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Thursday, November 21, 2013

Ordower: A Grand Unified Global Income Tax

Henry Ordower (Saint Louis), Utopian Visions Toward a Grand Unified Global Income Tax:

Over the past several decades, many countries that historically relied on progressive taxes on income, wealth, and decedents’ estates for much governmental revenue have shifted to less progressive and regressive taxes on labor and consumption. Reasons for the shift are many but include international tax competition as world economies have become increasing global. This paper assumes that progressive taxes remain the best and fairest choice for providing governmental revenue, so that a fundamental change in the scope of the progressive income tax is essential to protect progressivity.

The paper argues that the rapid growth of international cooperation on economic and tax matters makes a shift to a unified global income tax possible. A GUGIT would make far better sense than separate national income taxes. The paper goes on to describe a vision of a GUGIT with a global taxing authority and a uniform tax base.

For business entities, the GUGIT would apportion the uniform tax base among countries in which a taxpayer is active based upon a four factor formula that includes sales, property but not intangible property with respect to which physical location has little meaning, labor based upon adjusted payroll that eliminates the distortions of wage differentials or upon person hours, and beneficial ownership. The GUGIT would include a robust related taxpayer definition in order to prevent taxpayers from artificially shifting income to countries that choose to impose lower rates of tax on their shares of the uniform base through transfer pricing and similar devices.

At individual level, the GUGIT would allocate income to the jurisdiction into which the taxpayer intends his or her services to have their impact or upon relative periods of residence during the year. Either method diminishes the benefit of expatriation to avoid taxes but a continuation tax or exit tax may remain necessary to combat tax expatriation.

http://taxprof.typepad.com/taxprof_blog/2013/11/ordower-.html

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Comments

Oh, great -- another massive bureaucracy that would need ever-increasing staff and enforcement authority to do it's "job". Just what the world needs.

Posted by: Hartley | Nov 21, 2013 3:37:49 PM

It's not clear what problem is solved by said "grand unified global income tax".

A country that wants tax revenue from transient rich people or foreign companies can already tax them as it sees fit.

Posted by: Andy Freeman | Nov 21, 2013 4:04:05 PM

A global tax collected in a super-jurisdiction will fully remove the power of the vote from the power of the purse. A global tax would be a global disaster.

Unless you were the person, or close to the person, wielding such unconscionable power. Just ask the EU.

Happily, "Utopia" is nowhere, and never will be.

Posted by: Kirk | Nov 21, 2013 4:07:37 PM

If you want to promote this idea, I suggest you either rewrite what you're saying or get someone who knows how to do so to help you. Writing about "business entities" and "apportion the uniform tax base" will cause most people's eyes to glaze over. They won't understand what you're saying and as a result won't trust what you're trying to do.

I suspect the Obamacare legislation was filled with similar language.


Posted by: Michael W. Perry | Nov 21, 2013 4:36:02 PM

I hope to live to see the day when persons expressing such sentiments are ostracized from polite society. Or hunted down with bloodhounds.

Posted by: John Skookum | Nov 21, 2013 4:58:35 PM

Utopian visions? More like a bad acid trip and probably written on one too.

Posted by: jb willikers | Nov 21, 2013 5:57:50 PM

"It's not clear what problem is solved"

I would almost be willing to usher in a global tax just to see the "we are the 99%" moonbats experience what it feels like to be the "greedy" rich.

Resdistribute their American wealth to sub-sahara Africa. Every last dime. When they whine, say its "for the children"

Posted by: Fen | Nov 21, 2013 6:04:26 PM

In the US, the Justice Department or FTC (in theory) prevent collusion which distorts the free markets. The premise of this government intrusion is that free markets best allocate the innumerable tradeoffs as measured by prices.
The GUGIT is a massive rejection, a complete violation of that premise.
There ought to be low-cost, low-service venues, as well as high-cost, high service counterparts. Then let the people decide.

Posted by: Robert Arvanitis | Nov 21, 2013 6:58:05 PM

Ditto that, "Skookum."

Posted by: Orson | Nov 21, 2013 7:06:46 PM

I hope that guy has lots of guns. Well, at least we know how that works out.

Posted by: sean | Nov 21, 2013 7:37:42 PM

Why won't these people leave us alone? Governments globally already squander and otherwise misallocate plenty of human wealth and productivity. Taxes on "decedent's estates" is theft pure and simple, which keep us all generally poor.

Posted by: jamesbbkk | Nov 21, 2013 8:13:14 PM

I cannot disagree with Richard Fernandez's comment at Belmont Club: "Although the GUGIT scheme may presently seem farfetched, it articulates the goal to which “progressive” activists must eventually aspire. Single payer, single electoral majority, single state. ‘Ein Volk, Ein Reich, Ein Führer. Once you build a jail, the only problem left is how to fill it. If they build it you must come."

http://pjmedia.com/richardfernandez/2013/11/21/one-and-twenty/#more-33178

Posted by: Mk50 of Brisbane | Nov 22, 2013 3:07:00 AM

GUGIT: A "solution" in search of a "problem."

Want to start another world war? GUGIT would a very good way to do it.

Posted by: MarkJ | Nov 22, 2013 4:06:04 AM

"I would almost be willing to usher in a global tax just to see the "we are the 99%" moonbats experience what it feels like to be the "greedy" rich."

Mr, Fen, clearly you wrote that without thinking things through.
Fact #1: Most people with incomes from more than 1 country are in the top 1%
Fact #2: The few from the 99% who do have incomes from more than 1 country have small incomes that are easy to conceal even from local government, unlike the investments of the rich.
Fact #3: Most of the 99% have incomes which are clearly documented, and moreover they have little discretionary income. This means that they must report all of their income to the IRS, unlike the wealthy who have suffiicient surplus income to use tax shelters or even to totally conceal part of their income in various parts of the world from the American IRS. Often, these concealed investments escape taxation even in the local country, due to various dodges or simply from corruption. That would no longer be the case under a corporate world government.
Fact #4: Tax rates are based on the needs of each taxing jurisdiction, depending on their expenditure. For example, could you tax a businessman in Rwanda, and apportion part of the receipts to the United States to spend on its military?

So a global tax would necessarily hit the 1%(or less) much harder than the 99%. A global tax system is untenable without global government. A global government can only function as a corporate entity with no emotions or loyalties to regions. What articles like this, and actions like the IRS global reach program, do is turn the sod on a project that is preparing the infrastructure for just such a global government. Who would be running such a government? The people who are already manipulating the world. Ultimate capitalism, where a private corporation gets profits("taxes") from all economic activity on the planet, in exchange for providing a global currency medium, global policing and global administration. Yeah, I know this sounds like "just another conspiracy theory", but just keep your eyes and ears open, and see if any pieces which come to hand fit into this puzzle.

Posted by: Vivek | Dec 1, 2013 5:39:50 AM