Submitted by Chris Moss CPA
Welcome to TaxView with Chris Moss CPA
You all remember when Credit Suisse plead guilty to helping “clients deceive U.S. tax authorities by concealing assets in illegal, undeclared bank accounts, in a conspiracy that spanned decades..” —and nobody going to jail? According to news reports back then the only penalty to Credit Suisse was a $2.5 billion fine. In fact, former US Attorney General Eric Holder, made certain that Credit Suisse and their CEO Brandy Dougan would still be allowed to do business as usual in the aftermath of the criminal plea. Are you surprised? The outdated and ultra-complex US Tax Code, 100 years in the making, is a dinosaur in the 21st century. Is there a better way to tax Americans? Stay with us here on TaxView with Chris Moss CPA to find out what can done to improve our current tax infrastructure and put an end to those offshore tax shelters.
It is well known that large corporations are legally moving their corporate headquarters offshore to save taxes; Wealthy individuals also move money offshore illegally. As a result, a few hundred or perhaps thousands of Americans put themselves and their family at risk of criminal prosecution just to save some tax dollars each year by illegally keeping assets and earnings off shore. Come on America’s top wealthy taxpayers there is always legal workaround to illegal activity. Keep your money and workers here in America, the country that made it possible for you to make all that money in the first place.
But what about corporations? They can and do legally reduce their taxes by setting up business operations offshore. But corporate tax strategy of shifting income oversees is hardly ethical. In my view moving offshore hurts America. Why? Because Americans lose tax revenue and workers lose jobs. Indeed the whole offshore process of allocating income and costs between Europe and the US makes absolutely no economic or even rational sense. It’s time for Congress to create incentives for American family business and large multinational corporations to keep their business assets in the United States where they belong.
But you can hardly blame corporations for wanting to save taxes. As this article is being written, Amazon is battling with the IRS in US Tax Court (Amazon vs IRS 2014) on how costs are allocated from European and US operations for years 2005 and 2006. The stakes are very high for both Amazon and the US Treasury. If Amazon loses they will owe over $1 Billion in tax and penalties. If they win, the American Government loses billions of dollars in lost tax revenue.
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Moreover, if we want American corporations to continue to hire American and not Chinese workers, a VAT is not enough. We must replace the personal income tax with a National Sales Tax (NST). American workers with no income tax to pay could work for less, take home more pay, and at the same time compete with oversees labor markets. Even wealthy American taxpayers would soon bring back their illegal offshore never taxed income to spend here in the United States.
As funds flow back to the Government from the VAT and NST, Congress could begin to pay down the National Debt and wipe out annual deficits without cutting funds to existing Government services and agencies. The underground economy would soon vanish, and tax revenue as a percentage of GDP would rise dramatically. With increased spending for goods and services by all Americans, the US Treasury would soon see a dramatic increase in tax receipts from both the VAT and the NST. In fact, the last dramatic increase in tax revenue as a percentage of GDP was in 1943 with the introduction of the W2 form during World War II. History perhaps will show a VAT/NST combination to be a likewise dramatic turning point for America, allowing us to once again regain our place as a world political and economic leader in the 21st century.
In conclusion, replacing the corporate and personal income tax with VAT and NST would be not only good for America but provide a revolutionary new way Americans pay taxes in the 21st century. Ask your elected officials their position on VAT and NST. Is Congress willing to scrap the 100 year old income tax for both corporations and individuals? Make sure you voice is heard before the next Presidential election. Let’s keep American business here in America. Ask Congress to think seriously about replacing the corporate and personal income tax with a National VAT and NST. Thank you for joining Chris Moss CPA on TaxView.
See you next TaxView,
Kindest regards,
Chris Moss CPA
