Top 20% of income-earning families in Ontario pay 58% of all taxes in this province of Canada

The situation is quite similar in most Western countries! So next time someone demands higher taxes on the rich keep that in mind!

One may safely assume that the rich in Western countries have been already squeezed by taxes for decades!

What do rich people do when they feel unjustly overtaxed? You guessed it! Move to a tax haven!

What is perhaps the fairest income tax of all known to mankind? A flat tax!

Measuring Provincial Tax Progressivity in Canada | Fraser Institute

Ireland Should Refund Apple About $14.6 Billion In Tax Money

Posted: 8/31/2016

It has been all over the media that the European Commission just has decided in a tax ruling that Apple owes Ireland $14.6 billion in back taxes for lax tax agreements, which the commission classified as illegal state aid. This is officially called a retroactive tax assessment covering the period 2003 to 2014.

This, and other, similar retroactive tax assessments are a huge scandal and a strong sign of greed on part of the EU Commission.

According to news reports, Ireland is embarrassed and unsure whether to accept this money.

I would suggest, Ireland should decide to refund this money immediately to Apple once it is received.

How Many Tax Savings Accounts Do Americans Need?

Posted: 6/21/2015

Trigger

These are two articles celebrating the recent passing of a law in Nevada establishing education savings accounts:

http://www.pacificresearch.org/article/all-states-should-emulate-nevadas-universal-school-choice-plan

http://fee.org/anythingpeaceful/detail/nevada-passes-universal-school-choice

Besides, I know the Goldwater Institute has been a strong advocate for such accounts for some years.

Too Many Tax Savings Accounts In The Tax Code!

Do you know how many different retirement savings accounts there are already available in the federal income tax code (e.g. Simple IRA, Traditional IRA, Roth IRA, SEP IRA, Keogh plan)? Too many!

Besides that we have e.g. health savings and college savings accounts (Section 529).

A Principled View

The current tax code is already complex enough, simplification and tabula rasa are in order not piling on.

1. Savings accounts are complex contraptions serving tax accountants, subsidizing colleges, health providers and so on. They tend to proliferate and become more complex over time once established. Politicians can not resist to tinker with them all the time
2. Savings accounts cloak the reduction of tax revenues and they usually benefit more clever people or those with good tax preparers
3. Foremost, the tax code should serve only to generate tax revenues for government in the most uniform, simple, fair, and transparent way possible. Any welfare programs or government subsidies should be strictly only on the expenditure side of the government budget. This would greatly enhance transparency etc. Politicians would have to explain their largesse etc.

Sin Taxes Are Sins Committed By Politicians

Posted: 2/16/2015 Updated: 2/21/2015, 2/20/2015

Sin taxes such as on alcohol or tobacco or sugary drinks or junk food are highly arbitrary and are feelgood acts of government control!

Sin taxes make governments promote those so called sins to increase revenues (see vodka in Russia or cigarettes in China)!

Sin taxes unnecessarily drive up crimes like smuggling and bootlegging! The higher the taxes, the higher such crime rates. Negative health effects of bootlegged products are well established for decades if not longer!

Sin taxes are highly regressive, affecting lower income citizens more than other! This has been known for at least two centuries!

Conclusion: Abolish all sin taxes immediately!

Big Government Tax Man Eliminates Bank Secrecy Worldwide

Posted: 10/29/2014

Trigger

Just read “50 Staaten schaffen Bankgeheimnis ab”. Here is a Reuters article about the Berlin tax conference 2014. Both articles, regrettably or deliberately, tell us little about the details.

This is probably one of the most shocking news that unfortunately most citizens of the Western world will not care about although it is of paramount importance to each one. It’s about our money!

I do not yet fully understand the implications nor the exact terms of this new international tax agreement.

Totally Pales Edward Snowden

Whatever Mr. Snowden has revealed so far about the activities of U.S. intelligence services this is almost completely negligible.

