8 ms·

Unless you are a wage or salary earner, it is trivially easy to avoid having to pay taxes, at least in the USA. Same with the much lauded “inheritance tax” and

by K0balt 5y ago

Unless you are a wage or salary earner, it is trivially easy to avoid having to pay taxes, at least in the USA. Same with the much lauded “inheritance tax” and even, to a lesser extent, sales taxes. It costs about 4000us a year to maintain the legal structures required to pay essentially no taxes, except sales taxes in some locations. In many cases, for lower levels of income, just having a small business can negate income tax burdens. Taxation always has been, and continues to be, a burden for the servile class to bear. The rich or enterprising pay taxes only when they are ill prepared or choose to, often to reduce scrutiny. The " I should pay more taxes" rhetoric from the wealthy is merely virtue signaling, it is totally legal to pay more taxes than you owe, and you can even reclaim the money later if you need to. There is nothing preventing anyone from paying the taxes that they feel that they should owe, in excess of legal requirements. By and large, sales taxes are more evenly applied, but that too is far from perfect.

md_ 5y ago
I think “I should pay more taxes” is generally understood as shorthand for “all people in my financial situation should pay more taxes.” It’s a bit like saying “I should be required to have fire protection”, “I should be required to carry health insurance,” or “I should be required to use standard turn signals on the road.”
- refurb 5y ago
  Are you saying that people who say “i should be required to have fire protection, carry health insurance or use turn signals” should be able to not do those things and not look like a hypocrit?
  - solveit 5y ago
    You're being obtuse. The point is that it's perfectly reasonable to be willing to pay more, but only if all the other rich people do too.
    - ericmay 5y ago
      Why would you need others to do something you think you should do? Actually, how would anybody ever start doing that thing if everybody is waiting for someone else to do it first and that person too is waiting for others to do it first? “Tax me more” is just a publicity stunt and unfortunately it confuses people.
      - md_ 5y ago
        As I noted elsewhere in this thread, this is the nature of what are called "collective action problems." In effect, these are situations where coordinated collective action may be beneficial, but there is a disincentive to being the initiator of such an action. The examples I gave above were fireproofing your building, buying health insurance before you are sick, and mandatory turn signals on cars, but these abound in public policy: think, mandatory face mask wearing during a global pandemic in which masks which block the transmission of a disease from an infected person are cheaper than masks which block the infection of someone else. Regardless of where you come down on the ideological question—perhaps you think it's fundamentally immoral for governments to exist at all, which I can respect!—it's very simple economics that such problems (where the global optimal is only achieved if we ignore individual optimization) exist.
        ericmay 5y ago
        And how are those collective action problems solved?
        md_ 5y ago
        Typically, by government action, ideally as a result of a democratic process.
        ericmay 5y ago
        So Warren Buffet and others should wait for the government to increase their tax rate and then they can pay more taxes? And this has to happen because if any one of them pays more taxes before the others they are at a disadvantage?
  - md_ 5y ago
    Yes, exactly. As a trivial example, it's perfectly rational to say, "I should be required to carry health insurance, because universal insuring would lower the premiums for everyone, but I will not do so until then because the premiums are too high." As a less trivial example that perhaps engages more with what I think your argument is, one can also argue, "Collisions between two SUVs have a higher rate of serious injuries than collisions between two sedans, but in a collision between an SUV and a sedan the sedan has an even higher serious injury rate. Ergo, because all of my fellow commuters drive SUVs, I am also driving an SUV, but I believe SUVs should be outlawed." (I've borrowed this example from an old James Surowiecki column: https://www.newyorker.com/magazine/2007/07/23/fuel-for-thought https://www.newyorker.com/magazine/2007/07/23/fuel-for-thoug....) Irrespective of whether these are good policies for other reasons—perhaps we believe it's too much of an infringement upon individual liberty to ban driving SUVs!—it is not inherently hypocritical to not voluntarily take part in an activity which one believes has positive external value only if universally partaken. Quite frankly, this is a trivial point, yet it's often lost in somewhat silly accusations of hypocrisy, which I think is really disappointing.
- gadders 5y ago
  Isn't that an easy statement to make? Especially as they know the chances of it happening are low.
  - tyre 5y ago
    I advocate for higher taxes on myself and others in my position. I vote that way. I worked on a presidential campaign that focused heavily on economic policy and social programs, all of which involved raising taxes. It's not a secret that one party in the United States wants to raise taxes on higher earners, which includes many in Silicon Valley.
    - sneak 5y ago
      Why do you believe that maximizing USG revenue is a net societal benefit?
furyg3 5y ago
I remember a speech by the British comedian David Mitchell. There had been recent scrutiny on a celebrity figure when it came to light that he used all sorts of dirty (but legal) tricks to avoid paying income tax. Tax avoidance is, of course, legal. In this sense the rich are allowed to choose how much tax they wish to pay, based on their individual conscience or morals. So effectively, governments have a 'tax on moral behavior', which is stupid.
