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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 br

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).
    - Zarkonnen 12y ago
      Thanks for that - I was trying to figure out how to respond, and you did it much better than I would have.
    - cpursley 12y ago
      Good point, I should clarify: A progressive sales tax not based on purchasers income, but the type of good. For example, luxury goods should be taxed higher and basic staples very low to none. This the wealthy could not avoid tax by simply shifting money around political jurisdictions. This system would encourage transparency, encourage wealth creation as well as thrift in lower and middle income earners. Also, a side benefit (not that I entirely agree with it) is this is a way to enforce social policy like healthy eating. Tax unhealthy items like sugary food and tobacco highly (up to a point). This is done already in the United States successfully. And if you want more tube riders and less drivers in a city, have a very high toll and vehicle purchase tax. Singapore does this successfully. Some countries that have no income tax already employ this to an extent by taxing certain sales and imports. I think this type of system is worth experimenting with at least on the city-state or state level (canton / province / state). If it does not work, you can always go back. There's been talk of this type of system in the US but it's not likely to gain traction. The real reason for progressive income tax is not good policy, but divide and conquer class politics. Something all sides of the political probably spectrum agree with: governments need to be good stewards of tax revenue no matter the collection method. https://en.wikipedia.org/wiki/FairTax https://en.wikipedia.org/wiki/FairTax (note the section on prebates for poor people - similar to basic income).
- saiya-jin 12y ago
  waaait, you call people living ie in Zug canton and commuting to Zurich "a massive tax evasion"??? People are doing what they want and can, within the swiss law, which is perfectly OK with this scheme of things. If it wouldn't be OK, the could easily pass laws ie for work permit/canton of residence relationships. There is this part of the tax called Federal tax, ya know... Now that you personally find the already uber-rich Zurich city somehow being on the wrong end of tax deal is your own personal issue. Personal anecdote - my friend is living in Zurich, commuting daily to Zug for work. But that's another story :)
- s3nnyy 12y ago
  Is there any interest in a HN meetup in Zurich? (If yes, contact me...)
fijal 12y ago
Swiss tourism is about 1% of the GDP (less than say watches), you're making a big dent in your logic with such a lack of fact checking :-) The reason why there is no tax evasion in Switzerland is multi-layered and very complicated, but in short they cut down on loopholes and tax actually rich people too with tax on wealth or or capital gains. In most places you have 50% or so of tax that is paid by medium-rich people, with actually rich getting away with lot less because of capital gain taxes being lower or controls being more lax or stuff like that. The "50% for rich" is mostly cannon fodder for voters, noone is really expecting anyone to pay that much. That said, you can't explain the swiss system in simple words, without looking into their long and complicated history etc. I suggest you do more research and get your own conclusions :-)
deleted 12y ago
[deleted]
unimportant 12y ago
Switzerland is a tiny country with most companies being service companies that cater to foreign customers just like in Singapore. Larger countries cannot function on that kind of taxation. The cantons can individually negotiate taxes btw. so there is little need for intricate avoidance schemes. I'd argue Japan is a good example of a larger well functioning country with fair taxation (up to 40% on income above 150k USD).
- mlrtime 12y ago
  Japan has one of the highest corporate tax rates in the world.
neoeldex 12y ago
There's a common misconception about progressive tax systems. I'm from the Netherlands, and we've got such a system like that. But it's not true its quite common to pay over 50% taxes. For example, here we got 4 tax-discs, where you pay taxes in a disc until a certain amount of money earned(profits). Disc 1: until €19822,- : 36.50% Disc 2: until €33589,- : 42.00% Disc 3: until €57585,- : 42.00% Disc 4: more €57585,- : 52.00% That means, you have to pay 52% taxes over the amount you've earned more than €57585. So in order to pay 50% taxes, one has to make about €300.000,- a year, (either income or profit).
- saiya-jin 12y ago
  those "discs" are per month? anyway, my comment was on rich people, no real definition but say earning more than 1 mil eur/ear. If I understood your description correctly, they pay around/above 50% of taxes, right?
  - ptaipale 12y ago
    Rich people get their income typically as capital gains, and I expect the income brackets above are given for earned income, which is a different thing. It is not really feasible to tax capital gains with a progressive system. You can make a small case for progressive taxes on capital gains by allowing a basic deduction, but the transaction cost of moving the capital gains somewhere else are generally quite small. (Just for information, I live in a country from where people are leaving as tax refugees to Sweden).
  - neoeldex 12y ago
    No, these are yearly.

