On the taxation of non-resident citizens: Yes, of course, there are lots of ways to legally avoid or reduce taxes, such as treaties, foreign income exclusion, and others. However, non-resident citizens still have to file US tax forms and pay any tax due. As far as I am aware, the US is the only country that taxes based on citizenship regardless of residence. (The US taxes based on residence as well, so that non-citizens residing in the US pay US taxes.)
On gazpacho’s rant: Yes, of course. The problem in looking at comparative taxes is that you have to draw the line somewhere. The question is how to define what you mean by the question of which country has a larger tax burden.
If you are an employer looking at labor costs, then you need to filter in employer’s social security tax and corporate tax rates (often different from individual rates) and various other bits. That is certainly one way of measuring the tax burden.
If you are looking at government expenditures on a per capita basis, you will get a different perspective.
I helped Cecil a bit on this one, and he chose to look at the direct impact on the employee: direct taxes and social security taxes. Yes, there are lots “indirect” impacts such as VAT or sales tax or property tax; there is the question of salary levels that gazpach raises(which may be higher in a high tax environment, although usually salary levels are based on competitive market practice and bear little relation to the tax rates in a country). I considered all those to be part of the cost of living – in an expensive environment, costs of goods and services are higher. We’re not saying cost of living differences aren’t important, we’re saying that we wanted to distinguish between taxes and cost of living.
On the “tax less benefits”: It is certainly reasonable to view the tax burden as being the cost (tax) above benefits/services received. However, I think any method of measuring that would be problematic. I’m paying social security tax but I don’t CURRENTLY receive benefits, so how do I measure that impact? Any method would be open to challenge. The point that Cecil raised is that many high-tax environments (like, say, Sweden) also provide many government benefits. He didn’t mention other high-tax environments, like Belgium, where much of the high taxes are squandered in governmental inefficiencies rather than in providing services.
Fact is that the seemingly easy question of comparing tax burdens is a very complex one.
Canada taxes non-resident Canadians on world-wide income unless they can demonstrate absolutely (whatever that means) no connection within Canada. Real property or bank accounts within Canada seem to be major stumbling blocks that keep Canadians “home” for national revenue purposes regardless of where they may actually live and work.
I find it interesting that none of the “usual suspects” have shown up to debate that “all taxes are theft.” Where are Libertarian, pldennison, Freedom2,et al?
The foregoing posts amply indicate the complexity of comparing the relative taxation rates of countries. If we assume that government income is almost entirely derived from taxes, then it is enlightening to compare total government income to GDP. A very helpful source for this information for the US is the US Department of Commerce Bureau of Economic Analysis. Referring to http://www.bea.doc.gov/bea/newsrel/gdp300p.htm and http://www.bea.doc.gov/bea/glance.htm we can see that for 1998, The GDP was 8.790 trillion dollars and government income (federal, state and local) was 2.826 trillion. Thus the government got a third of every dollar.
From the same reference, total US personal income was 7.391 trillion dollars. I suggest that it’s not really money until it gets personal. GDP seems a bit too theoretical. Doing the calculation, the government in 1998 got 38.2% of our personal income. Since some of us are supporting some others with government benefits, our effective tax rate is probably somewhat higher. Impressive, isn’t it? All those hidden taxes take their toll.
Does anyone have a data source to make such comparisons for other countries? I wonder how they compare by this standard.
<< Canada taxes non-resident Canadians on world-wide income unless they can demonstrate absolutely (whatever that means) no connection within Canada. Real property or bank accounts within Canada seem to be major stumbling blocks that keep Canadians “home” for national revenue purposes regardless of where they may actually live and work. >>
Care is needed here. In the U.K., there is a similar situation, with a distinction between “resident” and “domiciled”. Resident means that the person is physically present in the country; domiciled means that the person still has strong economic ties to the country. (The U.K. is actually more complicated than that, with categories of domiciled, but let’s ignore that.)
The purpose behind such a distinction is to catch the very rich, who maintain their home, savings accounts, trust funds, etc in Canada, but who live in their house in Bermuda for more than 183 days each year. Such people would avoid a significant amount of Canadian tax, were it not for the difficulty of breaking residence. The rules in Canada are a trifle confusing, since what it takes to break “residence” can be somewhat arbitrary. No matter how clear the law, there’s always a gray area around this. Having kids in college, maintaining your house, having continued contributions made to an RRSP (Canadian savings plan), are all indications that the person is really still a resident (that is, still domiciled, although the Canadians don’t use that terminology) even if not physically present in Canada.
