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Comment by jhancock | Hacker News Reader

You right, it is screwed up. You should write to your Canadian representative to let them know you are being unfairly taxes by Canada for a service they do not provide.

Why should Canada profit from your stock transaction for a U.S. entity? Canada doesn't pay for the costs of allowing Disney to keep Mickey under intellectual property protection indefinitely. Canada doesn't pay for the costs of running the SEC. The U.S. does. I think a stock appreciation tax (capital gains) should be paid to the country the stock is listed in, i.e., where you made your investment. Same with property, which this thread started with. Pay your taxes where the value was created.

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Canada taxes my income. The US waives the taxes on the stock because of this. Thankfully we've got pretty good tax treaties, and Canada is a little better versed in dealing with partial residents, as is Europe.

Canada doesn't pay for the costs of running the SEC.

That's an interesting point and I don't necessarily disagree. Of course if they followed that line, they wouldn't be killing American expatriates now would they?

I agree that taxes, just about everywhere, are uneven, unfair, and horribly misspent. I have an interest in fixing this. I think step one is to get everyone to feel the pain. Then we can have honest debate about what is fair and continue to adjust. At the moment, there are too many ways that some people simply don't pay. As long as this happens, there is not enough force to fix the problems. When I say there is not enough force, imagine if only 10%, in a certain tax situation, can afford to dodge the tax. It is most likely this 10% has more strength/wealth than the other 90% that do pay. In aggregate, they will use some of the gains they have made to apply a force to not change the structure which allows them to dodge the taxes. This is a problem of uneven strength. And it will continue as long as we allow the loopholes to exist.

I would agree with your loophole assessment. The easiest way to close such a loophole is to simply shift from income taxes to consumption taxes. (i.e. VAT and the like)

Then, you get two (perhaps three) desired effects:

1. Loopholes don't exist. (or exist for everybody)

2. Adding more value is not punished, consumption is.

3. The last effect is that it may slow growth, which may or may not be desirable.

The U.S. would never allow this to happen because then U.S. citizens would be able to invest in equities in someplace like Hong Kong and pay much lower taxes. It would be very nice if this happened.

Most people savvy enough to make international investments have setup structures that ensure they don't pay any tax at all. Forcing the issue and making everyone pay where the value is generated would be a win for each country. The U.S. has lost massive potential tax revenue by not collecting on foreign investment gains in U.S. entities. China does not need to make such a move as they already have in place a much larger protection deal going: your gains in China for the most part, get locked up in RMB and can't easily be moved out of China. So although your foreign invested capital gains are not taxed directly, your gains mostly have to get reinvested in other China interests. Now that is a sweet racket!! Its t least on par with the petrodollar scheme.

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