Evidence from leaked account data on how elites use offshore banking [pdf](brookings.edu)
brookings.edu
Evidence from leaked account data on how elites use offshore banking [pdf]
https://www.brookings.edu/wp-content/uploads/2021/05/What-lies-beneath_Collin.pdf
331 comments
Citations for any of this?
I have noticed nothing "pejorative" in the language used in the document. I'd be more pejorative myself. The individuals with accounts are described clinically - "high net worth individuals". The ethics of using the leaked data is examined.
The situation that individuals with these accounts may be committing crimes is also described dispassionately. It is a fact that these accounts are often used for the crime of tax evasion. Do you want to dispute this fact? Or do you want language that tries avoid any mention of this likelihood? That would be less "pejorative" I suppose.
Edit: OK, the Mel Brooks quote is an exception to the generally clinical language. But by that point the author has made their case and should get at least a little cookie.
I have noticed nothing "pejorative" in the language used in the document. I'd be more pejorative myself. The individuals with accounts are described clinically - "high net worth individuals". The ethics of using the leaked data is examined.
The situation that individuals with these accounts may be committing crimes is also described dispassionately. It is a fact that these accounts are often used for the crime of tax evasion. Do you want to dispute this fact? Or do you want language that tries avoid any mention of this likelihood? That would be less "pejorative" I suppose.
Edit: OK, the Mel Brooks quote is an exception to the generally clinical language. But by that point the author has made their case and should get at least a little cookie.
> I have noticed nothing "pejorative" in the language used in the document.
First page after the abstract
"It is this information asymmetry that gives rise to a host of problems" as opposed to benefits?
This study is fairly balanced but chooses to only focus on illegal tax evasion by the wealthy and corrupt behavior of public officials. Instead of legal tax deferment or avoidance.
First page after the abstract
"It is this information asymmetry that gives rise to a host of problems" as opposed to benefits?
This study is fairly balanced but chooses to only focus on illegal tax evasion by the wealthy and corrupt behavior of public officials. Instead of legal tax deferment or avoidance.
Because legal tax avoidance isn't an issue and is a topic for another paper.
Why is every second reply in this comment thread trying to deflect away from the documented widespread, commonplace fraud that constitutes a wealth transfer away from common taxpayers?
Why is every second reply in this comment thread trying to deflect away from the documented widespread, commonplace fraud that constitutes a wealth transfer away from common taxpayers?
Because it fails to distinguish. This paper would be more productive talking about the cybersecurity failings of the bank in the Isle of Man and how the country's data legislation can be improved.
The history of state revenue sources has been much broader than the last 100 years of worrying about whether everyone is getting hosed equally. High tax jurisdictions who will never balance their budget are in a quagmire of their own design, and they lack the consensus mechanisms to do anything about it. They are failed states in this regard and that has nothing to do with rest of the world.
The history of state revenue sources has been much broader than the last 100 years of worrying about whether everyone is getting hosed equally. High tax jurisdictions who will never balance their budget are in a quagmire of their own design, and they lack the consensus mechanisms to do anything about it. They are failed states in this regard and that has nothing to do with rest of the world.
So what exactly are the 'benefits' of this information asymmetry?
What 'benefit' is derived from Congolese President's ability to have 'hidden' accounts on the Isle of Man, instead of accounts that are available to be scrutinized by Congolese authorities?
What 'benefit' is derived from Congolese President's ability to have 'hidden' accounts on the Isle of Man, instead of accounts that are available to be scrutinized by Congolese authorities?
If corrupt there is no benefit to argue in favor of, if not corrupt then access to the international markets obviously
Like I said, its actually strange to focus on corrupt behavior of public officials to say another country is the problem and not the corrupt official. A reason this is strange that you might not have considered is that more universally respected countries such as the US and the UK offer the same opaque tax evading capabilities to non-citizens as the smaller countries they complain about. As well as access to international markets. So focus on the corrupt person, or educate on how to use more competitive jurisdictions instead of being manipulated into the small country tax haven meme. Its just larger economic unions exempting themselves from scrutiny and saying other countries are the problem.
Like I said, its actually strange to focus on corrupt behavior of public officials to say another country is the problem and not the corrupt official. A reason this is strange that you might not have considered is that more universally respected countries such as the US and the UK offer the same opaque tax evading capabilities to non-citizens as the smaller countries they complain about. As well as access to international markets. So focus on the corrupt person, or educate on how to use more competitive jurisdictions instead of being manipulated into the small country tax haven meme. Its just larger economic unions exempting themselves from scrutiny and saying other countries are the problem.
"if not corrupt then access to the international markets obviously"
? That is not a 'benefit' of hidden bank accounts.
"US and the UK offer the same opaque tax evading capabilities to non-citizens"
They don't really. Nations have tax treaties to avoid this kind of stuff. While there are loopholes etc. it's not going to be a good idea to keep stolen money in London, it will get frozen.
