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I am an American citizen. I live in Mexico for about 11 months out of the year. The US, unlike most other countries, taxes its citizens on their worldwide income.

So I pay US taxes. If I had Mexican income above ~$95,000, I would also owe US tax on that income, but I would receive a credit for the taxes I paid to Mexico. So why aren't we doing this with corporations?

I have no problem with corporations having foreign subsidiaries - there are many good reasons to do so. But to allow them to be set up in such a way that they have no "tax home" (and therefore no tax liability) whatsoever is ridiculous.

US corporations should receive a credit for taxes paid abroad, but if they're paying less than they'd pay in US tax, they should be paying the difference to the US. After all, they're taking advantage of the legal system, the educational system, the infrastructure, etc., etc., there. They're selling their products in the US. Why should they get a free ride when US citizens abroad are on the hook for US taxes, no matter how long they've been abroad, and no matter how little time they spend in the US? If "corporations are people", why aren't they treated like people? It seems so simple...

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Comment Preferences

  •  While the U.S is still the Big Dog on the Planet, (2+ / 0-)
    Recommended by:
    VeggiElaine, blue91

    economically, we need to defend the principle of "pay to play" always, for everyone, everywhere. And at our, already decent rates across the board.

    To me, that's what tax simplification would look like.

    Why in the hell would we want to try to become the low cost leader?

    Leave that to "Bum Fuck, Egypt", or some other hell hole.

    There can be no protection locally if we're content to ignore the fact that there are no controls globally.

    by oldpotsmuggler on Fri May 24, 2013 at 09:14:06 PM PDT

  •  When it comes to most things (3+ / 0-)
    Recommended by:
    leu2500, Nattiq, blue91

    "corporations are people" and are treated as if they were. When it comes to taxes, however, they are somehow suddenly different entities with different rights (and obligations). Go figure.

    None are so hopelessly enslaved as those who falsely believe they are free. -Johann Wolfgang von Goethe

    by achronon on Sat May 25, 2013 at 01:44:54 AM PDT

  •  we do exactly like that with corporations. (5+ / 0-)

    A US corp that makes money in Mexico pays tax to them, owes tax to us and gets a credit for tax paid, just like the individual.

    Typically, though, the corp will do business through a foreign subsidiary, and we don't tax foreign corporations in many circumstances.

  •  The object of the federal revenue system (2+ / 0-)
    Recommended by:
    VeggiElaine, blue91

    should be to keep the dollars moving through the economy and have them come back (revenue = return) to where they came from so they can be properly counted and recycled. That should be one of the factors associated with using dollars, the certified IOUs issued by the U.S. Treasury. Users of our currency have an obligation to send some back for auditing and re-use by someone else. You know, in accordance with that old "give unto Caesar" rule.

    Why does the Congress make exceptions for some individuals and many corporations? Well, to answer the latter first, because Congress is a public corporation and its members have great sympathy for their colleagues in private corporations. It's like birds of a feather flocking together. Also, "you scratch my back, I'll scratch yours." The officers of public corporations (nation and states and cities) do favors for the officers of private corporations because, come election time, they expect to be repaid. So, like the Unjust Steward in the Bible, our public servants dole out public assets to feather their own nests, just in case they're going to get sacked.
    Why does the Congress levy disproportionate taxes on individuals? For the same reason. Dollars are a lever to reward or punish citizens who vote right or wrongly. Since actually doling out dollars in the form of grants to individuals might look like bribery, public officials have discovered that meting out penalties to the disaffected voters works a whole lot better. Indeed, it turns out that threats to withhold services work best of all to turn out the vote. For some reason, people end up being grateful for not being totally deprived on the necessities of life. Using dollars as a sort of middleman facilitates that.

    "You and your children are going to starve or end up malnourished because you don't vote right," sounds harsh and might even spawn an impulse to get revenge. "You and your children are starving because there's not enough money," is a difficult argument to counter, especially as long as everyone perpetuates the myth that Congress has nothing to do with how much money there is. Blaming the banks makes sense 'cause everyone knows that's where the money is kept. This, btw, is the hundreth anniversary of the launching of that myth. 60 years later, Richard Nixon finally deep-sixed the cross of gold, but the myth of Congress' no-contact with the nations' purse strings continues.
    Why persist with the fiction that collection comes first and then comes spending? Is it just a matter of habit that Congress insists on putting the cart before the horse? I think not. What I think is that Congress has discovered the scarcity of dollars to be a positive, an excuse for letting them ration the distribution to supporters and the deprivation of antagonists. Dollars let Congress pick "winners" and "losers" and take revenge on whoever might challenge their authority to do so. Which, since the election of 2008, happens to be the American people as a whole. The sequester is what we get for having voted wrong in 2008 and then again in 2012.

    The last three elections have seen the hiring of 212 new faces in the House alone. While the citizenry might think it has sent a clear message demanding change, that's not how the old guard sees it.  From their perspective, it's obvious that the threats of deprivation (to cut pensions and health care and jobs) were not enough and the sequester is needed to actually follow through. Government by the people just can't be countenanced. Whoever heard of public officials being successfully demoted to public servants? That's a regime change that simply won't do. Letting the public vote individuals out is bad enough. The authority of the office has to be maintained.

    We organize governments to deliver services and prevent abuse.

    by hannah on Sat May 25, 2013 at 06:53:26 AM PDT

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