All the hysteria of a loss of privacy on the Internet is dwarfed by these news!

A New Far Reaching Tax Agreement By OECD

Apparently, as of today 51 countries have already signed this new international tax agreement to allow for more extensive and comprehensive exchange of tax relevant information between national tax authorities.

The U.S. and FATCA (Foreign Account Tax Compliance Act) is reported to be a driving force behind this euphemistically called transparency and tax fairness.

Simply Lower Taxes

The best and cheapest way to reduce tax avoidance and tax evasion is to maintain low taxes. It is that simple!

The tax burden in most Western countries is way too excessive and burdensome. It is a form of expropriation or theft committed by government! When taxes become confiscatory, then evasion of taxes is a legitimate response by citizens! I have blogged here about this subject of taxation several times.

Indoctrination Of Our Students To Favor Tax Increases And Bad Tax Policies

Posted: 9/28/2014

Trigger

Just read “How textbooks are biased toward favoring tax hikes”. This short article is about a study by three economists on how economic textbooks misrepresent the burdens of taxation. In the abstract of this study we read “Most estimates find that raising a dollar of tax revenue costs much more than a dollar. ” (emphasis added).

Indoctrination And Fooling All The Time

The bias toward favoring tax hikes and more government expenditures goes far beyond economic textbooks. What do e.g. high school students learn about this?

What do many citizens say when asked about taxes: Yes, they complain about too high, too complicated etc., but most kind of agree that government needs revenues and that certain government services are necessary. Does the average citizen have any idea how expensive, complex, and how burdensome taxes and tax collection are? I doubt it.

How much do average citizens know about taxation principles? Why do e.g. citizens not question more intensely so called sin taxes, or estate taxes, or the side by side of income and sales taxes, or tax expenditures and much more.

Supposedly, Abraham Lincoln once said “You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time” (emphasis added; Lincoln probably never said this, but anyway). Unfortunately, when it comes to taxes, basically all of the people are fooled all of the time.

Tax Reform Proposal By Lee And Rubio Is So 20th Century

Posted: 9/24/2014

Trigger

Just read “A Pro-Family, Pro-Growth Tax Reform Two simple income-tax brackets: 15% and 35%. End the marriage penalty and increase the child tax credit.” written by U.S. Senators Mike Lee and Marco Rubio.

I usually add emphasis when I quote from sources unless otherwise noted.

Remarks

Both U.S. Senators claim that “the policies and practices of Washington remain stuck in the 20th century, leaving too many Americans unable to access the enormous potential of this new era.”. Big words by two men, but their proposal is extremely stuck in the past century. It is about retooling the personal income tax. This is not good enough!

Their proposal in bullet points:

1. The reform proposal for corporate income tax is run of the mill, nothing exciting. It is the only tax reform proposal that is acceptable. Highlights:
   a) Cut the current 35%, but they do not say by how much (What do you expect from politicians?)
   b) Eliminate “cronyist giveaways”. Whatever this means?
   c) Tax only domestic business earnings. Well, this is overdue anyway. Nothing new!
2. Consolidate the existing income tax brackets into two, i.e. 15% and 35% This stinks! Why not a flat rate! The latter rate, i.e. 35% is way too high! Who is going to pay the higher rate the two politicians do not say as is typical.
3. The two U.S. Senators discovered a new penalty, which they call the “parent tax penalty”. Parents should get higher child tax credits because they raise “raising the next generation of taxpayers, who will grow up to fund the Social Security and Medicare benefits of all future seniors”. Absurd!
4. They want to retool the Earned Income Tax Credit.  These and similar provisions only unnecessarily complicate the personal income tax code and should be eliminated ASAP!