"So focus on the corrupt person" - the corruption is enabled by banking secrecy. A big focus on corruption is going after hidden networks.
? That is not a 'benefit' of hidden bank accounts.
"US and the UK offer the same opaque tax evading capabilities to non-citizens"
They don't really. Nations have tax treaties to avoid this kind of stuff. While there are loopholes etc. it's not going to be a good idea to keep stolen money in London, it will get frozen.
"So focus on the corrupt person" - the corruption is enabled by banking secrecy. A big focus on corruption is going after hidden networks.
All the “tax haven” countries have treaties and information sharing agreements that can result in freezing assets
You are conflating several concepts:
If you don’t want assets frozen then don’t use banks, they haven't been necessary for an entire decade. Bearer-everything is back in vogue.
You are conflating several concepts:
If you don’t want assets frozen then don’t use banks, they haven't been necessary for an entire decade. Bearer-everything is back in vogue.
>The situation that individuals with these accounts may be committing crimes
What happened to innocent until guilty?
Hell I've got an account in an offshore jurisdiction. I guess I need to go do some introspection about my "crime of tax evasion"...
What happened to innocent until guilty?
Hell I've got an account in an offshore jurisdiction. I guess I need to go do some introspection about my "crime of tax evasion"...
"Innocent until proven guilty" is really "innocent until there's sufficient evidence to strongly suspect you are guilty". There aren't very many innocent reasons to have accounts in tax havens.
>There aren't very many innocent reasons to have accounts in tax havens.
I see. And the innocent ones? Just acceptable collateral damage in your guilty by association campaign?
The irony is that likely you and everyone else probably has a fair chunk of their net wealth flowing through these types of structures via their pension/insurance.
Pension funds don't just hop onto Robinhood app and buy a 100MM basket of shares. It gets structured through places like these. Same for large chunks of the cross jurisdiction M&A activity.
Unfortunately it's all confidential so the people that know can't talk, and everyone else has knowledge/opinion made up entirely out of clickbait and stuff like this...someone patching together a "how the elites screw you" article based on patchy partial leaks. The notion of patching together something that is global based on one leak from one bank in one jurisdiction is comical in itself. It's like looking at the left rear tyre of a car and speculating that cars are probably all scams because you can't see what makes it move forward.
The information asymetry is insane and 99.99% of the world is on the wrong side of it.
Alas...rage on hn
I see. And the innocent ones? Just acceptable collateral damage in your guilty by association campaign?
The irony is that likely you and everyone else probably has a fair chunk of their net wealth flowing through these types of structures via their pension/insurance.
Pension funds don't just hop onto Robinhood app and buy a 100MM basket of shares. It gets structured through places like these. Same for large chunks of the cross jurisdiction M&A activity.
Unfortunately it's all confidential so the people that know can't talk, and everyone else has knowledge/opinion made up entirely out of clickbait and stuff like this...someone patching together a "how the elites screw you" article based on patchy partial leaks. The notion of patching together something that is global based on one leak from one bank in one jurisdiction is comical in itself. It's like looking at the left rear tyre of a car and speculating that cars are probably all scams because you can't see what makes it move forward.
The information asymetry is insane and 99.99% of the world is on the wrong side of it.
Alas...rage on hn
> There aren't very many innocent reasons to have accounts in tax havens.
Courts disagree.
The primary form of investment firms (PE firms) rely on an "onshore" feeder, for certain countries taxable persons to invest into, and an "offshore" feeder for everyone else as well as those same countries non-taxable persons (charities, retirement plans) to invest into. The offshore feeder typically being an offshore corporation taxed only at the entity level, in a place that does not levy tax on the kinds of transactions conducted, and in many cases also means banking and brokerage accounts offshore. But it also means banking and brokerage accounts onshore under the name of the offshore entity, because it is completely legal and the relevant financial professionals are completely familiar with it.
Status in our society is based on understanding whose opinion matters, and that is the executive and judicial branch, while the legislative branch and head of states pretends to act like they are in an adversarial relationship with people that keep their money.
Courts disagree.
The primary form of investment firms (PE firms) rely on an "onshore" feeder, for certain countries taxable persons to invest into, and an "offshore" feeder for everyone else as well as those same countries non-taxable persons (charities, retirement plans) to invest into. The offshore feeder typically being an offshore corporation taxed only at the entity level, in a place that does not levy tax on the kinds of transactions conducted, and in many cases also means banking and brokerage accounts offshore. But it also means banking and brokerage accounts onshore under the name of the offshore entity, because it is completely legal and the relevant financial professionals are completely familiar with it.
Status in our society is based on understanding whose opinion matters, and that is the executive and judicial branch, while the legislative branch and head of states pretends to act like they are in an adversarial relationship with people that keep their money.
