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How Plutocrats Cripple the IRS: You pay more because elites pay less

109 points by nkurz 11y ago

blue_dinner 11y ago
"Plutocrats, the richest 0.1 percent of Americans, get the most benefit from a weakened IRS. Because they have the money, the lawyers, the lobbyists, the accountants, and the secret campaign funds, they are able to ensure that the IRS won’t have the resources to effectively collect the money they owe to it. " Since when is generalizing an entire group acceptable? Also, How do you explain this? http://money.cnn.com/2013/03/12/news/economy/rich-taxes/ http://money.cnn.com/2013/03/12/news/economy/rich-taxes/ In 2013: top 10% paid over 70% of total federal taxes 47% of all Americans pretty much paid nothing in terms of federal taxes This also doesn't include the multitude of other taxes the rich pay (property taxes, use taxes, gas tax) and the fact that they employ many people that also pay taxes into the system (indirectly paying more into the system). There are definitely some people using off-shore accounts, but it's not nearly as bleak as this article would like us to believe. The US also has one of the highest corporate tax rate in the world. If people are taking the risk and leaving the country with their money, we may need to take a look at our existing tax laws and figure out why they are taking the risk.
- orionblastar 11y ago
  Just remember that this is an election year so articles blaming scapegoats come from both sides. Conservatives blaming immigrants and Liberals blaming the rich.
  - blue_dinner 11y ago
    You are exactly right.
  - spacemanmatt 11y ago
    The difference is, immigrants didn't cause any economic depressions.
    - pixl97 11y ago
      Wait, is this the same forum that complains about HB1 abuse?
      - chillwaves 11y ago
        And who disproportionately benefits from that arrangement? Who makes it happen? It's not the immigrants.
      - spacemanmatt 11y ago
        I often find myself an outlier in this forum.
- Latty 11y ago
  What generalisation? The comment is they gain the most, and that they have the ability to exploit it. That's a statement of fact. You could similarly say that men are the most likely to benefit from sexism, and are positioned best ot exploit it due to the historical sexism against women. It's not saying all men are sexist, just that they are the ones likely to benefit. The article directly talks about your 70% figure, and explains why it's misleading. I also don't get why we should care about the 'fairness' of it. We don't allow people to do anything they want for the benefit of society - that can include not allowing people to hoard money if we want. As to your latter points, just because they pay a lot doesn't mean they pay enough, and employing people isn't a 'gift' to society - it's something they do to gain benefit themselves. Yes, it's a behaviour we should encourage, but it isn't somehow equivalent to paying tax.
  - weberc2 11y ago
    > just because they pay a lot doesn't mean they pay enough So how do we fairly determine what is 'enough'?
    - LanceH 11y ago
      More. From "them."
    - GunboatDiplomat 11y ago
      Enough that the country isn't constantly running massive deficits, and can afford to invest properly in infrastructure and other needed areas. Which we're clearly not doing right now.
      - goobsfoo 11y ago
        So cut costs and your problem is solved.
        GunboatDiplomat 11y ago
        That is not compatible with our necessary infrastructure investments, etc.
- anoonmoose 11y ago
  >> How do you explain this? How do I explain the top 10% paying over 70% of total federal taxes? I would wager a guess it has something to do with them having about 70% of the total wealth of the country. https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite...
  - lostcolony 11y ago
    This. The OP's particular numbers are -obviously- meaningless without including further context. If one person had all the money, literally, all the money, and paid any amount on it, be it one cent, or half of the money (either way leaving them with trillions, and everyone else still able to earn nothing), they'd be paying 100% of the taxes. This is an absurd hypothetical, but it demonstrates that the percentage of taxes paid by a particular group tells you nothing by itself.
  - srj 11y ago
    You're assuming a large overlap between top 10% income and top 10% wealth. I'm not able to find great data on this, with most sources just focusing on one or the other. It seems to me though that many of the wealthiest individuals, including those drawing down retirement savings, probably have low W2 income.
    - marrington 11y ago
      This discrepancy, and people's unwillingness to intellectually engage with it, is what allows the extremely wealthy to be just fine with society demonizing high income people. Once you have stored wealth, you don't care any more because there is no wealth tax (other than property tax and inflation). Taxing high income people into oblivion is what allows the very rich to keep their club small.
  - yummyfajitas 11y ago
    Actually no, it's due to the high levels of progressivity of US income taxes relative to other nations. http://taxfoundation.org/blog/no-country-leans-upper-income-households-much-us http://taxfoundation.org/blog/no-country-leans-upper-income-...
- kleiba 11y ago
  > Since when is generalizing an entire group acceptable? What other kind of generalizing is there?
- maxerickson 11y ago
  The "they employ many people" is a purple cod. You know what a huge percentage of the population does? Participates in the economy, helping other people earn economic rewards, economic rewards that are taxed. That it is advantageous for some people to employ others is not any different in that respect than the fact that people buy goods and services.
  - TheOtherHobbes 11y ago
    I think you'll find the terms of employment may be relevant too. A lot of employment in the UK has moved from being a job to being a zero-hours "we only pay you if we want you for a day, but you have to be available for us to choose you every day" contract. Most people would prefer a steady job, but when the playing field is so heavily slanted politically, that kind of job is becoming a middle class luxury.
