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U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

nytimes.com

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Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#41

Post by drcoopster »

kspaans wrote: post #24
codegeek wrote: post #20

Earlier quoted context omitted.

I agree that double taxation is crazy BUT lets add the fact that US will tax you ONLY if your worldwide income is over a certain threshold (believe it is $90,000 currently). Not that I am defending this but there is difference between saying that you are double taxed vs you are double taxed only for a certain portion of income

See my sibling reply, it's _not_ double-taxation. If a US citizen works in a foreign country and happens to pay higher income taxes than they would in the US (e.g. in Canada), the US won't charge them any extra.

But it is. If I earn $120k in let's say the Netherlands, I pay NL taxes on all of it and US taxes on about $20k of it. I'm getting double-taxed on the amount over $100k. (Nice round numbers might not be accurate, but the idea is still there.)

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#43

Post by adventured »

lowpro wrote: post #28
colechristensen wrote: post #26

Earlier quoted context omitted.

The fist $100,000 income isn't taxed this way[1]. And it's not abhorrent. If you earned enough money to think it's advantageous to lose one of the most valuable passports in the world, you probably earned that money in large parts due to the support of the people and infrastructure of the United States. You don't get to drop your duties once you win big. [1] $97,600 for 2013, $99,200 for 2014 and $100,800 for 2015

American Imperialism at its finest. "Since we're the best country in the world, you couldn't have possibly become rich without us, and therefore you must pay to leave us!"

You're intentionally blowing the parent's comment dramatically out of proportion to what was actually said, as a cheap excuse to bash America.

The parent never proclaimed America was the best in any regard, nor hinted at such an attitude.

Nobody needs to think their country is the best just to implement negative tax policies. All it indicates at a base level is the desire to maximize tax revenue. That goes for countries with extremely high tax rates on high income, which is semi-common in the developed world: it does not necessarily mean those nations must think their country is the best, therefore they can tax the rich whatever they like and said rich won't leave.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#44

Post by tmaly »

benjaminl wrote: post #5

This is happening because unlike almost every other developed nation the US has a worldwide tax system. Almost every other nation has a territorial tax system. The rest of the world with their territorial system taxes income earned within that country, the US rather taxes income worldwide, regardless of where it is earned. For example, if a British company earns income in Germany, its pays German taxes on its German…

Also, the US has one of the highest corporate tax rates in the world. If you can go to Ireland and pay something close to 10%, its a no brainier.

The tax rates are pretty crazy in the US if you think about it. A single person small business just getting started still has to pay 33% of their profit even if their profit is $1,000 for the entire year.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#45

Post by cr1895 »

wnevets wrote: post #37
colechristensen wrote: post #26

Earlier quoted context omitted.

The fist $100,000 income isn't taxed this way[1]. And it's not abhorrent. If you earned enough money to think it's advantageous to lose one of the most valuable passports in the world, you probably earned that money in large parts due to the support of the people and infrastructure of the United States. You don't get to drop your duties once you win big. [1] $97,600 for 2013, $99,200 for 2014 and $100,800 for 2015

its very typical for people to want their cake and eat it too. They want the benefits of having the US passport but don't want to pay for it.

Or, consider that when you're born in the US you become a US citizen. There was a fuss in the Netherlands recently where some Dutch people who were born in the US but were only there very briefly as a baby, and as such lived a Dutch life in the Netherlands. The article I linked goes into how much of an absolute pain it is to renounce citizenship.

Article in Dutch: http://nos.nl/nieuwsuur/artikel/2044332-amerikaanse-belastin...

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#46

Post by rayiner »

benjaminl wrote: post #5

This is happening because unlike almost every other developed nation the US has a worldwide tax system. Almost every other nation has a territorial tax system. The rest of the world with their territorial system taxes income earned within that country, the US rather taxes income worldwide, regardless of where it is earned. For example, if a British company earns income in Germany, its pays German taxes on its German…

Territorial versus non-territorial taxation isn't such a simple issue. In a non-territorial system, it's very easy for a company to set up internal transfers to shift profits to whatever happens to be the lowest-tax jurisdiction.

Moreover, the U.S. system generally does not double-tax income that is already taxed elsewhere. A U.S. company that pays taxes on German income will receive a credit for those taxes paid against its U.S. liability: http://www.cbpp.org/research/the-fiscal-and-economic-risks-o....

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#47

Post by jaredklewis »

sschueller wrote: post #13
benjaminl wrote: post #5

This is happening because unlike almost every other developed nation the US has a worldwide tax system. Almost every other nation has a territorial tax system. The rest of the world with their territorial system taxes income earned within that country, the US rather taxes income worldwide, regardless of where it is earned. For example, if a British company earns income in Germany, its pays German taxes on its German…

And the US double taxes their citizens living abroad the same way. As an American making the same money as your non-american co-worker you are left with a lot less just for having a US passport. It is even possible you have never set foot in the US yet are required to pay uncle sam's taxes. Wanna get rid of your US passport? Not before you pay 10 years projected taxes and pay an abhorrent fee. You will also be listed…

While I agree, there are a lot of problems with the tax system for ex-pats, and I would love some reform being an ex-pat myself, it's not clear to me why citizens shouldn't be double taxed.

Sure, for some things (national funding for roads, schools, etc...), ex-pats may receive no benefit.

But 53% of US discretionary spending is military spending. In what way does the US military provide more service to resident citizens than ex-pats? Now to my mind, all this military spending doesn't help anyone and just causes a bunch of problems, but that's not how our democracy works. I don't get to opt out of paying for the war in Iraq just because I didn't support it.

And what about programs like NASA, which I do support? They provide no less benefit to me than they do to resident citizens.

Given that large portions of the budget (Military, Veteran's Benefits, International Services together make up 63% of discretionary spending) serve residents and ex-pats, it seems like the most logical thing would be for ex-pats to get a tax discount (which they do), not to pay no taxes at all.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#48

Post by kspaans »

drcoopster wrote: post #41
kspaans wrote: post #24

Earlier quoted context omitted.

See my sibling reply, it's _not_ double-taxation. If a US citizen works in a foreign country and happens to pay higher income taxes than they would in the US (e.g. in Canada), the US won't charge them any extra.

But it is. If I earn $120k in let's say the Netherlands, I pay NL taxes on all of it and US taxes on about $20k of it. I'm getting double-taxed on the amount over $100k. (Nice round numbers might not be accurate, but the idea is still there.)

That's why you claim a foreign tax credit on those income taxes you paid in NL. If NL charges less income tax than you'd be charged in the US, then your tax credits will reduce your taxable income to, say, $20k like you mentioned. But this isn't double taxation because you are only be charged tax to top up the amount of tax you pay to be in line with US income taxes.

This is exactly like state income taxes. It's not "double taxation" because you get to deduct your federal taxable income by the amount you pay in state income tax.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#49

Post by ams6110 »

tmaly wrote: post #44
benjaminl wrote: post #5

This is happening because unlike almost every other developed nation the US has a worldwide tax system. Almost every other nation has a territorial tax system. The rest of the world with their territorial system taxes income earned within that country, the US rather taxes income worldwide, regardless of where it is earned. For example, if a British company earns income in Germany, its pays German taxes on its German…

Also, the US has one of the highest corporate tax rates in the world. If you can go to Ireland and pay something close to 10%, its a no brainier. The tax rates are pretty crazy in the US if you think about it. A single person small business just getting started still has to pay 33% of their profit even if their profit is $1,000 for the entire year.

A single person small business is likely an LLC or S-Corp and taxed on the owner's individual form 1040.
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