> look at KPMG, Deloitte and PwC annual reports on the offshore industry
I'll add that to my reading list alongside the 'climate change' reports written by the global petrochemical industry, and the reports written by hedge-fund traders on what really happened in the 2008 financial crisis.
I'll add that to my reading list alongside the 'climate change' reports written by the global petrochemical industry, and the reports written by hedge-fund traders on what really happened in the 2008 financial crisis.
occasionally some people like to know what they are doing, while the academics and regulators play catch up. instruction manuals are better than studies and leaks decades after the fact.
Although that seems to presume they would put the most honest information on what we could call 'trade secrets' in tax minimization through offshoring in a public document published for the whole world to read.
Yes, that's a good assumption because there is nothing secret about it.
I'm telling you, and everyone, that the entire phrasing of "leaks" and "secret" and "loopholes" is either complete clickbait or the musing of the completely ignorant, and both of those outcomes means you should go to the actual source of truth instead of bothering with this wealth-porn.
And yet you want to argue that. Plato-esque.
I'm telling you, and everyone, that the entire phrasing of "leaks" and "secret" and "loopholes" is either complete clickbait or the musing of the completely ignorant, and both of those outcomes means you should go to the actual source of truth instead of bothering with this wealth-porn.
And yet you want to argue that. Plato-esque.
The massive pile of internal client correspondence, documents and information that escaped from Mossack Fonseca, from their internal file servers, wasn't "secret"?
https://en.wikipedia.org/wiki/Mossack_Fonseca
https://panamapapers.sueddeutsche.de/en/
https://en.wikipedia.org/wiki/Mossack_Fonseca
https://panamapapers.sueddeutsche.de/en/
there were no "secret" uses of combinations of entities or laws that was new or surprising from this leak and Mossack Fonseca, big 4 accounting firms, and many other providers - as well as anybody with decent reading comprehension skills - can do it as well.
that has nothing to do with client data, which is "secret" even in the "I overpaid my percentage of taxes onshore by not deducting anything" world
that has nothing to do with client data, which is "secret" even in the "I overpaid my percentage of taxes onshore by not deducting anything" world
You seem to be operating from the position that there is nothing morally wrong with the one percent using every available loophole to pay as little taxes as possible. I'm sure all the laws and corporate structures Mossack Fonsecka made use of for their clients were perfectly 'legal' in the jurisdictions in which the paperwork and shell entities exist(ed).
Where I think we have a significant difference of opinion is whether something should be done to rectify the question of hiding assets offshore.
Where I think we have a significant difference of opinion is whether something should be done to rectify the question of hiding assets offshore.
Our particular comment thread doesn't show me having any strong opinion on anything. You have to assume that the absence of disdain means tacit consent.
I do personally hate ignorance and always had high marks on reading comprehension, our conversation was exclusively congruent with me saying a different source of truth conforms to reality and the authorities in this reality.
I do personally hate ignorance and always had high marks on reading comprehension, our conversation was exclusively congruent with me saying a different source of truth conforms to reality and the authorities in this reality.
> KPMG, Deloitte and PwC
But aren't they in bed with the companies using these schemes?
But aren't they in bed with the companies using these schemes?
Even if they were, these are massive organizations, so different people may have different views on the matter.
The companies that wish to use these would go to KPMG, Deloitte and PwC if it is in the budget, yes. They have offices in every jurisdiction for an unparalleled and holistic view of an ever changing landscape.
Is there some sort of issue with ICIJ reporting?
Yes. Over time they've balanced out their reporting by at least acknowledging legitimate uses of tax havens, and even going as far to point out that it is probably the predominate use of tax havens - compliant to all countries involved. But their headlines still lead their readers towards assuming impropriety. And now that they bother to acknowledge the existence of legitimate uses, given the ongoing criticism from anybody educated in the financial sector, they don't bother with the advantages or "the why". They could educate, but choose to only raise awareness towards the assumption of guilt for using leading and competitive jurisdictions. They just instigate populist sentiment and make a tally of the few people adversely affected due to the populist sentiment after being doxxed, alongside the different and fewer people that actually broke their country's laws.
Well, just because it's not breaking laws doesn't mean the use of tax havens has positive benefits for society which ,I guess, is the point of these ICIJ investigations - to eventually change laws.
Do you have a link to one of these reports?
Any links, please?
>> the customers of offshore banks are likely to be from the wealthiest segment of whichever society they come from.
What a surprising discovery.
Governments with the most abusive tax policies still cannot realize that they cannot tax their way to prosperity.
Most creative and productive people, entities and businessed did, do and will use any tools at their disposal to escape barbaric tax racket and turn their attention toward jurisdictions where they treated better than in their own home country.