- spacemanmatt 11y ago
  > Since when is generalizing an entire group acceptable? Do you know what time it is?
- deepnet 11y ago
  Customer's pay the wages and costs of business - plurocrats reap the profits. Socially beneficial plutocrats invest in economies, risking their capital to seek reward. Money hoarded is of no value, an economy is powered by the movement of capital. Corruption of economies by money to escape ones tax burden is antisocial and ultimately short sighted. The wealth of nations is a functional, fair economy. Good goverance should keep markets fair & ensure universal access to Justice. Weak, corruptible governments are anti capitalist, distorting markets by granting monopolies, tax-fixing & denying judicial remedies to the powerless & poor.
- Nursie 11y ago
  Do you not see the discrepancy between a statement about the top 0.1% and your claims about the top 10%?
mikekij 11y ago
I was very disappointed to see no mention of the fact that the US is one of the only developed nations that taxes companies' offshore profits. The trillions in profits held offshore by American companies is an unintended consequence of an overly complex tax system.
- SomewhatLikely 11y ago
  The article does point out how easy is it is make profits appear as though they were earned offshore however.
lkrubner 11y ago
Relevant: "Chutzpah, according to the traditional definition, is when you murder your mother and father, then plead for mercy from the court on the grounds that you’re an orphan.Something like that is now happening in the tax debate." http://krugman.blogs.nytimes.com/2011/05/07/federal-tax-chutzpah/ http://krugman.blogs.nytimes.com/2011/05/07/federal-tax-chut... Since 1962, and especially since 1982, the USA tax system has relentlessly reduced the taxes that the rich have to pay. The point is, if you change the tax system, so that all the money goes to the rich, then even with the lower taxes, the rich will end up paying a lot of what taxes are collected, because they have all the money. And that is basically what is happened. But now the rich like to claim "Hey, we are paying 70% of all the taxes!" But of course, their share of all wealth has expanded dramatically, so even with lower taxes, they still end up paying quite a bit. But of course, all of these taxes are voluntary. They could voluntarily give up their wealth, and donate all of it to charity, and then they would be poor, and they would not have to pay taxes. That they choose not to do this suggests that they mind the taxes less than they would mind being poor.
- zaroth 11y ago
  That's not what the word "voluntary" actually means.
  - spacemanmatt 11y ago
    What part of voluntarily giving up their wealth defies the definition of "voluntary?"
    - 3pt14159 11y ago
      "all of these taxes are voluntary" Is the place where the word in contention here. Just like if I point a gun at your hand and tell you that receiving the bullet is "voluntary" because you can always voluntarily cut off your hand. That being said, I agree with the concept of taxes, but let's not kid ourselves and call them voluntary.
      - 11y ago
ef4 11y ago
"You pay more taxes because somebody else pays less" is fundamentally misleading. If the government had to balance its income and expenses, then yes, one person paying less taxes would imply somebody else had to pay more taxes. But that is not how it works. Not for a government that can borrow at practically zero cost. The reality is that when somebody else doesn't pay their taxes, it has no bearing on how much you pay. It just causes the treasury to issue incrementally more bonds. This may seem like a minor point, but it's important in understanding what taxes are really for in a country that issues its own reserve currency: they support the value of the currency by ensuring everybody needs to use it to pay their taxes.
- svantana 11y ago
  In the short term, yes, but long term, deficits will put an upward pressure on tax revenue, so you'll end up paying more in the end (than you would have if other people paid more taxes).
  - wycx 11y ago
    Only if you are borrowing the money to fund the deficit. Public money (as opposed to bank money) is a legitimate, but ignored, alternative. See https://en.wikipedia.org/wiki/Modern_Monetary_Theory https://en.wikipedia.org/wiki/Modern_Monetary_Theory
    - force_reboot 11y ago
      That would cause inflation, and would cause markets to raise interest rates to account for this one they knew about the policy. Modern monetary theory is very non mainstream, flawed economics. It has a Wikipedia page, but very very few academic proponents. Check out https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory#Criticisms https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory#Criti... if you're interested in reading more criticism of MMT
      - wycx 11y ago
        Mainstream (neoliberal/monetarist) economics has abundant academic proponents and is demonstrably flawed, so I am not sure counting the number of academic proponents is much of an indicator of anything other than what is academically fashionable. In a similarly patronising way to your comment, I suggest checking out http://bilbo.economicoutlook.net/blog/ http://bilbo.economicoutlook.net/blog/ if you are interested in reading more criticism of neoliberalism and learning more about MMT than is presented on the wikipedia page.
zaroth 11y ago
As first impressions go, the first sentence of OP is pretty bizarre; "For every dollar appropriated to the IRS the public collects more than $4 in taxes." Missing a couple zeros there? The IRS annual budget is $11.2B and total federal revenue is about $7 trillion.... As far as meaningless stats go that's a factor of 625x, not 4x. Talk about blowing any credibility from the start!
- danieltillett 11y ago
  I think they missed the word extra after every.
  - zaroth 11y ago
    Now that would be an interesting stat... So they collect $7 trillion a year, but to collect 1% more ($70B) we would have to pay them 1/4th of that, or $17.5B -- an additional 150% of their current budget. Hardly seems worth it, aside from the satisfaction of holding all those tax cheats feet to the fire.
