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The carried interest loophole survives again
- Overtonwindow 4y agoWill the U.S. ever seriously consider a VAT? It has always struck me as asinine to tax income, rather than consumption.
- koheripbal 4y agoConsumption is a regressive tax - like a flat (dollar-amount-per-person) tax.
- lotsofpulp 4y agoWe need to track all purchases and implement marginal sales taxes. Given the reduced frequency of cash transactions, it might be feasible.
- JKCalhoun 4y agoA regressive tax like that would raise taxes on the working class, lower it for the wealthy.
- lotsofpulp 4y agoHow are marginal sales taxes regressive? Only the wealthy can spend more, so only the wealthy would get taxed more.
- croon 4y agoBecause poor people need to spend a larger portion of their money just to live.
- lotsofpulp 4y agoSee https://news.ycombinator.com/item?id=32563944 https://news.ycombinator.com/item?id=32563944
- whiddershins 4y agoThe poorer you are the higher a percentage of your money you typically spend.
- lotsofpulp 4y agoThe margin is not based on the percentage of your income/wealth that you spend, it is based on the amount you spend. Like income. For example, $0 to $50k per year spend is taxed at 0%, then $50k to $100k is 10%, etc. Although a continuous exponential function is preferable than discrete cliffs.
- whiddershins 4y agoAre you saying that is how VAT works? Because I have no idea how any could keep track of all that.
- lotsofpulp 4y agoNo, marginal sales tax is not in effect anywhere. Assuming electronic payments, I could see it being relatively easy to track everyone’s spending since bank accounts/credit cards/etc would be tied to tax ID #s. Of course, there are all sorts of issues with possible downsides and jurisdictional issues.
- ironSkillet 4y agoSuppose a poor person makes $20k a year, all of this immediately spent on necessities and taxed, say at 5%. So their net tax rate is 5%. Now imagine a rich person making $200k, spending $100k taxed at 10% because of marginal increases, and saving the rest. The rich person also pays a net tax rate of 5%.
- lotsofpulp 4y agoSo you increase the tax rate for higher spending amounts, and/or lower the tax rate for lower spending amounts.
- washadjeffmad 4y agoThat's neolib hoo-ha. Most of society is pay gated, where increasing costs are required in order to maintain your current standard of living or day to day operations. We're living that right now with inflation and supply chain scarcity. The wealthy have what they need and can afford to wait or shop around. The immediacy of need for a one car household to replace their only vehicle puts them at the whims of a highly fluctuating car market. A wealthy household can afford regular maintenance, more reliable cars, or just to Uber around every day. At scale, we can't buy the computer components we need at a price that isn't a huge markup of what we paid three years ago, which either gets passed on to customers or means we have to limit our service offerings. Instead, we're suspending some operations and waiting it out while we rework some designs. We're about as big and wealthy as orgs get and can survive it.
- lotsofpulp 4y ago> Most of society is pay gated, where increasing costs are required in order to maintain your current standard of living or day to day operations. The cash benefits tax rates can also be increased. As a rough outline: UBI to ensure minimum quality of life Marginal sales tax to tax luxury purchases more than necessity purchases Estate tax to prevent too wide of wealth gap. The goal would be to incentivize income and disincentivize profligate spending. If one does not want to be at the whims of a highly fluctuating car market, then they have to plan accordingly. But in the worst case, the UBI will be the safety net, and whether or not that means they can afford a car is up to society. > At scale, we can't buy the computer components we need at a price that isn't a huge markup of what we paid three years ago, which either gets passed on to customers or means we have to limit our service offerings. Instead, we're suspending some operations and waiting it out while we rework some designs. We're about as big and wealthy as orgs get and can survive it. I am not sure how this relates, but I think this is getting more into anti trust rather than personal taxes. Either way, I think society should reward businesses (or individuals) that invest in robustness/redundancies/resiliencies.
- shellfisher 4y agoA marginal sales tax would not necessarily do so. Pick a consumption dollar amount below which one is not wealthy and above which one is wealthy, according to you. Say, spending $1,000,000 per year. Consumption up to that amount is taxed at 0%. Marginal consumption above that amount is taxed at 20%.
- qsort 4y agoYes, but a marginal sales tax is impossible to enforce. Countries that do have sales taxes usually have a "normal" rate and several tiers of reduced rates for food and essential goods. E.g. in Italy the VAT rate is 22%, but some listed goods and services are instead taxed 10%, 4% or 0%.
- saalweachter 4y agoI think I don't like this idea for the wrong reason. Making sales tax less regressive would be a good thing. The implementation difficulties don't bother me per se; I think what's making me not like this idea is that it wouldn't do much for wealth disparity. If you're Wealthy with a capital W, you don't really spend that much, compared to your income. But even if I'm also interested in tax policies to decrease the accumulation of massive amounts of wealth and the accompanying power in the hands of a single individual, I shouldn't dislike a tax policy that would do a different good thing -- if it could be implemented -- just because it doesn't do the other thing I want.