Trillions of dollars of wealth escaped and will continue escaping away from economies where ruling politicians cannot get their heads out of their bottoms.
What a surprising discovery.
Governments with the most abusive tax policies still cannot realize that they cannot tax their way to prosperity.
Most creative and productive people, entities and businessed did, do and will use any tools at their disposal to escape barbaric tax racket and turn their attention toward jurisdictions where they treated better than in their own home country.
Trillions of dollars of wealth escaped and will continue escaping away from economies where ruling politicians cannot get their heads out of their bottoms.
Do you think there's any level of taxation where a wealthy individual wouldn't want to do some "tax avoidance" in another jurisdiction? I suspect there is not.
I suspect the more hands-on tools by which law and order is enforced such as asset seizure, 24/7 monitoring, discreditation, and prison time could be the motivation for otherwise tax averse entities to transparently contribute their exact tax proportion.
It still won't work unless the whole world agrees to do it simultaneously. A classic game theory problem, the more some countries agree on it, the more benefit to those countries that don't do it.
Because worst case, the rich entity can flee, or renounce citizenship and buy citizenship where the tax climate is more favorable. With the amount of money we are speaking about, you can buy anything. Each and every country has a very fast track to citizenship in exchange for money (and an instant path to pretty much all rights except for voting). So you threaten the wealthy with torture? Unless you do all this by surprise one day all of a sudden, they can and will escape.
Because worst case, the rich entity can flee, or renounce citizenship and buy citizenship where the tax climate is more favorable. With the amount of money we are speaking about, you can buy anything. Each and every country has a very fast track to citizenship in exchange for money (and an instant path to pretty much all rights except for voting). So you threaten the wealthy with torture? Unless you do all this by surprise one day all of a sudden, they can and will escape.
Definitely.
$150k buys you a Carribean citizenship + passports for the family of 4. 0% income tax and 0% capital gains tax in Antigua and Barbuda. 365 sandy beaches.
What not to love for freedom seeking individuals?
$150k buys you a Carribean citizenship + passports for the family of 4. 0% income tax and 0% capital gains tax in Antigua and Barbuda. 365 sandy beaches.
What not to love for freedom seeking individuals?
Not so. The US can simply refuse to recognize or work with entities that don't want to report the incomes of US residents.
There is quite a bit of progress among rich nations, which is indeed why the article mentioned many of the individuals come from corrupt nations.
The issue, therefore, may not be so much of 'tax havens' but of 'corrupt systems that allow for tax havens'.
I don't think Bezos has a pile of cash secretly offshore.
There is quite a bit of progress among rich nations, which is indeed why the article mentioned many of the individuals come from corrupt nations.
The issue, therefore, may not be so much of 'tax havens' but of 'corrupt systems that allow for tax havens'.
I don't think Bezos has a pile of cash secretly offshore.
So enhancement of punishment and enforcement to allow government to redistribute wealth from some citizens to the government?
I think we’ve seen this before… usually ends in democide…
https://en.wikipedia.org/wiki/Democide
I think we’ve seen this before… usually ends in democide…
https://en.wikipedia.org/wiki/Democide
"enhancement of punishment and enforcement" is what the whole US justice system is built to do*, unlike systems in Northern Europe for example.
*Except for white-collar crime.
*Except for white-collar crime.
The lower the tax - the more money will stay and will be reinvested into the local economy.
That should be easy to understand.
Just as robbing productive people with taxes is not going to work.
That should be easy to understand.
Just as robbing productive people with taxes is not going to work.
>The lower the tax - the more money will stay and will be reinvested into the local economy.
The less progressive the tax and the less it's properly enforced the more inequality will occur. Poor and middleclass more effectively stimulate the economy with an equal amount of consumption simply due to the nature of what they spend it on and their quantity.
>Just as robbing productive people with taxes is not going to work.
How many of these are super productive, hardworking and/or smart to such an extent that their hard work and/or wonderful decision-making proportionally matches their wealth compared to you know your average middleclass engineers, programmers, medium and small business owners or the like. I'd estimate the percentage to be very small. And if their wealth somehow matches their productivity proportionally and above a certain amount quantifiable as ridiculously wealthy i'd start wondering where in the superhero universe these people fit.
The less progressive the tax and the less it's properly enforced the more inequality will occur. Poor and middleclass more effectively stimulate the economy with an equal amount of consumption simply due to the nature of what they spend it on and their quantity.
>Just as robbing productive people with taxes is not going to work.
How many of these are super productive, hardworking and/or smart to such an extent that their hard work and/or wonderful decision-making proportionally matches their wealth compared to you know your average middleclass engineers, programmers, medium and small business owners or the like. I'd estimate the percentage to be very small. And if their wealth somehow matches their productivity proportionally and above a certain amount quantifiable as ridiculously wealthy i'd start wondering where in the superhero universe these people fit.