    - danieltillett 11y ago
      Well I guess it all comes down to how you feel about tax cheats. Given the current state of US tax law it would be a far better to simplify the rules and thus making it easier for the IRS to do its job within its current budget. Everyone recognises this, but given the political constraints it appears to be impossible to do.
KKKKkkkk1 11y ago
Here's a counterpoint: How I get harassed by the IRS because Americans hate rich people. I'm earning a below-average Bay Area income, but as foreigner I have a bank account and an IRA abroad, so I get to file a 30-page paper return that costs > $1K to prepare, in which I pay taxes on foreign income I did not actually earn, and get audited every year. So remember that every $1 spent on the IRS also generates an $X amount in time and money wasted for taxpayers.
- tacostakohashi 11y ago
  This situation is voluntary / self-inflicted - I'd suggest either getting rid of your bank account abroad, or not be a foreigner any more (i.e., leave the US).
  - KKKKkkkk1 11y ago
    Sure it's self inflicted. What if the IRS did this to all US citizens? Then it would still be self inflicted since they can renounce their citizenship. That's not the point.
    - tacostakohashi 11y ago
      The IRS does in fact do this to all US citizens with overseas bank accounts too.
- ptaipale 11y ago
  For me this is a major deterrent for considering to work in the US. What I hear about NSA surveillance does not bother me that much. What I hear about IRS makes me want to stay away.
  - kmonsen 11y ago
    I am a European citizen living in the Bay Area and although I like to whine about it, paying taxes is not a big deal. It is also getting simpler as I now have almost only US assets. I used to have some stocks vested that was awarded when I worked for the same company in the UK. The tax authorities of the two countries decided to split my earnings leaving me with more or less nothing. Another thing most people say is that US tax gives a lot less back even though we pay about the same as in Europe. This is true, but to some degree this is instead given to you by your employer (like health care).
rayiner 11y ago
You don't pay more. There is an important fact that rarely gets mentioned in the taxation debate (by either side): the U.S. tax system is much more progressive than in similar developed countries: https://www.washingtonpost.com/news/wonk/wp/2013/04/05/americas-taxes-are-the-most-progressive-in-the-world-its-government-is-among-the-least https://www.washingtonpost.com/news/wonk/wp/2013/04/05/ameri.... The top 10% in the U.S. carry much more of the tax burden relative to their share of the income (33.5% of income, but 45% of taxes). In Germany, for example, the top 10% earn 29% of income and pay 31% of taxes. Middle class people in the United States pay very low taxes. I met a young woman from Germany, who has a typical entry-level desk job at a logistics company. Her tax bill was about 40%, which is level only high-income people here in the U.S. would pay. A typical middle class family eligible for the various deductions pays about 25% in state and federal taxes. My two cents: A welfare state requires buy in from the population. You can't have a successful one just taxing the rich heavily to pay for middle class benefits like college and expensive old-age care. You need to flatten the tax curve and raise taxes on everyone to pay for services you expect everyone to use. People need to feel like they are getting something from the system, not just being forced to fund it.
- revelation 11y ago
  The 40% pay for healthcare, though.
- ryguytilidie 11y ago
  You're kind of missing the point. I'm middle class and I'm well aware that compared to Germany or Scandanavian countries, I pay lower taxes. However, the issue is whether you "pay more" than the wealthy people in the US. So no, I don't "pay more" than people living in a completely different country (how is this even a comparison) but I do pay more, on a percentage basis, than the highest earners in the actual country I live in, which is complete lunacy.
  - yummyfajitas 11y ago
    Rayiner's stats explicitly show that the wealthy pay more, on a percentage basis, than the non-wealthy. If the wealthy pay 45% of taxes while earning only 33.5% of income (ratio = 1.34), then simple arithmetic shows that the non-wealthy pay 55% of taxes while earning 66.5% of income (ratio = 0.82). So no, you don't pay more on a percentage basis. You pay a lot less.
tmptmp 11y ago
I want to point out another angle to this issue. The US tax system may be okayish but renting system is way too much flawed and is giving undue advantage to the dirty-rich few (read the top 0.1%). There should be some law (e.g. ceiling on land holding act) to restrict the ownership of real estate. Some low enough ceiling on land should be there so that no one be in a position to keep on gaining ever increasing rent revenue and thus keep on putting huge burden on the rest of the society. The tax laws should be accompanied by laws that put hard limits on ownership of real estate. Else the dirty-rich will soon "own" this entire nation for all "practical" and "important" purposes.
- dbcurtis 11y ago
  Please present your data on rates of home ownership in the US compared to other industrialized nations. Also, what do you think should be done to encourage home ownership beyond the current scheme of making mortgage interest deductable for primary residences?
  - tmptmp 11y ago