- lotsofpulp 4y ago> I think what's making me not like this idea is that it wouldn't do much for wealth disparity. If you're Wealthy with a capital W, you don't really spend that much, compared to your income. These problems can be solved via extremely high estate taxes or property taxes.
- k3liutZu 4y agoThe EU taxes both. And the US does add some local and regional tax to sales, no? I remember the prices were always "without tax", so as a consumer you don't know how much you actually have to pay.
- snowwrestler 4y agoSome U.S. states have a sales tax. Some also have an annual tax on the current assessed value of personal property, like real estate, cars, boats, etc. There are no federal (nationwide) versions of those, though.
- oldsecondhand 4y agoVAT rate isn't the same in the EU either, but each member country has to have at least 20% VAT.
- benj111 4y agoExcept on certain items. Gas and electricity are 5% I believe.
- lotsofpulp 4y agoWould federal excise taxes count as close enough to a sales tax? And for the purposes of comparing to VAT, is VAT considered an excise tax too? https://en.wikipedia.org/wiki/Excise_tax_in_the_United_States https://en.wikipedia.org/wiki/Excise_tax_in_the_United_State...
- marcus0x62 4y ago“Some”, as in 45 out 50[1]? 1 - https://taxfoundation.org/2021-sales-taxes/ https://taxfoundation.org/2021-sales-taxes/
- memling 4y ago> Some U.S. states have a sales tax. Some also have an annual tax on the current assessed value of personal property, like real estate, cars, boats, etc. My current state has sales taxes (on non-essentials), property taxes that go to the state and the local school district (separate assessments), and an income tax to the state and my local district. The state counts income as earned income and passive income. Federal deductions reduce my tax burden there, but no such deductions obtain at the state or local level. While it's popular to talk about the tax differential between the EU and US—and there is one—it's probably not quite as big as advertised (at least not in all states).
- JKCalhoun 4y agoI don't think a regressive tax would do anything to reverse the growing wealth gap in the U.S.
- lotsofpulp 4y agoRegressive taxes are fine if they are offset by a universal cash benefit. The purpose of a tax can be to curb some type of behavior, such as carbon emissions or water usage or road usage. If it happens to be regressive, then that can be solved by giving everyone $x. And then you recoup via marginal income/marginal sales taxes.
- actionfromafar 4y agoAren't "handouts" a hard sell in the US?
- lotsofpulp 4y agoYes, I do not expect any substantial movement for wealth redistribution on the federal (nationwide) level.
- throwaway0a5e 4y agoEven if you ignore the resistance to handouts the idea that the federal government in its current state or any reasonably probable future state could pull off administrating said handouts without it devolving into a bunch of special interest BS and partisan bickering and actually accomplish the goal of making a VAT a regressive pain in everyone's butt is just laughable. Look at healthcare spending. Look at social safety nets. Look at defense. Odds are that any spending in an attempt to make VAT less regressive would wind up looking a lot like those and having most of the same problems because it would be subject to the same sets of perverse incentives from top to bottom.
- Wyoming23 4y agoNot really. Every time a new handout gets created, there is a predictable round of complaining from the fiscal conservatives, but fiscal conservatives make up only about 10-15% of Republicans and 3-5% of Democrats so inevitably the handout eventually gets passed, perhaps with a name-change or some token constraint, but then once established becomes normalized and permanent.
- arminiusreturns 4y agoThere is a reason the 16th ammendment was passed in 1913 (along with questions about if it was even properly ratified!) which cancelled the previous apportionment requirement for income taxes in America. The Federal Reserve Act was a key turning point in the entire US approach to monetary policy, and was also passed in 1913 under Woodrow Wilson, who later said "I am a most unhappy man. I have unwittingly ruined my country." Down this path lies a rabbit-hole of epic proportions. I'll say this, the crash of 1907, spurring the commission sent to wine and dine and learn how to do things the European central banker way, was engineered, and the surface version taught is false.
- JKCalhoun 4y agoWhen lobbyists push to reduce the tax burdens of equity firms it is implicitly putting a larger tax burden on the rest of us. I suppose someone that thinks equity firms are overburdened with taxes are probably okay with that.
- throwaway0a5e 4y agoGovernment spending is neither fixed nor wholly paid for via taxes (a lot of it is deficit spending). So while it's a stupid group to give a tax break to it's not necessarily a tax burden increase on the rest of us. Heck, if we stopped being world police or fixed our healthcare we'd have a bunch of slush money on the table for whatever boondoggle tickles your fancy.
- ImPostingOnHN 4y agoare there no people who, even today, advocate for reducing spending to be closer to revenues? if so, forgoing revenues in such a scenario would consequently lead to such people advocating for even less spending, and/or higher taxes on the rest of us, even if we'd rather have the spending and also higher taxes on the parties in question tl;dr: Your comment is based on the fallacy that a) government spending can't be maintained at current levels while simultaneously removing this loophole and taxing the parties in question
- benj111 4y agoThere are people that advocate that. I wish there were some good write ups on money printing after the 2008 crash. Theoretically that should lead to higher inflation, which it didn't until now (and for different reasons). So yes established theory used to be that spending should match revenues, with the difference being made up by inflation essentially. What the latest thinking is, and the implications of that I don't know.