- stordoff 5y ago
  I suspect you're thinking of https://www.youtube.com/watch?v=xc8epam4NyY https://www.youtube.com/watch?v=xc8epam4NyY
  - llimos 5y ago
    Absolutely brilliant
- refurb 5y ago
  By “dirty (but legal) tricks” you means following the the tax code and legally paying what you owe?
  - anonymoushn 5y ago
    That's one framing. Another framing is that if you think we ought to have roads and socialized healthcare and so on, then it seems like it's a bad thing if people are financially incentivized to pay a small platoon of rule-understanders to prevent their money from being spent on those things you think we ought to have.
    - throwaway0a5e 5y ago
      This framing seems like a classic case of "yesterday's compromise is today's loophole". The rules and their various exceptions and special cases were put in to be used. Would you complain that someone takes a right turn on red where allowed or complain that someone builds a structure to the maximum specifications they can before incurring additional permitting or construction compliance requirements?
Scarblac 5y ago
I'm trying to understand how these things work. How does having the income in a business help? At some point you want to do something with the money, and then you have to take it out of the company and it is taxed, isn't it? Can that be avoided?
- Just1689 5y ago
  Not an American here but this could be related to the order in which things pay tax. If you receive 10K USD as income one month, you would pay tax on that and then be able to buy things If your business received 10K USD it could buy all sorts of things before declaring a profit and paying tax only on the profit.
  - fastball 5y ago
    Sure, but you can't just classify everything as a business expense. And regardless, that's not really a carve out for the wealthy, that's just a policy we have because we think it encourages business growth, which is generally a good thing.
    - lelanthran 5y ago
      > Sure, but you can't just classify everything as a business expense. If the business is buying it, then sure you can. There's limits on this for sole proprietors as the tax authorities will argue that the businessman who bought a yacht "for the business" only ever uses it for himself. But the rich folk, who have 20% of the company (the largest share, usually), can force the company to buy a yacht where use is limited to that single shareholder ... once again proving that the rich would pay less tax than the poor.
    - llimos 5y ago
      Ok, but why can't I use the same system for my income, and deduct my essentials like rent and power and water before I pay tax on the rest?
      - 5y ago
bryanrasmussen 5y ago
>it is totally legal to pay more taxes than you owe, and you can even reclaim the money later if you need to. There is nothing preventing anyone from paying the taxes that they feel that they should owe, in excess of legal requirements. Gary Trudeau had a story about how he and his wife were always getting audited because they paid more taxes than people in their income bracket normally paid, so that would be one reason why you might not want to pay more than you have to. also if I thought I should pay more tax I would probably also think the other people like me should pay more tax and since I am probably in competition with them over things I would not like to disarm myself unless they were likewise disarmed.
insta_anon 5y ago
> Unless you are a wage or salary earner, it is trivially easy to avoid having to pay taxes, at least in the USA. Same with the much lauded “inheritance tax” and even, to a lesser extent, sales taxes. It costs about 4000us a year to maintain the legal structures required to pay essentially no taxes, except sales taxes in some locations. In many cases, for lower levels of income, just having a small business can negate income tax burdens. If it is that easy and costs only $4000, would you mind describing the technique(s)? I can't believe that it would be simple / cheap / legal, because otherwise every business owner would do it?!
- vmception 5y ago
  I think starting with that assumption is the primary disservice you are doing yourself. Its important to actually understand taxes so that you don't eventually assume that the tax collector / revenue service is an adversary. They are exuberant collaborators. Reading comprehension is key because even just imagining that rich people have an army of lawyers and accountants to figure it out is wrong. That takes way too much trust and those lawyers and accountants arent incentivized properly to figure things out. They have to be steered by the person that knows what they want and what ongoing compliance burdens they are willing to have, which requires already knowing or being part of a network of people that already have compliant systems set up and will tell. There are many more people that make wrong assumptions, to their detriment. Listing “the techniques” aren't useful, reading the tax code is. Read IRS codes from the 400s section (tax deferral accounts) and the 500s section (tax-exempt entities) as a start. That will boost your own search queries by using more useful terms to search. I sometimes find entire industries I was unaware of simply by being surprised by what the law says. The IRS has many parallel tax regimes that are different than the default one. You have to know to look behind door number 2 and door number 3, there are IRS agents sitting behind them bored and excitedly waiting to help you after you find them.
  - tarr11 5y ago
    “RTFTaxCode” doesn’t answer OP’s question. What is the mechanism for paying $4000 and avoiding taxes? I assume some sort of trust? What are the details?
hemantv 5y ago
Curious how do you setup this?
throwkeep 5y ago
> Taxation always has been, and continues to be, a burden for the servile class to bear. How does that square with the fact that the top 50 percent pays 97% of taxes? The top 1% pays 40% of taxes.

