3 ms·

Such is the nature of people. My father worked in property tax assessing, so I've known about the specific rules in Michigan and how to minimize my personal tax

Such is the nature of people. My father worked in property tax assessing, so I've known about the specific rules in Michigan and how to minimize my personal tax bill for my entire life. If you build a system with a bunch of complex rules, someone will adjust to optimize their outcomes under those rules. Just look at building permits in any heavily populated location, from both the perspective of the person applying and the neighbors.

Zaheer 7y ago
> I've known about the specific rules in Michigan and how to minimize my personal tax bill Any tips? :)
- hammock 7y ago
  Here's a tip from Illinois: https://www.npr.org/2018/10/03/654201077/illinois-gov-candidate-removed-mansions-toilets-to-dodge-taxes-report-finds https://www.npr.org/2018/10/03/654201077/illinois-gov-candid...
- wcunning 7y ago
  File the permanent residence exception, learn the Mathieu Gast rules for normal maintenance and repairs, and always fight the tax assessor on the first year you own a property, up through Board of Review and Tax Tribunal if you have to.
- asdff 7y ago
  Please hold off until after flint has clean water.
  - wcunning 7y ago
    Property taxes pay for local government, state income tax and sales tax pay for state government. If you live in the city of Flint (why would you if you don't have to at this point?) then it's maybe unethical to minimize your tax burden. On the other hand if you live in the city of Flint, your property value is so low that you're basically not paying taxes anyway... That's a whole different problem that what's being discussed here.
jerf 7y ago
"someone will adjust to optimize their outcomes under those rules." It isn't even clear how to make them stop that, per se, because in general that's a desirable characteristic of the system. You can't use the tax system to nudge people or do anything progressive beyond the most basic and clumsy income-bucket based categorization if you can't set up incentives and expect people to "optimize" to them.
- wcunning 7y ago
  Sadly, unless you think about those nudges like a pen-tester, you're going to create unintended consequences with your adjustments and new rules and new exceptions every single time. I just listened to a podcast that posited that much of the CEO pay problem was due to changes in the corporate tax ability to write of CEO salary in the early 90's which led, through other tax provisions and investor desires, to paying with stock options. That happened right at the beginning of the dotcom boom and caused every person with a stock heavy position to massively increase in wealth, far faster than any salary would have. Had that been left alone, they would all be paid millions, but not hundreds of millions. The position posited in the podcast was that it should be stock with long term holding requirements and awarded based on relative performance vs. the market to prevent everyone getting the maximum stock bonus based on the market going up and nothing the managers and executives did.
  - epow 7y ago
    Podcast sounds interesting. What's it called?
- asdff 7y ago
  The devil is in the details. People are clever and find out how obscure rules can work for them. However, if the system is stupidly simple, it would be much harder to game. Throw out the rulebook. Say you make 15k a year, your tax rate is zero, 16k, it's perhaps 1%, etc. etc. until you get to the big dogs who net millions a year, far more than they could reasonably spend on their own living expenses and well being, then you tax them 90%. Or maybe you can add tax on every purchase if you have a certain level of wealth. Someone who is broke might reserve a $2 coke for a special treat if they only made $50 that day, but if you made 50k that day it's still a $2 coke and not a $2000 coke. Replace coke with house, car, tuition, medical bills, anything you want. In the current system you can hide your income in a company and pay yourself remarkably little on paper, so I say tax those companies heavily as well. If money is fungible, taxes should be too and it shouldn't matter if the company makes 1m and you make 100k or if you make 1m and the company makes 100k, the tax burden should be exactly the same as it represents the same movement of 1.1m. The fact that the tax burden isn't the same currently is corrupt and serves the few at the cost of the many.

Zaheer 7y ago

> I've known about the specific rules in Michigan and how to minimize my personal tax bill Any tips? :)

hammock 7y ago
Here's a tip from Illinois: https://www.npr.org/2018/10/03/654201077/illinois-gov-candidate-removed-mansions-toilets-to-dodge-taxes-report-finds https://www.npr.org/2018/10/03/654201077/illinois-gov-candid...
wcunning 7y ago
File the permanent residence exception, learn the Mathieu Gast rules for normal maintenance and repairs, and always fight the tax assessor on the first year you own a property, up through Board of Review and Tax Tribunal if you have to.
asdff 7y ago
Please hold off until after flint has clean water.
- wcunning 7y ago
  Property taxes pay for local government, state income tax and sales tax pay for state government. If you live in the city of Flint (why would you if you don't have to at this point?) then it's maybe unethical to minimize your tax burden. On the other hand if you live in the city of Flint, your property value is so low that you're basically not paying taxes anyway... That's a whole different problem that what's being discussed here.

jerf 7y ago

"someone will adjust to optimize their outcomes under those rules." It isn't even clear how to make them stop that, per se, because in general that's a desirable characteristic of the system. You can't use the tax system to nudge people or do anything progressive beyond the most basic and clumsy income-bucket based categorization if you can't set up incentives and expect people to "optimize" to them.

wcunning 7y ago
Sadly, unless you think about those nudges like a pen-tester, you're going to create unintended consequences with your adjustments and new rules and new exceptions every single time. I just listened to a podcast that posited that much of the CEO pay problem was due to changes in the corporate tax ability to write of CEO salary in the early 90's which led, through other tax provisions and investor desires, to paying with stock options. That happened right at the beginning of the dotcom boom and caused every person with a stock heavy position to massively increase in wealth, far faster than any salary would have. Had that been left alone, they would all be paid millions, but not hundreds of millions. The position posited in the podcast was that it should be stock with long term holding requirements and awarded based on relative performance vs. the market to prevent everyone getting the maximum stock bonus based on the market going up and nothing the managers and executives did.
- epow 7y ago
  Podcast sounds interesting. What's it called?
asdff 7y ago
The devil is in the details. People are clever and find out how obscure rules can work for them. However, if the system is stupidly simple, it would be much harder to game. Throw out the rulebook. Say you make 15k a year, your tax rate is zero, 16k, it's perhaps 1%, etc. etc. until you get to the big dogs who net millions a year, far more than they could reasonably spend on their own living expenses and well being, then you tax them 90%. Or maybe you can add tax on every purchase if you have a certain level of wealth. Someone who is broke might reserve a $2 coke for a special treat if they only made $50 that day, but if you made 50k that day it's still a $2 coke and not a $2000 coke. Replace coke with house, car, tuition, medical bills, anything you want. In the current system you can hide your income in a company and pay yourself remarkably little on paper, so I say tax those companies heavily as well. If money is fungible, taxes should be too and it shouldn't matter if the company makes 1m and you make 100k or if you make 1m and the company makes 100k, the tax burden should be exactly the same as it represents the same movement of 1.1m. The fact that the tax burden isn't the same currently is corrupt and serves the few at the cost of the many.