5 ms·

Huh? The neighbor kid has always had to pay taxes.

by sjg007 5y ago

rsstack 5y ago
People don't like to acknowledge the difference between tax evasion and tax avoidance. Amazon always avoided taxes, which was legal and is still legal. The neighbor kid often evaded taxes, which was illegal and is still illegal - just slightly easier to enforce after this change.
- lotsofpulp 5y ago
  Everyone avoids taxes.
  - rsstack 5y ago
    That's between you and your accountant (and if caught: lawyer). I don't see an issue with the IRS attempting to enforce the law.
    - lotsofpulp 5y ago
      I do not either. I was pointing out that, functionally, no one intentionally chooses to pay more tax than they have to. Hence the uselessness of bringing up tax avoidance. Amazon spending all of their revenue to expand the business and hence not owing any tax is tax avoidance, and people contributing to tax advantaged retirement/health/education accounts and deductible charitable expenses is tax avoidance all the same.
      - rsstack 5y ago
        You're right and I apologize. I replied to you hastily.
  - yxwvut 5y ago
    The problem is that tax avoidance is an economy of scale - it's easier to avoid taxes the bigger your revenue stream is, and as such follow the letter of the tax law while completely subverting the spirit of it (whereas the gap between those is far narrower for small players without a multinational presence, multiple subsidiaries, etc). The flexibility goes up, and the legal cost of doing so (which has a fixed lower bound) becomes a proportionally smaller part of your costs and has a higher ROI.
    - lotsofpulp 5y ago
      I do not know what the "spirit of it" means. Obtaining records from big companies facilitating money transfers does not mean tax liabilities have changed for anyone. If big companies are getting away with not paying their fair share, then laws should be changed prevent them from doing that. But they can simultaneously happen. However, most examples given of supposedly nefarious tax avoidance I see are simply businesses that plow a ton of money back into expanding the business, hence bringing their tax liability way down, exactly as the law intended. Amazon being the prototypical example. Or even better, is the complaining of billionaire's having low income tax...when they have low incomes. The better use of time and energy would be to propose additional property (wealth) taxes.
      - seanp2k2 5y ago
        >the complaining of billionaire's having low income tax...when they have low incomes Just because they take a $1 salary and get paid in stock or have tons of stock holdings that increase in value instead doesn’t mean they don’t have any money to play with to cover their own personal needs / desires, as I’m sure you’re aware. This is what people mean about avoiding the spirit of the tax while adhering to the letter of the law. From what I understand, they way they do this is to get millions per year in personal loans from banks, secured with their stock. Then, instead of “income”, they have “debt”, but most reasonable people would still see that as “they can spend millions of dollars on whatever they’d like and they didn’t pay tax on it”. Most people would love to do this, the problem being they don’t have hundreds of millions+ in stock to secure those same types of loans. I’m sure every politician working with tax law understands how they play the system (and how tax offshoring works for companies), yet they choose to do nothing about it as not enough lay folks complain hard enough to affect their next election. Combine that with “the car dealership” / “ISP” model, where “if we all agree to do the bad thing and hold the line, people will have no choice but to let us continue to do the bad thing”. There’s no political will to fix it among those in power, as they benefit from it too. This is why I have very little hope of ever seeing real tax reform in my lifetime in this country — the politicians willing to actually carry out the will of the people or engage in topics that would materially benefit the masses are few and far between. It’s much easier to keep everyone frothing at the mouth over tie pins and tan suits.
