7 ms·

The pattern is apparent - once you become rich, you don't want to donate millions to governments in taxes. Anyway you do, but trying to minimize it. Be it for t

The pattern is apparent - once you become rich, you don't want to donate millions to governments in taxes. Anyway you do, but trying to minimize it. Be it for their lack of any transparency how cash will be used (mostly wasted in very ineffective way). It doesn't matter if it's famous or unknown rich. Now what to do with this situation... There are too many tax havens out there (Suisse, Monaco, Channel islands, Luxemburg, Malta etc. - this is just good ol' europe). There will always be rich, powerful people no matter what system you come up with (sheep/wolf human nature responsible here). If you tax them too much, they will flee (ie Tina Turner) and you lose all the money for good. Those are clever people, having best financial advisors out there. Heck, if I had hard earned/inherited millions or more, I wouldn't want to support some war efforts/failing eu social policies either. If feeling generous, you can always give back more directly ie by building some school, avoiding bureaucrats that eat away most of cash. YOu know, the richest man in the world style. There is a good reason why he didn't donate all his money to something existing, but managing investments by himself (maybe not exact description, but you get the point). All in all, nothing new...

jakobegger 12y ago
Paying taxes is not "donating money". You are required by law to pay them. You get certain things in exchange, like laws that protect your property. If you think that you shouldn't be forced to pay taxes, why do you think that other laws should be enforced? If rich people steal from the state, why shouldn't poor people just take what they want from the rich? If you avoid taxes, you are stealing from everybody.
- saiya-jin 12y ago
  Nice textbook phrases, now let's get back to the real world out there for a while. Do you even understand the simple truth, that most of the times no law is broken in tax optimalizations? Only when it does, it gets highly publitized. Usually, tax systems are full of loopholes and accountants just need to be creative enough (and yes, they are...). Without breaking any specific law, by logic "what is not explicitly forbidden is allowed". Personally, I do believe in minimal and fair taxation. If you have system where successful people have over 50% tax burden (quite common in progressive tax systems), you can expect many attempts to get away from it. Just human nature. Your textbook phrases won't help much, do they. Just look at Switzerland itself - most democratic country in the world, one of the richest (and their wealth ain't based on banking secrecy - whole banking industry brings roughly 12% into GDP... tourism and high quality exports are primes here). Low personal and corporate taxation, and the country and system just works. Why cannot rest of europe work this way? How much tax evasion is within Switzerand? Almost none...
  - Zarkonnen 12y ago
    Nice textbook phrases. What does it matter whether laws are broken or not if the result is still people not paying their taxes while benefiting massively from society. If the best you can say about someone's behavior is that it's "not technically illegal", that's quite telling. And don't get me started on Switzerland. I live there. I'm Swiss. We have massive tax evasion. We have special tax deals for foreign nationals living here. Here in Zurich, where I live, the cantonal (state) finances are under huge strain because all the wealthy people live across the border in other cantons where the taxes are much lower, but commute into Zurich to work. So Zurich gets to pay for the infrastructure, for the poor who live here rather than across the border, etc. So please don't talk about some imaginary Switzerland that supports your self-serving rhetoric.
    - cpursley 12y ago
      This is a perfect example of why taxing income is not the correct way. Things like progressive sales tax and taxing usage is. For example, those commuters should be taxed enough to support their burden each time they come in to the city. And for those companies within the city limits enjoying the infrastructure, protection of law, etc, a sales tax on their products sold should cover that. The point of tax extraction should be consumption, not production. It's more efficient, more market (reality) based and a whole lot less political.
      - raquo 12y ago
        What should the sales tax be progressive on? You don't know the buyer's income when they pay for stuff. Some usage taxes might work, but unless they specifically target out-of-canton persons, they will just drive more rich people out of Zurich, exacerbating the problem. At the end of the day having every 20x30 miles plot of your country independently decide on taxation is not be the best idea. Different tax regimes can only coexist when taxpayers' mobility is limited, otherwise the cheapest tax-land wins. EDIT: I forgot to mention that standard sales tax is regressive by nature (poor people spend a much higher percent of their income than rich people).