All countries tax people who are resident, however defined. Some countries tax people who are domiciled, even if not resident. Only the U.S. taxes people who are neither resident nor domiciled, but citizens.
I think the final impact is important to consider on the issue of taxation. It would appear that the USA has one of the highest taxation rates in the world if one considers the various levels of taxes (federal, state, and in some cases, apparently, city taxes, in addition to sales tax and assorted goodies).
My fiancee has American nationality, is forced to declare EVERYTHING about her finances, was born outside the US, has to pay US taxes, and lives on the other side of the planet in Hong Kong. Where the lovable IRS is opening an office so they can further pile hilarity on the outdated concepts of privacy, freedom, and dignity.
In contrast, Hong Kong doesn’t care how much we buy or what our income is. There’s a flat tax rate of 15%, and only alcohol, tobacco, cars, and perfumes are taxed (luxury items). I never paid taxes when I lived in the US, since (as has been pointed out) Uncle Sam does next to zilch for you and even less for foreigners, regardless of whether you pay your taxes or shirk the responsibility. I sure as hell am not going to pay for the government to bomb innocents in Yugoslavia, thanks.
Now that I live in Hong Kong, I can make as much money as I want on the stock exchange and not be taxed on it. My flat tax is only 15% (nothing additional, and, in fact, there are generous tax deductions available) instead of the cumulative 40-50% that I would have to pay in the US or similar countries. Throwing money out the window if you ask me.
After living here for a few years, I never want to leave! I imagine all the money saved through the simple and efficient taxation rate, and then I think about the people who consider flat tax an insanity. Flat income tax (and nothing else) works really well here, but I guess it keeps less people employed, since the whole culture of scrutiny, bureaucracy, harrassment, invasion of privacy, and so forth does not exist and therefore does not need to employ small armies. You never know, the US is actually moving towards decimalization at long last, perhaps there’s a chance the people up there will see reason as regards flat taxation too.
Also a word about taxing non-residents. I know that Austria is one of the countries that will tax you if you live abroad. A friend of mine who was absent from Austria for a few years was taxed on the highest yearly income he earned during those years, multiplied by the years he had been away. Nice, no?
You know, Abe, the Red Militia are going to have a HELL of a lot of fun “re-educating” you in the farm/work-camp. Hong Kong has no Defense, and lives on the day to day sufferance of e huge not-to-be-trusted nation. With no welfare, no Social security, and no Defence budget- it would seem that even 15% is too high.
My prediction- we will not get to see 2010 without the end of freedom in Hong Kong.
However, the overall tax burden fo rthe US residents is amoung the lowest of the “industrialized nations”.
I know this is getting away from the OP now, but I must make a comment.
Have you been to China lately? By 2010 China will be the biggest economy in Asia, bigger than Japan. By 2020 it will be the biggest economy in the world. (My prediction)
Mao’s China is long gone and capitalism is alive and kicking.
Hong Kong is way to important for the Chinese to mess with and it is more likely that Chinese cities will look more and more like Hong Kong rather than the other way around.
As an example, I’ve traveled to Shanghai on a regular basis for the past ten years. Ten years ago, the place was just muddy streets and old dilapidated buildings and you couldn’t find a decent restaurant anywhere.
Today, there are skyscrapers, clean streets, and great restaurants. It has become a super modern city and it is starting to regain the old splendor it had in the E0’s when it was known as the Paris of the east (so I have heard, I’m not that old). The one down side that is noticeable with this new capitalism and modernization is the increase in the sleaze trade. I guess you can’t get away from it. Sex and money go hand in hand.
Hong Kong’s problem with Mother China is going to be competition , not invasion or indoctrination. Although, Mao’s face can be found here and there in some official buildings in China, no one reads Mao’s “red bookEany more, and the ideas have all but been scraped.
