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I really believe the best way to combat tax evasion is to make the tax process easier, more efficient, and less burdensome, especially to wealthy earners. It i

I really believe the best way to combat tax evasion is to make the tax process easier, more efficient, and less burdensome, especially to wealthy earners. It is insane the amount of work that I put into my taxes each year, only because we have a small business and doing things right versus doing things wrong is a difference in the tens of thousands of dollars. The extraordinary amount of loopholes and special interests means you need experts. And as I've said before here, the current tax system exist in the interest and benefit of large companies, not small companies or individuals. If we instituted an overnight 9%, 9%, 9% "Simcity Tax" system and eliminated the massive tax loopholes that exist in all levels of the tax code, then I guarantee that money would come pouring back into the United States.

deleted 10y ago
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Negative1 10y ago
No offense to you but that is absolute and utter bullshit. The tax process being exploited has nothing to do with it being inefficient and burdensome. It is in fact that way to obfuscate the external influences that incorporated all the loopholes that very well trained attorneys that only the wealthy can afford are incentivized to take advantage of. Your 'institute my idea and it will fix everything I promise' idea has basically been why many Presidents have been elected and yet nothing has really improved. The problem is not simple but the root is; while the wealthy can influence the process of how much they pay in taxes, the system will continue to be in their favor. How do we fix that? Damned if I know.
- noobermin 10y ago
  How do we fix that? Damned if I know. Public funding of elections[0]. [0] https://en.wikipedia.org/wiki/Publicly_funded_elections https://en.wikipedia.org/wiki/Publicly_funded_elections
  - blastrat 10y ago
    wait, you are proposing government control of election funding so you can change the government?... hahahahahahahahaha there are plenty of rich people on all parts of the political spectrum always trying to unseat the current government. That's probably a good thing. The idea that taking away private citizen's influence in order to swing the pendulum in any direction except more deeply entrenching the political incumbents is naive at best.
    - zanny 10y ago
      The only real lasting solution is the decentralization of power. If all it takes to buy the violence of the state is owning a handful of senators, that is a bargain few can resist. If it took thousands of individuals to be under your influence, it gets harder. Make it millions and even the richest oligarchs cannot command absolute loyalty with their measly fortunes. Of course, they have to be accountable millions, which means you want to try to respect Dunbar's Number in relation to how many individuals any one representative actually represents.
    - devin 10y ago
      > "There are plenty of rich people on all parts of the political spectrum always trying to unseat the current government." This is wildly reductive. Your post in general seems to suggest that "rich people" (ill-advised usage, IMO) have equal sway in every corner of politics that could possibly matter to large swaths of voting US citizens. To sit there and defend "private citizen's influence" while shouting down the idea of public funding is _truly_ naive. Even a fool's review of The American Legislative Exchange Council's (ALEC) effect on elections and public policy show that there is disproportionate private influence that needs tending to. I'd suggest you give http://www.theatlantic.com/politics/archive/2015/02/if-corporations-are-people-they-should-act-like-it/385034/ http://www.theatlantic.com/politics/archive/2015/02/if-corpo... a read.
    - noobermin 10y ago
      Let's just trust the rich people you say, be the grass under which the elephants that fight. Yes, it's difficult, but the hope is that if we make it so the government we elect is closer to the will of the people, then at least when the government is corrupt, we can vote them out. Sorry, but as far as I can tell, I don't see "plenty of rich people" trying to unseat anyone other than installing their cronies which will do their bidding.
- ianai 10y ago
  I'm a write in vote for changing the voting system. One person, one vote, and winner take all got us two parties very fast.
- rayiner 10y ago
  What "loopholes" would you get rid of if you were President and had no donors to contend with?
- bko 10y ago
  Avoiding taxes through complicated tax schemes has a cost (actual cost and moral cost). The higher the tax burden, in both absolute terms and complexity, the more appealing the alternative. You can't just pretend that an illegal alternative is not an alternative. It's never going to go away completely, but making taxes less burdensome will certainly bring down the appeal of a tax avoidance scheme.
  - flamedoge 10y ago
    > moral cost do you honestly think, not even big corporations but your mom and pop businesses, will put morality over profit if they know they can squeeze more profit?
  - blubb-fish 10y ago
    > moral cost Trump just shed a tear ...
- godzillabrennus 10y ago
  Pitchforks.
- um_ya 10y ago
