In my previous post, I talked about Thomas Piketty's book "Capital in the Twenty-First Century" and the heated debate it has incited over the rapidly increasing disparity in wealth between the wealthiest 1%, who own one-third of everything, and the rest of us, and how that may end up "killing the goose that lays the golden egg" for everyone, the wealthy included. This article in today's "Bloomberg Businessweek" contains a good review of the debate and concludes with the very valid point that, in the modern world, it's a practical impossibility to tax the rich to any significant degree due to the mobility of their wealth and the political power they wield.
So I have a tax idea that is truly worthy of the title of this blog--a truly "hyperloopy" idea. You may not be aware that the United States is among the small number of countries that impose income tax on their citizens and residents even though they may no longer live or work in the U.S. Well, you can take that a step further. The United States, or any country for that matter, can impose any tax it wants on any person who resides anywhere in the world on any basis and for any reason, even though that person has never been a citizen of the taxing country, and even if that person has never resided in that country nor in fact ever had anything whatever to do with that country. The Independent and Sovereign Republic of Kiribati, an island nation in the Pacific Ocean, for example, may perfectly well pass a law imposing a tax of 1% per year on assets exceeding, say, 100 million dollars, owned by any person anywhere in the world, whether or not they have ever heard of Kiribati let alone so much as made a phone call to anyone there. There is no international law that prevents it.
Of course Kiribati wouldn't get very far trying to collect such a tax unless a wealthy person had the misfortune to land in that country unawares. If more important countries started adopting such taxes, though, things could start to happen. Tit-for-tat taxes by one country on another country's citizens would be resolved by agreeing to tax treaties, which is exactly the endgame that's needed in order to tax the uber-wealthy. In fairness, a credit should be allowed against such a tax for all other taxes paid by the individual to any jurisdiction, but it would guarantee that the wealthy would pay at least 1% per year of their assets in taxes, which, if I understand Piketty correctly, is just the amount of taxation needed to prevent catastrophic accumulations of wealth.
2 comments:
Very clever !
But ... given the right of nations to self-determination, I just wonder what kind of magic would be invoked to go from point "A" = concept to point "B" = application. ;D
If, for example, France extended its wealth tax to everyone on earth, the country might try to enforce it through banking laws and tax treaties, which is how the U.S. applies laws outside its borders. It would raise a ruckus, but might eventually result in acceptance and international cooperation. It's sometimes said that there's nothing as powerful as an idea whose time has come, and France has a long history of being the birthplace of powerful ideas.
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