countries. Much in the way that very few ships now operate under the American flag.
    This statement by Biden tells us the the idea of a territorial tax system is something that is not in the cards, even though it was recommended by Obama’s own Bowles-Simpson commission.

  3. In 1960, 17 of the world’s largest 20 companies were headquartered in the US. By 2010, just 6 of the world’s largest companies were headquartered in the US.

    Joe Biden is hoping to bring that number down to 0.

  4. The top 20 companies is an interesting list. On Wikipedia they’re as follows for the US:

    ExxonMobil
    Walmart
    Chevon
    ConocoPhillips
    Fannie Mae
    GE

    The Oil Companies – if Obama gets his way and cuts off the oil companies’ tax break, I reckon 3/6 won’t have much reason to remain headquartered in the US. What are the Americans going to do? Stop buying oil ! Or boycott 70% of all the gas stations in the US? They would whinge, whine, and get Fox news on the case, then it would settle down and be forgotten about. The US has been happy for decades to keep sending dollars to the Middle East and even pay in blood.

    Walmart is pretty international now (China, UK, Mexico, Canada, etc), with 26% of its revenue from outside the US. They’ll probably stay put for the moment – they probably can’t afford to upset the Americans at present without negatively affecting the business.

    Fannie Mae – A department of the US Government not going anywhere.

    GE – 54% of its revenue comes from overseas, do they really need to stay in the US if they didn’t want to? It’s debatable.

    So there you have it – out of the 6, 1 definitely will stay, 3 could be given an incentive if Obama takes back their tax breaks, 1 stays by choice, and the other it’s too soon to make such a choice.

    That top 20 could look different in the years to come –

    http://en.wikipedia.org/wiki/List_of_companies_by_revenue

  5. Although this makes economic sense, it would require that FBARs be translated into all the world’s languages. Congress would have to authorize this increase in spending. (Correction: this cost could conceivably passed on to the foreign government – as a contribution to American Exceptionalism.)

    The IRS’ foreign-language terminology guides (Publication 850) already feature some of the worst translation work I’ve seen. Their translations aren’t even consistent with their other translations into the same language; it’s like they farmed their work out to multiple translators at the lowest bid. The Korean version is particularly egregious: at various points they mistranslate “tax credit”, “tax deduction”, and “tax exclusion” all into the same word.

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