4 ms·

So where's the travesty then? Is the complaint that enabling underage gambling is tax inefficient?

by joosters 12y ago

reitzensteinm 12y ago
There's a difference between tax inefficient, and a 100% effective tax rate.
- joosters 12y ago
  What effective tax rate should we use for underage gambling then?
  - reitzensteinm 12y ago
    Personally, I don't believe it should be legal at all. In Australia and NZ, where I'm from, they just won't let you in until you're 18 and (I believe) 20 respectively. Allowing kids to play, and then funneling the earnings through their parents with extreme tax consequences is the kind of bizarre middle ground I'm not surprised to see from the US.
    - tedunangst 12y ago
      Well, it's not really allowed in the US either. Minors aren't allowed on the gambling floor, but Keno games can be played from essentially anywhere, such as the restaurant where you take your family to eat. A "it's legal if you pay extra" loophole doesn't exist except to the extent that if you lie and put the wrong name on the form, it's hard to check.
    - hiharryhere 12y ago
      Yeah but go to any RSL club or pub and you'll see keno, greyhound racing and the trots on every TV in the family bistro. We don't really have a moral high ground here.
fsniper 12y ago
His problem is not with underage gambling restrictions. It's about how expensive it's to transfer funds to family. Also he's paying income taxes on behalf of his daughter. That's unavoidable. But the gift tax? that's really insane.
- dalke 12y ago
  The gift tax exists to prevent estate tax avoidance. Is your view that on principle estate and gift taxes shouldn't exist? I am philosophically against inherited capital accumulation, so think it should exist. FWIW, only those who have given over $5.43 million of gifts in their lifetime pay the gift tax in the first place. Woz is by all accounts a generous person. While generous, this also reduced the size of his taxable estate by quite a bit. In addition, each parent can give a child up to $14K tax free (now; $10K then). Spouses can give gifts to each other tax free. If I read it right, each of Woz's children probably received up to $20K in a year without paying gift taxes, though he only mentions the $10K from him personally. This gambling win would have been on top of that $20K. It's hard for me to be concerned about 12 year olds making 20K/year tax-free.
  - fsniper 12y ago
    I do not understand the rational after estate tax. It may be rational to prevent "depth escaping" in many cases but in death? I think most of the time some illegal activities or workarounds are used as subtext by government to take some more cut.
    - dalke 12y ago
      I don't know what you mean by "death escaping." I don't know what illegal activities you are referring to in this matter. The Wikipedia page http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States has a pretty complete coverage of the points both for and against the estate tax. While the gift tax is, in the US, closely coupled to the estate tax, they are distinct things. I made an error in not mentioning income tax as well was the estate tax. Gifts could be used to get around income tax. If I pay my children to work in my store, then they pay income tax. If however I give them gifts, and they just happen, out of generousness and familial good will, happen to do the same amount of work as an employee, then that's an illegal scheme to avoid paying income tax. Estate taxes are a reflection of a philosophical viewpoint, which is that inherited wealth is not as good for the country's well-being as wealth from labor. Consider if I were to own 1/5th of the land of Manhattan, and make money from leasing out the properties. If there were no wealth tax, then I could pass that land to one of my children, who then passes it on to one of my grandchildren, etc. Wealth like that tends to accumulate, and lead to increased economic inequality. The philosophical viewpoint is that a humane society does not have drastic differences between the richest and poorest people. In addition, this would tend to create de facto nobility, or landed gentry, which is something the US has traditionally opposed. If Picketty is right, and r > g, then the death tax or a wealth tax or some other means is needed to limit wealth inequality.

So where's the travesty then? Is the complaint that enabling underage gambling is tax inefficient?

reitzensteinm 12y ago

There's a difference between tax inefficient, and a 100% effective tax rate.

joosters 12y ago
What effective tax rate should we use for underage gambling then?
- reitzensteinm 12y ago
  Personally, I don't believe it should be legal at all. In Australia and NZ, where I'm from, they just won't let you in until you're 18 and (I believe) 20 respectively. Allowing kids to play, and then funneling the earnings through their parents with extreme tax consequences is the kind of bizarre middle ground I'm not surprised to see from the US.
  - tedunangst 12y ago
    Well, it's not really allowed in the US either. Minors aren't allowed on the gambling floor, but Keno games can be played from essentially anywhere, such as the restaurant where you take your family to eat. A "it's legal if you pay extra" loophole doesn't exist except to the extent that if you lie and put the wrong name on the form, it's hard to check.
  - hiharryhere 12y ago
    Yeah but go to any RSL club or pub and you'll see keno, greyhound racing and the trots on every TV in the family bistro. We don't really have a moral high ground here.

fsniper 12y ago

His problem is not with underage gambling restrictions. It's about how expensive it's to transfer funds to family. Also he's paying income taxes on behalf of his daughter. That's unavoidable. But the gift tax? that's really insane.

dalke 12y ago
The gift tax exists to prevent estate tax avoidance. Is your view that on principle estate and gift taxes shouldn't exist? I am philosophically against inherited capital accumulation, so think it should exist. FWIW, only those who have given over $5.43 million of gifts in their lifetime pay the gift tax in the first place. Woz is by all accounts a generous person. While generous, this also reduced the size of his taxable estate by quite a bit. In addition, each parent can give a child up to $14K tax free (now; $10K then). Spouses can give gifts to each other tax free. If I read it right, each of Woz's children probably received up to $20K in a year without paying gift taxes, though he only mentions the $10K from him personally. This gambling win would have been on top of that $20K. It's hard for me to be concerned about 12 year olds making 20K/year tax-free.
- fsniper 12y ago
  I do not understand the rational after estate tax. It may be rational to prevent "depth escaping" in many cases but in death? I think most of the time some illegal activities or workarounds are used as subtext by government to take some more cut.
  - dalke 12y ago
    I don't know what you mean by "death escaping." I don't know what illegal activities you are referring to in this matter. The Wikipedia page http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States has a pretty complete coverage of the points both for and against the estate tax. While the gift tax is, in the US, closely coupled to the estate tax, they are distinct things. I made an error in not mentioning income tax as well was the estate tax. Gifts could be used to get around income tax. If I pay my children to work in my store, then they pay income tax. If however I give them gifts, and they just happen, out of generousness and familial good will, happen to do the same amount of work as an employee, then that's an illegal scheme to avoid paying income tax. Estate taxes are a reflection of a philosophical viewpoint, which is that inherited wealth is not as good for the country's well-being as wealth from labor. Consider if I were to own 1/5th of the land of Manhattan, and make money from leasing out the properties. If there were no wealth tax, then I could pass that land to one of my children, who then passes it on to one of my grandchildren, etc. Wealth like that tends to accumulate, and lead to increased economic inequality. The philosophical viewpoint is that a humane society does not have drastic differences between the richest and poorest people. In addition, this would tend to create de facto nobility, or landed gentry, which is something the US has traditionally opposed. If Picketty is right, and r > g, then the death tax or a wealth tax or some other means is needed to limit wealth inequality.