- j42 12y ago
  Perhaps the issue isn't so much in "forcing" people, as it is in recognizing that the perceived unfairness of the tax system itself is causing systemic dysfunction. Because taxes are perceived to be so unfairly high in certain economies, many devote significant time and effort into "innovating" around policy which is completely legal. Transfer pricing, long-term capital gains distinctions and LLC/Trust configurations, to name a few. It makes sense to do this, because the disincentives of NOT pursuing legal tax minimization strategies are severe. You'll lose almost half your income. The more money you have, the more strategies you get--meaning they are formed in the ranks of industry leaders like Apple or Google, and eventually trickle down throughout private industry (though in the interim this only serves to widen the disparity & narrow the concentration of wealth). This won't change unless the common psychology changes. If the tax system were more balanced and fair (a more moderate/halfway implementation of a "flat tax?") then less energy would be devoted into the legal arms race that is out-maneuvering the tax code. ... but obviously that's a pipe dream.
  - ttty 12y ago
    the taxes are for the poor, not rich.
- sambe 12y ago
  Paying more than you are legally obliged to could be considered donating though. I'm not commenting on the specific cases linked to but as I'm sure you're aware there is a massive grey area around tax law. You can't simply claim that not paying is stealing any more than the parent can claim not paying is ok (it didn't). The details are all about the amounts, which methods are legal and which methods are of untested legality. I think parent's claim is that money is both more willingly and better spent elsewhere (perhaps regardless of legality). Significant numbers of rich people/corporations use methods that are legal to reduce their taxes. Most people consider this wrong despite its legality (probably they also mistakenly believe it to be illegal - because journalism). There's certainly an argument that this is - in part - a of problem for the creator of a complex tax system, who should respond by reducing complexity (increasing enforcement tends not to go well - complexity also hinders that). It also seems likely that the people who consider it morally wrong would do likewise if their tax bill were 100x larger (in Switzerland, it is not a criminal offence to make an incorrect tax declaration. Many non-rich Swiss compete with the tax office to lower their bill). It also seems that you are saying laws are by definition correct. Many laws are not uniformly enforced and many laws are changed as a result of disobedience. Perhaps such people are indeed paying proportionally way too little now but perhaps their actions also affect positive change in future (more efficient system overall, but resource allocation, fewer unintended loopholes). This may not even be their intention, but it doesn't matter.
- charlesdm 12y ago
  That's ridiculous (the second part, not the "donating money" part) If you avoid taxes, you are following the law. No one should pay more than is required of him to pay. If you can structure certain transactions in different ways (e.g. 25% tax vs 50% tax), why would one choose the more expensive option? If you evade taxes, yes, then you are stealing from everybody. That I do not condone. But, there is a clear difference.
  - DanBC 12y ago
    Tax laws are complex. People avoiding, not evading, taxes think they are obeying the laws. But sometimes they are using the laws in weird ways and the tax authorities might not agree. Those tax laws get tested in the courts which is a slow expensive process. Or the tax authorities will enter discussion with people using weird tax schemes to try to get some money before going to court. Tax avoidance used to mean normal tax planning but it has gained a meaning of people using bizarre interpretations of the law.
