3 ms·
You're making the mistake that thinking they'll lower their income to avoid an increase in income tax means they'll make less money for the year. If the account
by talmand 14y ago
You're making the mistake that thinking they'll lower their income to avoid an increase in income tax means they'll make less money for the year. If the accountant says that because of the oddities of the tax code it's possible to exit the year with more money after taxes by lowering their income, you better believe they'll do it. But don't necessarily think they'll make less money overall, it's just that their reported income will be lower.
Why do you think all those CEO's are so nice to accept a $1 yearly salary and take stock instead?
So, in the end the guy still gets enough money to make him happy and tax revenue goes down.
The other popular option is to just move, which some countries in Europe are now experiencing.
- eridius 14y agoDoes raising the tax burden slightly on a particular bracket affect the presence of loopholes like this?
- talmand 14y agoI wouldn't necessarily say they are connected, but they could be. If lawmakers change the tax code to increase the tax burden then it's possible they will introduce new loopholes. The Federal tax system is incredibly complicated and sometimes it seems that just reading the table of contents causes new loopholes to magically appear. Often times I think that simplifying the tax code would result in higher revenue even if you lowered the percentage on each bracket.