True that exchange rate affects the comparision, especially in $ terms, but as a % of income not by so much. One thing that's mssing from the scenario is whether the pre-mitigation tax for the US person abroad includes the ACA penalties that they would pay (if not exempted by mitigation for out-of-country exemption) for not having US health insurance. FTC and FEIE are mentioned but not whether the health care tax and insurance differences enter into the equation. Another factor to be considered is that the income tax for the Homelander living in Califoria or New York is noticeably higher than for one living in a state such as WA. It's hard to quantify but the total tax burden for the Homelander is also affected by differences in sales tax policies, e.g. Oregon nil, WA state 9 or 10%. I vote for "it depends".
Todd Stoudt - 8 years ago
I would think that it would depend greatly upon the exchange rate each year. Some years the EBA may owe less than HT others, more and rarely the same, given the parameters set.
However, EBA would be paying taxes to both Canada and the US, so his overall tax bill woukd be greater than HT's.
True that exchange rate affects the comparision, especially in $ terms, but as a % of income not by so much. One thing that's mssing from the scenario is whether the pre-mitigation tax for the US person abroad includes the ACA penalties that they would pay (if not exempted by mitigation for out-of-country exemption) for not having US health insurance. FTC and FEIE are mentioned but not whether the health care tax and insurance differences enter into the equation. Another factor to be considered is that the income tax for the Homelander living in Califoria or New York is noticeably higher than for one living in a state such as WA. It's hard to quantify but the total tax burden for the Homelander is also affected by differences in sales tax policies, e.g. Oregon nil, WA state 9 or 10%. I vote for "it depends".
I would think that it would depend greatly upon the exchange rate each year. Some years the EBA may owe less than HT others, more and rarely the same, given the parameters set.
However, EBA would be paying taxes to both Canada and the US, so his overall tax bill woukd be greater than HT's.