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Residence-Based Taxation: A Necessary and Urgent Tax Reform
almost 5 years ago
Adopting RBT is not a matter of paying, or not paying, U.S. taxes. RBT means paying U.S. taxes under a different model which is fairer and more efficient than the current CBT paradigm.
The United States has everything to gain and nothing to lose by adopting RBT. RBT would be economically advantageous to the United States:
- The transition period from CBT to RBT would produce significant revenue; thereafter, on-going tax revenues under RBT would be higher than under the current law.
- RBT broadens the tax base of the American overseas community and ensures compliance through automatic tax collection at source.
- RBT simplifies application of the U.S. tax code, increases tax collection efficiency and reduces IRS administrative and enforcement costs.
- RBT allows Americans abroad to be competitive overseas and to have unencumbered access to foreign financial institutions and investments.
- RBT aligns United States tax practices with norms and standards in effect internationally.
CBT has been ingrained in the U.S. tradition and mentality since the Civil War, but it is no longer justified and has become obsolete. It is, in fact, counter-productive for the United States in today’s global economy. In parallel with fundamental tax reform for corporations and individuals now underway in the United States, it is essential to modernize tax policies concerning Americans abroad. Contrary to myths held by many that Americans abroad are the privileged wealthy, the community of Americans overseas is comparable to the community of hard-working average Americans resident in the United States.
RBT will significantly improve the U.S. image in the world and will invigorate the partnership between U.S. businesses and Americans abroad, who are the nation’s unofficial ambassadors, representing U.S. economic, political and cultural interests, and the United States. Facilitating mobility for Americans to work and live throughout the world is of great importance at this time of global competition. RBT also provides fair tax conditions to continue to encourage immigration of foreigners in to the United States, a recognized source of enrichment for the country.
ACA requests Congress to hold hearings on the taxation of Americans residing overseas and the impact of RBT. ACA aims to have the RBT proposal sponsored by members of Congress and scored by the Joint Committee on Taxation which has access to IRS data and economists specialized in estimating the fiscal impact of legislation.
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