Necessary Reforms

What these two gentlemen are missing is:

1. The corporate income tax should be phased out ASAP. I blogged about this here
2. Social Security should be privatized and phased out ASAP
3. Medicare should be privatized and phased out ASAP

Contra Education Savings Accounts

Posted: 9/24/2014

Trigger

Just came across this article “GOLDWATER INSTITUTE’S WORK ON EDUCATION SAVINGS ACCOUNTS NAMED 2014 TEMPLETON FREEDOM AWARD FINALIST” to remind me that I had planned to blog about this pet project of the Arizona Goldwater Institute for some time.

The Cons

1. The fundamental critique is that the income tax code should not be complicated. Any special provisions like education savings accounts add to the complexity and provide extra jobs  for tax advisors
2. Another fundamental critique is that the tax code should be strictly limited to providing government revenues without any welfare, etc. tax expenditure provisions.
3. Lower the tax rates! Period! Then individuals or families can freely decide how much of their income they want to dedicate to the education of their children. In Arizona specifically, abolish the sales tax!
4. How many different retirement savings accounts are available in the personal income tax code? Too many!
5. Besides retirement savings accounts we also have already health savings accounts
6. What is next?

President Obama Persecutes U.S. Expats

Posted: 9/13/2014

In The News Again

The media are full again of news how the U.S. government treats expats.

NPR radio reported 9/12/2014 that the fee for renouncing the U.S. citizenship very recently jumped from a few hundred dollars to $2000 or so (can’t remember the details and could not find it online).

The wall street journal reported today on the front page of “Money & Investing” in an article titled “” that expats face extreme difficulties to do ordinary banking and investments abroad, because U.S. and foreign banks have been intimidated by U.S. authorities to do business with alleged tax cheats. Here is a recent article about that.

Some more news here.

A Bit Of Statistics & Background

I am presuming that most of these runciants are expats as well. Could be wrong! :-)

According to a Wikipedia article the number of U.S. citizens who renounced their U.S. citizenship climbed dramatically: “There were 235 renunciants in 2008, between 731 and 743 in 2009, and about 1485 in 2010. In 2011, there were 1781 renunciants. A total of 2,999 Americans renounced their citizenship in 2013.”  This is under the Obama administration!

“The United States is the only country in the world which taxes nonresident citizens in the same manner as residents.” (from the same Wikipedia article).

Perhaps small numbers, but these are the proverbial canaries in the coal mine!

An Economic Illiterate U.S. President

The current U.S. President is perhaps the most economically illiterate of all U.S. Presidents next to Franklin D. Roosevelt. Or how do you explain the Great Recession?

A dim witted U.S. President Obama does not understand what impact the monstrous U.S. tax system has on civilian U.S. citizens who live and earn income abroad has. However, the U.S. Congress is not much better by not successfully addressing the issue.

On Arthur Laffer's Handbook Of Tobacco Taxation

Posted: 8/9/2014

Trigger

The Pacific Research Institute recently published Arthur Laffer’s 400 pages Handbook of Tobacco Taxation – Theory and Practice. This insitute goes by the motto “Promoting and Preserving Supply-Side Economics”.

Here is about the book:

“Laffer’s handbook advises governments to construct their tax systems based on four principles. These include:

1. CLEAR PRODUCT CATEGORIES – So that revenue is not lost in “loophole products,” setting precise tobacco product category definitions while amending and updating these categories.

2. SOLID TAX STRUCTURES – The excise tax structure should support stable and predictable collections and ensure, as much as possible, that excise tax increases translate into government tax revenue increases.

3. CORRECT TAX LEVELS – To prevent consumers from turning to lower priced products on the black market following tax increases, ensure the correct tax level is applied to each category.

4. EFFICIENT COLLECTION SYSTEM – To minimize administrative burdens on tax payers and tax collectors, and ensure efficient payment of tobacco taxes by all manufactures and importers.”

A Head Scratcher

Why a famous economist (of Laffer Curve fame) would write such a handbook/monograph on such a narrow topic beats me (I have to admit, as so often, I have not read the book).

I suspect it will be selling well perhaps because many libraries or treasury departments think it necessary to buy this handbook.

In the age of e-cigarettes and vaping this handbook seems so anachronistic!