  You don't need to be a millionaire to use these tax loopholes. I calculated that it would take $2600 a year to maintain an offshore structure. That includes an offshore LLC and trust in Belize (the best jurisdiction). The Belize trust owns membership position in your Belize LLC, and your Belize LLC has control over the trust. Then you just appoint yourself as manager of the LLC. Once that's done, you can simply open bank accounts or brokerage accounts in the LLC name.
  - rando444 10y ago
    Your ideas are intriguing to me, and I wish to subscribe to your newsletter.
  - Pyxl101 10y ago
    What tax advantage does this provide? I'm curious to learn more. Are we talking about tax avoidance, or tax evasion?
    - deleted 10y ago
      [deleted]
  - charlesdm 10y ago
    You can set up the structure, but you won't be able to defend it in court without bankrupting yourself when the IRS comes knocking. And that's exactly where the problem lies.
    - danieltillett 10y ago
      Exactly. It does not matter how clever your structure is if the IRS thinks it is fishy you are going to be in for a world of pain.
      - rbcgerard 10y ago
        Which makes it particularly painful if you're innocent
- smsm42 10y ago
  It has actually a lot to do with it. For two main reasons: 1. All tax complications, special exceptions, special deductions, etc. usually meant to benefit some behaviors and/or punish some other behaviors. One can't wonder then that some people use these regulations to reduce their tax load - that's exactly how they are supposed to work! If you put into the law, say, deduction for making a movie, because you want more movies to be made, and then somebody makes a movie with the purpose of lowering the taxes, you got exactly what you wanted. It may be a crappy movie because its sole purpose was to avoid taxes, but that's still how it supposed to work. More you have special regulations, more you have ways to play them to reduce your taxes. 2. Tax scheming is not free. It takes a lot of inconveniences, highly paid specialists and paperwork to achieve. If the cost of compliance is high, it makes sense to scheme, but if compliance is very cheap but scheming is expensive, not a lot of people would bother with scheming. Some, of course, still will, but there is still a reverse proportion between cost of compliance and incentive to scheme. > The problem is not simple but the root is; while the wealthy can influence the process of how much they pay in taxes, the system will continue to be in their favor. How is it in their favor exactly? Top quintile has about half of total income in US and pays about 2/3 of overall taxes. That's some unusual definition of favorable treatment.
  - eevilspock 10y ago
    > How is it in their favor exactly? Top quintile has about half of total income in US and pays about 2/3 of overall taxes. That's some unusual definition of favorable treatment. Not really. Some, perhaps you, will say 1/2 of overall taxes is more fair, while others will say 3/4 is more fair. It all depends on a combination of one's value system (what's fair) and one's interpretation of how the economic system does or doesn't work. [EDIT: It's funny getting down-votes for saying something logically valid and consistent. I didn't even take a side.]
- wdr1 10y ago
  The challenge is "loophole" is in the eye of the beholder. Is the backdoor Roth IRA contribution a loophole? The mortgage deduction? Tax-loss harvesting that carries for 20+ years?
  - protomyth 10y ago
    Actually, yes, they are all loopholes. They just are for general consumption and trying to encourage behavior.
    - vonmoltke 10y ago
      You are abusing the meaning of the term "loophole" then. Something explicitly and purposefully added is not a loophole. A loophole is an error or missed corner case that allows someone to legally bypass some portion of the law.
- fit2rule 10y ago
  >How do we fix that? Its really quite simple: Stop taxing income. Start taxing spending. Income Tax is a heinous enslavement mechanism. Spending-Tax is far, far more fair and just.
  - rusabd 10y ago
    Spending tax affects mostly poor as they spend all their income. Rich spend more in absolute terms but still very little compare to overall income.
    - fit2rule 10y ago
      The point is, if you tax spending and not income, people will do more with less. If you tax income, and not spending, people just do less. Income tax is how poor people are made, and kept poor. Spending tax encourages the poor to become more wealthy by saving - Income tax encourages people to be (and stay poor) by removing the incentive to work.
      - pjc50 10y ago
        Income tax is how poor people are made, and kept poor. Spending tax encourages the poor to become more wealthy by saving - Income tax encourages people to be (and stay poor) by removing the incentive to work People very rarely negotiate down their amount of work in exchange for more leisure. Especially in America, land of 2-weeks-a-year holidays. Very few people have the realistic option of working more for more income but are put off by the tax system. Saving isn't really the route to wealth in a land of near-zero interest rates, either. It's just deferred consumption. Leveraged property speculation is the great route to wealth. The one exception is the decision of whether one parent should stay at home or the labour of childcare should be outsourced, which is quite dependent on the tax levels involved.
        fit2rule 10y ago
