26 ms·
High-income tax avoidance far larger than thought, new paper estimates
- maxrev17 6y agoSadly this is unsurprising. Those who could help the most, doing the least.
- donovanian 6y ago> those who could help the most Wouldn't complete confiscation of the wealth of billionaires finance something like Medicare for All for around 3 years? I don't think people understand how utopian and ultimately ill-conceived their plans are.
- missedthecue 6y agoThe total wealth of all American billionaires is $4 trillion, the same amount Bernie Sanders estimates M4A would cost on an annual basis. So if you took all those assets, somehow found $4 trillion of buyers (lots of Chinese, Russians, and Saudis would line up, I'm sure) we'd get 1 year, not 3.
- vrovro 6y agoThis is not a valid comparison. We still spend close to $4 trillion on healthcare in the private sector.
- missedthecue 6y agoAnd almost all of it is funding by the employees, just like in Europe.
- LinuxBender 6y agoAnd it is about to get much worse according to the CDC in 2017. [1] IIRC there were some articles cant find them that talked about the Department of Defense tracking this as an existential threat to the future of the United States of America. [1] - https://www.cdc.gov/media/releases/2017/p0718-diabetes-report.html https://www.cdc.gov/media/releases/2017/p0718-diabetes-repor...
- jellicle 6y agoUniversal healthcare in the USA would have a negative cost; that is, today, the US government spends more than Canada does per capita on providing healthcare to the population. And then private individuals spend as much more again. And for all that spending a huge proportion of the population has effectively zero healthcare. So if the US could implement Canada's system wholesale not only would your health insurance costs and direct payments drop vastly but you'd also get a tax refund.
- missedthecue 6y agoWhy is Bernie's estimate so high then? ($12k per man, woman, and child)
- smabie 6y agoBut they're not paying the least, they are paying the most (of course, not as much as they are legally obligated to pay). Moreover correctly paying your taxes starts to get really difficult the more and more money you make: income starts to come from many different sources and figuring it all out is super difficult. If we drastically simplified the tax code, I think the IRS would collect more taxes, people would pay more taxes, and high earners could easily calculate their tax burden without hiring very expensive professionals. This would unequivocally be a net win, though entrenched interests would never allow it to happen.
- patmorgan23 6y agoPeople in the top 1% don't have an issue paying a CPA to make sure their taxes are correct. That being said the tax code and filling process is made purposely obtuse due to lobbying for tax prep companies.
- ratsmack 6y agoThe tax code is also heavily influenced by the very wealthy allowing for massive tax relief through various tax havens, shell companies and loopholes. Of course that all takes a team of high power accountants to figure out.
- withinboredom 6y agoA CPA only knows what you tell them and ultimately relies on you remembering to tell them about a new bank account, invoices, etc. If one is forgotten or missed, the CPA won’t add it the books.
- NoSorryCannot 6y agoA simpler tax code would likely make for fewer unintended loopholes so revenue may very well go up but I don't find "oopsie" to be a remotely plausible explanation for this state of affairs. The wealthy have wealth managers who know exactly what they are doing.
- smabie 6y ago
- jl2718 6y agoHow much extra did you pay?
- eucryphia 6y agoHigh marginal tax rates redistributes people, not money.
- barbazoo 6y agoDo you have a source for that?
- jmpman 6y agoA 99% estate tax on money over $10M, and revocation of any visas on any heirs who attempt to avoid them.
- missedthecue 6y agoEasy. Put your estate into a terminally settled, non-transferable, future-callable, sale-leaseback with a partial-repo feature, with a European or Japanese bank. Impossible to tax (aside from the income stream), no downside except for some additional tax headaches. But I assume a few tax headaches are worth it in order to keep billions of dollars in your family.
- goddess33 6y ago> Easy. Put your estate into a terminally settled, non-transferable, future-callable, sale-leaseback with a partial-repo feature, with a European or Japanese bank. is this word salad or legit? If so, any resources to learn this?
- emptysongglass 6y agoWhere can one learn this black magic?
- commandlinefan 6y agoThat was my thought - if America won't let you keep your money, Luxembourg surely will.
- cheph 6y agoWhy should you be punished if you do something entirely legal? Can't we rather just close the legal avenues that allow people to avoid them? Why keep it legal? What do you gain by having these loopholes?
- deleted 6y ago[deleted]
- viggity 6y agoImplementing an exit visa process. That sounds like a completely healthy thing for a free society to enact. Not.
- DC1350 6y agoGood. High income people get almost nothing for the amount that they have to pay. Some day we’ll have flat fee city states for remote workers who will only have to pay for what they use. How can you justify taking so much when a person’s customers, education, employer, etc. are all located outside of the region that they live in? What is so special about the people living nearby that makes them deserving of another guy’s money even if their lives are entirely independent? It makes no sense...
