The Most Fair Tax

Wondering what's the fairest way to tax people in a country that wants to have taxes? In this video, Andrew answers a question shared by one of our viewers.

00:00 Start
0:47 Taxation is theft
- Pay zero tax
2:09 How to Move to Switzerland
- Taxation in Switzerland
3:11 Comment
3:56 Taxation in the United States
- Living in the USA
- Federal income tax
11:10 The fairest tax

Andrew Henderson and the Nomad Capitalist team are the world's most sought-after experts on legal offshore tax strategies, investment immigration, and global citizenship. We work exclusively with seven- and eight-figure entrepreneurs and investors who want to "go where they're treated best".

Andrew has started offshore companies, opened dozens of offshore bank accounts, obtained multiple second passports, and purchased real estate on four continents. He has spent the last 12 years studying and personally implementing the Nomad Capitalist lifestyle.

Our growing team of researchers, strategies, and implementers add to our ever-growing knowledge base of the best options available. In addition, we've spent years studying the behavior of hundreds of clients in order to help people get the results they want faster and with less effort.

DISCLAIMER: The information in this video should not be considered tax, financial, investment, or any kind of professional advice. Only a professional diagnosis of your specific situation can determine which strategies are appropriate for your needs. Nomad Capitalist can and does not provide advice unless/until engaged by you.

[nomadcapitalist]

What do you think is the fairest way to tax people?

[justinstephenson]

I always start with some basic principles:

1. The complex the tax system the more likely that there will be unintended consequences.
2. Jean Colbert understood the taxation system perfectly: "The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing." What people often fail to understand is something Colbert knew, it is easier to extract small amounts from large numbers of people than a large amount from small numbers of people.
3. In general it is easier to collect tax money from people when they are receiving money or when they are about to spend money because in both cases the people have money in their pockets at the time.
4. For most taxes the purpose of the tax is to raise money for govt spending, it is not about changing behaviour or making society "fair" - that is what the govt spends money on policies to do. Obviously there are some exceptions to this, so-called "sin" taxes on alcohol or cigarettes are good examples where the intent is to change behaviour because the behaviour is a massive cost to society or govt.
5. Finally please no one bring up the Laffer Curve - it was never an economic theory merely a conjecture or possibly no more than an observation. Laffer was completely correct on his basic idea but as an idea it is useless it provides no guidance on what the optimal rate of taxation should be in any particular country at any particular time.

It is pretty obvious that the US tax system fails to meet any of the basic principles. No tax system should be so complex, involve so many deductions, credits etc that large numbers of ordinary people need to employ a tax accountant. Being from the UK, I can say with some confidence that whilst the UK tax system is a lot better than the US it is still a long way from being a good system and our current politicians want to make it worse.

My starting position is that govt should tax income of people, but the income tax system needs to be very simple with no more than 3 or 4 deductions (pension contributions, charitable donations and a small number of simple approved investment vehicles) and there should be no more than 3 rates of tax one of which should be 0%. I do believe that people whose income is below a certain level should not be paying income tax - they will still pay tax through consumption taxes - because they are already at poverty levels of income. Whenever possible income tax should always be calculated and collected on a real time basis

[cavejohnson]

The US government spends Elon Musk's entire net worth in 2 and a half weeks. So even if you tax billionaires 100% it wouldn't be even to cover the reckless black hole spending. It's a simple math problem.

[fumble_brewski]

U.S. Government's idea of a "fair tax":
1) State your full name, current address and SSAN.
2) Enter all income from whatever sources derived.
3) Send it all in. 💸

[msaylorBTCM]

agree, if US imposes a flat tax like Switzerland, it will reduce the number of Billionaires leaving

[williambetzelberger]

Personally, I find the idea of a flat rate consumption tax/sales tax to be the fairest

[GhislaineBeauce]

The thing is, how often are our tax dollars wisely spent? (I'd say almost never)
Stephan Molyneux once did a comparison of the Republic and later empire of Rome, with western countries today. A fact that stuck with me was that in the early days, citizens of Rome only needed to work 3 days per year to pay their taxes, and at the same time, the rich were displaying their wealth to each other by making generous donations to people in need. Of which there were very few because pretty much everybody had a job.
If you can fish out Stephan Molyneux's présentation, no longer on youtube, it's time well spent, and I'm sure you'll find his perspectives interesting.