        >People very rarely negotiate down their amount of work in exchange for more leisure. Yes, they do. Oh, wait: >Especially in America Right, this is a strictly American discussion. This is not the case in Europe! People do quite frequently negotiate for less work hours, so that they don't enter that 'sour spot' where their monthly income is too high, and they end up working more for less reward, so they scale back. 20-30 hr/weeks are quite common - because the value of working longer isn't as high (40-hour work weeks means you're working half the time for the state..)
jd3 10y ago
While I agree that the tax system should be simpler (which is a totally bipartisan opinion, imo), I don't think making the tax code simpler would ensure that the ultra-rich don't hide their assets in overseas tax havens. The reason they are hiding their assets there is usually due to the ultra-low tax rates that these countries have (or thugs like Putin, Xi Jinping, pretty much any leader from the middle east or africa, ect. who use it to hide their blood money).
- harryh 10y ago
  I don't really think that having a simpler tax system is a bipartisan opinion at this point. I think we can see that Democrats want to raise taxes but go through various contortions so that these increases do not fall on "the middle class." You saw this in the various tax increases that were part of ObamaCare. You're also seeing it now with various proposals for increasing social security taxes on high earners (the donut hole). We've also seen lots of simplifying proposals from Republican politicians. In particular there is fairly strong support for eliminating the deductibility of state & local taxes (one of the more complex aspects of the individual income tax code).
  - honkhonkpants 10y ago
    Isn't removing the social security tax limit a simplification rather than a complication of that code?
    - harryh 10y ago
      Most proposals don't remove the limit. They would tax income from 0 to X, not tax it from X to Y, and then tax it again for income over Y. Hence you get a "donut hole" of untaxed income in the middle. I can think of no economic justification for such a proposal, though it's clear why it would be politically palatable. But that's exactly where complexity comes from: political compromises.
  - _delirium 10y ago
    In what sense is the deductibility of state & local taxes a complex aspect of the individual income tax code? I did that recently, and it was extremely simple for me to fill out. I paid some state/local taxes, and then I entered that number on my federal income tax return as a deduction. Now the treatment of investment income, that's complex. Even with my pretty modest investments it was a whole bunch of pages to fill out (more than 1/2 the total pages of the return), with a ton of special cases I had to read instructions for. Some of the more left-wing Democrats have proposed a simplifying measure that afaik no Republican has signed on to (or even most Democrats, for that matter): just treat all income the same for federal tax purposes, and delete the thousands of pages of the tax code that specify complex special treatment for dividend, qualifying dividend, and capital-gains income.
Spooky23 10y ago
At some point in the 70s taxation flipped into a political/Ideaology issue. "Simplifying" the tax code is code for lowering taxes for influential people. Your taxes and burdens are high because leeches on society pay nothing. Why do you defend them?
- andrepd 10y ago
  I don't understand. What leeches are you referring to?
- afarrell 10y ago
  When have taxes ever not been a political issue?
charlesdm 10y ago
> I really believe the best way to combat tax evasion is to make the tax process easier, more efficient, and less burdensome, especially to wealthy earners. No. Most wealthy people don't evade, they avoid. Loopholes are great for wealthy people, and they want things to be as complex as possible because they can afford lawyers and accountants that cost a fraction of the value they deliver. "Normal" people can't, so they'll pay the higher rate, which often leads to even more tax breaks / loopholes for the wealthy.
- shawnee_ 10y ago
  No. Most wealthy people don't evade, they avoid. To be technically correct, it really is evasion when the purpose is to violate the spirit of the law. Which is, very very simple: wealthier people paying more taxes is supposed to have the net effect of benefiting more people. This makes sense and is a good idea because in a business's quest to "maximize shareholder value" it tends to use more than its share of resources at the expense of many who are not shareholders. Think: more WalMart 18-wheeler delivery trucks driving on roads wears down roads more quickly, and creates more pollution for everybody to breathe, regardless of whether they are a WalMart shareholder. The original tax code was designed tax business only -- individuals didn't have to pay anything for income under $4K (adjusted for inflation this is about $100K today). source: http://books.google.com/books?id=ogUNAAAAYAAJ&printsec=frontcover&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false http://books.google.com/books?id=ogUNAAAAYAAJ&printsec=front... Instead, the evolving nature of the business loopholes (driven primarily by what boils down to real estate exploitation) means that wealthy people still pay a "tax" (that is, they don't technically "avoid" it), but it gets distributed to fewer people -- the lawyers and accountants that cost a fraction of the value they deliver you cited being the first in line. Now their incentives are to maximize the theft from the people, because in doing so they get a cut of the wealthy client's wealth. That's probably a crude way of putting it, but it's the basic idea. A few people catch a glimpse of this right out of school (me, ~11 years ago) and make a conscious choice to not sign off or embrace the ethics of those kinds of people or companies (and to be fair, most of them didn't want me either). There were quite a few really rough years. Anyway. Digression aside, the IRS is pretty much the only entity that has the explicit purpose of discovering, investigating, and recovering that theft from the people. The tax system is not bad and the IRS isn't either.. it's the matter of how to best spend the recovered funds that probably needs re-hauled.