    Why compare with other nations? Don't you think the USA should show some leadership here? >>Also, what do you think should be done to encourage home ownership beyond the current scheme of making mortgage interest deductable for primary residences? This is a good question. First and foremost, make houses affordable. For this to happen in any meaningful manner, the excess houses/spaces owned by people/companies should be freed from their clutches. Another point is the development across the nation must be more evenly distributed across the entire nation as the population grows, this will help lessen the burden on certain areas. Also, home ownership rate in itself doesn't speak much, what is more significant is how large (i.e. how many tens, hundreds or even thousands of houses) living space is owned by how many individuals/companies and what is the rent-income of these people/companies? This will show that the rent seeking is already rampant in USA. See this news "The affordable units will range for $950 to $1,492 (£615 to £966), and market-rate units will start at $2,000 (£1,294). Monadnock Development is backing the project." [1]. Why these people (like the Monadnock) should be allowed to own such excessive pieces of land, which they are not using for living themselves or not using for any manufacturing activity? No one (individual or company) should be allowed to own multiple houses or even "too big" houses/spaces for living/renting. The dirty-rich owning even the supposedly "public" space is also already happening. See the news about Vinod Khosla [2]. Or see this news about Mark Zukerberg [3]. I understand there are various issues here (e.g. cartels building hotels, in the name of hospitality industry, and using that space to achieve some sort of rent-seeking and/or seeking some sort of leverage through excessive land ownership). But these issues can be tackled through good legislation and enforcement, without harming the interests of the large populations. [1] http://www.dezeen.com/2015/10/21/narchitects-my-micro-ny-modular-residential-tower-affordable-housing-new-york-usa-adapt-nyc/ http://www.dezeen.com/2015/10/21/narchitects-my-micro-ny-mod... [2] http://www.theguardian.com/us-news/2016/feb/23/vinod-khosla-martins-beach-silicon-valley-billionaire-public-access-beach http://www.theguardian.com/us-news/2016/feb/23/vinod-khosla-... [3] http://www.mercurynews.com/business/ci_24285169/mark-zuckerberg-buys-four-houses-near-his-palo-alto-home http://www.mercurynews.com/business/ci_24285169/mark-zuckerb...
ccvannorman 11y ago
I find it surprising that so many HN users on this thread are rushing to the comments to make the point that the rich do, in fact, pay more than "the rest of us." Did you not hear about the Panama papers? It should be quite evident that if you are wealthy enough, you can use creative loopholes to pay very little tax. It's also very well known that many big corporations use offshore accounts to pay little/no taxes. No, I'm not going to cite sources. If you are so living under a rock that you don't know this is a real problem, a source isn't going to help you -- you're just going to start arguing about sources instead of the real, actual issue that should be fucking obvious.
- ptaipale 11y ago
  Generally the problem is not that your fellow HN users are living under a rock; it's more that getting good evidence about the problem is hard.
- tyingq 11y ago
  Even the super rich that don't delve in grey area loopholes do pretty well. Warren Buffet explaining the issue: http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?_r=1 http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-...
- asdfologist 11y ago
  Exactly. Percentage tax rates don't mean squat when you're hiding all your income.
  - MrTonyD 11y ago
    Percentages mean almost nothing sometimes. I was running my own business for a while and making many hundreds of thousands - and spending $30,000 in a day didn't mean anything to me. So paying 20% vs 30% vs 50% wouldn't have made any difference in my daily life.
  - adevine 11y ago
    Percentages also don't mean much when you split "rich" vs "middle-class" based on some arbitrary top x% of income. The real difference in the US is between the landed gentry (people who live off their investments) and people who are paid for their labor. That is where many people (like Warren Buffet) see a fundamental unfairness, especially in cases where people who are paid for their labor manage to get it taxed at investment income levels (e.g. carried interest).
aetherson 11y ago
So, while I'm sure that the very wealthy ("plutocrats"? Really?) include some people who actively work to defraud the government, I don't think it's mostly that. Here's the fact: If you have a net worth north of say $20 million, you're going to hire an accountant to do your taxes. Not, like, an H&R Block come down with a box of your documents accountant, a real accountant. That accountant's _job_ is to interact with an incredibly arcane tax code that includes a lot of special cases and exceptions, and come up with the lowest tax burden possible for you. Legally. Even if you don't super care to shave another 5% off your taxes, your accountant will probably do it for you without your asking. How else would it work? Would an accountant say, "Come use me! I'll increase your tax burden!"? If at the end of the process you feel like giving away more of your wealth, then you can always choose to do that.
lavamantis 11y ago
Discussions like these, among many clearly intelligent people, can sometimes get lost in the weeds. What's missing is a basic contextual foundation, without which all the wonky details in world are nearly meaningless. Why discuss AMT, Germany, and tax loopholes without first agreeing on inequality. Most would agree that in a capitalist system there MUST be some inequality to provide incentive; extreme inequality is unsustainable; an economy (and society) is at it's best when inequality is low; and progressive earnings taxation is in fact the only proven and viable solution to address extreme inequality. I rarely see this foundation laid here or in "the media". We can bitch and moan about the 0.1%ers and the tax code they've written for us, and it's certainly entertaining. But let's try to agree generally on where we want to go before discussing how to get there and who's going to drive.
jbpetersen 11y ago
Anyone else think we'll see "tax havens for the masses" become a thing in the next several years?
simonebrunozzi 11y ago
In this article, I like that they talk about the plutocrats being the "0.1%" instead of the more common "1%". The 1% is NOT plutocrats; they are lawyers, doctors, engineers, that pay high sums in taxes. The 0.1%, instead, starts to become really "interesting". Glad that they used the right percentage amount.