As for “freedomE the Chinese still have a long ways to go to achieve full freedom, but they are moving in the right direction. They are letting go a little at a time, which can be seen with the new capitalism. They have also let go of art, which is now flourishing after 50 years of suppression. Uncensored news flows in freely via satellite, Internet, and imported newsprint, including Chinese language HK newspapers. It’s a country in transition, and although it is true that there are still people on the top who are afraid of letting go, it’s going to be impossible to put a lid on it. If you compare how China is transitioning into a market economy slowly but surely, versus the way the Russians did it, perhaps the Chinese way is not so bad.
Um, it would have been pretty easy for you to find out the answer to this one; in fact, taxes are at some of their lowest rates in the past 50 years. (No)Thanks to Reagan and 6 tax acts during 8 years, sometimes referred to as the Accountants Full Employment period, but believe me we could have lived without it. (I worked for a national large CPA firm at the time.)
Jack did a good job of handling Danielinthewolvesden’s observations, but I also want to add a few more things, especially as regards taxes. Fist of all, government services in Hong Kong are mostly superior to anything you will find in countries with high taxation. Whether it’s immigration, public transport, or the police force, everything works extremely smoothly and efficiently. Kudos to the British for setting all this up (makes you wonder why they didn’t try that it home).
As for the “benefits” Hong Kong residents are missing out on, let’s take a look. There’s a myth out there that taxation is actually for your own good and the good of the country, but frankly that is just government brainwashing. When taxes are at a reasonable level, like in Hong Kong, I can accept that. But taking 50-60% of my salary is definitely not for my own good–it’s for the good of hare-brained politicians who consistently screw up at their jobs.
WELFARE
used to be substandard to developed nations in Hong Kong, however the implementation of the Mandatory Provident Fund now ensures that anyone who works and has to retire for whatever reason will receive a tidy (transferable if they wish) sum invested for them over the period they were employed. There are also programs that teach useful skills to the unemployed, and allowances for those who are trying to find a job but can’t. This is a system that is not abused, unlike obvious cases such as Canada and the US, where many people seem to think welfare is a career choice.
SOCIAL SECURITY
What do you mean exactly? In spite of the huge tax revenues in the US, there is still no healthcare. In countries like Italy healthcare is free in theory but not completely so in practice. In Hong Kong there are public hospitals that will treat you if you have no money, and much better private hospitals that you can choose if you so wish. Not the best arrangement, but it works.
DEFENSE
By this I assume you actually mean Offense, or the ability to hurt other countries and the posturing that comes with that ability. Considering that Hong Kong is part of China, and that the PLA stands guard over this (former) island state, I don’t think there’s too much to worry about. Mind you, we never get to see the PLA officers stationed in Hong Kong, as they are not allowed to leave their barracks.
THE WHOLE COMMIE THING
OK, the commies have always been bastards no matter where they are. But in China Communism was the lesser evil that worked, and that saved hundreds of millions of lives from the starvation and massacre that were routine prior to the revolution. Is change coming? Of course it is, but slowly. Look at Russia, and you see a communist country that attempted to implement social changes before economic changes, with disastrous results. China is doing the opposite, and implementing economic changes before social changes, in order to have a stable base before upsetting anything. Chinese are born entrepreneurs, come 2010 they will be more capitalist than the USA, and China will probably be the largest economy in the world (greater than the USA and Japan combined). There will be at least 1.5 billion Chinese living in China by the year 2010. Even if only 15% of them are above the poverty line, that number is comparable to the entire population of the world’s largest economy, the US (not all of whom are above the poverty line)
HONG KONG AND CHINA
Hong Kong is a cash cow. It is actually the British who fouled up and returned it to the Chinese in 1997, thanks to a miscalculated comment by a HK governor to Deng Xiaoping 30 years ago. The Chinese were quite willing to let the British keep Hong Kong for another 50 years while they gradually changed themselves from totalitarian assholes and murderers into a modern nation. Yes, you can occasionally feel the Beijing squeeze in Hong Kong, and yes, China wants their own cities (such as Shanghai) rather than Hong Kong to be the commercial pearls of the Orient.
I will gladly live with all the above if it means paying reasonable taxes for a system that works, as opposed to unreasonable taxes that are spent on oppressing other nations, bombing innocents, unifying church and state, or attempting to ban abortion! Taxation is not the Word of God, and you ARE entitled to full value for your money.
First, there are any number of countries with lower tax rates than even Hong Kong. The Bahamas, Bermuda, the Channel Islands, Lichtenstein… all sorts of tax havens with very low (or no) income tax at all.