- mamonster 4y agoWell technically speaking it did lead to higher inflation, it's just that the things that got inflated(assets, especially financial ones) are not part of what people look at when they look at inflation.
- cainxinth 4y agoKyrsten Sinema was bought and paid for by private equity special interests to prevent the Dems from raising taxes on their management fees… and they got exactly what they wanted.
- lotsofpulp 4y agoThe other 50 or 51 senators were not?
- cainxinth 4y agoFrom what I understand, the bill was ready to go. Everyone had gotten their pork… especially Manchin. And it was Sinema who was the last hold out, and the biggest concession she wanted was this.
- lotsofpulp 4y agoI do not find it useful to describe a single voter as being THE vote that causes something to pass or fail. Presumably, the other 50 or so senators that voted against had similar motivations as Sinema, so why would I assume she was “bought and paid for” any more than the others were?
- pwinnski 4y agoBecause the issue at hand is the carried interest loophole, and she is the person responsible for that surviving in this bill. The other 49 Senators and the Vice President were all on board with removing the loophole, and Sinema said she would vote against the bill unless the loophole was preserved. So in this case, in this timeline, with the information we have, Senator Sinema is in fact the reason this bill passed--since she was the last to come on board--and her motivation was clear.
- lotsofpulp 4y agoThat is the art of politics. She said it, so the others do not have to, and in exchange she will be owed something else from the others. I bet if the vote was singularly for legislation about carried interest taxation, the votes would have been the same way (given their historical voting patterns). I would be more persuaded if carried interest was not already a contentious issue that Repubs have had plenty of opportunity to change themselves. The fact that they did not indicated it is not just Sinema who is against removing the carried interest loophole.
- macinjosh 4y ago
- ImPostingOnHN 4y agoin order to forgo the social contract, you must first forgo the benefits of it i.e. leave
- deleted 4y ago[deleted]
- roflyear 4y agoGo live in the woods. No one will hound you for taxes.
- macinjosh 4y ago
- ironSkillet 4y agoThe fact that you are on this forum communicating over the internet means that you have benefited from a public good, and therefore derived some benefit from taxes. We can argue about the value of things and what taxes should be, but a blanket statement like that strikes me as completely unreasonable in the modern connected world.
- macinjosh 4y agoJust because I have received some benefit, (something which I am due since the money was taken from me) does not mean I have to agree that I am getting my money's worth or that I even have a want or need for some service I am paying for. That's like NPR saying my $1,000 donation of a clunker car is of equal value and worth of the tote bag they sent me.
- TrackerFF 4y agoWell, as a voter, you have a say. So if you do feel taxation is theft, campaign against it. But you do live in democracy, so you will have to abide by the democratic rule. And if that rule says taxation is a benefit to society, you must continue to pay your taxes. An alternative would be to leave for a country without taxation.
- mupuff1234 4y agoIt's a shame we live in a world where loyalty to the party is more important than loyalty to the public. You would've hoped that a single republican would step in and agree to vote yes instead of Kyrsten Sinema in order to eliminate the loophole, but that just seems like an unimaginable scenario in today's politics.
- jmyeet 4y agoThere are several lessons to draw from this: 1. Yes, Kyrsten Sinema is the current villain but in truth, she was probably doing it as a favor to Chuck Schumer. Schumer is the Senator from Wall Street. Money coming from Wall Street is why he is majority leader; 2. It's surprising how cheaply politicians can be bought; 3. While Sinema is the villain here, you should know there is always a rotating villain in the Democratic Party. Today it's Sinema. A month ago it was Manchin. In Obama's first term it was Joe Lieberman. This isn't an individual problem. It's a systemic problem. That's because the Demoratic Party operates as a controlled opposition party, not a governing party. The job of the Democratic Party is simply to fundraise off of how awful the Republicans are without actually having to do anything. I mean how many fundraising texts and emails were sent when the Dobbs decision was handed down? 4. Legislative bodies have a position called the whip. The job of the whip is to whip votes, meaning getting votes and getting an accurate count of votes. The Republican Party is very good at whipping votes. You see this with those who voted to impeach Trump getting primaried. A great example was Madison Cawthorn. This is a long and fascinating story but he came out of Kevin McCarthy's office looking like he'd been physically beaten. The Democrats need to emulate this particular aspect of the Republican Party but, as stated above, the reason they don't is the Democratic Party is happy being the controlled opposition party. In the same situation, the GOP would absolutely primary both Manchin and Sinema when they were up for reelection.
- seaourfreed 4y agoCongress sells out to corporations / wealthy / lobbyists. Congress represents them instead of US citizens, anytime they can rig the economy. 86% of all federal taxes are paid by workers. 12% of all federal taxes = business taxes + capital gains. It used to be 50% by workers in 70 years ago. Congress sells out to redirect wealth to who they represent: wealthy / big corporations / lobbyists. Above numbers comes from US gov (congressional budget office) on breakdown of tax revenues.