109 points by nkurz 11y ago

"Plutocrats, the richest 0.1 percent of Americans, get the most benefit from a weakened IRS. Because they have the money, the lawyers, the lobbyists, the accountants, and the secret campaign funds, they are able to ensure that the IRS won’t have the resources to effectively collect the money they owe to it. " Since when is generalizing an entire group acceptable? Also, How do you explain this? http://money.cnn.com/2013/03/12/news/economy/rich-taxes/ http://money.cnn.com/2013/03/12/news/economy/rich-taxes/ In 2013: top 10% paid over 70% of total federal taxes 47% of all Americans pretty much paid nothing in terms of federal taxes This also doesn't include the multitude of other taxes the rich pay (property taxes, use taxes, gas tax) and the fact that they employ many people that also pay taxes into the system (indirectly paying more into the system). There are definitely some people using off-shore accounts, but it's not nearly as bleak as this article would like us to believe. The US also has one of the highest corporate tax rate in the world. If people are taking the risk and leaving the country with their money, we may need to take a look at our existing tax laws and figure out why they are taking the risk.

orionblastar 11y ago
Just remember that this is an election year so articles blaming scapegoats come from both sides. Conservatives blaming immigrants and Liberals blaming the rich.
- blue_dinner 11y ago
  You are exactly right.
- spacemanmatt 11y ago
  The difference is, immigrants didn't cause any economic depressions.
  - pixl97 11y ago
    Wait, is this the same forum that complains about HB1 abuse?
    - chillwaves 11y ago
      And who disproportionately benefits from that arrangement? Who makes it happen? It's not the immigrants.
    - spacemanmatt 11y ago
      I often find myself an outlier in this forum.
Latty 11y ago
What generalisation? The comment is they gain the most, and that they have the ability to exploit it. That's a statement of fact. You could similarly say that men are the most likely to benefit from sexism, and are positioned best ot exploit it due to the historical sexism against women. It's not saying all men are sexist, just that they are the ones likely to benefit. The article directly talks about your 70% figure, and explains why it's misleading. I also don't get why we should care about the 'fairness' of it. We don't allow people to do anything they want for the benefit of society - that can include not allowing people to hoard money if we want. As to your latter points, just because they pay a lot doesn't mean they pay enough, and employing people isn't a 'gift' to society - it's something they do to gain benefit themselves. Yes, it's a behaviour we should encourage, but it isn't somehow equivalent to paying tax.
- weberc2 11y ago
  > just because they pay a lot doesn't mean they pay enough So how do we fairly determine what is 'enough'?
  - LanceH 11y ago
    More. From "them."
  - GunboatDiplomat 11y ago
    Enough that the country isn't constantly running massive deficits, and can afford to invest properly in infrastructure and other needed areas. Which we're clearly not doing right now.
    - goobsfoo 11y ago
      So cut costs and your problem is solved.
      - GunboatDiplomat 11y ago
        That is not compatible with our necessary infrastructure investments, etc.
anoonmoose 11y ago
>> How do you explain this? How do I explain the top 10% paying over 70% of total federal taxes? I would wager a guess it has something to do with them having about 70% of the total wealth of the country. https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite...
- lostcolony 11y ago
  This. The OP's particular numbers are -obviously- meaningless without including further context. If one person had all the money, literally, all the money, and paid any amount on it, be it one cent, or half of the money (either way leaving them with trillions, and everyone else still able to earn nothing), they'd be paying 100% of the taxes. This is an absurd hypothetical, but it demonstrates that the percentage of taxes paid by a particular group tells you nothing by itself.
- srj 11y ago
  You're assuming a large overlap between top 10% income and top 10% wealth. I'm not able to find great data on this, with most sources just focusing on one or the other. It seems to me though that many of the wealthiest individuals, including those drawing down retirement savings, probably have low W2 income.
  - marrington 11y ago
    This discrepancy, and people's unwillingness to intellectually engage with it, is what allows the extremely wealthy to be just fine with society demonizing high income people. Once you have stored wealth, you don't care any more because there is no wealth tax (other than property tax and inflation). Taxing high income people into oblivion is what allows the very rich to keep their club small.
- yummyfajitas 11y ago
  Actually no, it's due to the high levels of progressivity of US income taxes relative to other nations. http://taxfoundation.org/blog/no-country-leans-upper-income-households-much-us http://taxfoundation.org/blog/no-country-leans-upper-income-...
kleiba 11y ago
> Since when is generalizing an entire group acceptable? What other kind of generalizing is there?
maxerickson 11y ago
The "they employ many people" is a purple cod. You know what a huge percentage of the population does? Participates in the economy, helping other people earn economic rewards, economic rewards that are taxed. That it is advantageous for some people to employ others is not any different in that respect than the fact that people buy goods and services.
- TheOtherHobbes 11y ago
  I think you'll find the terms of employment may be relevant too. A lot of employment in the UK has moved from being a job to being a zero-hours "we only pay you if we want you for a day, but you have to be available for us to choose you every day" contract. Most people would prefer a steady job, but when the playing field is so heavily slanted politically, that kind of job is becoming a middle class luxury.
spacemanmatt 11y ago
> Since when is generalizing an entire group acceptable? Do you know what time it is?
deepnet 11y ago
Customer's pay the wages and costs of business - plurocrats reap the profits. Socially beneficial plutocrats invest in economies, risking their capital to seek reward. Money hoarded is of no value, an economy is powered by the movement of capital. Corruption of economies by money to escape ones tax burden is antisocial and ultimately short sighted. The wealth of nations is a functional, fair economy. Good goverance should keep markets fair & ensure universal access to Justice. Weak, corruptible governments are anti capitalist, distorting markets by granting monopolies, tax-fixing & denying judicial remedies to the powerless & poor.
Nursie 11y ago
Do you not see the discrepancy between a statement about the top 0.1% and your claims about the top 10%?

