International Tax & the US Presidential Elections: The Transcript
As the results of the US presidential elections are now in full swing and the uncertainty is overwhelming for most, we thought we'd share the transcript for our event of a couple of weeks ago that looked at the potential impact the two candidates' tax policies could have on international taxation.
A special thank you to our three panelists—Elena Hanson, Larry Stern and Stuart Gibson—and moderator John Richardson for sharing their insight into the Trump and Biden tax platforms and how they might affect US citizens living abroad, American multinational companies and the world at large.
Feel free to download the transcript below and share with your network!
For now, here are a few of the event's main highlights courtesy of our speakers.
How do you view the upcoming election in terms of the potential for tax reform and what are some ways that that might affect the individuals who you serve?
Elena Hanson: "Biden is offering something quite dramatic and very detailed and, if he gets elected, we certainly are out there for a bit of trouble in terms of seeing quite a few changes and getting used to new provisions. Clearly, it's going to impact a lot of our clients because a lot of our clients are the ones who the reforms are specifically directed at—that is affluent business owners conducting businesses in other countries, running multinational businesses, etc., so there will be a playground for us to learn and implement his platform and also for clients to get adjusted to new rules and new rates."
How is the proposed Biden tax change specifically doubling the GILTI and moving the corporate rate to 28 percent?
Larry Stern: "…It's ironic that we're such a big population outside the US where we would be the 13th largest state if they looked at us as a combined group yet there's very little thought process within the regulations. We saw this with the Trump regulations and the TCJA, that basically things were done haphazard without the questioning or the analysis that's needed to see what kind of impact it would have on individuals living outside the US and small businesses outside the US.
What's going to happen with the digital services tax and the OECD's plan to tax the digital economy?
Stuart Gibson: "…There are other countries that I haven't even mentioned that are tackling the whole notion of digital services in a very different way and that's something that's alien to us in America, which is through a VAT. For example, Chile last year imposed a VAT on provision of digital services within the country, so now every Netflix subscriber in Chile has a 19 percent VAT added. Many countries in Latin America including Mexico, Colombia and Argentina are adding or considering adding VAT on digital services that completely takes it out of the realm of income taxation."
"So you have so many moving parts going, and one of the issues that OECD is having to face is this whole notion of tax certainty, because in the corporate world how can you plan unless you have some idea of what the result is going to be across a number of international tax jurisdictions in different countries where you do business. I realize a lot of the discussion has been about individuals, but this is huge in terms of how it impacts multinationals and, at the end of the day, they're consumers…when the US put tariffs on imported goods from China, China didn't pay anything, US consumers paid. They paid 80 billion dollars in Chinese tariffs because all the importers just passed the cost on. It costs more to buy a washing machine made in China today in the US than it did two years ago because of tariffs."