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How can you calculate someone’s income in a way that makes this feasible? Wealthy people 1) dont have most stuff to their name directly, 2) have capital gains w

How can you calculate someone’s income in a way that makes this feasible? Wealthy people 1) dont have most stuff to their name directly, 2) have capital gains which make income ‘spike-y’, 3) make money on many jurisdictions, many which may not be visible to the country fining the person Just curious how this works in practice

TheFattestNinja 3y ago
Based off tax return and make tax fraud hurt. Sure some people will still optimize for tax avoidance but will be far fewer than the totality of those wealthy enough to disregard rules at present.
- throwaway60607 3y ago
  Here's how you do it if you're rich: Every European country (even Finland) has harmonized rules about "tax residency". The rules are simple: If you actually and honestly live there at least half a year and one day of a calendar year, that place becomes your tax residency for that year. The rich person buys a property in Monaco and goes there for half a year + 1 day. That year Monaco is their tax residency. They take out dividends from their off-shore (or Netherlands) holding companies. Boom, perfectly legal personal income taxed at super-low (or 0) rate that Finland has no idea about. Then the person returns back to Finland and again accumulates their income into the holding company for a few years until they run out of whatever they got as a dividend. Repeat until...
  - theshrike79 3y ago
    Just being "rich" isn't enough to get a citizenship in Monaco. You need to be either famous+rich or wealthy. But that's how it goes and there are other countries you can use to evade taxes too.
    - throwaway60607 3y ago
      You don't need citizenship at all. Not even permanent or temporary residency. You will become a tax resident of a state even if you have just a tourist visa. You don't need to own the property either, a rental apartment is just fine. Even living in a hotel would work if you can prove it was your "base of operations" during that time. Not sure what's the distinction between rich and wealthy, sounds the same to me.
      - theshrike79 3y ago
        Rich people have money, wealthy people have assets. Rich people have high incomes, wealthy people own a lot of valuable things (properties, land, art, stuff that keeps its value). New money vs old money/generational wealth pretty much.
        throwaway60607 3y ago
        Well I think I meant something in between. You don't need to be from old money to get a property in Monaco and much less in other places in EU - I got several, and I started literally from 0. And you definitely don't need to be from old money to rent an apartment in Monaco for half a year. A senior software engineer (contractor) could afford it and would profit from the operation if they live in Scandinavia/Germany/Austria/France. I have a good enough tax regime where I live in Central Europe - for 2022 I paid 8% including income tax, health and social insurance. But I'd definitely consider doing this if it was over 20%.
- masklinn 3y ago
  Or go off of wealth as a proxy for income. But if Switzerland can do day fines, I think other countries can as well, it's the will that's missing and nothing else.
ethanbond 3y ago
Could probably get pretty close by making it a % of the current Blue Book value of the car. No offsite data needed.
- badcppdev 3y ago
  That is an excellent suggestion although obviously needs a minimum amount because a fair number of cars being driven around have a cash value close to zero.
- eganist 3y ago
  This is a kernel of a good idea; it can be refined further by making the fine a percentage of the combined value of all taxable property registered to that person (otherwise the fine hits middle class drivers disproportionately). Would probably need to leverage something like the interstate drivers license compact to synchronize that data across all states, and there'd need to be solutions for edge cases e.g for people who rent cars and homes rather than own them.
  - ethanbond 3y ago
    That’s why it’s a good idea as-is (with a minimum $ amount): you don’t need any of those things.
    - eganist 3y ago
      That misses the forest for the trees without any of those. You still penalize low and middle income drivers and miss the people who disregard the social contract the most.
      - ethanbond 3y ago
        Missing the forest for the trees is foregoing a decent solution that a single city could implement in 12 hours for a solution that will literally never happen ever. You think Montana is (or should) expose a complete picture of a citizen’s financial situation so that New York City can issue tickets a bit more fairly in the event that citizen visits NYC? Won’t happen. The point is not to punish every single violator exactly fairly, it’s to more effectively deter violations among everyone
frereubu 3y ago
I'm sure you're going to get lots of responses detailing situations where the outcome isn't optimal, but I bet the majority, if not all, of those will be an example of the perfect being the enemy of the good. That is to say, I think the question should be whether the proposed imperfect solution is better than what we have now.
vidarh 3y ago
You can't make it perfect. But you can make it better. Put another way: For the tiny proportion of people who are wealthy enough to obscure their income or get most of it from capital gains, the fines don't currently matter financially, so if they end up getting off more easily it has minimal effect. They get unfair advantages now and still would if you indexed by taxable income. But the much larger portion who earn well above median yet not enough to obscure their income would get a fairer/stricter treatment.
Radim 3y ago
You're thinking different "rich". When poor people talk about "taking from the rich", they typically mean (well) salaried people. Their bosses, managers, higher up employees… folks they personally know, just with more income. The truly wealthy you describe are of course unaffected. But they're also off the radar for most – too far removed from their daily experience. And difficult to fleece for the state. So the sacrificial goat always ends up being the middle class.
- orwin 3y ago
  No, they mean wealthy people. I had a discussion yesterday about an incremental inheritance tax of 10% every 50 month of minimum wage income. Basically in my country, that would mean 10% of the money you have bellow 65k, 20% of the money you have between 65 and 130k... Until 100% is txed. We might see increase in minimum wages soon.
theshrike79 3y ago
This is a rich vs wealthy thing :) Rich people have high income and are affected by percentage-of-income based fines. Wealthy people don't necessarily have a big yearly income, but they own a LOT of stuff and don't directly handle money in their own name -> not affected as much. Actually wealthy people are also a lot more likely to have a chauffeur, why bother driving yourself when you can just rest in the back of a Rolls Royce or an S-Class Mercedes. You can just hire a new driver if the old one loses their license for speeding =)