- patmorgan23 6y agoBecause their lives aren't independent. They're all connected through the economy and social interactions. Would Jeff bezos be worth as much if millions of people didn't throw money at his company and he didn't squeeze as much productivity out of his employees whole paying most of them as little as possible? Probably not.
- neolog 6y ago> High income people get almost nothing ... They get high incomes.
- ageek123 6y agoI think they meant get from the government (unless you believe in an extreme collectivist view of the economy and think all wealth fundamentally belongs to the government, not the person who received it through voluntary transactions with other people).
- neolog 6y ago> think all wealth fundamentally belongs to the government Not the government, no.
- chillacy 6y agoOne of the only convincing rebuttals to the statement "taxation is theft" I've heard relies on the fact that the government is the entity that bootstraps the very concept of private property as we know it. Without this guarantee of private property, there is no way to accumulate wealth for an individual in the first place.
- explodingman 6y agoThe URL isn’t supported on outline.com and there’s no citation of the source article in the first few paragraphs. How do I read about it?
- phyalow 6y agoThis extension is a godsend https://github.com/iamadamdev/bypass-paywalls-chrome https://github.com/iamadamdev/bypass-paywalls-chrome
- reilly3000 6y agoThis is more of a problem with legalized obstruction of justice by financial arbitrage. There is no easy solution to that problem, and it plagues all areas of modern life.
- Dracophoenix 6y ago>>legalized obstruction of justice That's a contradiction in terms. No person owes a red cent more than what their legal required to pay. There is no obstruction of justice unless you're of the persuasion that sovereignty & property rights mean nothing while any government should have a right to pilfer bank accounts as they see fit.
- salawat 6y agoYou're missing their point. They're talking about shell games. Basically, you can play audit chicken with legal fictions. In order for the IRS to enforce accurate tax collection, they rely on you and everyone else you work/interact with to provide an accurate picture of your fiscal status quo. That requires footwork once you start making any amount of money sufficient enough where it becomes doable for you to establish multiple independent legal entities worth of books that then have to be combed through in order to ensure compliance. The IRS continually has their funding restricted to the point they can't muster the kinds of effective enforcement actions that span multiple taxable entities, possibly distributed across international boundaries. They can, however, root out Susie Q. Small-Business-Owner taking out deductions she shouldn't be. That's what they mean by legalized obstruction of justice, even if they are abusing the term a bit. Those that make their affairs difficult or time conbsuming enough to work through, but also avoid "low-level gotchas" are effectively shielded from the risks of enforcement actions. You'd really need some pretty significant whistles to be blown to even get enough auditors mustered to a case to make it worthwhile to invest the effort, and if you're making enough to be worth it, you probably make enough to hire a few tax attorneys capable of getting you off the hook, miring the tax authority in jurisdictional squabbles or doing the requisite financial engineering to exploit the loophole of the year. That's the issue. Nevermind the IRS makes more money for the government for every dollar invested. Never mind that the tax code is a nightmare because of Congress more so than the IRS. It's a multi-faceted perennial political problem that shows no hint of going away until 99% of tge country accept that in order to get the government funded to do their job better, you've got to equip it enough to make everybody's life miserable, and at that point you're kind of at best back to square one, where operationally, you'll have 1% screaming their unfairly burdened and everyone else isn't pulling their weight, and it's unfair, yada, yada, yada. Of course, this is all exacerbated by all kinds of deficit spending doubled down on every couple of years, which if we're ever going to dial that back as a country and stop playing games with MMT... Eh. Let me stop. The horse is dead, no use beating it further.
- frozencell 6y agoHN readers: tax avoiders should go to jail Also HN readers: avoid paywalls
- eyelidlessness 6y agoThis common Twitter content format is great, but doesn't really represent the situation well. Let me help: Companies that paywall: I shouldn't be expected to participate in the economy by any rules shared by society. Anyone that isn't cheerleading them: I'm not paying you
- nwah1 6y agoAdvertising has perverse incentives, which encourage business models that require invading privacy and optimizing "engagement" at the expense of civil discourse and mental health. When you don't pay for something, you are the product. We should come up with some sort of alternate system which enables wide participation in non-predatory media platforms.
- frozencell 6y agoA token of authenticity to support creators and platforms. Or crack anonymous advertising.
- nwah1 6y agoTokens are an abstraction layer that can never improve any payment processing system. Anonymous advertising sounds like a way to literally make everything I spoke about worse.
- BuyMyBitcoins 6y agoWait a minute, there is a distinction between Tax Avoidance and Tax Evasion. Tax Avoidance is perfectly legal and encouraged by the IRS. There are many exemptions and credits for anyone who is eligible to take advantage of. If you’ve ever seen “whichever is lower” on a tax preparation form, that’s an example of avoidance. Why pay more when the law says you don’t have to? Tax Evasion is the illegal activity of not paying taxes you were supposed to pay. This is where fraud comes into play. People should absolutely be prosecuted for evasion, but they should not shamed for avoidance.