You're overcomplicating this. Back to my point:
"The lower the tax - the more money will stay and will be reinvested into the local economy."
Start here. Less taxes == more money is staying and reinvested in the local economy for the good of everyone.
Bonus: more money start coming in from other jurisdictions that are abusing their productive citizens and businesses with exorbitant taxes.
"The lower the tax - the more money will stay and will be reinvested into the local economy."
Start here. Less taxes == more money is staying and reinvested in the local economy for the good of everyone.
Bonus: more money start coming in from other jurisdictions that are abusing their productive citizens and businesses with exorbitant taxes.
>You're overcomplicating this.
You're oversimplifying this but even when just sticking to the core of your point i strongly disagree.
>Start here. Less taxes == more money is staying and reinvested in the local economy for the good of everyone.
Not really. Want to stimulate the economy with reinvestments? Dis-incentivise stock buybacks and the like, tax hard. Companies and people don't like to pay taxes. How do you avoid taxes as a company or owner? By having less profits trough reinvestment in R&D, growthprojects and wages.
Tax less and you reduce the incentive to reinvest into the local economy.
You're oversimplifying this but even when just sticking to the core of your point i strongly disagree.
>Start here. Less taxes == more money is staying and reinvested in the local economy for the good of everyone.
Not really. Want to stimulate the economy with reinvestments? Dis-incentivise stock buybacks and the like, tax hard. Companies and people don't like to pay taxes. How do you avoid taxes as a company or owner? By having less profits trough reinvestment in R&D, growthprojects and wages.
Tax less and you reduce the incentive to reinvest into the local economy.
How do you pay for schools, police, firefighters in your tax-free world?
Make tax rate 5% to keep ALL capital in local economy.
And that better than losing 90% of capital away for good.
Significantly reduce or offset personal and capital gain taxes for people who are investing into public projects.
There are many more better ways that tax abusive policies that never work.
Significantly reduce or offset personal and capital gain taxes for people who are investing into public projects.
There are many more better ways that tax abusive policies that never work.
What?
Reinvested money already isn't taxed. Companies pay taxes on profits. If they invest more, they reduce their taxable profit and therefore their taxes.
Taxes are not deferring investments, investments are the prime way to pay less taxes. The government wants you to reinvest rather than pay taxes.
Off-shore tax havens broke that system. These companies have billions of dollars sitting unproductively in the Bahamas because they neither want to invest not pay taxes.
Reinvested money already isn't taxed. Companies pay taxes on profits. If they invest more, they reduce their taxable profit and therefore their taxes.
Taxes are not deferring investments, investments are the prime way to pay less taxes. The government wants you to reinvest rather than pay taxes.
Off-shore tax havens broke that system. These companies have billions of dollars sitting unproductively in the Bahamas because they neither want to invest not pay taxes.
"Other" jurisdictions are easily attracting capital from countries who are trigger happy to rob their citizens with taxes.
People very rarely actually leave countries over tax policies. Countries pretend ignorance because of who’s benefiting, but unless they renounce citizenship moving money off shore is effectively symbolic.
Loopholes for example aren’t some inherent element of tax codes their built and maintained for the express purpose of being used.
Loopholes for example aren’t some inherent element of tax codes their built and maintained for the express purpose of being used.
Quite a few wealthy people do. Especially Canadians and non-americans who can.
Why wouldn't person move outside of tax jurusdiction if it afford saving few extra $MM's and possibility to discover more beautiful, friendly countries?
Of course US Citizenship essentially became IRS trap and renouncing it became very difficult thing to do for americans
Why wouldn't person move outside of tax jurusdiction if it afford saving few extra $MM's and possibility to discover more beautiful, friendly countries?
Of course US Citizenship essentially became IRS trap and renouncing it became very difficult thing to do for americans
Of Canadians top 10 wealthiest, 8 live in Canada, 2 are living in the US. That’s hardly an exodus to low tax countries.
So sure, examples exist they simply don’t add up to a meaningful percentage. As to why they stay, making say 10% more money just isn’t worth much hassle to the rich. They have money what they want is all the things a well functioning society gives them.
So sure, examples exist they simply don’t add up to a meaningful percentage. As to why they stay, making say 10% more money just isn’t worth much hassle to the rich. They have money what they want is all the things a well functioning society gives them.
Direct taxation.
Run on a road or highway? Pay a toll. Run a container through the ocean? Pay a fee for protection. Want to have nicer neighborhoods with better maintenance? Pay higher property taxes to your municipality.
You can't escape direct taxation. And as long as you keep competition between companies, municipalities and jurisdictions; the system will balance itself where individuals will pay what they are comfortable with by their own volition.
The current system is broken because a small bureaucratic minority has too much power over your own property (they can seize your property/money at random). It's also too easy to get popular votes and people onboard with it (free healthcare for everyone!).