- cft 5y ago
  With this strict standard, what do we do with 11+m illegal immigrants in the US? Getting paid in cash, are they indulging in tax evasion or in tax avoidance?
  - rsstack 5y ago
    First, many of them aren't cash only. Second, a single enforcement mechanism of the IRS isn't supposed to catch all infractions. The IRS, and other federal and state agencies, have other mechanisms than asking Venmo to report transactions.
  - Broken_Hippo 5y ago
    That's obviously a different beast. To deal with a bunch of folks getting paid under the table, the obvious answer is to jail the person paying them in cash, and then investigate them to see if they are exploiting folks in other ways as well. Without exploitation of this sort, folks without paperwork find it harder to be employed. If you want to reduce illegal immigration, a good starting point is to look at laws and make sure they are not only fair, but easy for the would-be immigrant to follow. Most folks in the US 'illegally' started out being legal, after all, and you realistically want to close that gap. And so we are clear, asylum seekers aren't "illegal".
    - ahefner 5y ago
      Paying people for work and enabling them to earn a living constitutes exploitation?
      - Broken_Hippo 5y ago
        This is a misrepresentation. Paying folks under the table is a sign of exploitation - and undocumented folks easily fall into exploitation. I would have thought a fair reading would have come to this conclusion. Of course it isn't always that way.
        ahefner 5y ago
saxonww 5y ago
I'd also like to see the yard they are mowing for $600+ a pop.
- frankbreetz 5y ago
  >> transactions totaling more than $600 per year
- lotsofpulp 5y ago
  The new reporting requirements are yearly receipts of $600.
  - vmception 5y ago
    which brings it in line with the other reporting requirement of $600 this really helps the IRS find non-compliance in the other long mandated 1099 filing big penalties to collect
adolph 5y ago
Yes. As a kid I mowed the yard of a rent house down the street a few times. Unbeknownst to me they reported to the IRS and my dad didn't. Time passes, IRS sent my dad a bill for more than what I earned mowing that yard.
- ziml77 5y ago
  That can't possibly be true. There's something big missing from this story because you will never end up being taxed more than you earned. And the income shouldn't have been attributed to your dad since the money was being paid to you. And you certainly didn't earn anywhere near enough to meet the minimum amount needed to even pay tax at all.
  - adolph 5y ago
    I definitely have parts missing from the story since it was a long time ago, early to mid eighties--the part I do remember is my dad's mild disbelief and feeling terrible that I had caused it.
  - LorenPechtel 5y ago
    It could happen with penalties.
    - junar 5y ago
      Not who you're replying to, but my take is that if everyone complied with their tax obligations correctly, nobody should have filed or owed taxes. The kid should probably have been a household employee. A household employee under the age of 18 is exempt from Social Security and Medicare taxes. https://www.irs.gov/taxtopics/tc756 https://www.irs.gov/taxtopics/tc756 In addition, if they made less than their standard deduction, there would also be no income tax liability or filing requirement. What probably happened was that the kid was incorrectly sent a 1099 form. This is wrong for two reasons. First, it's not needed for a personal residence or rental properties for investment, only for businesses. Second, a household employee is not a contractor, and should generally receive a W-2 (or nothing at all, in the kid's case).
deleted 5y ago
[deleted]
jcims 5y ago
Only if the neighbor kid earned more than the minimum filing requirements. For the IRS that's generally >$12k per year unless the kid is married but filing separately.

