Wednesday 8 February 2012

Income Made Outside the Country

Unless you don't read newspapers or their on-line equivalents, or tech-oriented websites (slashdot, etc.), you're probably aware of the New York Times piece and the ZDNet pieces on the subject of off-shore income.

Being a person rather than a multinational corporation, and further, being a Canadian who is neither a lawyer nor unacquainted with international law;

Being an actual person rather than a fictional person (this meaning the popular definition of corporations, which I might add conveniently places almost all the egregious behaviours of a fictional person without the realm of national laws), I must protest.

According to Canadian law, all income acquired outside Canada must be reported to our Department of Revenue. For example, a few years back I took a job in Bermuda as a DBA/SQL Developer, at a very nice rate, and Bermudian taxes on same were very low (4.5% if memory serves). But I also had to declare this income to Canada's Revenue people, since I maintained that my permanent residence was in Canada, and therefore Revenue Canada wanted their piece of the action.

Personally, I had no problem with this. It seems only reasonable to me that insofar as I maintain my permanent residence in Canada, then I am subject to the laws of Canada, regardless of where I happen to be contracting in another nation. These laws apply to my continuing status as a Canadian citizen. In the case of Bermuda, there are very strict laws about who is allowed to work there, and how long one is entitled to work there. Similar laws may apply to numerous other nations, or not. But that is not the point.

If I want to protect my Canadian nationality, then all foreign income must be reported and taxed accordingly. That's because I am an actual person, rather than a fictional person (i.e. a corporation). But if fictional persons want the status of "person", then IMO they ought obey the same rules as I.

I realize the significant consequences of this maxim to Canadian corporations: about 75% of the world's mining companies are headquartered in Canada. They make their phenomenal profits in Nigeria etc., and pay nothing to the Canadian government in the way of taxes on said income. The closer you look, the uglier it gets: the Canadian government actually co-funds housing projects and school-building projects in numerous domains, the better to serve those corporations' profits in the Third World -- at the expense of the local citizens.

I want the current Canadian law to apply equally to fictional persons as well as actual persons. And I would like USA law to reflect this policy (and not only the USA -- this is not a singular attack, but rather a plural attack, upon many corporations and nations).

The current target of attack is Apple, and justly so, IMO. But many, many other corporations are equally guilty of this egregious behaviour. To cite just one or two, look at Cisco and Intel and Nike and hundreds if not thousands of others.

According to Canadian law, if I make money off-shore, said income is subject to Canadian taxation on said income. All I am asking is that the same rule be applied to Fictional Persons, insofar as they maintain their headquarters in the USA or Canada or any member of the EU.

I'm asking more than that: the various unions involved have to grow up and realize that it's now One World, and demand that equal wages be paid to employees, regardless of the nation in which they work. I am cognizant of at least some of the effects of this policy:
  • There would be no wage-edge in shipping the jobs to another nation. That is not to dismiss the edge in taxation that might be gained, but that is another issue, to be dealt with separately.
  • The transportation costs of shipping good from China to the USA would far outweigh the advantages of shipping jobs off-shore, not to mention the temporal edge gained by local Just-In-Time shipping. Gant has proved this with its shirts.
  • We might even get to the point where "Think global, buy local" becomes an economic mantra.
  • Finally, this might cause rather abrupt upheavals in nations where the Powerful overwhelm the WeakerThans at every turn. I consider that a Good Thing.
I realize that this might cause various Canadian and USA and EU corporations to move their headquarters off-shore to escape local taxes, but that move would prove my point: these fictional persons are concerned only with profits, feeling no obligation to the nation in which they were fictionally born. The ultimate realization is that said corporations are no better than sluts, willing to go for the best best Cheap Trick their accountants can invent, and all this at the expense of locals in every nation.

To paraphrase Shakespeare, "Something (serious) is wrong in the state of Denmark."

Call me naive, but I tend to think of the planet as a city, of its nations as suburbs, and our situation as "We are all in this together", that every citizen of this planet ought to receive free medical care (admittedly a Canadian and Scandinavian concept, but gradually other nations are included), that all methods of income ought to be taxed equally (including capital gains, stock-market trading, real-estate flips and escalations, blue-chip coupons, and numerous other methods of income-accrual).

There remains one vague area in this mess: inheritance. This one, I agree, is problematic.
a) One ought to be entitled to disperse to one's descendants the wealth that one has accrued. I don't agree with is one, but numerous nations, including Canada, have agreed with this principle; The problem arises when certain families in certain nations own 90% of the wealth. In those nations, said accruals might amount to 70%+ of the national wealth,  GNP and GDP (c.f. the Phillippines, the USA, Canada and numerous other nations).
c) Numerous nations have adopted the policy that "What I own now is forevermore MINE". I do not accept this maxim. I can cite numerous nations in which small families own 90% + of their nations' wealth, and this is Wrong, Wrong, Wrong!

Under the current laws, I applaud the moves by Warren Buffet and William Gates, the former who admitted that he pays less taxes than his help, and the latter who has donated many billions of dollars toward causes such as, to name but one, the cure for malaria and AIDS medications.

These two people strike me as the models for behaviour of the massively wealthy persons in the world, and I salute them both. I stand at attention and salute them both.

I have no beef with accruing massive wealth. That is nothing more than a measure of one's influence upon the world. Steve Jobs and William Gates and the folks behind Linux and Wikipedia and WikiLeaks strike me as massive contributors toward this goal -- unlike, for example, Larry Ellison, whose massive wealth he chooses not to disperse to any of the world's people in need That is his current privilege, and according to current laws, that's perfectly OK. However I would argue that this evinces the problem with today's laws..

I wish that I were in their company, with billions to donate to worthy causes. Sadly, I am not. The best I could do is write some code and donate it to the world of database programmers, a minuscule contribution compared to theirs. But I don't have the funds to do what they do, so I do my tiny part.

What I want:
a)Fictional persons pay the same taxes as real persons do, meaning that all my off-shore income be subjected to the same taxes as if I made it in my native country. I want Apple etc. to obey the same laws.
b) "A Dollar Made is a Dollar Earned", no matter how it was made. Every stock trade, every real-estate flip, every rise in the value of one's stock-holdings, ought be taxed as if it were money made by working a job.The alternative is a society in which the worst possible thing you could do is hold a job, since you'll be caught holding the bag, every time.
That's my mantra.

Ultimately, I would argue for these positions as the true spirit of capitalism. Play by the rules or f**k off and demand your subsidies, all of which fly in the face of capitalism. And while I'm at it, To Hell with Bailing Out the Banks! None of them is too big to fail. Let them crumble just like the millions of real people whose lives crumbled under their weight. To think they are worth saving is to fall into the trap of "corporate socialism" -- socialism for the rich, and ugly unrepentant capitalism for the great unwashed.

I'm hoping that the Occupy movement is the first glimmer of a collective realization that the current arrangements demand a rethinking and even a revolution.


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