rayiner 10y ago
> And as I've said before here, the current tax system exist in the interest and benefit of large companies, not small companies or individuals That is contradicted by the huge number of middle-class tax loopholes out there for, e.g. mortgage interest, small business credits, etc. Several middle-class tax expenditures cost $100 billion or more: http://taxfoundation.org/blog/12-largest-individual-tax-expenditures http://taxfoundation.org/blog/12-largest-individual-tax-expe.... Health insurance deduction: $212 billion; retirement savings deduction $176 billion; mortgage interest deduction: $101 billion. Tax evasion using overseas havens is estimated to cost $100 billion per year: http://freebeacon.com/issues/report-tax-evasion-avoidance-costs-united-states-100-billion-a-year http://freebeacon.com/issues/report-tax-evasion-avoidance-co.... Legal corporate tax avoidance costs about the same: http://www.theatlantic.com/business/archive/2016/04/corporate-tax-avoidance/478293 http://www.theatlantic.com/business/archive/2016/04/corporat.... > If we instituted an overnight 9%, 9%, 9% "Simcity Tax" system Sophisticated tax evasion has little to do with claiming various deductions and credits. It is a mechanical and straightforward process to run through those. The real complexity is intrinsic: what's an appropriate depreciation schedule for this asset? Does appreciation of this options contract result in ordinary income or capital gains? Is this payment between related companies legitimate, or a way to shift profits? You can't get rid of these basic distinctions, but at the same time those are the bread-and-butter of sophisticated tax planning. There is a way to limit tax evasion from companies: stop taxing corporations.
- celticninja 10y ago
  Yeah, go further, stop all taxation and be rid of the problem of evasion altogether.
  - afarrell 10y ago
    How do you simultaneously stop all taxation and prevent someone from breaking the flourist's kneecaps if she doesn't pay protection money?
    - zanny 10y ago
      In the theoretical anarchist paradise, the person threatening the florist (I think is what you meant) breaks all the non-violence contracts with the rest of society by doing so, and if the florist (or witnesses) can prove the aggression in contract courts agreed upon in all participants contracts, then the aggressor is either fined to rejoin or outright removed from participating in the economy. Of course, its theoretical, and only works so long as the economy of good actors and voluntary participants is sufficiently larger than the economy of violent aggressors to prevent them from rising to power. If the violent aggressors can accumulate enough capital and power, they influence the rest of the economy and can rapidly usurp it because they aren't working by the same ethics as everyone else.
mempko 10y ago
Buckshit. You know why? Taxes for the rich are much lower than they were 40 years ago. Yet they still take as much , maybe even more, money out of the country.
megablast 10y ago
> then I guarantee that money would come pouring back into the United States. To top it all off, you promise something that you can't possibly promise. Well done.
gerbilly 10y ago
>make the tax process easier, more efficient, and less burdensome One factor that makes the tax code so complicated is that incentives are often placed in the tax code instead of passing legislation. Say you want to promote the cultivation of industrial hemp (yeah right) you could pass a law incentivizing it or put some tax credit into the tax code. It's as if the tax code has 70 years of technical debt in it from all these little tweaks and fixes that have been added to it.
sgnelson 10y ago
I agree that the tax code needs to be fixed (or a total overhaul more like it.) But cheaters are going to cheat, thieves are going to thieve. If it was truly a "postcard" taxation system (your entire tax forms could fit on a postcard), people will still feel the need to hide money from Uncle Sam, business partners, spouses, etc. For example, look at every other law on the books. They're broken all of the time. (See: the US Financial Industry)
superuser2 10y ago
There is simplifying the tax code, and there is eliminating progressive taxation/introducing regressive taxation (like your Herman Cain sales tax there). The former is generally agreeable, the latter implies a set of beliefs about how government ought to work which I believe need to be fought tooth and nail. This rhetoric is disingenuous, because flattening taxation isn't really about simplifying it, it's about shifting the burden further towards the poor.
seriousthrowaw 10y ago
I am fully with you. I have no interest for business on the administrative side, never had. But affording a book keeper AND paying taxes would be not possible right now. So i mostly avoid to pay taxes, my next step is to setup a offshore company to legally avoid them. I see why that is bad, but i am lazy and hell no will i create myself additional work when it is avoidable.