Huh? The neighbor kid has always had to pay taxes.

by sjg007 5y ago

Huh? The neighbor kid has always had to pay taxes.

People don't like to acknowledge the difference between tax evasion and tax avoidance. Amazon always avoided taxes, which was legal and is still legal. The neighbor kid often evaded taxes, which was illegal and is still illegal - just slightly easier to enforce after this change.

lotsofpulp 5y ago
Everyone avoids taxes.
- rsstack 5y ago
  That's between you and your accountant (and if caught: lawyer). I don't see an issue with the IRS attempting to enforce the law.
  - lotsofpulp 5y ago
    I do not either. I was pointing out that, functionally, no one intentionally chooses to pay more tax than they have to. Hence the uselessness of bringing up tax avoidance. Amazon spending all of their revenue to expand the business and hence not owing any tax is tax avoidance, and people contributing to tax advantaged retirement/health/education accounts and deductible charitable expenses is tax avoidance all the same.
    - rsstack 5y ago
      You're right and I apologize. I replied to you hastily.
- yxwvut 5y ago
  The problem is that tax avoidance is an economy of scale - it's easier to avoid taxes the bigger your revenue stream is, and as such follow the letter of the tax law while completely subverting the spirit of it (whereas the gap between those is far narrower for small players without a multinational presence, multiple subsidiaries, etc). The flexibility goes up, and the legal cost of doing so (which has a fixed lower bound) becomes a proportionally smaller part of your costs and has a higher ROI.
  - lotsofpulp 5y ago
    I do not know what the "spirit of it" means. Obtaining records from big companies facilitating money transfers does not mean tax liabilities have changed for anyone. If big companies are getting away with not paying their fair share, then laws should be changed prevent them from doing that. But they can simultaneously happen. However, most examples given of supposedly nefarious tax avoidance I see are simply businesses that plow a ton of money back into expanding the business, hence bringing their tax liability way down, exactly as the law intended. Amazon being the prototypical example. Or even better, is the complaining of billionaire's having low income tax...when they have low incomes. The better use of time and energy would be to propose additional property (wealth) taxes.
    - seanp2k2 5y ago
      >the complaining of billionaire's having low income tax...when they have low incomes Just because they take a $1 salary and get paid in stock or have tons of stock holdings that increase in value instead doesn’t mean they don’t have any money to play with to cover their own personal needs / desires, as I’m sure you’re aware. This is what people mean about avoiding the spirit of the tax while adhering to the letter of the law. From what I understand, they way they do this is to get millions per year in personal loans from banks, secured with their stock. Then, instead of “income”, they have “debt”, but most reasonable people would still see that as “they can spend millions of dollars on whatever they’d like and they didn’t pay tax on it”. Most people would love to do this, the problem being they don’t have hundreds of millions+ in stock to secure those same types of loans. I’m sure every politician working with tax law understands how they play the system (and how tax offshoring works for companies), yet they choose to do nothing about it as not enough lay folks complain hard enough to affect their next election. Combine that with “the car dealership” / “ISP” model, where “if we all agree to do the bad thing and hold the line, people will have no choice but to let us continue to do the bad thing”. There’s no political will to fix it among those in power, as they benefit from it too. This is why I have very little hope of ever seeing real tax reform in my lifetime in this country — the politicians willing to actually carry out the will of the people or engage in topics that would materially benefit the masses are few and far between. It’s much easier to keep everyone frothing at the mouth over tie pins and tan suits.
cft 5y ago
With this strict standard, what do we do with 11+m illegal immigrants in the US? Getting paid in cash, are they indulging in tax evasion or in tax avoidance?
- rsstack 5y ago
  First, many of them aren't cash only. Second, a single enforcement mechanism of the IRS isn't supposed to catch all infractions. The IRS, and other federal and state agencies, have other mechanisms than asking Venmo to report transactions.
- Broken_Hippo 5y ago
  That's obviously a different beast. To deal with a bunch of folks getting paid under the table, the obvious answer is to jail the person paying them in cash, and then investigate them to see if they are exploiting folks in other ways as well. Without exploitation of this sort, folks without paperwork find it harder to be employed. If you want to reduce illegal immigration, a good starting point is to look at laws and make sure they are not only fair, but easy for the would-be immigrant to follow. Most folks in the US 'illegally' started out being legal, after all, and you realistically want to close that gap. And so we are clear, asylum seekers aren't "illegal".
  - ahefner 5y ago
    Paying people for work and enabling them to earn a living constitutes exploitation?
    - Broken_Hippo 5y ago
      This is a misrepresentation. Paying folks under the table is a sign of exploitation - and undocumented folks easily fall into exploitation. I would have thought a fair reading would have come to this conclusion. Of course it isn't always that way.
      - ahefner 5y ago

saxonww 5y ago

I'd also like to see the yard they are mowing for $600+ a pop.

frankbreetz 5y ago
>> transactions totaling more than $600 per year
lotsofpulp 5y ago
The new reporting requirements are yearly receipts of $600.
- vmception 5y ago
  which brings it in line with the other reporting requirement of $600 this really helps the IRS find non-compliance in the other long mandated 1099 filing big penalties to collect

adolph 5y ago

Yes. As a kid I mowed the yard of a rent house down the street a few times. Unbeknownst to me they reported to the IRS and my dad didn't. Time passes, IRS sent my dad a bill for more than what I earned mowing that yard.

ziml77 5y ago
That can't possibly be true. There's something big missing from this story because you will never end up being taxed more than you earned. And the income shouldn't have been attributed to your dad since the money was being paid to you. And you certainly didn't earn anywhere near enough to meet the minimum amount needed to even pay tax at all.
- adolph 5y ago
  I definitely have parts missing from the story since it was a long time ago, early to mid eighties--the part I do remember is my dad's mild disbelief and feeling terrible that I had caused it.
- LorenPechtel 5y ago
  It could happen with penalties.
  - junar 5y ago
    Not who you're replying to, but my take is that if everyone complied with their tax obligations correctly, nobody should have filed or owed taxes. The kid should probably have been a household employee. A household employee under the age of 18 is exempt from Social Security and Medicare taxes. https://www.irs.gov/taxtopics/tc756 https://www.irs.gov/taxtopics/tc756 In addition, if they made less than their standard deduction, there would also be no income tax liability or filing requirement. What probably happened was that the kid was incorrectly sent a 1099 form. This is wrong for two reasons. First, it's not needed for a personal residence or rental properties for investment, only for businesses. Second, a household employee is not a contractor, and should generally receive a W-2 (or nothing at all, in the kid's case).

deleted 5y ago

[deleted]

jcims 5y ago

Only if the neighbor kid earned more than the minimum filing requirements. For the IRS that's generally >$12k per year unless the kid is married but filing separately.