mikekij 11y ago

I was very disappointed to see no mention of the fact that the US is one of the only developed nations that taxes companies' offshore profits. The trillions in profits held offshore by American companies is an unintended consequence of an overly complex tax system.

SomewhatLikely 11y ago
The article does point out how easy is it is make profits appear as though they were earned offshore however.

lkrubner 11y ago

Relevant: "Chutzpah, according to the traditional definition, is when you murder your mother and father, then plead for mercy from the court on the grounds that you’re an orphan.Something like that is now happening in the tax debate." http://krugman.blogs.nytimes.com/2011/05/07/federal-tax-chutzpah/ http://krugman.blogs.nytimes.com/2011/05/07/federal-tax-chut... Since 1962, and especially since 1982, the USA tax system has relentlessly reduced the taxes that the rich have to pay. The point is, if you change the tax system, so that all the money goes to the rich, then even with the lower taxes, the rich will end up paying a lot of what taxes are collected, because they have all the money. And that is basically what is happened. But now the rich like to claim "Hey, we are paying 70% of all the taxes!" But of course, their share of all wealth has expanded dramatically, so even with lower taxes, they still end up paying quite a bit. But of course, all of these taxes are voluntary. They could voluntarily give up their wealth, and donate all of it to charity, and then they would be poor, and they would not have to pay taxes. That they choose not to do this suggests that they mind the taxes less than they would mind being poor.

zaroth 11y ago
That's not what the word "voluntary" actually means.
- spacemanmatt 11y ago
  What part of voluntarily giving up their wealth defies the definition of "voluntary?"
  - 3pt14159 11y ago
    "all of these taxes are voluntary" Is the place where the word in contention here. Just like if I point a gun at your hand and tell you that receiving the bullet is "voluntary" because you can always voluntarily cut off your hand. That being said, I agree with the concept of taxes, but let's not kid ourselves and call them voluntary.
    - 11y ago

ef4 11y ago

"You pay more taxes because somebody else pays less" is fundamentally misleading. If the government had to balance its income and expenses, then yes, one person paying less taxes would imply somebody else had to pay more taxes. But that is not how it works. Not for a government that can borrow at practically zero cost. The reality is that when somebody else doesn't pay their taxes, it has no bearing on how much you pay. It just causes the treasury to issue incrementally more bonds. This may seem like a minor point, but it's important in understanding what taxes are really for in a country that issues its own reserve currency: they support the value of the currency by ensuring everybody needs to use it to pay their taxes.

svantana 11y ago
In the short term, yes, but long term, deficits will put an upward pressure on tax revenue, so you'll end up paying more in the end (than you would have if other people paid more taxes).
- wycx 11y ago
  Only if you are borrowing the money to fund the deficit. Public money (as opposed to bank money) is a legitimate, but ignored, alternative. See https://en.wikipedia.org/wiki/Modern_Monetary_Theory https://en.wikipedia.org/wiki/Modern_Monetary_Theory
  - force_reboot 11y ago
    That would cause inflation, and would cause markets to raise interest rates to account for this one they knew about the policy. Modern monetary theory is very non mainstream, flawed economics. It has a Wikipedia page, but very very few academic proponents. Check out https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory#Criticisms https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory#Criti... if you're interested in reading more criticism of MMT
    - wycx 11y ago
      Mainstream (neoliberal/monetarist) economics has abundant academic proponents and is demonstrably flawed, so I am not sure counting the number of academic proponents is much of an indicator of anything other than what is academically fashionable. In a similarly patronising way to your comment, I suggest checking out http://bilbo.economicoutlook.net/blog/ http://bilbo.economicoutlook.net/blog/ if you are interested in reading more criticism of neoliberalism and learning more about MMT than is presented on the wikipedia page.

zaroth 11y ago

As first impressions go, the first sentence of OP is pretty bizarre; "For every dollar appropriated to the IRS the public collects more than $4 in taxes." Missing a couple zeros there? The IRS annual budget is $11.2B and total federal revenue is about $7 trillion.... As far as meaningless stats go that's a factor of 625x, not 4x. Talk about blowing any credibility from the start!

danieltillett 11y ago
I think they missed the word extra after every.
- zaroth 11y ago
  Now that would be an interesting stat... So they collect $7 trillion a year, but to collect 1% more ($70B) we would have to pay them 1/4th of that, or $17.5B -- an additional 150% of their current budget. Hardly seems worth it, aside from the satisfaction of holding all those tax cheats feet to the fire.
  - danieltillett 11y ago
    Well I guess it all comes down to how you feel about tax cheats. Given the current state of US tax law it would be a far better to simplify the rules and thus making it easier for the IRS to do its job within its current budget. Everyone recognises this, but given the political constraints it appears to be impossible to do.

