Maximising the tax take

July 7, 2012

So there is to be more tinkering with the tax laws to prevent the rich avoiding paying their way. No doubt the following day the accountants will be prodding at new loopholes to ensure that the mass of wealth remains in the pockets of those who are stashing huge amounts of it away.

Perhaps it is time for a radical rethink and follow the US down the avenue of worldwide taxation based on citizenship rather than residency. Every “US person” is required to pay tax on their income from whatever source worldwide, regardless of whether they are living in the US or overseas and regardless of where their wealth is laying and attracting interest.

To spread the net even wider a “ US Person” for the purposes of taxation includes anybody working in the US regardless of citizenship and claws income even from the interest of foreign citizens accounts in their home or other country whilst they fall within the US tax net. This way there is no such thing as a tax exile. Short of renouncing citizenship there is no escape from giving the revenue its due simply by virtue of domicile. Even renouncing citizenship is no certain way of avoiding dues. The US imposes an expatriate tax whereby the property of the renunciant is deemed sold and tax paid on the capital gain. In short teh IRS has a tight hold on the short and curlies of every citizen.

If Westminster is serious about plugging loopholes would this not be the certain way to maximise the tax take? Or would that upset too many donors?

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