deleted 10y ago

[deleted]

Negative1 10y ago

No offense to you but that is absolute and utter bullshit. The tax process being exploited has nothing to do with it being inefficient and burdensome. It is in fact that way to obfuscate the external influences that incorporated all the loopholes that very well trained attorneys that only the wealthy can afford are incentivized to take advantage of. Your 'institute my idea and it will fix everything I promise' idea has basically been why many Presidents have been elected and yet nothing has really improved. The problem is not simple but the root is; while the wealthy can influence the process of how much they pay in taxes, the system will continue to be in their favor. How do we fix that? Damned if I know.

noobermin 10y ago
How do we fix that? Damned if I know. Public funding of elections[0]. [0] https://en.wikipedia.org/wiki/Publicly_funded_elections https://en.wikipedia.org/wiki/Publicly_funded_elections
- blastrat 10y ago
  wait, you are proposing government control of election funding so you can change the government?... hahahahahahahahaha there are plenty of rich people on all parts of the political spectrum always trying to unseat the current government. That's probably a good thing. The idea that taking away private citizen's influence in order to swing the pendulum in any direction except more deeply entrenching the political incumbents is naive at best.
  - zanny 10y ago
    The only real lasting solution is the decentralization of power. If all it takes to buy the violence of the state is owning a handful of senators, that is a bargain few can resist. If it took thousands of individuals to be under your influence, it gets harder. Make it millions and even the richest oligarchs cannot command absolute loyalty with their measly fortunes. Of course, they have to be accountable millions, which means you want to try to respect Dunbar's Number in relation to how many individuals any one representative actually represents.
  - devin 10y ago
    > "There are plenty of rich people on all parts of the political spectrum always trying to unseat the current government." This is wildly reductive. Your post in general seems to suggest that "rich people" (ill-advised usage, IMO) have equal sway in every corner of politics that could possibly matter to large swaths of voting US citizens. To sit there and defend "private citizen's influence" while shouting down the idea of public funding is _truly_ naive. Even a fool's review of The American Legislative Exchange Council's (ALEC) effect on elections and public policy show that there is disproportionate private influence that needs tending to. I'd suggest you give http://www.theatlantic.com/politics/archive/2015/02/if-corporations-are-people-they-should-act-like-it/385034/ http://www.theatlantic.com/politics/archive/2015/02/if-corpo... a read.
  - noobermin 10y ago
    Let's just trust the rich people you say, be the grass under which the elephants that fight. Yes, it's difficult, but the hope is that if we make it so the government we elect is closer to the will of the people, then at least when the government is corrupt, we can vote them out. Sorry, but as far as I can tell, I don't see "plenty of rich people" trying to unseat anyone other than installing their cronies which will do their bidding.
ianai 10y ago
I'm a write in vote for changing the voting system. One person, one vote, and winner take all got us two parties very fast.
rayiner 10y ago
What "loopholes" would you get rid of if you were President and had no donors to contend with?
bko 10y ago
Avoiding taxes through complicated tax schemes has a cost (actual cost and moral cost). The higher the tax burden, in both absolute terms and complexity, the more appealing the alternative. You can't just pretend that an illegal alternative is not an alternative. It's never going to go away completely, but making taxes less burdensome will certainly bring down the appeal of a tax avoidance scheme.
- flamedoge 10y ago
  > moral cost do you honestly think, not even big corporations but your mom and pop businesses, will put morality over profit if they know they can squeeze more profit?
- blubb-fish 10y ago
  > moral cost Trump just shed a tear ...
godzillabrennus 10y ago
Pitchforks.
um_ya 10y ago
You don't need to be a millionaire to use these tax loopholes. I calculated that it would take $2600 a year to maintain an offshore structure. That includes an offshore LLC and trust in Belize (the best jurisdiction). The Belize trust owns membership position in your Belize LLC, and your Belize LLC has control over the trust. Then you just appoint yourself as manager of the LLC. Once that's done, you can simply open bank accounts or brokerage accounts in the LLC name.
- rando444 10y ago
  Your ideas are intriguing to me, and I wish to subscribe to your newsletter.
- Pyxl101 10y ago
  What tax advantage does this provide? I'm curious to learn more. Are we talking about tax avoidance, or tax evasion?
  - deleted 10y ago
    [deleted]
- charlesdm 10y ago
  You can set up the structure, but you won't be able to defend it in court without bankrupting yourself when the IRS comes knocking. And that's exactly where the problem lies.
