Taxing the wealthy across jurisdictions

This chapter considers imposition and coordination of the arsenal of taxes that can be assessed on the wealthy across different taxing jurisdictions. This leads to consideration of shifting the tax burden to ‘inelastic’ immovables, especially real property, while reducing taxes on wage income relative to capital income. After considering property tax, attention pivots to taxation of consumption and expenditures. Such taxes can be imposed at the national, local and, where applicable, the state/provincial level, and can be applied to other ‘immovables’ including graduated vehicle licencing and operating levies; enhanced luxury and gift taxes; and graduated user fees. The potential for reforms based on increased taxes on immovables to disrupt the life cycle saving process is assessed. Turning to death taxes, it is recognized that the discussion of bequest taxation has a significant, largely intractable, philosophical content. Schemes involving the use of trusts and other legal devices available for the wealthiest to avoid death taxes are identified, along with the role of globalization in the use of offshore trusts and corporations to avoid payment of taxes on the level and increase in wealth and income. The rise of tax competition across countries has permitted a variety of aggressive tax management schemes devised by accounting and legal practitioners. Various examples uncovered in recent whistleblower and legal disclosures are provided to illustrate how globalization has permitted current taxation rules to produce inequitably perverse taxation outcomes; and, encouraged tax evasion and questionable avoidance strategies using offshore tax havens. Efforts such as the Foreign Account Tax Compliance Act to stem such activity are assessed.