With most dual taxation treaty, and automatic sharing between countries (incl. almost all those you cited, starting this and next year), that is slowly going away.
I mean, the US Government just suggested a new taxation at the G7 to prevent this. The EU and US (and UK) are going to fix the issue. But it will probably take a few years.
Are you suggesting that it's not possible to revise and enforce tax laws?
I can see the argument that, if a country attempts to close the gap with taxes, they will just lose a great deal of wealthy citizens and successful businesses, but that can change too. Nations can make new trade deals and treaties.
The problem I find with these global taxes is not the arbitrary percentage set but the agreement and collaboration between countries that implement it. Some specialize in offering tax incentives in differing sectors (i.e. Ireland with their innovation tax). Some are very lax on enforcement or keeping a good eye on things (i.e. Switzerland). Are they really going to scrap that for this global tax if there is high likelihood that not everyone will play ball?
If you only have a subset of countries on the same page, the accounting firms will definitely exploit that and move the wealth away from them, avoiding the tax. I just don't see this working at all any time soon, period - too many corrupt states in play at the moment.
If you go out of the western developed world, you'll find out that tax rates don't effectively exist in much of the developing world. Officially or unofficially. For example saudi arabia and dubai have %0 income tax for example. Not great places to live permanently for other reasons, but they exist. I don't think they will let go of their %0 income tax rates any time soon either.
Panama and the HK only tax Panama and HK source income. They are far nicer places to live. This tax nature is unlikely to change any time soon.
Switzerland has no capital gains tax on share sales. The UK has a horrible tax law called non-domiciled resident that has created the housing affordability apocalypse of london. The wealthy can just pay a flat tax of 30k pounds per year after 7 years of the status. Those 7 years before they do not pay tax on their world wide foreign income.
All of the mentioned nations above are not small micro-states that can be easily bullied, and have too many power players in their country that benefit from the status quo to allow those changes to happen. The only reason why they will change is from higher power players who would benefit from their taxation.
Double taxation in practice is unavoidable for every tax jurisdiction, which is why the USA tilts towards exemptions, exclusions rather than outright credits. It isn’t just the EU, it’s cambodia, Indonesia, India, etc...how are you going to manage 200 different taxation regimes in this new world order?
I agree, but the theory goes that eventually tax havens will disappear. Europe would probably adopt UBI along with us. So those lower rates would go away. China would do something similar or would be too scary for westerners to fully flee to. Right now many companies are fleeing to Europe for better corporate rates while their C level employees benefit from lower personal tax rates in the US.
The parent comments mentions a solution where there can still be different tax regimes like the EU. But, you only pay tax to one place and they take care of splitting. Let the bureaucracy do it's work.
They already do. If you are selling from a tax haven (especially services), there is a 15-30% withholding. Of course, you might be able to recover some of that. But it's a defacto tax.
Nobody here seems to understand that this is not about taxes but rather about re-shoring trade power back to the Western world (which is why it concerns the EU the most). EU/US and other developed countries offloaded a part of their industries 20-30 years ago to under-developing countries to save up on some costs.
These countries (evil 0% tax countries) reduced taxes, wages and regulation to attract these offshores companies. Not because these countries like to play games, but because that's their only attraction point. And here we are, 30 years later or something like that, and the EU/US have lost a significant portion of their industrial base.
Now, they want it back. Either because they have a high unemployment rate (ie: France, Italy) and they have actually people who can do these jobs; or because they think the balance has swift too much in favor of these "international" companies and zero-tax countries. Some of them have become too powerful and one of them even downright dangerous to the world order.
Of course, I'm not holding my breath for the "developing" world. It still lacks lots of the infrastructure and many key industries that the EU/US can pressure with. The place to look at will be South East Asia. Europe seems to have lost here to US/Japan and China. I think Europe is going to come to a dark realization real soon. The US might emerge, again ugh, as the winner. China is hated by pretty much all its neighbors.
Slightly OT, but countries tend to dislike this brave new world where they cannot obviously and clearly collect taxes on business owners that reside in their country. It is going to be a tough day if the other shoe drops on this. No idea what it will look like if it happens though.
Nice twist. A country that is a tax heaven and enables a lot of business to avoid due taxes in other jurisdictions is now concerned that it can't get its own share of taxes.
Also it’s becoming increasingly difficult legally avoid tax so people actually have to physically move to the tax havens instead of just sending their money there.
That doesn't require "radical change in tax law, including breaking more than a hundred tax treaties." to fix though. Those countries can deal with it as they see fit.
It might not be the only country, but such taxation practice is definitely not the norm.
Unfortunately, there's little chance of normalizing the laws with international custom, since I can already see the attack ads about tax breaks for the wealthy.
Which is why tax flight would be a big risk.It compounds over time. You pay taxes on the same money year after year. Nevermind what happens if you save even more. Why stay in an economy that is dying from taxation when you could move to an area with a vibrant economy and avoid the tax.
The US and UK are slowly becoming dinosaurs. The amount of taxes they need to keep functioning as handout societies will be the end of them.
But where will they go as the same thing will be happening to most western countries as their tax base is hollowed out due to the failure of largely trust based basis of their taxation systems, and as more and more economic activity has moved overseas or under the table, and profits stored outside the formal system?
When taken together, it means that Americans are basically unable to ever leave American taxation. No other nation has the ability to restrict their citizens like Americans do while their citizens are abroad.
This is bad news if you want to own a company while living abroad (you can't unless it's American or you'll be double taxed), live in a lower taxed country, or renounce your citizenship if you make more than something like 139k a year.
Any tax applied to America's rich would not result in money leaving the country - it's no longer really possible.
I wholeheartedly support strong inheritance tax. Dynasties are bad things and create bad systems. The US is uniquely positioned to enforce it even if it means that citizens are basically serfs to their country.
One solution to avoid the need to coordinate between countries is tax access to markets, meaning just use VAT. Of course there will be a need to collaborate on equal taxes between states.
But as people said here the loopholes are probably deliberate.
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