    - pluma 12y ago
      The funny thing is that this is exactly the same fallacy programmers tend to run into when trying to game the legal system: that you're not violating the letter of the law, doesn't mean what you're doing is legal or that you can't be sued. It's not just a bunch of code. The problem with taxation IMO is that it's caught in a vicious circle: companies / "the rich" are dodging taxes so the taxes need to be raised leading to more tax dodging and so on. Part of the problem is that tax fraud is often not punished in proportion to the actual value[0]. I don't think there's an easy solution, especially in a world that is as interconnected as ours is today. Personally, I think income tax is a broken model because property is no longer a good indicator of wealth (it just encourages "investing" the money where it can't be taxed -- which comes with a threshold so high you end up hitting the middle and lower income households disproportionally). Taxing the transfer of wealth more instead of its possession seems like a good idea, though. It might "slow the economy down", but with sub-millisecond stock trading being a thing I'm not sure this is a bad thing. It's not as if a huge income would be particularly useful if you aren't going to do anything with it anyway. [0]: A recent case in Germany was Ulrich Hoeneß, the former president of the football club Bayern Munich, who was found guilty to have withheld nearly 30 million euros in taxes (after repeatedly admitting to much lower sums throughout the trial -- which to me sounds like obstruction, but what do I know). He was sentenced to three and a half years in prison, BUT an early release is extremely likely (so it's doubtful he will spend anywhere close to the full sentence behind bars) and after a mere six months he was already granted day release (meaning he can walk freely outside prison as long as he returns in the evening). EDIT: Frankly, I'd be happy if income tax was replaced entirely by some form of transaction tax. It's far easier to reason about and far less likely to bite founders in the ass. In Germany most newly founded business go bankrupt in their third year because that's often the first time they not only have to pay tax on the previous years but also make advance payments for the current year, which can be deadly if you didn't make sure to put aside enough of your income to cover taxes (and accountants are expensive).
- VMG 12y ago
  > You get certain things in exchange, like laws that protect your property. With the important difference that the price is non-negotiable, and set by the service provider alone. The people highlighted on the website chose to park their property elsewhere, so the government had zero cost in protecting that. The price is not in proportion to the quality of service at all, it's proportional to the income of the citizen. Which is consistent with what most people understand taxes to be: a wealth redistribution mechanism, rather than a service fee. > If you avoid taxes, you are stealing from everybody. If all the people which avoid some taxes currently (basically every large corporation) close down operations in the US and move to a country with more favorable conditions, the theft (under your definition) would stop. Do you think the net gain would be positive?
  - jsprogrammer 12y ago
    >With the important difference that the price is non-negotiable, and set by the service provider alone. Hunh? Most (all) of the states involved have some form of democratic government don't they? I know some of them still have monarchs (why?), but I believe their policy makers are elected by the general population, are they not?
    - wtbob 12y ago
      Democracy is a pack of wolves voting on which sheep to have for dinner. Now, what I'd like to see is each person's vote multiplied by the amount he pays in taxes (all taxes: property, sales, income &c.). That would be fair, and it'd give an incentive to pay up too.
      - jevgeni 12y ago
        Which is even more cut throat, since you're basically selling political power: rich people would be able to afford way more, than the poor.
        avn2109 12y ago
        Fair point, but it seems relevant to acknowledge that the American campaign finance system as presently organized is exactly isomorphic to the "selling political power" you mention above.
easytiger 12y ago
The problem is one i can sympathise with to some degree. For standard wage levels taxation (whilst still to much in UK) makes sense. Scale that up to millions and it really is out of wack. There is no moral reason why a government deserves 50% of everything you have made. Its like when you order a more expensive bottle of wine, and the restaurant's service charge is a percentage of it... its ridiculous to charge $100 to open a bottle of wine.
- vidarh 12y ago
  > There is no moral reason why a government deserves 50% of everything you have made. Why? Personally I think the marginal tax rate should be much higher on the highest earners, for the simple reason that the impact of exact additional percentage point tax is far lower for a higher earner. To me the actual percentage is irrelevant. The relative impact is far more important. If I had to pay 1 percentage points more tax, I wouldn't notice. I spend more than that on comics and takeaways, and also set aside 15-20 times more than that in savings and investments. If I had to pay 5 percentage points it would begin to sting a bit, but I could still easily afford it. 10 percentage points more would start to be painful but still doable. In fact, while I'd be complaining and whining about it at that point, I could manage 50% tax quite easily (I actually pay about 32% combined income tax and national insurance, despite being far into the 40% income tax threshold, and earning enough to be in the top 10% UK earners or so) Meanwhile I have neighbours that would have to cut down on their food budget if their tax rate went up 1%, despite paying at least 10 percentage points less than I do, and many people in the UK would struggle to keep modest accommodation and food if they paid more than 20%. I don't find it at all unfair that I pay more than them, not least because the only reason I can make what I do is that there is a functioning society around me that can afford my services.
