An International Tax on the Rich?

Don’t know if any of you are familiar with Patrick Weil.  He is a researcher at CNRS here in France and he has written extensively on citizenship and integration issues.  He’s done some amazing work (I have read almost all of his books.)

A few days ago this article by him appeared in La Tribune, Une taxe internationale sur les ultrariches.

It is an interesting article for several reasons:   Not only does he talk about Nicolas Sarkozy’s proposal to tax French expats, he notes the recent phenomenon of Americans renouncing citizenship as one reason why Sarko’s proposal was fundamentally flawed.

Mais la proposition de Nicolas Sarkozy n’est qu’une demi-mesure, comme le montre l’exemple des États-Unis : les ultrariches peuvent non seulement changer de résidence, mais aussi de nationalité… Car lorsqu’un État soumet ses ressortissants à des impôts au-delà des frontières nationales, quel que soit leur lieu de résidence, ces personnes optent de plus en plus souvent pour un changement de nationalité. Les États-Unis, seul pays développé à imposer un impôt fondé sur la citoyenneté plutôt que sur le domicile, subissent ce phénomène.

(But Sarkozy’s proposal was only a half measure as the example of the United States shows:  the super-rich can not only change their residency, but also their nationality.  Because when a state insists on taxing its expatriates beyond national borders, whatever their host country, these people choose more and more often to swap nationalities.  The United States, the only country to tax on the basis of citizenship, is experiencing this phenomenon.)

His solution is to create an international tax on the super-rich.  “Un impôt annuel de 1 % sur la fortune appliqué aux 1 210 milliardaires du monde entier aurait représenté 45 milliards de dollars en 2011.” An annual 1% tax to be applied to the billionaires of the world.  He offers a couple of ideas about how this would work in practice and he suggests that the money be used to support international organizations.

Interesting idea.  What do you all think?

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17 thoughts on “An International Tax on the Rich?

  1. It is the anti-thesis of freedom. And that’s exactly what we need is a one-world government that has the authority of super-international taxation. In order to implement tax, you must use violence. This means that we’d have to centralize authority into a single entity which has the power to internationally pillage the wealthy. Then, eventually it will not stop at billionaires, but then millionaires, then even the poor. For power corrupts, absolute power corrupts absolutely.

    And if you doubt that taxation isn’t done at the point of gun, consider how many would actually pay their taxes if there was no threat of fines and imprisonment. Violence is necessary to maintain taxation.

    Consider further: I know Steve Mopsick says I’m putting a target on my back, but the IRS has no power to tax me. The only way they can do that is if they use violence to annex Canada. And then, if they go to the trouble of doing that, why would they stop at taxing expats? Surely all Canadians would be benefiting (already benefit actually in minds of many Americans) from the protection of the United States government. The question is whether the United States, after annexing Canada, would apply belated FBAR fines to all Canadians.

  2. Peter, why would the US annex Canada if they can enforce laws extraterritorily?

    About the violence thing, not really. I work with a system where we “voltuntarily” claim our taxes here. There’s no automatic withholding like on interest income. We claim every payment that comes through and nothing less. Why? Because I don’t want a headache and more work dealing with audits. Still, no one ever goes to jail over taxes here because the government loathes paying for people (and their families) while they stay in jail. Still, I always try to avoid headaches. It’s just easier to pay for the mayor’s next campaign and go about my life.

  3. @ Geeez The statement that I made about violence being necessary in order to make people pay taxes is so absolutely banal that it hardly needs to be said, and yet, as you show, it never hurts to remind people of something they have obviously forgotten. For when it comes to taxes, it is paid at the point of gun–or sword and spears in earlier days. Otherwise, the entity which is taxing has no power to force people to pay.

  4. Most tax revenues in this world are actually collected pretty “easily”. A lot of GST revenues in Canada are actually collected right at the border. I suppose if you were a truck driver who didn’t want to(and its not the drivers money anyways) you could smash your way through the customs house to not pay GST on the trucks cargo. However, the point is whether the truck driver who declares his cargo for GST purposes when crossing the border or the employer who witholds tax out of his employees salaries most tax is collected by parties who have no incentive not to PAY tax. My sense is in fact the idea of behind FATCA is try to “extend” this type of system to banks. In the sense its not the banks “money” that is getting taxed under FATCA its their customers(in reality reported). The issue with FATCA vs the GST is while the GST seemed very ominous to many American compaies doing business in Canada back in the late 1980s the Canadian GST in no way invaded American soveriegnty. Canada has the right under international law to control its borders and force declarers of goods to pay tax and duty. GST was simply a new form of tax under Canadian law.