by K0balt 5y ago

md_ 5y ago

I think “I should pay more taxes” is generally understood as shorthand for “all people in my financial situation should pay more taxes.” It’s a bit like saying “I should be required to have fire protection”, “I should be required to carry health insurance,” or “I should be required to use standard turn signals on the road.”

refurb 5y ago
Are you saying that people who say “i should be required to have fire protection, carry health insurance or use turn signals” should be able to not do those things and not look like a hypocrit?
- solveit 5y ago
  You're being obtuse. The point is that it's perfectly reasonable to be willing to pay more, but only if all the other rich people do too.
  - ericmay 5y ago
    Why would you need others to do something you think you should do? Actually, how would anybody ever start doing that thing if everybody is waiting for someone else to do it first and that person too is waiting for others to do it first? “Tax me more” is just a publicity stunt and unfortunately it confuses people.
    - md_ 5y ago
      As I noted elsewhere in this thread, this is the nature of what are called "collective action problems." In effect, these are situations where coordinated collective action may be beneficial, but there is a disincentive to being the initiator of such an action. The examples I gave above were fireproofing your building, buying health insurance before you are sick, and mandatory turn signals on cars, but these abound in public policy: think, mandatory face mask wearing during a global pandemic in which masks which block the transmission of a disease from an infected person are cheaper than masks which block the infection of someone else. Regardless of where you come down on the ideological question—perhaps you think it's fundamentally immoral for governments to exist at all, which I can respect!—it's very simple economics that such problems (where the global optimal is only achieved if we ignore individual optimization) exist.
      - ericmay 5y ago
        And how are those collective action problems solved?
        md_ 5y ago
        Typically, by government action, ideally as a result of a democratic process.
        ericmay 5y ago
        So Warren Buffet and others should wait for the government to increase their tax rate and then they can pay more taxes? And this has to happen because if any one of them pays more taxes before the others they are at a disadvantage?
- md_ 5y ago
  Yes, exactly. As a trivial example, it's perfectly rational to say, "I should be required to carry health insurance, because universal insuring would lower the premiums for everyone, but I will not do so until then because the premiums are too high." As a less trivial example that perhaps engages more with what I think your argument is, one can also argue, "Collisions between two SUVs have a higher rate of serious injuries than collisions between two sedans, but in a collision between an SUV and a sedan the sedan has an even higher serious injury rate. Ergo, because all of my fellow commuters drive SUVs, I am also driving an SUV, but I believe SUVs should be outlawed." (I've borrowed this example from an old James Surowiecki column: https://www.newyorker.com/magazine/2007/07/23/fuel-for-thought https://www.newyorker.com/magazine/2007/07/23/fuel-for-thoug....) Irrespective of whether these are good policies for other reasons—perhaps we believe it's too much of an infringement upon individual liberty to ban driving SUVs!—it is not inherently hypocritical to not voluntarily take part in an activity which one believes has positive external value only if universally partaken. Quite frankly, this is a trivial point, yet it's often lost in somewhat silly accusations of hypocrisy, which I think is really disappointing.
gadders 5y ago
Isn't that an easy statement to make? Especially as they know the chances of it happening are low.
- tyre 5y ago
  I advocate for higher taxes on myself and others in my position. I vote that way. I worked on a presidential campaign that focused heavily on economic policy and social programs, all of which involved raising taxes. It's not a secret that one party in the United States wants to raise taxes on higher earners, which includes many in Silicon Valley.
  - sneak 5y ago
    Why do you believe that maximizing USG revenue is a net societal benefit?

furyg3 5y ago

I remember a speech by the British comedian David Mitchell. There had been recent scrutiny on a celebrity figure when it came to light that he used all sorts of dirty (but legal) tricks to avoid paying income tax. Tax avoidance is, of course, legal. In this sense the rich are allowed to choose how much tax they wish to pay, based on their individual conscience or morals. So effectively, governments have a 'tax on moral behavior', which is stupid.

