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What countries have fared well, or do fare well, with zero income taxes using only consumption taxes?
No country, to my knowledge, has no income tax and funds government solely through consumption taxes. There are countries with a value added tax, but none has the kind of consumption tax proposed in the fair tax legislation. That said, there are states in this country with no income tax and they are well run.
As far as countries without an income tax:
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By J.B. Maverick | October 2, 2015 — 11:12 AM EDT
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Some of the most popular countries that offer the financial benefit of having no income tax are Bermuda, Monaco, the Bahamas, Andorra and the United Arab Emirates (UAE). There are a number of countries without the burden of income taxes, and many of them are very pleasant countries in which to live. However, taking advantage of living in a no-income tax country is not as easy as packing a suitcase and buying a plane ticket. Citizens of the United States cannot escape paying U.S. income taxes just by moving to another country. All U.S. citizens, regardless of where they choose to reside, are still legally obligated to file U.S. income taxes in the same way as if they were living in the U.S. The only small exception is in some instances, it is possible to exclude a limited amount of foreign-earned income from U.S. taxation.
The only way to get out from under the tax thumb of the IRS and enjoy living free of income taxes is for an individual to renounce his U.S. citizenship and become a citizen or legal resident of a country with no income tax. Neither of those two requirements is usually easy to fulfill. First of all, many countries do not offer easy access to citizenship. In most instances, the process is lengthy and expensive. Secondly, U.S. tax authorities, hit hard by the loss of dozens of multimillionaires and billionaires who have chosen to obtain citizenship in more tax-friendly countries, have made it increasingly difficult and expensive to renounce U.S. citizenship. Renouncing U.S. citizenship used to be as easy as walking into a U.S. embassy and signing a document attesting to the fact a person was renouncing his U.S. citizenship. But as of 2013, the U.S. imposes a stiff expatriation tax. For example, for individuals with net worths of more than $2 million, to renounce U.S. citizenship, they must pay income tax on all capital gains of all their assets as if all the assets were sold at the time of renouncing their citizenship.
Still, the continuously increasing rate of U.S. citizens choosing to do exactly that indicates many consider it worth the one-time expense. A record number of people renounced their U.S. citizenship in 2014. Many low income tax or income tax-free countries have economies that are largely driven by oil or financial services.
No country, to my knowledge, has no income tax and funds government solely through consumption taxes. There are countries with a value added tax, but none has the kind of consumption tax proposed in the fair tax legislation. That said, there are states in this country with no income tax and they are well run.
As far as countries without an income tax:
I've only been to one, the Bahama's and yes it is a very pleasant place to live but a pretty poor place for most. Most of the places mentioned are also very small areas, one certainly can't compare Monaco with the U.S. Only a select few get to live there.
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