[SamKaiserLittle]

I'm starting to worry about the Nomad Capitalist philosophy changing from Go To Where You're Treated Best, to Go To Where You're Treated Fairly.
The first is a the howl of the wolf, the second is the bark if a dog. No matter how nice and golden the leash is, it's nothing like its very absence.
Granted that discussions of fairness in taxation are all important, they are simply endless. Power will simply never leave you alone. So I think one should go where they're treated best while they CAN.

[lerryperry]

I think Value Added Taxes or Consumption Taxes are the best way to go. I am of the belief that Governments should tax consumption and not production.

[LisaCulton]

There's also "television tax" in Germany, Switzerland and Austria. They just don't call it a tax, but it is.

[MILE]

Also, lump sum isn't always the case in Switzerland. You have tax brackets, this depends on your county & canton though. The lump sum system is mostly in smaller counties. Serbian / Swiss / UK citizen, so I know a lil bit of this stuff.

[chasedoman]

How is the exit tax legal? Seriously, it is a financial wall keeping people in

[pamela]

Thank you for sharing your knowledge in these videos. I'm not wealthy, but I'm still looking to leave the US and may even give up my citizenship depending on how that affects my social security and federal retirement. Southern Mexico seems like the best place for me. Maybe I'll say hello to your dad!

[meontube]

personally I think 10% across the board on income is fair n sufficient to run a government - if a big business wants special security or someone wants to see big bird or sports on tv they should have the "option" to pay for it not forced so it's available for everyone - as for bus tickets etc there can be a sliding scale for the TRULY less fortunate

[newsnowadirondacksredux]

Problem with taxes is that there is never enough money for governments.

[MeganTucker]

Get rid of all the BS expenses (propping up banks and big pharma, regulations, etc) and put in a sales tax on non-essentials and make any other tax illegal. Oh and non-essentials includes industrially processed foods, bags of chips and coca cola etc. Raw milk from the local farm, meat, fruits, vegetables, eggs, domestically produced clothing, etc., would be tax-free.

[marianchicago]

Actually "the user" tax does apply to the roads right now. What most people don't realize is that americans pay for the roads at the pump, there is a road tax that's added to the gas you buy which funds are meant to be spend on the upkeep of the roads. What's actually messing up that "social contract" is that hybrid and electric cars don't pay as much or none at all for the upkeep of the roads. I was told california had to levy a special tax for the upkeep of the roads and more communities and states will have to do the same, or a new way form of taxation will have to be put in place, something like odometer readings where you pay per mile you drove.

[iamalfaia]

I believe the most fair tax is a consumption tax. The more you consume, the more you pay. We want people to produce more than they consume. Not the opposite. That being said, not 60% sales tax in gas like here in Portugal. 10-15% consumption tax maximum. No income tax, no property tax, nothing. Just 10-15 per cent, consumption tax. That’s it.

[scottzalaha]

The Least Fair Tax is the tax on wages aka earnings. In a free society one's wages should never be taxed; it is akin to involuntary servitude. Income tax in the U.S. Tax code has many definitions among which are; capital gains, dividends, interest, profits, etc., yes, even wages. It is not necessary for any taxing jurisdiction to lay and collect taxes on a person's wages, especially at the federal level. Some states tax wages and some do not. The states that do not have a tax on wages have much less bureaucracy and administrative overhead. These states simply raise tax revenue in other, more "American" ways e.g., duties, imposts, excises, sales, ad-valorem, fees, tolls, etc. In otter words, taxes based upon use and consumption - arguably the most fair tax and the way our founders originally engineered the system. Pretty darn efficient for over 126 years (Adoption of the U.S. Constitution to the 16th Amendment in 1913). I wonder how we managed without a tax on labor before that?

[omeryehezkely]

A fair tax system is a tax system which satisfies the following:

Prerequisites:
1. Tax money is spent efficiently (when compared to the private sector).
2. Average tax income (of the state) per capita doesn't increase every year.
3. The state should see each citizen as a client - hence it should strive to make each citizen healthy and it should strive to increase the number of citizens.

Taxes:
4. Flat tax rate on all kinds of income. Capital gains and work compensations should be subject to the same tax rate.
5. No tax exemptions, but also no tax on any kind of organization - No corporate tax, only humans should pay taxes (but again, any kind of gain that you take out of a corporate you own - such as dividends will be subject to the same global flat rate tax).
6. No local taxes or taxes on spending..