Second, Abe, with due respect, the U.S. does NOT have “one of the highest taxation rates”, no matter how you cut it. Sales tax (VAT) in Europe is generally three to four times the rates in the U.S.; gasoline (petrol) taxes are much higher, etc etc. The problem with comparison is that the taxes are not evenly distributed by income – all sorts of other factors come into play, like family size, purchasing patterns, own vs rent home, etc etc. Thus, the comparisons get fuzzy around the edges; so you can probably find specific U.S. individuals who pay more total tax than specific Swedish individuals – but those are anomalies. The Swedish tax rates are higher on every item than the U.S. tax rates.
Now, your complaint may be the question of WHO the U.S. taxes. The U.S. does tax a broader population segment than does any other country. The rest of the world taxes based on RESIDENCY – roughly, living in the country. The U.S. taxes not only on residency but also on CITIZENSHIP, so that U.S. citizens get taxed regardless of residence.
Generally, there are tax treaties (and foreign income exclusions) to help reduce the tax burden for non-resident citizens, but they still have to file and pay.
Third, the question of services. Abe, I have to say that your attempt to defend Hong Kong is somewhat droll. So Hong Kong has no defense budget because China provides defense? Very nice. But the U.S. has a massive defense budget – let’s not try to compare the per captia costs of defending Hong Kong (geographic area 400 square miles, population 5 million) with the costs of defending the U.S. (geographic area 3.5 milliion square miles, population 250 million).
And, of course, Hong Kong doesn’t have commitments to NATO, doesn’t send troops to U.N. peacekeeping forces, and doesn’t have military bases to defend their interests around the world.
Let’s also think about highways – Hong Kong doesn’t have to worry about building and maintaining transcontinental highways or transportation system. Hong Kong doesn’t have an equivalent to the FDA. Your attempts to pretend that the Hong Kong government provdies all the same services that the U.S. does, are … well… amusing. Even if we are talking about comparable services (perhaps, such as welfare), I trust you will acknowledge that there is a much lower administrative cost (per person) in handling the geographically compact Hong Kong than the geographically enormous U.S.
Hong Kong does NOT have a socialized medical system – don’t pretend that the poverty-level free care there is a socialized system. Hong Kong does NOT have a social security system – the Mandatory Provident Fund was new last year, provides not benefits whatsoever to current retirees.
I’m not trying to attack Hong Kong, but your claims that Hong Kong’s low tax system still provides comparable or better services than the U.S. are, well, ludicrous. Rather than compare Hong Kong tax to U.S. federal tax, we should probably be comparing Hong Kong tax rates to Minneapolis City tax rates. By that standard, Hong Kong tax rates would be outrageously HIGH.
[Edited by C K Dexter Haven on 02-13-2001 at 10:22 AM]
Oh, and Abe- if you think you are living in a free country- two words “falun gong”.
Besides- my army is there to protect me from the Red Guard breaking down my door at midnite & dragging me off to be re-educated. Your “army” is there to facilitate that happening. You have no security what-so-ever. True, China might not take over HK- in fact it would be silly if they did. But that does not stop the fact they they CAN at any time do so- and nothing can be done about it.
Daniel, really. Hong Kong IS China now. It would do China absolutely no good to invade Hong Kong and drag people from their beds and off to the camps (have you ever seen modern China??) because they already own the whole show. How do you like that: the CHINESE own and run one of the only true free economies in the world! Must be staggering to those perpetuating the old stereotypes about China. They have their problems and plenty of them, but try to understand the whole situation before outlining imaginary issues.
As for the Falun Gong, it is really interesting to follow this situation. They have come to Hong Kong in order to protest the persecution on the mainland, since the One Country Two Systems means that Hong Kong enjoys a degree of autonomy. They are allowed to express themselves here. What is your point?
And I would caution you not to be too sympathetic towards the Falun Gong either at this stage–it is too early to assess the situation, but there is an extremely large number of followers of this discipline, and they appear to be remarkably organized. With a network such as they are reputed to be building, they could be aspiring to more than just peaceful meditation, although I am not suggesting anything one way or another yet.