  - wtbob 12y ago
    > Personally I think the marginal tax rate should be much higher on the highest earners, for the simple reason that the impact of exact additional percentage point tax is far lower for a higher earner. To me the actual percentage is irrelevant. The relative impact is far more important. So, you define a fair tax system as one whose perceived impact is identical across the tax base. I define it as one where people pay in proportion to the benefits they receive. One can, indeed, argue that a rich man receives more benefits than a poor man, since his larger fortune is protected, and indeed due to his connexions he himself is more likely to be able to call on the protection of his state. I'd bet that it's linear or sublinear, though, and surely not superlinear (which is the case with progressive tax systems).

jakobegger 12y ago

Paying taxes is not "donating money". You are required by law to pay them. You get certain things in exchange, like laws that protect your property. If you think that you shouldn't be forced to pay taxes, why do you think that other laws should be enforced? If rich people steal from the state, why shouldn't poor people just take what they want from the rich? If you avoid taxes, you are stealing from everybody.

saiya-jin 12y ago
Nice textbook phrases, now let's get back to the real world out there for a while. Do you even understand the simple truth, that most of the times no law is broken in tax optimalizations? Only when it does, it gets highly publitized. Usually, tax systems are full of loopholes and accountants just need to be creative enough (and yes, they are...). Without breaking any specific law, by logic "what is not explicitly forbidden is allowed". Personally, I do believe in minimal and fair taxation. If you have system where successful people have over 50% tax burden (quite common in progressive tax systems), you can expect many attempts to get away from it. Just human nature. Your textbook phrases won't help much, do they. Just look at Switzerland itself - most democratic country in the world, one of the richest (and their wealth ain't based on banking secrecy - whole banking industry brings roughly 12% into GDP... tourism and high quality exports are primes here). Low personal and corporate taxation, and the country and system just works. Why cannot rest of europe work this way? How much tax evasion is within Switzerand? Almost none...
- Zarkonnen 12y ago
  Nice textbook phrases. What does it matter whether laws are broken or not if the result is still people not paying their taxes while benefiting massively from society. If the best you can say about someone's behavior is that it's "not technically illegal", that's quite telling. And don't get me started on Switzerland. I live there. I'm Swiss. We have massive tax evasion. We have special tax deals for foreign nationals living here. Here in Zurich, where I live, the cantonal (state) finances are under huge strain because all the wealthy people live across the border in other cantons where the taxes are much lower, but commute into Zurich to work. So Zurich gets to pay for the infrastructure, for the poor who live here rather than across the border, etc. So please don't talk about some imaginary Switzerland that supports your self-serving rhetoric.
  - cpursley 12y ago
    This is a perfect example of why taxing income is not the correct way. Things like progressive sales tax and taxing usage is. For example, those commuters should be taxed enough to support their burden each time they come in to the city. And for those companies within the city limits enjoying the infrastructure, protection of law, etc, a sales tax on their products sold should cover that. The point of tax extraction should be consumption, not production. It's more efficient, more market (reality) based and a whole lot less political.
    - raquo 12y ago
      What should the sales tax be progressive on? You don't know the buyer's income when they pay for stuff. Some usage taxes might work, but unless they specifically target out-of-canton persons, they will just drive more rich people out of Zurich, exacerbating the problem. At the end of the day having every 20x30 miles plot of your country independently decide on taxation is not be the best idea. Different tax regimes can only coexist when taxpayers' mobility is limited, otherwise the cheapest tax-land wins. EDIT: I forgot to mention that standard sales tax is regressive by nature (poor people spend a much higher percent of their income than rich people).
j42 12y ago
Perhaps the issue isn't so much in "forcing" people, as it is in recognizing that the perceived unfairness of the tax system itself is causing systemic dysfunction. Because taxes are perceived to be so unfairly high in certain economies, many devote significant time and effort into "innovating" around policy which is completely legal. Transfer pricing, long-term capital gains distinctions and LLC/Trust configurations, to name a few. It makes sense to do this, because the disincentives of NOT pursuing legal tax minimization strategies are severe. You'll lose almost half your income. The more money you have, the more strategies you get--meaning they are formed in the ranks of industry leaders like Apple or Google, and eventually trickle down throughout private industry (though in the interim this only serves to widen the disparity & narrow the concentration of wealth). This won't change unless the common psychology changes. If the tax system were more balanced and fair (a more moderate/halfway implementation of a "flat tax?") then less energy would be devoted into the legal arms race that is out-maneuvering the tax code. ... but obviously that's a pipe dream.