Run on a road or highway? Pay a toll. Run a container through the ocean? Pay a fee for protection. Want to have nicer neighborhoods with better maintenance? Pay higher property taxes to your municipality.
You can't escape direct taxation. And as long as you keep competition between companies, municipalities and jurisdictions; the system will balance itself where individuals will pay what they are comfortable with by their own volition.
The current system is broken because a small bureaucratic minority has too much power over your own property (they can seize your property/money at random). It's also too easy to get popular votes and people onboard with it (free healthcare for everyone!).
Governments generally let people do this stuff. It’s the difference between De Jore and De Facto enforcement.
[deleted]
What do you recommend for people who want to increase their wealth but aren't rich yet? The people who have potential and a solid foundation but don't yet have the capital necessary to move around like that and find the most favorable place.
> aren't rich yet
This is the real reason the ultra-wealthy aren't taxed. People think that they are obviously going to become rich any day now, and they won't want to pay high taxes when it inevitability happens. Some strange, shared delusion of the middle class.
This is the real reason the ultra-wealthy aren't taxed. People think that they are obviously going to become rich any day now, and they won't want to pay high taxes when it inevitability happens. Some strange, shared delusion of the middle class.
>the ultra-wealthy aren't taxed.
The ultra-wealthy pay more tax per capita than any other group. This is the opposite of "aren't taxed"
The ultra-wealthy pay more tax per capita than any other group. This is the opposite of "aren't taxed"
Education, investments, creative work.
Of course investments in the country where corrupt polititicans are proposing doubling capital gain tax is not going to work.
Of course investments in the country where corrupt polititicans are proposing doubling capital gain tax is not going to work.
Momentum trading is all you have. So last week that was Dogecoin and a few years ago it was value investing. The answer is “make money” and let it be taxed. The governments dont care about after-tax money which can then go anywhere unaccounted for. Thats when it can go in a tax deferred account in perpetuity.
It'd be nice if there were some sort of 70+% reliable rule of thumb for this. I say this as someone who's made money on both value investing and dogecoin, but who's still anxious when taking on risk in new momentum-y ventures.
There isn't. The only 70+% reliable rule is general personal finance advice: "Dollar cost average" "Diversify" "The broad index of equities goes up by 7% on average annually over your whole life span, do this and you can afford an extra tennis ball on your walker in a few decades when your body fails you"
If some aspect of that sounded less appealing, then you are back to momentum trading and looking for opportunities that distort the market and reality and bet the farm when you make the trade at all. Try to have fun, usually it comes with dopamine.
If some aspect of that sounded less appealing, then you are back to momentum trading and looking for opportunities that distort the market and reality and bet the farm when you make the trade at all. Try to have fun, usually it comes with dopamine.
How depressing that people on HN of all places think of Dogecoin trading before starting a business.
If that is really your perspective, why live in the US?
If that is really your perspective, why live in the US?
Correct, you don't need any infrastructure of the US to make money. It offers nothing except a collective culture of growth expectations. But you don't need any aspect of the US to act on it. The variety of growth capital from a wide array of investment firms is only available to a thin sliver of society that has a similar background as the investment firm directors, which would make prioritizing "starting a business" to be a waste of time in comparison to an internationally available opportunity like Dogecoin, an opportunity which only needed to last a few weeks before the market reverts to allocating capital in other things. Be depressed. The rest of us just want to give an answer to the question.
[deleted]
One word, Dogecoin.
Come on. The ultra-rich don’t pay their fair share. You know this and everyone knows this. Wealth inequality is obscene. Full stop.
The top 1% pay 6x more tax than the bottom 50%! It's obscene how much they pay and how a small group of individuals is forced to carry the entire country. Much, much more should be expected from the bottom 50%.
I am sorry for being rude but this comment is borderline idiotic.
Do the words 'top' and 'bottom' perhaps mean something? Have you ever bothered to look at the distribution on wealth and income?
The top 1% has more more wealth than the bottomn 50%, it is impossible for the bottom to contribute more than the top
Do the words 'top' and 'bottom' perhaps mean something? Have you ever bothered to look at the distribution on wealth and income?
The top 1% has more more wealth than the bottomn 50%, it is impossible for the bottom to contribute more than the top
"it is impossible for the bottom to contribute more than the top"
What I'm hoping for is a significantly more equitable contribution of the bottom 50 percent to broader society than what they're currently contributing. Something like a flat tax rate and a reduction in entitlements, perhaps, but I don't have conviction on the exact specifics.
>The top 1% pay 6x more tax than the bottom 50%!
And yet their share of wealth keeps on growing and growing for decades. Curious.
And yet their share of wealth keeps on growing and growing for decades. Curious.
Primarily because their unique value add to society has been growing (due to technology), and the unique value add of the bottom 50 percent has been decreasing (due to technology and globalization).
