“A virtuous and industrious people may be cheaply governed.” — Ben Franklin
“For tax reform, keep it simple.” — Steve Forbes, Larry Kudlow, Arthur Laffer and Steve Moore
Ben Franklin is famous for saying “Nothing is certain in life except death and taxes.”
But some tax regimes are better than others. For two years, I lived in the Bahamas, which has no tax on investments or income, but a huge tax on imported goods. So it’s a great tax haven for wealthy investors. I saved enough money in taxes to buy a flat in London for cash!
Hong Kong has a better system — a maximum flat tax of 15% on individual income and 16.5% on businesses, and no tax on investments or foreign income. That’s the best tax regime, where capital can quickly be transferred to its most productive use without penalties.
Not surprisingly, Hong Kong has the highest growth rate of any country since World War II, and it also is #1 in the Economic Freedom Index. This small region is both free and prosperous. It also doesn’t change its tax policy every couple of years like we do in the United States.
In the United States, fearing that we might give a tax break to the rich, we impose heavy taxes on capital investments, from 23.9% to 39.6%, depending on how long you hold the asset — and that doesn’t even include state and local taxes. Our tax rate on business income is also high, 35%, one of the highest in the world among developed countries. Our northern neighbor Canada only charges a 15% corporate income tax.
Click here to read the full article: “Trump Courts Disasters Again, This Time with Tax Reform.”