7 ms·

That's like saying it will always be possible to murder someone so there is no point in trying to curb chemical weapons sales to children. Every loop closed ma

by Iv 9y ago

That's like saying it will always be possible to murder someone so there is no point in trying to curb chemical weapons sales to children. Every loop closed makes tax evasion harder and riskier. There will always be people who do it, like there will always be people killing other people, but it is worth making it hard and risky enough that most people will consider other solutions before resorting to murder/tax evasion.

zip1234 9y ago
Tax evasion is illegally not paying the taxes that are due. If you are taking advantages of legal loopholes, it is not tax evasion.
- jazzyk 9y ago
  What if you make the rules so simple that there are NO loopholes and there is no/little possibility for tax avoidance?
  - aaronchall 9y ago
    This would be an ideal world: > What if you make the rules so simple that there are NO loopholes and there is no/little possibility for tax avoidance? Then we could lower tax "rates", reduce dead weight loss, and increase tax receipts. But no, we've decided, for example, that home ownership is important for everyone so we subsidize home ownership by letting people write off mortgage interest. This has the unintended effect of driving up prices for homes and encouraging people to buy more home than they need. When taxes are too high, it causes pathological behavior. Some people will, even if it nets them less after taxes, minimize taxes paid. "Tax shelters" in the 80's would be all but guaranteed to lose money, and yet people would still buy into them because they would reduce their taxes and pay huge fees based on the total taxes that would be reduced. These arrangements were legal (although the IRS was hawkish on them) but actually made no business sense for investors.
    - sokoloff 9y ago
      Home mortgage interest deduction serves to put the financing of private home ownership on the same footing as financing of commercial house ownership (wherein the interest on loans for income-seeking activities is deductible). Eliminating the MID without eliminating the deductibility of commercial loans' interest makes commercial purchasing of real estate cheaper than private purchasing. IOW, eliminating the MID is a big handout to commercial landlords and serves to keep even more people renting rather than owning their housing.
      - aaronchall 9y ago
        > Home mortgage interest deduction serves to put the financing of private home ownership on the same footing as financing of commercial house ownership (wherein the interest on loans for income-seeking activities is deductible). Sounds fair. Can I also reduce my income by furnishing my building (home) with equipment (e.g. furniture and appliances) in the same way that commerce can? Would that make sense? > Eliminating the MID without eliminating the deductibility of commercial loans' interest makes commercial purchasing of real estate cheaper than private purchasing. IOW, eliminating the MID is a big handout to commercial landlords and serves to keep even more people renting rather than owning their housing. There's only so much housing stock. If more are renting, there's more business in renting, but that mostly affects the mid to upper classes. Do we really want to subsidize urban sprawl? Maybe we do. Maybe we should. Should we do it forever? I... don't like it. Maybe all subsidies should have a phase-out/sunsetting period to avoid economic shocks while reducing the plethora of loop-holes and market distortions that they create.
        sokoloff 9y ago
        > There's only so much housing stock. If more are renting, there's more business in renting, but that mostly affects the mid to upper classes. I'm not following you here. Rental market dynamics affect the lower and middle classes and the rent/buy margin affects the middle class. If the gulf between renting and buying widens (by buying becoming relatively more expensive), how does that not help landlords (mostly upper-middle and upper class), who in turn achieve increased power over the poor and middle classes (vs the status quo)? Every 750 credit score, 2 steady income, $100K household income family who doesn't buy a house but instead rents put pressure on someone worse off in the economic stack-rank.
  - sharemywin 9y ago
    Simpler isn't always better. The simplest rule would be "no violence" but then the court system would have to make a bunch of decisions. is it literal? so is everyone that harms an insect in criminal jeopardy? So, now that we've introduced complexity we need to argue about degree not absolutes.
  - sharemywin 9y ago
    If you believe that too much wealth equates to too much power in a democracy then the simplest tax code would be all wealth over X is taxed at 100% all transgressions are punishable by death. Personally, I think that's a little harsh but some people only see black and white.
    - brianwawok 9y ago
      Hah my hft bot would double stock value of apple for 1 second and a bunch of automatic deaths would be handed down to investors.
      - ReverseCold 9y ago
        I think gp said that it would be taxed at 100%, not that one couldn't keep over x at a time.
        brianwawok 9y ago
        Sure we started at 100% tax, and then moved on to death panels for breaking the rule ;)
  - charlesdm 9y ago