  5. From reading the original text I noticed he proposed it as a “g20” initiative just what we need more of.

  6. This tax would be levied by the country of residence or, in case of refusal or failure of tax collection, by any other UN countries signatory to this agreement. This tax divided between the nation states could contribute primarily to fund international organizations (as an example and comparison, the United Nations budget is 13 billion). It could be deducted from the contributions to be performed by each State to the various international organizations to which it belongs (priority would be given to development agencies of the UN, the World Bank and International Monetary Fund). If the amount of tax collected exceeds the amount of these contributions to international organizations, the surplus may be used to repay the debts of these nation states with such organizations or for direct financing of expenditure with an international impact, as environmental expenditures or développement.Un such tax would benefit the largest countries and their citizens by reducing the financing needs of these States and deterring tax evasion. It could discourage some people who change their country of residence and / or nationality to do so. For, even if Switzerland, Monaco or the Cayman Islands refused to sign the agreement, their nationals and expatriate residents will no longer travel in the States of the European Union, China, Russia, the United States – all countries that suffer tax evasion and have an interest in the agreement – without the risk of being imposed. The agreement would also benefit poor countries by strengthening international bodies to which they belong. Costs would be borne mainly by the citi-zens of the world’s wealthiest and tax havens, which has become potentially less tractifs. But is not it time? The next president of France to propose to his colleagues in the G8 or G20 the creation of such agreement and such a tax.

  7. I support his idea but am unsure of how it would work in practice. Sarkozy’s idea to tax French expats seems a bit more dangerous to me though and if I were a French passport holder abroad I would be very uncomfortable right now thinking about what Hollande might do.

    I’ve always found the way that French and American politicians view their expats as traitors or criminals to be completely foreign. I couldn’t imagine the same happening in most other EU countries: the EU itself funds people to live, work and study in other EU countries and overseas. It wants people to move around and gain international competencies.

    I don’t believe that there will ever be a call from a Belgian politician to tax Belgian expats. Most people here couldn’t care less and patriotism is, well, almost non-existant…the only thing really holding us together here is the King and Belgian beers 🙂 The Flemish don’t like the Walloons, the walloons don’t like the Flemish and everywhere hates Brussels 😛 Recently Luxembourg started to allow dual citizenship…so what happened was that lots of people in the border area near Arlon started applying in droves, even the local alderman (sort of a town council head). They’re all preparing for the collapse of Belgium. Basically what I am getting at I guess is that in Belgium, Italy and some other countries with a real lack of a tradition of patriotism its almost considered “patriotic” to do exactly what the French and Americans find to be treasonous – move abroad or take out another passport. Check this article out – Totally different culture and climate:

    http://www.dw.de/dw/article/0,,15158900,00.html

  8. Personally I hate this idea. I’m not a billionaire, and never likely to be one. But… camel’s nose.

  9. For one thing for France to start taxing its expats is incompatible with EU law and its previous tax treaty committments. The issue is there absolutely no incentive for a country such as Canada to go along with and the US Senate would never ratify such an agreement despite the hyprocracy because it would mean allowing an international tax on US Citizen US resident billionaries which just isn’t in the cards for many Republicans and even many Democrats.

  10. This is how it starts. Sure, 1% percent doesn’t seem too much, and it would only be applied to the very rich, right? Well, the US income tax was initially 1-7%, and the top rate only applied to income above the equivalent of today’s 10 million dollars. Similarly, the alternative minimum tax was specifically created for 155 very rich people. And we all know how much those taxes have expanded over time.

    Regarding taxes, the only part of the world that seems to be going in the righ direction, in my view, is Eastern Europe. In the last few years, almost all countries there have switched to a flat tax, and in some countries the rate has been slowly decreasing.

  11. @shadow – amazing isn’t it. Sometimes I think that politicians don’t want to do the right thing for fear of their currencies appreciating too much and hurting exports. The US does everything it can possibly do to erode the value of the dollar, I believe for this reason primarily. The solutions are too simple; if they wanted to do something, they would.

    @Don – yep.. I think the US sees us as foreign. I think resident Americans do too. Isn’t government respresentative of the people? One of my favourite pasttimes when I go to a big city is finding an American here and going up to them and speaking in English. They usually don’t expect that so the reaction is usually astonishment. Yes, you can usually pick them out due to the way that they are dressed and look. I think some people show real aversion to ever going native, especially Americans.

  12. Global tax => global government => global tyranny!

    Not a world I would want to live in.

  13. @ Petros who wrote
    The only way they can do that is if they use violence to annex Canada.

    Actually I don’t think violence is planned. The NAU (North American Union) is being negotiated behind closed doors. It’s been a concern of mine for quite some time. This link (over the top perhaps — or is it?) is prior to the Harper majority gov’t but illustrates what I mean.
    http://presscore.ca/2011/?p=2250

    I know the boiling frog meme is a myth but slow, steady, seemingly baby steps, sliding along in secret, can accomplish as much as an outright military invasion. I think in regard to Canada it is the preferred American plan.

    @ FromTheWilderness
    I agree. I prefer a world model of sovereign states. It’s the water-tight bulkhead theory which best resonates with me. I don’t want the whole planet to sink just because one or a few more countries have a blow-out. Obviously I do not like the idea of a New World Order and this 1% tax on the rich sounds like a precursor.

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