  - danieltillett 10y ago
    Exactly. It does not matter how clever your structure is if the IRS thinks it is fishy you are going to be in for a world of pain.
    - rbcgerard 10y ago
      Which makes it particularly painful if you're innocent
smsm42 10y ago
It has actually a lot to do with it. For two main reasons: 1. All tax complications, special exceptions, special deductions, etc. usually meant to benefit some behaviors and/or punish some other behaviors. One can't wonder then that some people use these regulations to reduce their tax load - that's exactly how they are supposed to work! If you put into the law, say, deduction for making a movie, because you want more movies to be made, and then somebody makes a movie with the purpose of lowering the taxes, you got exactly what you wanted. It may be a crappy movie because its sole purpose was to avoid taxes, but that's still how it supposed to work. More you have special regulations, more you have ways to play them to reduce your taxes. 2. Tax scheming is not free. It takes a lot of inconveniences, highly paid specialists and paperwork to achieve. If the cost of compliance is high, it makes sense to scheme, but if compliance is very cheap but scheming is expensive, not a lot of people would bother with scheming. Some, of course, still will, but there is still a reverse proportion between cost of compliance and incentive to scheme. > The problem is not simple but the root is; while the wealthy can influence the process of how much they pay in taxes, the system will continue to be in their favor. How is it in their favor exactly? Top quintile has about half of total income in US and pays about 2/3 of overall taxes. That's some unusual definition of favorable treatment.
- eevilspock 10y ago
  > How is it in their favor exactly? Top quintile has about half of total income in US and pays about 2/3 of overall taxes. That's some unusual definition of favorable treatment. Not really. Some, perhaps you, will say 1/2 of overall taxes is more fair, while others will say 3/4 is more fair. It all depends on a combination of one's value system (what's fair) and one's interpretation of how the economic system does or doesn't work. [EDIT: It's funny getting down-votes for saying something logically valid and consistent. I didn't even take a side.]
wdr1 10y ago
The challenge is "loophole" is in the eye of the beholder. Is the backdoor Roth IRA contribution a loophole? The mortgage deduction? Tax-loss harvesting that carries for 20+ years?
- protomyth 10y ago
  Actually, yes, they are all loopholes. They just are for general consumption and trying to encourage behavior.
  - vonmoltke 10y ago
    You are abusing the meaning of the term "loophole" then. Something explicitly and purposefully added is not a loophole. A loophole is an error or missed corner case that allows someone to legally bypass some portion of the law.
fit2rule 10y ago
>How do we fix that? Its really quite simple: Stop taxing income. Start taxing spending. Income Tax is a heinous enslavement mechanism. Spending-Tax is far, far more fair and just.
- rusabd 10y ago
  Spending tax affects mostly poor as they spend all their income. Rich spend more in absolute terms but still very little compare to overall income.
  - fit2rule 10y ago
    The point is, if you tax spending and not income, people will do more with less. If you tax income, and not spending, people just do less. Income tax is how poor people are made, and kept poor. Spending tax encourages the poor to become more wealthy by saving - Income tax encourages people to be (and stay poor) by removing the incentive to work.
    - pjc50 10y ago
      Income tax is how poor people are made, and kept poor. Spending tax encourages the poor to become more wealthy by saving - Income tax encourages people to be (and stay poor) by removing the incentive to work People very rarely negotiate down their amount of work in exchange for more leisure. Especially in America, land of 2-weeks-a-year holidays. Very few people have the realistic option of working more for more income but are put off by the tax system. Saving isn't really the route to wealth in a land of near-zero interest rates, either. It's just deferred consumption. Leveraged property speculation is the great route to wealth. The one exception is the decision of whether one parent should stay at home or the labour of childcare should be outsourced, which is quite dependent on the tax levels involved.
      - fit2rule 10y ago
        >People very rarely negotiate down their amount of work in exchange for more leisure. Yes, they do. Oh, wait: >Especially in America Right, this is a strictly American discussion. This is not the case in Europe! People do quite frequently negotiate for less work hours, so that they don't enter that 'sour spot' where their monthly income is too high, and they end up working more for less reward, so they scale back. 20-30 hr/weeks are quite common - because the value of working longer isn't as high (40-hour work weeks means you're working half the time for the state..)