    Because most loopholes are in fact deductions that are there for a reason. The overall tax rate is too high (or it would be too expensive to lower the overall rate), so politicians give certain people sweetheart deals on certain things because they consider it relevant, thus offering someone, somewhere a tax break. Others are then free to use the same deduction for their benefit. The wealthy aren't stupid. They're generally quite pragmatic and flexible when it comes to making money.
    - jazzyk 9y ago
      Most loopholes are aimed at big corporations and high-income people ($1M+). You and I cannot take advantage of them easily. Loopholes: - obfuscate the fact that "certain" people, who should be paying 35% are not, in fact, paying a penny. - give incredible power to the people who decide what "certain" group to reward with them or threaten to withdraw them
      - charlesdm 9y ago
        You can actually use them, but probably are not, since you're a high income, high income tax paying person? If you can earn $300k a year as an entrepreneur, vs $300k as an employee, then it's a lot more likely you'll be paying significantly less taxes when going the self employed route.
  - logfromblammo 9y ago
    I think the problem is not with the complexity of the tax code, but that those taxed by it have significant incentive to avoid paying taxes, and have the ability to manipulate information such that they can pay less. No matter how you slice it, if government taxes "income", and your business is set up such that you decide what your "income" is, you can control how much tax you are bound to pay. The only way around it is to make people think that spending more money on more government is a good and sensible thing to do. Or perhaps that spending more money on higher employee payroll is a good and sensible thing to do.
    - sokoloff 9y ago
      That is one, but not the only, way around it. Another is to tax things that are very hard to structure around. Taxing land, taxing stock sales (the SEC section 31 fee), taxing retail purchases, etc.
- dx034 9y ago
  With principles based legislation you can introduce rules that make it illegal to find "creative" ways only to circumvent restrictions. These rules already exist for anti money laundering and terrorism financing. The problem is that changes also always affect some of the non-rich. You'll never manage to tailor laws so that everyone is hit exactly as desired.
  - Karunamon 9y ago
    With principles based legislation you can introduce rules that make it illegal to find "creative" ways only to circumvent restrictions. Read: Arbitrary and capricious legislation what will be abused in creative ways. I'd prefer laws remain as objective as possible, and I'm a lot more concerned about bad legislation than 1%ers moving their money around.
  - charlesdm 9y ago
    You can't define "creative ways" in an objective way in a law. It's black or white. What you want is a clear rulebook of what isn't allowed. Everything else is fair game, because that's the only logical way to approach things. You don't want the IRS dictating what they consider to be creative ways. The IRS can not agree with something you've done, but you don't want to end up in a situation where they effectively make the law. That makes no sense at all.
- british_india 9y ago
  Yes, it's Tax Avoidance and it's every bit as despicable. Often it goes hand in hand with Regulatory Capture, where corporations pay money to corrupt legislators (I know, a redundant statement) to get the loopholes only they can use inserted into law on the sly.
wickedlogic 9y ago
The point you are missing about these loopholes, is that broader strategies are mostly indistinguishable from "legitimate" usage of the same strategy. Wealth allows people to take more risk, and will/can do so... even at the risk of not having the money go to taxes. That is what you have to "solve"...
drzaiusapelord 9y ago
I don't think the parent poster is saying 'don't try,' as much as countering the very real propaganda from the rich about how "We're the new enlightened rich, are we're not greedy or dangerous, and we're not hurting the working people at all." Claiming 'nothing has changed' in this regard is mostly true. There's some more red tape to get through but we're very clearly moving towards a Gilded-Age level of corruption and inequality in the US. Heck, we even put one of these 'enlightened' billionaires in as president! Wish I had more to contribute to this conversation, but its pretty hopeless as the wealthy can simply propagandize people via their media sources to vote against their interests and can successfully lobby politicians to give them almost anything they want. Trust me, the Koch brothers aren't funding reason.com because they're academics, but because the libertarian philosophy it sells lines their pockets the most. I suspect this is the norm for later-stage capitalist economies that pride themselves on low regulations. High regulatory European economies seem to have a stronger firewall against this compared to the US. This isn't going away barring a massive economic change, perhaps when we can't continue to hide what automation and wealth hoarding are doing to working people. That could be anywhere between 10 and 100 years from now depending on how its handled. I suspect deep automation will simply lend itself to a new economic and social reality. I just don't envy our kids and grandkids who will have this fight against the status quo. The 'enlightened' wealthy aren't going to concede on anything that affects wealth and status easily.