- brundolf 6y agoThey should not be prosecuted for avoidance. I think at a certain point it's fair to shame people for seeking out loopholes, even if they're technically legal. Not that they probably care.
- bawolff 6y agoGovernments should just close the loopholes. In some cases, the loopholes people talk about are less loopholes and more the intentional way the law works. Those in particular are the govs fault.
- neaden 6y agoAn accountant once told me a loophole is just someone else's deduction. I don't think you can even just go with the intent of the law, 401ks famously weren't intended at all, they were a loophole that are now viewed as a pillar of most American's retirement plans.
- jjeaff 6y agoYa, but there are a lot more ways to avoid taxes than just deductions. Sometimes going way out of your way and doing things like renouncing your citizenship or creating shell corporations or never paying dividends and just using corporate profits to buy back your own stock forever.
- neonate 6y agohttps://archive.is/EFMuR https://archive.is/EFMuR
- technick 6y agoTaxes are whack, the more you make the more you get to keep. But you wanna know whats really whack? My mom died and I'm going thru the process of transferring her property to me. I've got to pay a MF'ing inheritance / property transfer tax on it. She owned it 100%, the house and property have been in the family for 60+ years. My grandparents paid tax on it when they bought it. Nothing like America to come back and double dip at every turn.
- mckirk 6y agoOn the one hand, it's really frustrating to be in that situation, because the property is clearly already yours. On the other hand, an inheritance tax is one of the few mechanisms I can think of to keep a wealth distribution at least somewhat under control. There's a constant accumulation of wealth at the top already anyway; re-distributing some of that back down the ladder when rich people die seems like a good idea. It of course would make more sense if the (elusive) middle class was hardly taxed at all in this scenario, and the 1% a ton, but... that would of course upset a lot of people with a lot of power.
- csomar 6y agoWe don't really know anything about the OP. It's possible he is not rich, the house is not worth that much and that's all he has/inherited, he doesn't have money to pax the tax, and thus will need to sell the home at (probably) a discount to cover the tax bill. He could be actually slipping from middle-class as we speak.
- mckirk 6y agoThat was my initial impression of the OP actually, but after looking at [1], it seems they wouldn't have to pay an estate tax at all if the inheritance wasn't worth at least $5.3 million. [1]: https://americansfortaxfairness.org/tax-fairness-briefing-booklet/fact-sheet-the-estate-inheritance-tax/ https://americansfortaxfairness.org/tax-fairness-briefing-bo...
- 6y ago
- ras2019183 6y agoCriminal behavior. Where is the “war on white collar crime”?? Much easier to scapegoat minorities and poor on why the country lags behind in most major indexes that measure education, healthcare, safety, equality and happiness.
- Proven 6y agoEvery now and then there's some good news that upsets socialists. That's just great!!! Peter Schiff is right: no matter how little they pay, it's too much. To the raging HN commenters: if you claimed any deductions, that's also tax avoidance. You could pay more but you chose not to.
- watertom 6y agoEliminate capital gains all income is taxed as earned income. Eliminate all deduction except primary residence and dependents. Since all deductions are eliminated lower tax rate to the effective tax rate for that tax bracket. We've just closed all the loopholes, and given most people a tax break. Add two new tax brackets: >$5M with a tax of 45% >$10M with a tax of 69% (back to the good old days). This simplifies tax for everyone, gives all but the 1% a tax cut, eliminates all the loopholes, makes auditing a breeze, because it simplifies everything the size of the IRS can be reduced and their effectiveness can be increased. There are about 16,000 people in the U.S. negatively impacted by these changes. For the other 353 Million people it's a huge plus.
- fatnoah 6y agoHonestly, just set up marginal brackets with zero deductions, exemptions, etc.
- malandrew 6y agoEven simpler solution: Switch entirely to sales tax to fund everything. Whittle things down to three sales taxes: federal, state and local and the federal also gets the benefit of import taxes. If you consume more, you pay more. Everyone has skin in the game (everyone pays proportional to their consumption) and thus everyone now has a vested interest in advocating for a leaner, smarter and more efficient government that is less wasteful. A progressive income tax is actively counter-productive to getting a greater return on investment for governance. Furthermore, a progressive income tax also massively distorts the price of labor so no one paying for labor is paying the true cost of labor which should be the sum of (1) the disposable income paid to a laborer and the (2) taxes that laborer pays to the government. You're not actually making people better off with a progressive income tax because the market will just lower the amount paid to be equal to the disposable income portion.
- AnimalMuppet 6y agoSo if I don't spend but save, there's no limits on the growth of my wealth? That's not going to be a popular option. People are concerned about wealth growing without bounds (and the growth of power that comes with it). Taxing that less is concerning in terms of the effect on social dynamics.