People ask me all the time, “Why is the tax code so complicated?”
My one sentence answer: “It’s riddled with countless exceptions and exemptions.”
Sen. Marco Rubio (R-FL) has proposed the winnings earned from medals by Olympians should be exempt from federal income tax.
We often see politicians spending far too much time advocating for measures that would ultimately have at most a marginal impact on a select few. Rubio’s suggestion is a perfect example.
I’m not looking to take away from the spectacle that is the Olympics. But millions of Americans work hard for their paychecks despite knowing a large cut is going to Uncle Sam.
Standing against the proposal, the Tax Foundation points out a far more significant policy issue with the current tax code:
[W]hy is the U.S. taxing this foreign earned personal income in the first place? The United States and Eritrea stand as the only countries to enforce a world-wide taxation system for personal income.
America’s worldwide income tax system combined with increasing foreign interest reporting is why we are seeing the expatriation rate significantly increase.
Expatriation is a very involved process. So involved that this 5,000+ word blog “Why people expatriate” is merely a starting point for those considering.
And yet, more and more of those considering are actually following through.
But Senator Rubio won’t spend time addressing the issues raised by our worldwide tax system. Those are too important too think about how to tackle.