by Iv 9y ago

zip1234 9y ago

Tax evasion is illegally not paying the taxes that are due. If you are taking advantages of legal loopholes, it is not tax evasion.

jazzyk 9y ago
What if you make the rules so simple that there are NO loopholes and there is no/little possibility for tax avoidance?
- aaronchall 9y ago
  This would be an ideal world: > What if you make the rules so simple that there are NO loopholes and there is no/little possibility for tax avoidance? Then we could lower tax "rates", reduce dead weight loss, and increase tax receipts. But no, we've decided, for example, that home ownership is important for everyone so we subsidize home ownership by letting people write off mortgage interest. This has the unintended effect of driving up prices for homes and encouraging people to buy more home than they need. When taxes are too high, it causes pathological behavior. Some people will, even if it nets them less after taxes, minimize taxes paid. "Tax shelters" in the 80's would be all but guaranteed to lose money, and yet people would still buy into them because they would reduce their taxes and pay huge fees based on the total taxes that would be reduced. These arrangements were legal (although the IRS was hawkish on them) but actually made no business sense for investors.
  - sokoloff 9y ago
    Home mortgage interest deduction serves to put the financing of private home ownership on the same footing as financing of commercial house ownership (wherein the interest on loans for income-seeking activities is deductible). Eliminating the MID without eliminating the deductibility of commercial loans' interest makes commercial purchasing of real estate cheaper than private purchasing. IOW, eliminating the MID is a big handout to commercial landlords and serves to keep even more people renting rather than owning their housing.
    - aaronchall 9y ago
      > Home mortgage interest deduction serves to put the financing of private home ownership on the same footing as financing of commercial house ownership (wherein the interest on loans for income-seeking activities is deductible). Sounds fair. Can I also reduce my income by furnishing my building (home) with equipment (e.g. furniture and appliances) in the same way that commerce can? Would that make sense? > Eliminating the MID without eliminating the deductibility of commercial loans' interest makes commercial purchasing of real estate cheaper than private purchasing. IOW, eliminating the MID is a big handout to commercial landlords and serves to keep even more people renting rather than owning their housing. There's only so much housing stock. If more are renting, there's more business in renting, but that mostly affects the mid to upper classes. Do we really want to subsidize urban sprawl? Maybe we do. Maybe we should. Should we do it forever? I... don't like it. Maybe all subsidies should have a phase-out/sunsetting period to avoid economic shocks while reducing the plethora of loop-holes and market distortions that they create.
      - sokoloff 9y ago
        > There's only so much housing stock. If more are renting, there's more business in renting, but that mostly affects the mid to upper classes. I'm not following you here. Rental market dynamics affect the lower and middle classes and the rent/buy margin affects the middle class. If the gulf between renting and buying widens (by buying becoming relatively more expensive), how does that not help landlords (mostly upper-middle and upper class), who in turn achieve increased power over the poor and middle classes (vs the status quo)? Every 750 credit score, 2 steady income, $100K household income family who doesn't buy a house but instead rents put pressure on someone worse off in the economic stack-rank.
- sharemywin 9y ago
  Simpler isn't always better. The simplest rule would be "no violence" but then the court system would have to make a bunch of decisions. is it literal? so is everyone that harms an insect in criminal jeopardy? So, now that we've introduced complexity we need to argue about degree not absolutes.
- sharemywin 9y ago
  If you believe that too much wealth equates to too much power in a democracy then the simplest tax code would be all wealth over X is taxed at 100% all transgressions are punishable by death. Personally, I think that's a little harsh but some people only see black and white.
  - brianwawok 9y ago
    Hah my hft bot would double stock value of apple for 1 second and a bunch of automatic deaths would be handed down to investors.
    - ReverseCold 9y ago
      I think gp said that it would be taxed at 100%, not that one couldn't keep over x at a time.
      - brianwawok 9y ago
        Sure we started at 100% tax, and then moved on to death panels for breaking the rule ;)
- charlesdm 9y ago
  Because most loopholes are in fact deductions that are there for a reason. The overall tax rate is too high (or it would be too expensive to lower the overall rate), so politicians give certain people sweetheart deals on certain things because they consider it relevant, thus offering someone, somewhere a tax break. Others are then free to use the same deduction for their benefit. The wealthy aren't stupid. They're generally quite pragmatic and flexible when it comes to making money.
  - jazzyk 9y ago
    Most loopholes are aimed at big corporations and high-income people ($1M+). You and I cannot take advantage of them easily. Loopholes: - obfuscate the fact that "certain" people, who should be paying 35% are not, in fact, paying a penny. - give incredible power to the people who decide what "certain" group to reward with them or threaten to withdraw them
    - charlesdm 9y ago
      You can actually use them, but probably are not, since you're a high income, high income tax paying person? If you can earn $300k a year as an entrepreneur, vs $300k as an employee, then it's a lot more likely you'll be paying significantly less taxes when going the self employed route.
- logfromblammo 9y ago
  I think the problem is not with the complexity of the tax code, but that those taxed by it have significant incentive to avoid paying taxes, and have the ability to manipulate information such that they can pay less. No matter how you slice it, if government taxes "income", and your business is set up such that you decide what your "income" is, you can control how much tax you are bound to pay. The only way around it is to make people think that spending more money on more government is a good and sensible thing to do. Or perhaps that spending more money on higher employee payroll is a good and sensible thing to do.
  - sokoloff 9y ago
    That is one, but not the only, way around it. Another is to tax things that are very hard to structure around. Taxing land, taxing stock sales (the SEC section 31 fee), taxing retail purchases, etc.
dx034 9y ago
With principles based legislation you can introduce rules that make it illegal to find "creative" ways only to circumvent restrictions. These rules already exist for anti money laundering and terrorism financing. The problem is that changes also always affect some of the non-rich. You'll never manage to tailor laws so that everyone is hit exactly as desired.
- Karunamon 9y ago
  With principles based legislation you can introduce rules that make it illegal to find "creative" ways only to circumvent restrictions. Read: Arbitrary and capricious legislation what will be abused in creative ways. I'd prefer laws remain as objective as possible, and I'm a lot more concerned about bad legislation than 1%ers moving their money around.
- charlesdm 9y ago
  You can't define "creative ways" in an objective way in a law. It's black or white. What you want is a clear rulebook of what isn't allowed. Everything else is fair game, because that's the only logical way to approach things. You don't want the IRS dictating what they consider to be creative ways. The IRS can not agree with something you've done, but you don't want to end up in a situation where they effectively make the law. That makes no sense at all.
british_india 9y ago
Yes, it's Tax Avoidance and it's every bit as despicable. Often it goes hand in hand with Regulatory Capture, where corporations pay money to corrupt legislators (I know, a redundant statement) to get the loopholes only they can use inserted into law on the sly.

