My colleague David Dayen, perhaps more optimistic than I, is hopeful that Senator Chuck Schumer’s proposal (with Senator Casey) to impose a tax penalty of 30 percent on those who renounce US citizenship to avoid US taxes will have useful spillover effects. I hope he’s right.
I suspect Chuck Schumer is pulling a fast one on us. After all, it doesn’t make sense to be upset that some selfish rich kid who came from another country would feel no particular loyalty to America, while we look the other way as millions of wealthy Americans and US-based corporations do everything they can to shield their income and evade US taxes while still enjoying all the benefits of US citizenship.
So here’s my suggestion, Chuck. The biggest, most egregious tax evaders in the US are not those who openly renounce their citizenship to evade taxes but rather the millions of self-described patriotic souls who are happy to wrap themselves in the flag while they pay only 15 percent on capital gains and effective rates on ordinary income far lower than the marginal 35% (or 39% if the Bush/Obama cuts expire) that are supposed to apply.
Let’s tax capital gains and Mitt Romney’s
looting fees hedge fund profits as ordinary income. Let’s raise the marginal tax rates on wealthy individuals to levels that existed when we used to have prosperity. Raise them to levels that would be economically justified — say up to 60 to 80 percent marginal rates, since research shows it won’t adversely affect their incentives much — because that’s in the national/economic interest. And then raise corporate tax rates on nominally US corporations that shield profits here and oversees while demanding tax holidays every decade or so to bring their untaxed profits back “home.”
We’ll then find out how patriotic these folks are . . . and whether Chuck Schumer is sincere or just a shill trying to distract from what he and his colleagues have been fronting for decades.