KKKKkkkk1 11y ago

Here's a counterpoint: How I get harassed by the IRS because Americans hate rich people. I'm earning a below-average Bay Area income, but as foreigner I have a bank account and an IRA abroad, so I get to file a 30-page paper return that costs > $1K to prepare, in which I pay taxes on foreign income I did not actually earn, and get audited every year. So remember that every $1 spent on the IRS also generates an $X amount in time and money wasted for taxpayers.

tacostakohashi 11y ago
This situation is voluntary / self-inflicted - I'd suggest either getting rid of your bank account abroad, or not be a foreigner any more (i.e., leave the US).
- KKKKkkkk1 11y ago
  Sure it's self inflicted. What if the IRS did this to all US citizens? Then it would still be self inflicted since they can renounce their citizenship. That's not the point.
  - tacostakohashi 11y ago
    The IRS does in fact do this to all US citizens with overseas bank accounts too.
ptaipale 11y ago
For me this is a major deterrent for considering to work in the US. What I hear about NSA surveillance does not bother me that much. What I hear about IRS makes me want to stay away.
- kmonsen 11y ago
  I am a European citizen living in the Bay Area and although I like to whine about it, paying taxes is not a big deal. It is also getting simpler as I now have almost only US assets. I used to have some stocks vested that was awarded when I worked for the same company in the UK. The tax authorities of the two countries decided to split my earnings leaving me with more or less nothing. Another thing most people say is that US tax gives a lot less back even though we pay about the same as in Europe. This is true, but to some degree this is instead given to you by your employer (like health care).

rayiner 11y ago

You don't pay more. There is an important fact that rarely gets mentioned in the taxation debate (by either side): the U.S. tax system is much more progressive than in similar developed countries: https://www.washingtonpost.com/news/wonk/wp/2013/04/05/americas-taxes-are-the-most-progressive-in-the-world-its-government-is-among-the-least https://www.washingtonpost.com/news/wonk/wp/2013/04/05/ameri.... The top 10% in the U.S. carry much more of the tax burden relative to their share of the income (33.5% of income, but 45% of taxes). In Germany, for example, the top 10% earn 29% of income and pay 31% of taxes. Middle class people in the United States pay very low taxes. I met a young woman from Germany, who has a typical entry-level desk job at a logistics company. Her tax bill was about 40%, which is level only high-income people here in the U.S. would pay. A typical middle class family eligible for the various deductions pays about 25% in state and federal taxes. My two cents: A welfare state requires buy in from the population. You can't have a successful one just taxing the rich heavily to pay for middle class benefits like college and expensive old-age care. You need to flatten the tax curve and raise taxes on everyone to pay for services you expect everyone to use. People need to feel like they are getting something from the system, not just being forced to fund it.

revelation 11y ago
The 40% pay for healthcare, though.
ryguytilidie 11y ago
You're kind of missing the point. I'm middle class and I'm well aware that compared to Germany or Scandanavian countries, I pay lower taxes. However, the issue is whether you "pay more" than the wealthy people in the US. So no, I don't "pay more" than people living in a completely different country (how is this even a comparison) but I do pay more, on a percentage basis, than the highest earners in the actual country I live in, which is complete lunacy.
- yummyfajitas 11y ago
  Rayiner's stats explicitly show that the wealthy pay more, on a percentage basis, than the non-wealthy. If the wealthy pay 45% of taxes while earning only 33.5% of income (ratio = 1.34), then simple arithmetic shows that the non-wealthy pay 55% of taxes while earning 66.5% of income (ratio = 0.82). So no, you don't pay more on a percentage basis. You pay a lot less.

tmptmp 11y ago

I want to point out another angle to this issue. The US tax system may be okayish but renting system is way too much flawed and is giving undue advantage to the dirty-rich few (read the top 0.1%). There should be some law (e.g. ceiling on land holding act) to restrict the ownership of real estate. Some low enough ceiling on land should be there so that no one be in a position to keep on gaining ever increasing rent revenue and thus keep on putting huge burden on the rest of the society. The tax laws should be accompanied by laws that put hard limits on ownership of real estate. Else the dirty-rich will soon "own" this entire nation for all "practical" and "important" purposes.