TheFattestNinja 3y ago

Based off tax return and make tax fraud hurt. Sure some people will still optimize for tax avoidance but will be far fewer than the totality of those wealthy enough to disregard rules at present.

throwaway60607 3y ago
Here's how you do it if you're rich: Every European country (even Finland) has harmonized rules about "tax residency". The rules are simple: If you actually and honestly live there at least half a year and one day of a calendar year, that place becomes your tax residency for that year. The rich person buys a property in Monaco and goes there for half a year + 1 day. That year Monaco is their tax residency. They take out dividends from their off-shore (or Netherlands) holding companies. Boom, perfectly legal personal income taxed at super-low (or 0) rate that Finland has no idea about. Then the person returns back to Finland and again accumulates their income into the holding company for a few years until they run out of whatever they got as a dividend. Repeat until...
- theshrike79 3y ago
  Just being "rich" isn't enough to get a citizenship in Monaco. You need to be either famous+rich or wealthy. But that's how it goes and there are other countries you can use to evade taxes too.
  - throwaway60607 3y ago
    You don't need citizenship at all. Not even permanent or temporary residency. You will become a tax resident of a state even if you have just a tourist visa. You don't need to own the property either, a rental apartment is just fine. Even living in a hotel would work if you can prove it was your "base of operations" during that time. Not sure what's the distinction between rich and wealthy, sounds the same to me.
    - theshrike79 3y ago
      Rich people have money, wealthy people have assets. Rich people have high incomes, wealthy people own a lot of valuable things (properties, land, art, stuff that keeps its value). New money vs old money/generational wealth pretty much.
      - throwaway60607 3y ago
        Well I think I meant something in between. You don't need to be from old money to get a property in Monaco and much less in other places in EU - I got several, and I started literally from 0. And you definitely don't need to be from old money to rent an apartment in Monaco for half a year. A senior software engineer (contractor) could afford it and would profit from the operation if they live in Scandinavia/Germany/Austria/France. I have a good enough tax regime where I live in Central Europe - for 2022 I paid 8% including income tax, health and social insurance. But I'd definitely consider doing this if it was over 20%.
masklinn 3y ago
Or go off of wealth as a proxy for income. But if Switzerland can do day fines, I think other countries can as well, it's the will that's missing and nothing else.

ethanbond 3y ago

Could probably get pretty close by making it a % of the current Blue Book value of the car. No offsite data needed.

badcppdev 3y ago
That is an excellent suggestion although obviously needs a minimum amount because a fair number of cars being driven around have a cash value close to zero.
eganist 3y ago
This is a kernel of a good idea; it can be refined further by making the fine a percentage of the combined value of all taxable property registered to that person (otherwise the fine hits middle class drivers disproportionately). Would probably need to leverage something like the interstate drivers license compact to synchronize that data across all states, and there'd need to be solutions for edge cases e.g for people who rent cars and homes rather than own them.
- ethanbond 3y ago
  That’s why it’s a good idea as-is (with a minimum $ amount): you don’t need any of those things.
  - eganist 3y ago
    That misses the forest for the trees without any of those. You still penalize low and middle income drivers and miss the people who disregard the social contract the most.
    - ethanbond 3y ago
      Missing the forest for the trees is foregoing a decent solution that a single city could implement in 12 hours for a solution that will literally never happen ever. You think Montana is (or should) expose a complete picture of a citizen’s financial situation so that New York City can issue tickets a bit more fairly in the event that citizen visits NYC? Won’t happen. The point is not to punish every single violator exactly fairly, it’s to more effectively deter violations among everyone

frereubu 3y ago

I'm sure you're going to get lots of responses detailing situations where the outcome isn't optimal, but I bet the majority, if not all, of those will be an example of the perfect being the enemy of the good. That is to say, I think the question should be whether the proposed imperfect solution is better than what we have now.

vidarh 3y ago

You can't make it perfect. But you can make it better. Put another way: For the tiny proportion of people who are wealthy enough to obscure their income or get most of it from capital gains, the fines don't currently matter financially, so if they end up getting off more easily it has minimal effect. They get unfair advantages now and still would if you indexed by taxable income. But the much larger portion who earn well above median yet not enough to obscure their income would get a fairer/stricter treatment.

Radim 3y ago

You're thinking different "rich". When poor people talk about "taking from the rich", they typically mean (well) salaried people. Their bosses, managers, higher up employees… folks they personally know, just with more income. The truly wealthy you describe are of course unaffected. But they're also off the radar for most – too far removed from their daily experience. And difficult to fleece for the state. So the sacrificial goat always ends up being the middle class.

orwin 3y ago
No, they mean wealthy people. I had a discussion yesterday about an incremental inheritance tax of 10% every 50 month of minimum wage income. Basically in my country, that would mean 10% of the money you have bellow 65k, 20% of the money you have between 65 and 130k... Until 100% is txed. We might see increase in minimum wages soon.

theshrike79 3y ago

This is a rich vs wealthy thing :) Rich people have high income and are affected by percentage-of-income based fines. Wealthy people don't necessarily have a big yearly income, but they own a LOT of stuff and don't directly handle money in their own name -> not affected as much. Actually wealthy people are also a lot more likely to have a chauffeur, why bother driving yourself when you can just rest in the back of a Rolls Royce or an S-Class Mercedes. You can just hire a new driver if the old one loses their license for speeding =)