- ttty 12y ago
  the taxes are for the poor, not rich.
sambe 12y ago
Paying more than you are legally obliged to could be considered donating though. I'm not commenting on the specific cases linked to but as I'm sure you're aware there is a massive grey area around tax law. You can't simply claim that not paying is stealing any more than the parent can claim not paying is ok (it didn't). The details are all about the amounts, which methods are legal and which methods are of untested legality. I think parent's claim is that money is both more willingly and better spent elsewhere (perhaps regardless of legality). Significant numbers of rich people/corporations use methods that are legal to reduce their taxes. Most people consider this wrong despite its legality (probably they also mistakenly believe it to be illegal - because journalism). There's certainly an argument that this is - in part - a of problem for the creator of a complex tax system, who should respond by reducing complexity (increasing enforcement tends not to go well - complexity also hinders that). It also seems likely that the people who consider it morally wrong would do likewise if their tax bill were 100x larger (in Switzerland, it is not a criminal offence to make an incorrect tax declaration. Many non-rich Swiss compete with the tax office to lower their bill). It also seems that you are saying laws are by definition correct. Many laws are not uniformly enforced and many laws are changed as a result of disobedience. Perhaps such people are indeed paying proportionally way too little now but perhaps their actions also affect positive change in future (more efficient system overall, but resource allocation, fewer unintended loopholes). This may not even be their intention, but it doesn't matter.
charlesdm 12y ago
That's ridiculous (the second part, not the "donating money" part) If you avoid taxes, you are following the law. No one should pay more than is required of him to pay. If you can structure certain transactions in different ways (e.g. 25% tax vs 50% tax), why would one choose the more expensive option? If you evade taxes, yes, then you are stealing from everybody. That I do not condone. But, there is a clear difference.
- DanBC 12y ago
  Tax laws are complex. People avoiding, not evading, taxes think they are obeying the laws. But sometimes they are using the laws in weird ways and the tax authorities might not agree. Those tax laws get tested in the courts which is a slow expensive process. Or the tax authorities will enter discussion with people using weird tax schemes to try to get some money before going to court. Tax avoidance used to mean normal tax planning but it has gained a meaning of people using bizarre interpretations of the law.
  - pluma 12y ago
    The funny thing is that this is exactly the same fallacy programmers tend to run into when trying to game the legal system: that you're not violating the letter of the law, doesn't mean what you're doing is legal or that you can't be sued. It's not just a bunch of code. The problem with taxation IMO is that it's caught in a vicious circle: companies / "the rich" are dodging taxes so the taxes need to be raised leading to more tax dodging and so on. Part of the problem is that tax fraud is often not punished in proportion to the actual value[0]. I don't think there's an easy solution, especially in a world that is as interconnected as ours is today. Personally, I think income tax is a broken model because property is no longer a good indicator of wealth (it just encourages "investing" the money where it can't be taxed -- which comes with a threshold so high you end up hitting the middle and lower income households disproportionally). Taxing the transfer of wealth more instead of its possession seems like a good idea, though. It might "slow the economy down", but with sub-millisecond stock trading being a thing I'm not sure this is a bad thing. It's not as if a huge income would be particularly useful if you aren't going to do anything with it anyway. [0]: A recent case in Germany was Ulrich Hoeneß, the former president of the football club Bayern Munich, who was found guilty to have withheld nearly 30 million euros in taxes (after repeatedly admitting to much lower sums throughout the trial -- which to me sounds like obstruction, but what do I know). He was sentenced to three and a half years in prison, BUT an early release is extremely likely (so it's doubtful he will spend anywhere close to the full sentence behind bars) and after a mere six months he was already granted day release (meaning he can walk freely outside prison as long as he returns in the evening). EDIT: Frankly, I'd be happy if income tax was replaced entirely by some form of transaction tax. It's far easier to reason about and far less likely to bite founders in the ass. In Germany most newly founded business go bankrupt in their third year because that's often the first time they not only have to pay tax on the previous years but also make advance payments for the current year, which can be deadly if you didn't make sure to put aside enough of your income to cover taxes (and accountants are expensive).