dbcurtis 11y ago
Please present your data on rates of home ownership in the US compared to other industrialized nations. Also, what do you think should be done to encourage home ownership beyond the current scheme of making mortgage interest deductable for primary residences?
- tmptmp 11y ago
  Why compare with other nations? Don't you think the USA should show some leadership here? >>Also, what do you think should be done to encourage home ownership beyond the current scheme of making mortgage interest deductable for primary residences? This is a good question. First and foremost, make houses affordable. For this to happen in any meaningful manner, the excess houses/spaces owned by people/companies should be freed from their clutches. Another point is the development across the nation must be more evenly distributed across the entire nation as the population grows, this will help lessen the burden on certain areas. Also, home ownership rate in itself doesn't speak much, what is more significant is how large (i.e. how many tens, hundreds or even thousands of houses) living space is owned by how many individuals/companies and what is the rent-income of these people/companies? This will show that the rent seeking is already rampant in USA. See this news "The affordable units will range for $950 to $1,492 (£615 to £966), and market-rate units will start at $2,000 (£1,294). Monadnock Development is backing the project." [1]. Why these people (like the Monadnock) should be allowed to own such excessive pieces of land, which they are not using for living themselves or not using for any manufacturing activity? No one (individual or company) should be allowed to own multiple houses or even "too big" houses/spaces for living/renting. The dirty-rich owning even the supposedly "public" space is also already happening. See the news about Vinod Khosla [2]. Or see this news about Mark Zukerberg [3]. I understand there are various issues here (e.g. cartels building hotels, in the name of hospitality industry, and using that space to achieve some sort of rent-seeking and/or seeking some sort of leverage through excessive land ownership). But these issues can be tackled through good legislation and enforcement, without harming the interests of the large populations. [1] http://www.dezeen.com/2015/10/21/narchitects-my-micro-ny-modular-residential-tower-affordable-housing-new-york-usa-adapt-nyc/ http://www.dezeen.com/2015/10/21/narchitects-my-micro-ny-mod... [2] http://www.theguardian.com/us-news/2016/feb/23/vinod-khosla-martins-beach-silicon-valley-billionaire-public-access-beach http://www.theguardian.com/us-news/2016/feb/23/vinod-khosla-... [3] http://www.mercurynews.com/business/ci_24285169/mark-zuckerberg-buys-four-houses-near-his-palo-alto-home http://www.mercurynews.com/business/ci_24285169/mark-zuckerb...

ccvannorman 11y ago

I find it surprising that so many HN users on this thread are rushing to the comments to make the point that the rich do, in fact, pay more than "the rest of us." Did you not hear about the Panama papers? It should be quite evident that if you are wealthy enough, you can use creative loopholes to pay very little tax. It's also very well known that many big corporations use offshore accounts to pay little/no taxes. No, I'm not going to cite sources. If you are so living under a rock that you don't know this is a real problem, a source isn't going to help you -- you're just going to start arguing about sources instead of the real, actual issue that should be fucking obvious.

ptaipale 11y ago
Generally the problem is not that your fellow HN users are living under a rock; it's more that getting good evidence about the problem is hard.
tyingq 11y ago
Even the super rich that don't delve in grey area loopholes do pretty well. Warren Buffet explaining the issue: http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?_r=1 http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-...
asdfologist 11y ago
Exactly. Percentage tax rates don't mean squat when you're hiding all your income.
- MrTonyD 11y ago
  Percentages mean almost nothing sometimes. I was running my own business for a while and making many hundreds of thousands - and spending $30,000 in a day didn't mean anything to me. So paying 20% vs 30% vs 50% wouldn't have made any difference in my daily life.
- adevine 11y ago
  Percentages also don't mean much when you split "rich" vs "middle-class" based on some arbitrary top x% of income. The real difference in the US is between the landed gentry (people who live off their investments) and people who are paid for their labor. That is where many people (like Warren Buffet) see a fundamental unfairness, especially in cases where people who are paid for their labor manage to get it taxed at investment income levels (e.g. carried interest).

aetherson 11y ago

So, while I'm sure that the very wealthy ("plutocrats"? Really?) include some people who actively work to defraud the government, I don't think it's mostly that. Here's the fact: If you have a net worth north of say $20 million, you're going to hire an accountant to do your taxes. Not, like, an H&R Block come down with a box of your documents accountant, a real accountant. That accountant's _job_ is to interact with an incredibly arcane tax code that includes a lot of special cases and exceptions, and come up with the lowest tax burden possible for you. Legally. Even if you don't super care to shave another 5% off your taxes, your accountant will probably do it for you without your asking. How else would it work? Would an accountant say, "Come use me! I'll increase your tax burden!"? If at the end of the process you feel like giving away more of your wealth, then you can always choose to do that.

lavamantis 11y ago

Discussions like these, among many clearly intelligent people, can sometimes get lost in the weeds. What's missing is a basic contextual foundation, without which all the wonky details in world are nearly meaningless. Why discuss AMT, Germany, and tax loopholes without first agreeing on inequality. Most would agree that in a capitalist system there MUST be some inequality to provide incentive; extreme inequality is unsustainable; an economy (and society) is at it's best when inequality is low; and progressive earnings taxation is in fact the only proven and viable solution to address extreme inequality. I rarely see this foundation laid here or in "the media". We can bitch and moan about the 0.1%ers and the tax code they've written for us, and it's certainly entertaining. But let's try to agree generally on where we want to go before discussing how to get there and who's going to drive.

jbpetersen 11y ago

Anyone else think we'll see "tax havens for the masses" become a thing in the next several years?

simonebrunozzi 11y ago

In this article, I like that they talk about the plutocrats being the "0.1%" instead of the more common "1%". The 1% is NOT plutocrats; they are lawyers, doctors, engineers, that pay high sums in taxes. The 0.1%, instead, starts to become really "interesting". Glad that they used the right percentage amount.