jd3 10y ago

While I agree that the tax system should be simpler (which is a totally bipartisan opinion, imo), I don't think making the tax code simpler would ensure that the ultra-rich don't hide their assets in overseas tax havens. The reason they are hiding their assets there is usually due to the ultra-low tax rates that these countries have (or thugs like Putin, Xi Jinping, pretty much any leader from the middle east or africa, ect. who use it to hide their blood money).

harryh 10y ago
I don't really think that having a simpler tax system is a bipartisan opinion at this point. I think we can see that Democrats want to raise taxes but go through various contortions so that these increases do not fall on "the middle class." You saw this in the various tax increases that were part of ObamaCare. You're also seeing it now with various proposals for increasing social security taxes on high earners (the donut hole). We've also seen lots of simplifying proposals from Republican politicians. In particular there is fairly strong support for eliminating the deductibility of state & local taxes (one of the more complex aspects of the individual income tax code).
- honkhonkpants 10y ago
  Isn't removing the social security tax limit a simplification rather than a complication of that code?
  - harryh 10y ago
    Most proposals don't remove the limit. They would tax income from 0 to X, not tax it from X to Y, and then tax it again for income over Y. Hence you get a "donut hole" of untaxed income in the middle. I can think of no economic justification for such a proposal, though it's clear why it would be politically palatable. But that's exactly where complexity comes from: political compromises.
- _delirium 10y ago
  In what sense is the deductibility of state & local taxes a complex aspect of the individual income tax code? I did that recently, and it was extremely simple for me to fill out. I paid some state/local taxes, and then I entered that number on my federal income tax return as a deduction. Now the treatment of investment income, that's complex. Even with my pretty modest investments it was a whole bunch of pages to fill out (more than 1/2 the total pages of the return), with a ton of special cases I had to read instructions for. Some of the more left-wing Democrats have proposed a simplifying measure that afaik no Republican has signed on to (or even most Democrats, for that matter): just treat all income the same for federal tax purposes, and delete the thousands of pages of the tax code that specify complex special treatment for dividend, qualifying dividend, and capital-gains income.

Spooky23 10y ago

At some point in the 70s taxation flipped into a political/Ideaology issue. "Simplifying" the tax code is code for lowering taxes for influential people. Your taxes and burdens are high because leeches on society pay nothing. Why do you defend them?

andrepd 10y ago
I don't understand. What leeches are you referring to?
afarrell 10y ago
When have taxes ever not been a political issue?

charlesdm 10y ago

> I really believe the best way to combat tax evasion is to make the tax process easier, more efficient, and less burdensome, especially to wealthy earners. No. Most wealthy people don't evade, they avoid. Loopholes are great for wealthy people, and they want things to be as complex as possible because they can afford lawyers and accountants that cost a fraction of the value they deliver. "Normal" people can't, so they'll pay the higher rate, which often leads to even more tax breaks / loopholes for the wealthy.

shawnee_ 10y ago
No. Most wealthy people don't evade, they avoid. To be technically correct, it really is evasion when the purpose is to violate the spirit of the law. Which is, very very simple: wealthier people paying more taxes is supposed to have the net effect of benefiting more people. This makes sense and is a good idea because in a business's quest to "maximize shareholder value" it tends to use more than its share of resources at the expense of many who are not shareholders. Think: more WalMart 18-wheeler delivery trucks driving on roads wears down roads more quickly, and creates more pollution for everybody to breathe, regardless of whether they are a WalMart shareholder. The original tax code was designed tax business only -- individuals didn't have to pay anything for income under $4K (adjusted for inflation this is about $100K today). source: http://books.google.com/books?id=ogUNAAAAYAAJ&printsec=frontcover&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false http://books.google.com/books?id=ogUNAAAAYAAJ&printsec=front... Instead, the evolving nature of the business loopholes (driven primarily by what boils down to real estate exploitation) means that wealthy people still pay a "tax" (that is, they don't technically "avoid" it), but it gets distributed to fewer people -- the lawyers and accountants that cost a fraction of the value they deliver you cited being the first in line. Now their incentives are to maximize the theft from the people, because in doing so they get a cut of the wealthy client's wealth. That's probably a crude way of putting it, but it's the basic idea. A few people catch a glimpse of this right out of school (me, ~11 years ago) and make a conscious choice to not sign off or embrace the ethics of those kinds of people or companies (and to be fair, most of them didn't want me either). There were quite a few really rough years. Anyway. Digression aside, the IRS is pretty much the only entity that has the explicit purpose of discovering, investigating, and recovering that theft from the people. The tax system is not bad and the IRS isn't either.. it's the matter of how to best spend the recovered funds that probably needs re-hauled.