VMG 12y ago
> You get certain things in exchange, like laws that protect your property. With the important difference that the price is non-negotiable, and set by the service provider alone. The people highlighted on the website chose to park their property elsewhere, so the government had zero cost in protecting that. The price is not in proportion to the quality of service at all, it's proportional to the income of the citizen. Which is consistent with what most people understand taxes to be: a wealth redistribution mechanism, rather than a service fee. > If you avoid taxes, you are stealing from everybody. If all the people which avoid some taxes currently (basically every large corporation) close down operations in the US and move to a country with more favorable conditions, the theft (under your definition) would stop. Do you think the net gain would be positive?
- jsprogrammer 12y ago
  >With the important difference that the price is non-negotiable, and set by the service provider alone. Hunh? Most (all) of the states involved have some form of democratic government don't they? I know some of them still have monarchs (why?), but I believe their policy makers are elected by the general population, are they not?
  - wtbob 12y ago
    Democracy is a pack of wolves voting on which sheep to have for dinner. Now, what I'd like to see is each person's vote multiplied by the amount he pays in taxes (all taxes: property, sales, income &c.). That would be fair, and it'd give an incentive to pay up too.
    - jevgeni 12y ago
      Which is even more cut throat, since you're basically selling political power: rich people would be able to afford way more, than the poor.
      - avn2109 12y ago
        Fair point, but it seems relevant to acknowledge that the American campaign finance system as presently organized is exactly isomorphic to the "selling political power" you mention above.

easytiger 12y ago

The problem is one i can sympathise with to some degree. For standard wage levels taxation (whilst still to much in UK) makes sense. Scale that up to millions and it really is out of wack. There is no moral reason why a government deserves 50% of everything you have made. Its like when you order a more expensive bottle of wine, and the restaurant's service charge is a percentage of it... its ridiculous to charge $100 to open a bottle of wine.

vidarh 12y ago
> There is no moral reason why a government deserves 50% of everything you have made. Why? Personally I think the marginal tax rate should be much higher on the highest earners, for the simple reason that the impact of exact additional percentage point tax is far lower for a higher earner. To me the actual percentage is irrelevant. The relative impact is far more important. If I had to pay 1 percentage points more tax, I wouldn't notice. I spend more than that on comics and takeaways, and also set aside 15-20 times more than that in savings and investments. If I had to pay 5 percentage points it would begin to sting a bit, but I could still easily afford it. 10 percentage points more would start to be painful but still doable. In fact, while I'd be complaining and whining about it at that point, I could manage 50% tax quite easily (I actually pay about 32% combined income tax and national insurance, despite being far into the 40% income tax threshold, and earning enough to be in the top 10% UK earners or so) Meanwhile I have neighbours that would have to cut down on their food budget if their tax rate went up 1%, despite paying at least 10 percentage points less than I do, and many people in the UK would struggle to keep modest accommodation and food if they paid more than 20%. I don't find it at all unfair that I pay more than them, not least because the only reason I can make what I do is that there is a functioning society around me that can afford my services.
- wtbob 12y ago
  > Personally I think the marginal tax rate should be much higher on the highest earners, for the simple reason that the impact of exact additional percentage point tax is far lower for a higher earner. To me the actual percentage is irrelevant. The relative impact is far more important. So, you define a fair tax system as one whose perceived impact is identical across the tax base. I define it as one where people pay in proportion to the benefits they receive. One can, indeed, argue that a rich man receives more benefits than a poor man, since his larger fortune is protected, and indeed due to his connexions he himself is more likely to be able to call on the protection of his state. I'd bet that it's linear or sublinear, though, and surely not superlinear (which is the case with progressive tax systems).