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Comment by ok_dad | Hacker News Reader

I’m an American citizen, and no matter where I go, I owe the IRS taxes on what I make, even if the USA isn’t involved otherwise.

Question: why can’t we do the same for corporations in the USA? The equivalent action might be to only allow a company to expense money spent inside the USA and thus they can’t just license themselves all their own technology and patents which are held in a one person office in Ireland.

I’m sure I’m simplifying things too much, but I’m tired of the two tiered tax system where regular people pay for everything and corps reap the rewards.

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You can probably dodge the taxes too by incorporating a company in a tax haven, "working" for that company, and then selling your services through that company. The company can pay you a minimal wage, which would be taxed, but everything else can be stashed in that company tax free.

That’s called a Controlled Foreign Corporation and it won’t work, because its earnings & profits need to be included on the Subpart F income of the shareholders.

Uncle Sam will get his share. Unless you’re a large corporation, that is.

How is the large corporation structured that lets it work?

Because you have to put actual substance in the entity. If OP ditched his US citizenship, moved to the Caymans, and then started consulting for international clients - it would work.

Controlled Foreign Corporation: a non-resident company, fund, institution or other entity in a low-tax country that is at least 50% owned or controlled, directly or indirectly, by resident taxpayers.

Or unless you're extremely wealthy. The rich often pay 0-not much% tax no matter where they are in the world.

Because you didn’t hire lobbyists to work on your behalf, didn’t fund elections etc…

A U.S. corporation that directly does business around the world is also subject to tax on its worldwide income.

Most companies big enough to be doing business around the world do so through separate companies.

well you would have to stop taxing profits and tax revenue.

Otherwise there is no way to stop companies doing the licensing Intellectual Property trick to bring profit to near zero.

But the people who would have to do it and the people who sponsor them into the office would lose a lot of money. So it will not be done.

Recently the Panama papers investigation was concluded and no wrongdoing was detected.

One thing begs a question why were the journalist responsible killed in a car bomb? As far as I checked a car bomb is not a random event.

If you allow companies to expense only money spend inside the US, you break their international supply chains.

Meanwhile Amazon pays 0% tax

It's fundamentally immoral and something the US should repeal.

correction: you have to report your earnings to the IRS, that doesnt mean there is anything to pay

corporations are under almost the same tax regime

Counterargument: At the end of the day, the ones reaping corporate profits are themselves people, who should be paying their income taxes, no?

and do they? if your money is in a tax haven, you don't pay income tax there. if your ghost company from the tax haven buys a private jet, you don't pay any tax on it. if you then rent it from yourself, you can call it a business expense, and deduct it from your company's profits. if you get a loan from yourself in the tax haven, that's also tax free.

where does the paying income tax come in? rich people are always, legally speaking, on the brink of bankruptcy, and can't afford to pay tax.

Or you can just move to a country with no/extremely low income taxes (well at least if you aren’t an US citizen..)

"non-domiciled for tax purposes" as some people call it.

As a us citizen that only works if you’re willing to risk a jail term

or you can afford the lawyers to set up the shell companies that own the shell companies that own your wealth on your behalf.

Again, if you’re willing to risk a jail term

FYI: The FEIE was $120k last year.

For reference

> If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($107,600 for 2020, $108,700 for 2021, $112,000 for 2022, and $120,000 for 2023). In addition, you can exclude or deduct certain foreign housing amounts.

i.e. if you make <$120k in a foreign country, you don't need to pay taxes on it (though you will need to declare!).

https://www.irs.gov/individuals/international-taxpayers/fore...

And here's info about the housing exclusion part: https://www.irs.gov/individuals/international-taxpayers/fore...

(I don't think any of this detracts from the OP's main point, but if you're an American living and working overseas, I hope you aren't paying taxes on all of your income)

Housing exclusion is max 16% of foreign income exclusion amount, or about 20K USD per year.

Because jobs

A. Do you live abroad? Every us citizen I know that lives abroad DESPISES their tax treatment so it’s the first time I’ve heard someone say that.

B. Corporations are owned by people (perhaps a very disparate group of people via pension plans, 401ks, etc) and the tax man eventually gets a piece

A) Last year's FEIE was 120k. When I was looking at teaching English as a second language abroad, US income tax wasn't a factor, but I could see it being one doing tech work. The annoying part is the paperwork and presence requirements. I did meet a couple ESL teachers who did have to worry about it in UAE.

B) A smaller piece. I pay no more than 15% on my capital gains, I think they're capped at 20%, and I get to write off losses. It's wild to me that this is taxed at a lower rate than employment.

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