rayiner 10y ago

> And as I've said before here, the current tax system exist in the interest and benefit of large companies, not small companies or individuals That is contradicted by the huge number of middle-class tax loopholes out there for, e.g. mortgage interest, small business credits, etc. Several middle-class tax expenditures cost $100 billion or more: http://taxfoundation.org/blog/12-largest-individual-tax-expenditures http://taxfoundation.org/blog/12-largest-individual-tax-expe.... Health insurance deduction: $212 billion; retirement savings deduction $176 billion; mortgage interest deduction: $101 billion. Tax evasion using overseas havens is estimated to cost $100 billion per year: http://freebeacon.com/issues/report-tax-evasion-avoidance-costs-united-states-100-billion-a-year http://freebeacon.com/issues/report-tax-evasion-avoidance-co.... Legal corporate tax avoidance costs about the same: http://www.theatlantic.com/business/archive/2016/04/corporate-tax-avoidance/478293 http://www.theatlantic.com/business/archive/2016/04/corporat.... > If we instituted an overnight 9%, 9%, 9% "Simcity Tax" system Sophisticated tax evasion has little to do with claiming various deductions and credits. It is a mechanical and straightforward process to run through those. The real complexity is intrinsic: what's an appropriate depreciation schedule for this asset? Does appreciation of this options contract result in ordinary income or capital gains? Is this payment between related companies legitimate, or a way to shift profits? You can't get rid of these basic distinctions, but at the same time those are the bread-and-butter of sophisticated tax planning. There is a way to limit tax evasion from companies: stop taxing corporations.

celticninja 10y ago
Yeah, go further, stop all taxation and be rid of the problem of evasion altogether.
- afarrell 10y ago
  How do you simultaneously stop all taxation and prevent someone from breaking the flourist's kneecaps if she doesn't pay protection money?
  - zanny 10y ago
    In the theoretical anarchist paradise, the person threatening the florist (I think is what you meant) breaks all the non-violence contracts with the rest of society by doing so, and if the florist (or witnesses) can prove the aggression in contract courts agreed upon in all participants contracts, then the aggressor is either fined to rejoin or outright removed from participating in the economy. Of course, its theoretical, and only works so long as the economy of good actors and voluntary participants is sufficiently larger than the economy of violent aggressors to prevent them from rising to power. If the violent aggressors can accumulate enough capital and power, they influence the rest of the economy and can rapidly usurp it because they aren't working by the same ethics as everyone else.

mempko 10y ago

Buckshit. You know why? Taxes for the rich are much lower than they were 40 years ago. Yet they still take as much , maybe even more, money out of the country.

megablast 10y ago

> then I guarantee that money would come pouring back into the United States. To top it all off, you promise something that you can't possibly promise. Well done.

gerbilly 10y ago

>make the tax process easier, more efficient, and less burdensome One factor that makes the tax code so complicated is that incentives are often placed in the tax code instead of passing legislation. Say you want to promote the cultivation of industrial hemp (yeah right) you could pass a law incentivizing it or put some tax credit into the tax code. It's as if the tax code has 70 years of technical debt in it from all these little tweaks and fixes that have been added to it.

sgnelson 10y ago

I agree that the tax code needs to be fixed (or a total overhaul more like it.) But cheaters are going to cheat, thieves are going to thieve. If it was truly a "postcard" taxation system (your entire tax forms could fit on a postcard), people will still feel the need to hide money from Uncle Sam, business partners, spouses, etc. For example, look at every other law on the books. They're broken all of the time. (See: the US Financial Industry)

superuser2 10y ago

There is simplifying the tax code, and there is eliminating progressive taxation/introducing regressive taxation (like your Herman Cain sales tax there). The former is generally agreeable, the latter implies a set of beliefs about how government ought to work which I believe need to be fought tooth and nail. This rhetoric is disingenuous, because flattening taxation isn't really about simplifying it, it's about shifting the burden further towards the poor.

seriousthrowaw 10y ago

I am fully with you. I have no interest for business on the administrative side, never had. But affording a book keeper AND paying taxes would be not possible right now. So i mostly avoid to pay taxes, my next step is to setup a offshore company to legally avoid them. I see why that is bad, but i am lazy and hell no will i create myself additional work when it is avoidable.