Double Taxation
Candlefocus EditorDouble Taxation between countries is also a common issue, as the same income might be taxed by both countries at different rates. An article recently published in The Economist, for instance, highlighted the tension between the US and Netherlands, where a US Olympic athlete was being taxed at a 37% rate on the same income that was being taxed by the Dutch government at a 25% tax rate.
The question of double taxation has been hotly debated among economists and policy makers for some time. While critics of double taxation argue that it is unfair, supporters of the system argue that without double taxation, wealthy stockholders would be able to virtually avoid paying any income tax. The US Internal Revenue Service (IRS), for instance, released a report in 2011 that suggested that if the double taxation of dividends was abolished, the federal government would lose an estimated $100 billion in annual tax revenues.
Double taxation, then, is a complex issue that requires careful consideration among policy makers. While those opposing double taxation argue that it is unfair, advocates of the system maintain that without it, wealthy stockholders would be able to get away with evading taxes. The US Internal Revenue Service (IRS) report, however, illustrates that double taxation serves an important purpose in ensuring that wealthy stockholders also pay their fair share of income tax.