wickedlogic 9y ago

The point you are missing about these loopholes, is that broader strategies are mostly indistinguishable from "legitimate" usage of the same strategy. Wealth allows people to take more risk, and will/can do so... even at the risk of not having the money go to taxes. That is what you have to "solve"...

drzaiusapelord 9y ago

I don't think the parent poster is saying 'don't try,' as much as countering the very real propaganda from the rich about how "We're the new enlightened rich, are we're not greedy or dangerous, and we're not hurting the working people at all." Claiming 'nothing has changed' in this regard is mostly true. There's some more red tape to get through but we're very clearly moving towards a Gilded-Age level of corruption and inequality in the US. Heck, we even put one of these 'enlightened' billionaires in as president! Wish I had more to contribute to this conversation, but its pretty hopeless as the wealthy can simply propagandize people via their media sources to vote against their interests and can successfully lobby politicians to give them almost anything they want. Trust me, the Koch brothers aren't funding reason.com because they're academics, but because the libertarian philosophy it sells lines their pockets the most. I suspect this is the norm for later-stage capitalist economies that pride themselves on low regulations. High regulatory European economies seem to have a stronger firewall against this compared to the US. This isn't going away barring a massive economic change, perhaps when we can't continue to hide what automation and wealth hoarding are doing to working people. That could be anywhere between 10 and 100 years from now depending on how its handled. I suspect deep automation will simply lend itself to a new economic and social reality. I just don't envy our kids and grandkids who will have this fight against the status quo. The 'enlightened' wealthy aren't going to concede on anything that affects wealth and status easily.