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).
  - Zarkonnen 12y ago
    Thanks for that - I was trying to figure out how to respond, and you did it much better than I would have.
  - cpursley 12y ago
    Good point, I should clarify: A progressive sales tax not based on purchasers income, but the type of good. For example, luxury goods should be taxed higher and basic staples very low to none. This the wealthy could not avoid tax by simply shifting money around political jurisdictions. This system would encourage transparency, encourage wealth creation as well as thrift in lower and middle income earners. Also, a side benefit (not that I entirely agree with it) is this is a way to enforce social policy like healthy eating. Tax unhealthy items like sugary food and tobacco highly (up to a point). This is done already in the United States successfully. And if you want more tube riders and less drivers in a city, have a very high toll and vehicle purchase tax. Singapore does this successfully. Some countries that have no income tax already employ this to an extent by taxing certain sales and imports. I think this type of system is worth experimenting with at least on the city-state or state level (canton / province / state). If it does not work, you can always go back. There's been talk of this type of system in the US but it's not likely to gain traction. The real reason for progressive income tax is not good policy, but divide and conquer class politics. Something all sides of the political probably spectrum agree with: governments need to be good stewards of tax revenue no matter the collection method. https://en.wikipedia.org/wiki/FairTax https://en.wikipedia.org/wiki/FairTax (note the section on prebates for poor people - similar to basic income).
saiya-jin 12y ago
waaait, you call people living ie in Zug canton and commuting to Zurich "a massive tax evasion"??? People are doing what they want and can, within the swiss law, which is perfectly OK with this scheme of things. If it wouldn't be OK, the could easily pass laws ie for work permit/canton of residence relationships. There is this part of the tax called Federal tax, ya know... Now that you personally find the already uber-rich Zurich city somehow being on the wrong end of tax deal is your own personal issue. Personal anecdote - my friend is living in Zurich, commuting daily to Zug for work. But that's another story :)
s3nnyy 12y ago
Is there any interest in a HN meetup in Zurich? (If yes, contact me...)

fijal 12y ago

Swiss tourism is about 1% of the GDP (less than say watches), you're making a big dent in your logic with such a lack of fact checking :-) The reason why there is no tax evasion in Switzerland is multi-layered and very complicated, but in short they cut down on loopholes and tax actually rich people too with tax on wealth or or capital gains. In most places you have 50% or so of tax that is paid by medium-rich people, with actually rich getting away with lot less because of capital gain taxes being lower or controls being more lax or stuff like that. The "50% for rich" is mostly cannon fodder for voters, noone is really expecting anyone to pay that much. That said, you can't explain the swiss system in simple words, without looking into their long and complicated history etc. I suggest you do more research and get your own conclusions :-)

deleted 12y ago

[deleted]

unimportant 12y ago

Switzerland is a tiny country with most companies being service companies that cater to foreign customers just like in Singapore. Larger countries cannot function on that kind of taxation. The cantons can individually negotiate taxes btw. so there is little need for intricate avoidance schemes. I'd argue Japan is a good example of a larger well functioning country with fair taxation (up to 40% on income above 150k USD).

mlrtime 12y ago
Japan has one of the highest corporate tax rates in the world.

neoeldex 12y ago

There's a common misconception about progressive tax systems. I'm from the Netherlands, and we've got such a system like that. But it's not true its quite common to pay over 50% taxes. For example, here we got 4 tax-discs, where you pay taxes in a disc until a certain amount of money earned(profits). Disc 1: until €19822,- : 36.50% Disc 2: until €33589,- : 42.00% Disc 3: until €57585,- : 42.00% Disc 4: more €57585,- : 52.00% That means, you have to pay 52% taxes over the amount you've earned more than €57585. So in order to pay 50% taxes, one has to make about €300.000,- a year, (either income or profit).

saiya-jin 12y ago
those "discs" are per month? anyway, my comment was on rich people, no real definition but say earning more than 1 mil eur/ear. If I understood your description correctly, they pay around/above 50% of taxes, right?
- ptaipale 12y ago
  Rich people get their income typically as capital gains, and I expect the income brackets above are given for earned income, which is a different thing. It is not really feasible to tax capital gains with a progressive system. You can make a small case for progressive taxes on capital gains by allowing a basic deduction, but the transaction cost of moving the capital gains somewhere else are generally quite small. (Just for information, I live in a country from where people are leaving as tax refugees to Sweden).
- neoeldex 12y ago
  No, these are yearly.