07/01/2005
Dear Editor:
“The Perpetual Traveler” (May 2005) by Michael Verdon was a very informative account of legal means to avoid taxes by relinquishing U.S. citizenship and claiming residence in another country. However, several major disadvantages were omitted to taking up citizenship or claiming legal residence in Canada.
I am a dual U.S.-Canadian citizen who resided in Canada for 25 years. According
to the Canadian tax code, while there is no inheritance tax per se, there is a
capital gains tax on assets held at death. Assets are not stepped-up as occurs
in the U.S. This can be as costly or more costly than an inheritance tax.
Secondly, Canada has an exit tax on all appreciated assets that becomes due when
changing residency and tax base to another country. These disadvantages ought to
make anyone think twice before taking the Canadian option.John Kershner, Merry Point, Va.
VAT Advantages
Dear Editor:
Michael Verdon, in his article “Taxing Decisions” (April 2005), neglects to mention the greatest advantage of the Value Added Tax. All of our trading partners who rely principally on the VAT exempt their exports from the tax. In addition, according to the WTO rules, they can charge a “border tax” equivalent to their VAT on imports. We can do neither.
Our payroll taxes are imbedded in our products as a cost. They are included in our products when they are exported. There is no way to eliminate them under our current tax system. This alone creates a serious competitive disadvantage in the global marketplace.
With a single tax rate on all categories of products and services, accounting under the VAT would be a simple procedure. The consumer, of course, would have no reporting to do at all.
The regressivity could be addressed by issuing a rebate to everyone,
approximating the tax that would be paid by someone at the poverty level. This
rebate could be universally issued without a means test. It would be similar to
what Alaska did with its oil royalties.Edward Golden Everett, Wash.
Out of Fashion
Dear Editor:
I just wanted to say how much I appreciated two stories in the April 2005 issue: the editorial “Aristocracy’s Anecdote” and the article “Class Conscious” on the estate tax. They grabbed my eye on the newsstand, and I felt like I got my money’s worth of thought-provoking articles. Thanks for having the courage to broach the out-of-fashion concept that maybe a “self-made man” has a lot to be thankful for and a lot of societal investment behind him (or her).
Elaine Lissner, San Francisco
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