The world is a sphere, not a pyramid with the USA at the Apex
11/06/12 03:30
It is a time of economic globalization - The US economy accounts for only 22% of the world economy, the Euro zone for about 18% and the BRICS (Brazil, Russia, India, China, South Africa) for about 20%. In order to compete, corporations, no matter where they are ‘homed’, must be global. While the State Department represents the American government abroad, expatriates represent the American people. So why does the United States discourage Americans from working abroad and companies from hiring Americans to work abroad?
I have a friend who works in Dubai. He wants to recruit Americans to take jobs there, but there is no incentive for these individuals and it is cheaper (far cheaper) to hire any other nationality. An Australian, for example, would not pay income tax (the Dubai rate is 0%) and would receive tax free housing and car allowances. Children could go to international schools paid that are paid for by his employer. An American, on the other hand, would pay US taxes on all of these benefits. In short, the Australian (or Kenyan, Chinese, Indian, German, French, Irish, Dutch, South African, Russian, etc.) would take home about 40% more than the American. Companies no longer can afford to ‘top-up’ compensation to Americans in order to make a foreign assignment attractive. This situation s not good for the United States.
This disastrous anomaly is a result of the quaint American policy of taxing based on citizenship rather than residency. It is a policy shared by exactly one other country on the planet - Eritrea. Every other country taxes income and benefits based on residency. In this case, the United States joins the crowd - income taxes are based on both citizenship and residency. If you reside in American you are subject to income tax. But, to make matters worse, if you become a permanent resident - i.e. get a green card - then you remain subject to US tax laws even when you return to your home country. Moreover, if you have children while you’re living in the United States, then they are subject to US taxation - even if they never return to the United States. Once again, this is a uniquely American approach. In short:
The United States discourages its citizens from working abroad and discourages citizens of other countries from working in America.
It is a time of economic globalization. America, no matter how economically, politically and militarily powerful cannot grow and prosper in isolation. It simply will not work.
I am well-aware of the American budget deficit. It is, therefore, reasonable to ask how much the unfairly exploited, serf-like expats contribute in taxes. Not much - see.here.
The world, my friends, is a sphere - not a pyramid with the United States at the apex. If this fact isn’t recognized, the sun will set and it won’t be as pretty as the photo on this blog.
I have a friend who works in Dubai. He wants to recruit Americans to take jobs there, but there is no incentive for these individuals and it is cheaper (far cheaper) to hire any other nationality. An Australian, for example, would not pay income tax (the Dubai rate is 0%) and would receive tax free housing and car allowances. Children could go to international schools paid that are paid for by his employer. An American, on the other hand, would pay US taxes on all of these benefits. In short, the Australian (or Kenyan, Chinese, Indian, German, French, Irish, Dutch, South African, Russian, etc.) would take home about 40% more than the American. Companies no longer can afford to ‘top-up’ compensation to Americans in order to make a foreign assignment attractive. This situation s not good for the United States.
This disastrous anomaly is a result of the quaint American policy of taxing based on citizenship rather than residency. It is a policy shared by exactly one other country on the planet - Eritrea. Every other country taxes income and benefits based on residency. In this case, the United States joins the crowd - income taxes are based on both citizenship and residency. If you reside in American you are subject to income tax. But, to make matters worse, if you become a permanent resident - i.e. get a green card - then you remain subject to US tax laws even when you return to your home country. Moreover, if you have children while you’re living in the United States, then they are subject to US taxation - even if they never return to the United States. Once again, this is a uniquely American approach. In short:
The United States discourages its citizens from working abroad and discourages citizens of other countries from working in America.
It is a time of economic globalization. America, no matter how economically, politically and militarily powerful cannot grow and prosper in isolation. It simply will not work.
I am well-aware of the American budget deficit. It is, therefore, reasonable to ask how much the unfairly exploited, serf-like expats contribute in taxes. Not much - see.here.
The world, my friends, is a sphere - not a pyramid with the United States at the apex. If this fact isn’t recognized, the sun will set and it won’t be as pretty as the photo on this blog.
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