Dex, I’ll challenge your views on US taxation. A broader taxation base (citizenship and residence) and the income tax sliding scale heavily skewed at the higher end, ON TOP of the capital gains tax, ON TOP of the property taxes (including inventory) all mean that the US government is squeezing more people for more cash–the end result is higher final taxation with remarkably few benefits. That is why I said the cumulative and grand total tax is probably a better index than other assessments.
You may have missed my earlier post where I mentioned that the US is not actually the only country that taxes citizenship (I am pretty sure Austria and a few others also do so). To my knowledge, however, it is the only country that has built such a massive tax institution.
Bermuda, the Cayman Islands, Cyprus, Malta, Mauritius, San Marino and the like are tax havens. Hong Kong is not. Hong Kong happens to have very rigid taxation laws as well as tax treaties that preclude it ever being a tax haven–and it is interesting to note that the tax havens mentioned above may no longer be havens in a few years, since there is enormous pressure to end the flow of funds through them.
Sure, Sweden and other countries have higher taxes, but you get more for your money there in terms of services than you would in most other places—therefore you could argue that is value for your money. In contrast, countries like Italy have the habit of adding pretty weird taxes when the budget requires it, i.e. there is an earthquake tax that has been collected for several years to repair damage caused by a particular earthquake in spite of the fact that no one even remembers the earthquake in question. And they have a tax that, although very small, must be paid by both infants and the dead. Such items are as ridiculous as the ratio between excessive cumulative tax paid by US nationals/residents and services received.
I’ll accuse you of glibness at the same time you accuse me of drollness. And you may want to add a few millions on the Hong Kong population figure, although of course the per capita defence costs will still not be comparable. It is also not wise to throw around numbers like these. The US has vast stretches of land that are uninhabited, undefended, and lacking infrastructure, including mountain ranges, forests, lakes, and deserts. If we don’t consider this space, your argument can be eliminated by simply looking at Canada, which has roughly 1/10 the population of the US but is larger, yet has better standards of living and superior services in almost every way (and yes, somewhat higher taxes too, but not enough to account for an area bigger than the US and far more sparsely populated). There are so many levels to consider. On general terms, I accept your point here, BUT here is my earlier point, which is the reason I contributed the Hong Kong example as an illustration of a problem:
This is my problem, and I pointed it out earlier. The question to ask when paying tax—any amount of tax—is What do you get for your money? The tax-funded item the US most excels at is military technology/aggression. Is the fact that the US is currently the strongest superpower and leading warmonger on the planet good value for your tax dollars? Are tax payers satisfied by expensive failures like the Vietnam war, the Gulf War, Yugoslavia, and all the tax-funded (illegal mind you) atrocities committed in those countries? Commitments to NATO? Contributions to U.N peacekeeping forces? At the end of the day and looking at the final results these are quite minimal, and it would be nice if the US finally decided to “contribute” its U.N. fees like every other member country—they certainly have enough tax revenues! Likewise, it would be nice if the US’s “commitment” to NATO were anything other than attempted leadership, to which the US is not entitled.
Do Americans feel comfortable paying whopping total taxes for this level of “defence” and International relations? Many of them do not, and many others simply believe what they are told. It’s all about pushing those taxes through.
Excellent point about the highways, but compare that with the fact that only 6% of the already very limited land in Hong Kong is arable. Or with the fact that Hong Kong consists of over 200 islands. or the lack of potable water. Or the fact that so much of Hong Kong is hilly/mountainous and extremely difficult to build on. Or the costs of land reclamation, since land is such a commodity. Everything has to be imported, from food, to water, to industrial machinery, to building supplies. You mention highways and transportation systems, so I invite you to look into the Tsing Ma Bridge, or the Chek lap Kok airport, which was built in the middle of the sea (and, to my knowledge, is the most expensive airport in the world). The Hong Kong “subway” runs on time all the time and conveys masses of people across the territory efficiently and cheaply. Don’t assume that simply because Hong Kong is such a small area it does not have infrastructure difficulties comparable in scale to larger countries. Since it is one of the most densely populated spots on the planet, imagine the constant work required to keep everything working, from cabling to roads, to SEWAGE!!! The infrastructure undergoes enormous stress simply from sheer use, yet everything works well (no small feat considering that flat ground is rare and much work is conducted on a steep gradient).
Of course not—Hong Kong has to import pre-approved medicine, like everything else, at an increased cost.