Take JK Rowling as an example. Her work added significant value to the lives of hundreds of millions, and she got a slice of all that value creation (say, 30 percent of it). Nobody is worse off. Everyone is better off. Her value proposition was magnified by the scale afforded to her by modern day distribution and movie deals, which is why she got so fabulously wealthy compared to what an author could've achieved (relative to their surrounding population) 100 years ago.
The poorest people inside developed countries on the other hand have had a decreasing value add to society. This is partly because of automation and partly because of globalization and the fact they now have to compete with 1 billion Chinese who work harder than them and for less.
Take JK Rowling as an example. Her work added significant value to the lives of hundreds of millions, and she got a slice of all that value creation (say, 30 percent of it). Nobody is worse off. Everyone is better off. Her value proposition was magnified by the scale afforded to her by modern day distribution and movie deals, which is why she got so fabulously wealthy compared to what an author could've achieved (relative to their surrounding population) 100 years ago.
The poorest people inside developed countries on the other hand have had a decreasing value add to society. This is partly because of automation and partly because of globalization and the fact they now have to compete with 1 billion Chinese who work harder than them and for less.
Why not just kill all the poor people then, or let them starve to death. Leave the land for Gates and Bezos and Musk, clearly they are worth more than me because they have more money. The value of a human is not measured by how much money they "earned" or how cheaply they can be "worked". You could bring back slavery so that poor people work for free and the rich get more rich and thus more valuable.
I expect more from them - I think it's less than ideal that there are people who take from public goods and contribute nothing or very little. They're effectively leeching off the backs of others. That doesn't mean I want them dead, they're contributing what society has demanded from them (nothing) and that's the fault of society's low expectations.
Do you think monetary wealth is gained only when someone adds value to society (and in proportion to the value added)? If so, what is your definition of value?
I think money earned through voluntary exchange is highly correlated and generally in proportion with value add to society. If we zoom in to particular examples, most of them fit into this category.
You pay Netflix $15/month because you think it adds more than that much value to your life. Netflix earning that income is a consequence of your judgement of the value add of that service to your life. If Netflix makes billions in profits, it's because people like you thought that it added that much value (and more) to their lives. The same reasoning applies to most things (groceries, personal trainer, hairdresser, etc).
There are ways that people can get rich that definitely aren't proportionate to their value add. Cronyism, externalities, hijacking people's dopamine systems, and so on. That's why we need a government that can implement the right policies that maximize the correlation between money earned and value add.
There's also things that add large value through positive externalities that don't result in getting rich, such as scientific research, where it's very hard to privatize the benefits.
A big problem we have in this discourse is the conflation of the two ways of making money (value add vs extraction) into a single bucket (on the far-left it's all extraction and on the economic-right it's all value-add), which is having a terrible impact on our ability to think clearly about policy and is making regular people resentful and jealous instead of thankful towards the most productive people in our society.
You pay Netflix $15/month because you think it adds more than that much value to your life. Netflix earning that income is a consequence of your judgement of the value add of that service to your life. If Netflix makes billions in profits, it's because people like you thought that it added that much value (and more) to their lives. The same reasoning applies to most things (groceries, personal trainer, hairdresser, etc).
There are ways that people can get rich that definitely aren't proportionate to their value add. Cronyism, externalities, hijacking people's dopamine systems, and so on. That's why we need a government that can implement the right policies that maximize the correlation between money earned and value add.
There's also things that add large value through positive externalities that don't result in getting rich, such as scientific research, where it's very hard to privatize the benefits.
A big problem we have in this discourse is the conflation of the two ways of making money (value add vs extraction) into a single bucket (on the far-left it's all extraction and on the economic-right it's all value-add), which is having a terrible impact on our ability to think clearly about policy and is making regular people resentful and jealous instead of thankful towards the most productive people in our society.
>I think money earned through voluntary exchange is highly correlated and generally in proportion with value add to society. If we zoom in to particular examples, most of them fit into this category.
When I think of the richest that gained a disproportionate amount of that wealth that left the bottom i generally think of rentseekers, people using anticompetitive practices,(near) monopolies, duopolies or monopsonies, etc Reaching that position has been made easier for many of them due to technological advances indeed but that they're in those and that they're incredibly unhealthy for capitalism is the case none the less. Also definitely cronyism and so on as you mentioned.
