The U.S. tax system is so burdensome and arbitrary that a 2013 study undertaken by a European think tank ranked it 94th out of 100, right after Zimbabwe, for its impact on business competitiveness. No wonder the U.S. economy is growing at half the pace as during the Reagan-Clinton years and creating about one-sixth the jobs. Recent IRS abuses of American businesses, taxpayers and non-profits for political views and contributions -- and Justice Department reluctance to prosecute malefactors -- only add to perceptions that the U.S. tax system makes America no place to do business. And increasing numbers of businesses and individuals are making that choice. American corporations are merging with foreign competitors for the explicit purpose of locating corporate headquarters and tax residences outside the United States. These so-called “tax inversions” started as a trickle in the 1990s but are increasing. Activist investors are pressuring U.S. corporate executives to maximize stockholders’ after tax profits -- and to shield stockholders from IRS and Justice Department enforcement abuses. Similarly, private citizens living abroad -- unable to obtain bank services, faced with huge tax and compliance costs, and the risk that even a hangnail error or whispered politically incorrect view could put them in the cross-hairs of the IRS -- are disavowing their U.S. citizenship. For private citizens, the costs of leaving America for good are quite high. Those include discriminatorily higher estate taxes for heirs who remain U.S. citizens, and arbitrarily higher taxes on the sale of property and securities. Democrats and Republicans alike say they want tax reform, but Obama is unwilling to reduce the overall tax burdens. He only wants to move around and reduce certain deductions but maintain or increase revenues. More and more businesses and citizens will still want to leave America. And Congress appears not to have the courage to take on America’s KGB -- the IRS.
Posted on: Wed, 06 Aug 2014 15:57:33 +0000
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