No need to belittle my statements with affectations of superiority. That approach has never worked in proving or refuting a claim in intelligent discussions. but what the hell, we all do it from time to time.
I am not sure this has such a large impact—please see my point above concerning Canada and the remarkable population difference.
I’m not pretending it is a full-fledged socialized medical system, I am pointing out that Hong Kong residents don’t have to pay for something they do not have. And I am not sure how good the poverty level free care is in the US (nor if it exists), however in no other developed country have I ever seen so many homeless, ill, and infirm people lying uncared for in the streets of major cities.
You are absolutely right, and I never said it did. the MPF is an excellent solution to the problem of social security. And, once again, Hong Kong residents are not paying exorbitant sums for social security! They are being guided and obliged to build their own retirement funds themselves—keeping them from becoming a drain on the system in the future. That is cheaper, more efficient, and more sensible than penalizing the richest in a given population (skewed income tax) by making them pay for the unemployment of others. If you pay more taxes, you don’t get better service–what’s the point?
I have just explained why these claims are not ludicrous. Hong Kong doesn’t provide better services across the entire board, but it manages to outdo the US in many areas—a sign that Americans are not getting good value for their (cumulative) tax money. Canada, with somewhat higher taxes than the US, has many services that are superior to HK services. But then again, HK residents enjoy a very low flat tax rate along with a simple taxation system (income tax only, no extra layers to add on) and my whole point once again is about the bang for your buck. I think it’s definitely worth it to pay so little for such an efficient system.
Why would you compare a special administrative region like Hong Kong with a city like Minneapolis? An SAR is practically a state in its own right and consists of more than a city. There are even HK SAR passports. Logical extension of your argument could mean that it is inappropriate to compare US taxes to Italian taxes or to Canadian taxes or to Singapore taxes because of the radically different variables involved (land area, population, population density, natural resources, etc.). Maybe it is inappropriate, yet it still seems to me that the most important thing is value for your money. As I said above, Hong Kong is not a tax haven–it is simply a free market economy that operates extremely efficiently.
In a comparison between the American and the Hong Kong systems, it seems to me that value for money is higher in Hong Kong–I would imagine this is the case for most free market economies, among which Hong Kong is, after all, one of the leaders. Every system has its drawbacks, but it is evident that, at the end of the day, some systems work better than others.
I am not going to answer all of Abe’s points, since the focus here is on the comparative tax burden, and not on the quality of life in the U.S. vs Hong Kong.
First: Abe, you are wrong, Austria does not tax citizens, Austria taxes only residents (including part-year residents, etc). Neither does Australia, if that’s what your thinking of. I work in this field professionally, and as far as I am aware, the U.S. is the ONLY country – certainly the only developed country – that taxes citizens regardless of residence.
Second, my population statistics were from a 1997 Atlas which was the closest at hand. I apologize if they were out of date, but they were equally out of date for both countries, and my point was not the raw numbers but the comparative size. You criticized the U.S. for not being as efficient in spending tax dollars as Hong Kong, and I contend that is a ludicrous criticism.
Finally, your comment about the broadness of the tax base (U.S. taxes more categories of people, therefore has a heavier tax burder.) Please. It’s been stated several times in this thread that there are several ways of judging the comparative tax burden:
Tax rate on individuals. This is what Cecil chose to use as the comparsion. Even then, he had to exclude “side” issues like sales tax/VAT, estate tax, wealth tax, immigration tax, luxury tax, and fines for speeding tickets, among other sources of government revenue.
Number of people subject to tax. In this case, I guess that China or India would show up as taxing the most people, although not necessarilly, since a huge number of low-income individuals do not pay tax in those countries. However, this is probably not a reasonable measure of the tax burden so much as a measure of the population.
Number of categories of people subject to tax, which seems to be your argument, and for which, the same objection.
Tax rate on corporations. Again, Cecil chose to focus on the individuals, not the corporations, hence only half of U.S. social security tax is included in the calcs.
Total amount of income taken in by the government per capita. This would in fact be another way of viewing the tax burden, and this may be what you’re getting at when you speak of the broader tax base in the U.S. While this might be a very interesting statistic, it is not one that Cecil felt would be consistent with the way people view the tax burden. We would still face the confusions of what is meant by “government,” and how to account for state/province, city, church taxes (in Germany) etc. We’d also have to worry about exchange rate conversions to make meaningful comparisons; not a problem with Hong Kong, but a significant problem with Europe or Mexico or…
Total amount of expenditure by government, per capita.