stordoff 5y ago
I suspect you're thinking of https://www.youtube.com/watch?v=xc8epam4NyY https://www.youtube.com/watch?v=xc8epam4NyY
- llimos 5y ago
  Absolutely brilliant
refurb 5y ago
By “dirty (but legal) tricks” you means following the the tax code and legally paying what you owe?
- anonymoushn 5y ago
  That's one framing. Another framing is that if you think we ought to have roads and socialized healthcare and so on, then it seems like it's a bad thing if people are financially incentivized to pay a small platoon of rule-understanders to prevent their money from being spent on those things you think we ought to have.
  - throwaway0a5e 5y ago
    This framing seems like a classic case of "yesterday's compromise is today's loophole". The rules and their various exceptions and special cases were put in to be used. Would you complain that someone takes a right turn on red where allowed or complain that someone builds a structure to the maximum specifications they can before incurring additional permitting or construction compliance requirements?

Scarblac 5y ago

I'm trying to understand how these things work. How does having the income in a business help? At some point you want to do something with the money, and then you have to take it out of the company and it is taxed, isn't it? Can that be avoided?

Just1689 5y ago
Not an American here but this could be related to the order in which things pay tax. If you receive 10K USD as income one month, you would pay tax on that and then be able to buy things If your business received 10K USD it could buy all sorts of things before declaring a profit and paying tax only on the profit.
- fastball 5y ago
  Sure, but you can't just classify everything as a business expense. And regardless, that's not really a carve out for the wealthy, that's just a policy we have because we think it encourages business growth, which is generally a good thing.
  - lelanthran 5y ago
    > Sure, but you can't just classify everything as a business expense. If the business is buying it, then sure you can. There's limits on this for sole proprietors as the tax authorities will argue that the businessman who bought a yacht "for the business" only ever uses it for himself. But the rich folk, who have 20% of the company (the largest share, usually), can force the company to buy a yacht where use is limited to that single shareholder ... once again proving that the rich would pay less tax than the poor.
  - llimos 5y ago
    Ok, but why can't I use the same system for my income, and deduct my essentials like rent and power and water before I pay tax on the rest?
    - 5y ago

bryanrasmussen 5y ago

>it is totally legal to pay more taxes than you owe, and you can even reclaim the money later if you need to. There is nothing preventing anyone from paying the taxes that they feel that they should owe, in excess of legal requirements. Gary Trudeau had a story about how he and his wife were always getting audited because they paid more taxes than people in their income bracket normally paid, so that would be one reason why you might not want to pay more than you have to. also if I thought I should pay more tax I would probably also think the other people like me should pay more tax and since I am probably in competition with them over things I would not like to disarm myself unless they were likewise disarmed.

insta_anon 5y ago

> Unless you are a wage or salary earner, it is trivially easy to avoid having to pay taxes, at least in the USA. Same with the much lauded “inheritance tax” and even, to a lesser extent, sales taxes. It costs about 4000us a year to maintain the legal structures required to pay essentially no taxes, except sales taxes in some locations. In many cases, for lower levels of income, just having a small business can negate income tax burdens. If it is that easy and costs only $4000, would you mind describing the technique(s)? I can't believe that it would be simple / cheap / legal, because otherwise every business owner would do it?!

vmception 5y ago
I think starting with that assumption is the primary disservice you are doing yourself. Its important to actually understand taxes so that you don't eventually assume that the tax collector / revenue service is an adversary. They are exuberant collaborators. Reading comprehension is key because even just imagining that rich people have an army of lawyers and accountants to figure it out is wrong. That takes way too much trust and those lawyers and accountants arent incentivized properly to figure things out. They have to be steered by the person that knows what they want and what ongoing compliance burdens they are willing to have, which requires already knowing or being part of a network of people that already have compliant systems set up and will tell. There are many more people that make wrong assumptions, to their detriment. Listing “the techniques” aren't useful, reading the tax code is. Read IRS codes from the 400s section (tax deferral accounts) and the 500s section (tax-exempt entities) as a start. That will boost your own search queries by using more useful terms to search. I sometimes find entire industries I was unaware of simply by being surprised by what the law says. The IRS has many parallel tax regimes that are different than the default one. You have to know to look behind door number 2 and door number 3, there are IRS agents sitting behind them bored and excitedly waiting to help you after you find them.
- tarr11 5y ago
  “RTFTaxCode” doesn’t answer OP’s question. What is the mechanism for paying $4000 and avoiding taxes? I assume some sort of trust? What are the details?

hemantv 5y ago

Curious how do you setup this?

throwkeep 5y ago

> Taxation always has been, and continues to be, a burden for the servile class to bear. How does that square with the fact that the top 50 percent pays 97% of taxes? The top 1% pays 40% of taxes.