A Critique

Any serious economist perhaps except for hilarious comedians like Nobel Laureate Paul Krugman would not promote, but call for the immediate phase out of all excise taxes. Simple as that!

Any serious economist knows that taxes are a wedge; taxes introduces distortions; somebody has to pay for it and the ever greedy governments can never have enough money.

Excise taxes in particular are ancient; they originated from some historic coincidence; they are mostly arbitrary, and have no place in a modern tax system.

Especially so called sin taxes are a sin committed by government!

Especially so called sin taxes are a sin committed by government!

The more different taxes there are at any time side by side, the more complex the system; the more the citizen is fooled about the overall tax burden.

Abolish Corporate Income Tax

Posted: 8/5/2014; Updated 8/9/2014

Trigger

Just read “Why corporations shouldn't pay any taxes — zero, zilch, nada It's time to stop feigning surprise and outrage when corporations relocate abroad. They're just logically and legally fleeing an aggressively confiscatory tax code.”

Here is a paper “Abolishing the Corporate Income Tax Could Be Good for Everyone ”on this subject by Laurence Kotlikoff published on 8/5/2014.

Corporate Income Tax Does Not Make Any Sense

Every serious economist with the exception of hilarious Nobel laureates and economists like Paul Krugman knows that corporate income taxes are paid by customers or employees not by the corporation (technically called tax incidence).

Thus, only revenue greedy governments came up with the idea of taxing corporations separately!

In a well designed income tax system only the owners of corporations should be taxed for the distributions they receive. In the U.S. this would also finally eliminate some of the double taxation affecting profits distributed by corporations! E.g. post-war Germany has many decades ago come up with a complicated system of Koerperschaftssteuer (KSt) to eliminate this kind of double taxation, but at the price of high complexity and lots of work for tax advisors.

Abolish The Firearms And Ammunition Excise Tax

Trigger

Today (8/27/2013), I saw news that two Democratic federal lawmakers want to increase the FAET for “on all weapons (except antique guns) covered under the National Firearms Act (which excludes most common guns) from $200 to $500 and index to inflation and increase the transfer tax for any other weapon from $5 to $100. The proposed legislation would also “would nearly double the current 11 percent tax on handguns, while raising the levy on bullets and cartridges from 11 percent to 50 percent.”

Comment

1.       This legislative proposal is unconstitutional. It would make purchasing guns and ammunition almost prohibitive for low income earners. Lawmakers who make such proposals should lose the next reelection.

2.       Special taxes like the FAET should be banned by the constitution anyway. Such special taxes like this one are usually expressions of paternalism or bias by our busybody lawmakers. A good constitution would only allow broadly based taxes like an income tax that applies equally to all citizens without any preferences etc.

The Greatest Tax Reform Of All Times In Honor Of Benjamin Franklin

Posted: 4/19/2011 Updated: 4/15/2015

Update 4/15/15

Just learnt of this quote from one of Ayn Rand’s books titled “The Virtue of Selfishness” (emphasis added):

“In a fully free society, taxation—or, to be exact, payment for governmental services — would be voluntary. Since the proper services of a government—the police, the armed forces, the law courts—are demonstrably needed by individual citizens and affect their interests directly, the citizens would (and should) be willing to pay for such services, as they pay for insurance.”

I fully agree!

A Tax Reform Like No Other

It is not utopian. It would be a triumph of individual freedom and responsibility. Such a tax reform would instantly solve so many problems with taxation. Too many to list here. The benefits of such a radical reform probably far outweigh the concerns. Politicians and civil servants would be held accountable like never before. The beast would be starved. No Taxation Without Representation was the beginning. Taxation Without Coercion is next.

A Tip Of The Hat To Benjamin Franklin

Benjamin Franklin wrote “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”. Taxes will still be certain, but the people will finally be able to vote with their money, because voting by feet is inconvenient. What would Benjamin Franklin think about voluntary taxes?