Same comments as for total amount of intake by government.
There are probably others that we haven’t thought of. In short, there is no perfect way of measuring the comparative tax burden with any precision. One can always quibble about the methodology of any attempt to compare tax in different countries.
Apparently not. Research on the Web was tricky, since most Web pages are concerned with issues other than double taxation, and I am no tax expert. However, I found this reference in http://www.Britannica.com (italics are mine): “Some countries (including the United States) exercise the right to tax the whole income of their nationals even if it is earned abroad.” (from http://www.britannica.com/bcom/eb/article/3/0,5716,115313+9+108613,00.html?query=double%20taxation). Notice that it says “some countries”, and not “exclusively the US”. A list of “some countries” would be useful, but I could not find one.
Secondly, I double-checked with my Austrian friend, and he was indeed threatened with taxes for past income upon his return to Austria after residing abroad as an entrepreneur (he is now in the process of dropping Austrian nationality and lives abroad once more). Thirdly, I called up the Austrian consulate and spoke to the vice-consul, and asked him whether an Austrian national has to pay Austrian taxes if he earns an income and resides outside Austria. His answer: “it depends”.
Apparently the situation is complicated, but from my understanding Austrian citizens who reside abroad may be taxed on their income depending on circumstances (including tax treaties and employer status). For example, if the Austrian person residing abroad is employed by an Austrian company, he may be subject to Austrian income taxes. The example of my friend illustrates that: when he was retro-taxed, they picked his highest yearly income during the years he was gone, and multiplied that by the years of absence. Ordinary administration? Maybe or maybe not, but there you have the facts of the matter.
Relative size comparison is not the end-all be-all of this argument, far from it. I explained this point already. I also don’t understand the point of comparing size or population in this argument—again, I explained why in a previous post. It is not my criticism that is ludicrous, seeing as how it was supported by several points. If you disagree with a point kindly explain why, and stop trying to ridicule my position in the discussion.
Yes. I am not arguing that and in fact I believe I have qualified my statements before, especially as regards income tax.
That’s great. I am not assaulting the research conducted by Cecil or you; I am engaging in a discussion that has bearing on that research, and that puts it in a new perspective. Among my issues were discussions on how judiciously tax dollars are put to use, the value and devaluation of taxes, the responsibilities of the people and its government, the benefits and fairness of flat tax, and so forth. All rather valuable in a discussion like this.
I don’t feel that this matter should be looked at in a purely mechanical way. Many of these issues involve ethical considerations --my previous posts make this point-- and ethical considerations were not touched upon in the original column for obvious reasons. Again, examples are above.
Elucidation: I am not quibbling about your methodology. But I feel it is important to consider issues other than the pure mechanics of tax laws and percentages. Hence my arguments about “value for your taxes’. In the case in question, the USA, the efficiency level (being the services you receive for the percentage of your money that winged its away to the government) is lower than Hong Kong, with its much smaller area yet hugely higher population density, and also lower than Canada, with its greater area and much lower population density.
The original column by Cecil ends with “Compared to other developed countries, we don’t pay much in taxes and we don’t get much". I agree with it insofar as the methodology used by Cecil took into account very precise segments of data. Looking at a broader picture may be, as you say, a situation too difficult to quantify, but discussion on the topic certainly helps to give a clearer idea. For example, it has been mentioned that petrol in Europe is much more expensive than in the US, but that could have something to do with economies, regional resources, distances, the fact that American cars consume more fuel than European and Japanese vehicles, the low priority given to rail infrastructure in the US, and the dubious strategies of fuel taxes in Europe–which reputedly help to pay for upgrading railway systems, while at the same time discouraging fuel consumption (considering the state of our planet, this is one of the moral issues linked with taxes).
It’s a big picture, and one brief article, even if written by Cecil, is not going to cover all of it.
Also Abe, from reading the anecdote concerning the person from Austria, it seems clear to me that it proves the point that he did not have to pay taxes while he wasn’t a resident of Austria. As far as the circumstances that govern the paying of taxes by non-resident Austrians, it seems like they are much more restrictive than the conditions under which US citizens living abroad are required to pay taxes.