When we look closely most companies and the people pulling profit from them fit into this category of utilising a form of capitalism that can't be considered healthy for society at large. For example everything from intel and amd artificially extending their IP into perpetuity by strategically extending the standards with new IP every x years to microsoft simply waiting out a competitors bankruptcy in court and abusing their clout for competitive advantage in new markets, apple and google using their duopoly/monopsony positions to charge high rates in their app stores to google dictating webstandards in their favour due to their clout and fucking over competitors, solarcity pulling shady contracts, supermarkt chains pulling a larger share of profit from farmers and other producers despite reducing their value to the distribution chain as their marketshare grows,etc
When i think of these i think of people who have gathered value worth countless lifetimes of hard work to a point where it should be impossible becaused it is impossible to be proportionate. People who are generally wayyyyy further away from anyone in this thread wealth wise than we are from a bum on the street.
> and is making regular people resentful and jealous
Might have something to do with things like social mobility and such declining for so long. Capitalism should not be allowed to devolve into an oligarchy.
When I think of the richest that gained a disproportionate amount of that wealth that left the bottom i generally think of rentseekers, people using anticompetitive practices,(near) monopolies, duopolies or monopsonies, etc Reaching that position has been made easier for many of them due to technological advances indeed but that they're in those and that they're incredibly unhealthy for capitalism is the case none the less. Also definitely cronyism and so on as you mentioned.
When we look closely most companies and the people pulling profit from them fit into this category of utilising a form of capitalism that can't be considered healthy for society at large. For example everything from intel and amd artificially extending their IP into perpetuity by strategically extending the standards with new IP every x years to microsoft simply waiting out a competitors bankruptcy in court and abusing their clout for competitive advantage in new markets, apple and google using their duopoly/monopsony positions to charge high rates in their app stores to google dictating webstandards in their favour due to their clout and fucking over competitors, solarcity pulling shady contracts, supermarkt chains pulling a larger share of profit from farmers and other producers despite reducing their value to the distribution chain as their marketshare grows,etc
When i think of these i think of people who have gathered value worth countless lifetimes of hard work to a point where it should be impossible becaused it is impossible to be proportionate. People who are generally wayyyyy further away from anyone in this thread wealth wise than we are from a bum on the street.
> and is making regular people resentful and jealous
Might have something to do with things like social mobility and such declining for so long. Capitalism should not be allowed to devolve into an oligarchy.
Redistributing wealth is not the primary purpose of taxes.
> Redistributing wealth is not the primary purpose of taxes
Yes it is. Also of government, more generally (well, power, of which wealth is a subset.) Before the modern era, this was pretty consistently upward redistribution, aka concentration.
Yes it is. Also of government, more generally (well, power, of which wealth is a subset.) Before the modern era, this was pretty consistently upward redistribution, aka concentration.
The primary purpose of taxes is to build bombs and train soldiers to defend the realm. Everything else is secondary. Imo the government does too much, but that's a whole other debate.
Because despite it not being popular to say, poor people are poor for a reason.
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It's not that their forced, it's that they get to. That's the reward for doing so well. It's also happens to be the cost of not getting eaten.
> You know this and everyone knows this.
False consensus fallacy
False consensus fallacy
>> The sky is blue.
>> You know this and everyone knows this.
> False consensus fallacy
Absurd comment. The wealth inequality and regressive taxation has been inherent to capitalism since at least roman times - http://www.bbc.co.uk/history/ancient/romans/social_structure... https://foreignpolicy.com/2020/08/14/wealth-tax-zakat-islami...
Once your wealth is international, you don't have to pay on what you don't declare across tax regions. These havens arent really havens, as much as optimizations on where you declare assets based on asset class. etc
>> You know this and everyone knows this.
> False consensus fallacy
Absurd comment. The wealth inequality and regressive taxation has been inherent to capitalism since at least roman times - http://www.bbc.co.uk/history/ancient/romans/social_structure... https://foreignpolicy.com/2020/08/14/wealth-tax-zakat-islami...
Once your wealth is international, you don't have to pay on what you don't declare across tax regions. These havens arent really havens, as much as optimizations on where you declare assets based on asset class. etc
In America, the top 1% has 20% of the income, but pays almost 40% of the taxes. What is their 'fair share'? What is your fair share of someone else's income?
Countries like Norway or Sweden, which have more billionaires per capita than the USA have much less progressive tax codes.
Countries like Norway or Sweden, which have more billionaires per capita than the USA have much less progressive tax codes.
I think the key word there is "income" - At some point income barely plays a role.
Could you define "fair share" please in a way that everyone is agree with?
I'll throw a range out there for the sake of argument, and I'm really low-balling it: 25-30%
So a little bit less than they pay right now in the US? The latest CBO data has the average Federal tax rate at around 31% for both the top 1% and top 0.01% cohorts [1].
[1] https://www.cbo.gov/system/files/2020-10/56575-Household-Inc...
[1] https://www.cbo.gov/system/files/2020-10/56575-Household-Inc...
Only if you assume "income" correctly captures the money made by the richest.
So significantly less than what they currently pay? Sure, I'm all for it!
and its still a lot
So what would be a single reason for person with $100MM of wealth to give $25MM away to wasteful, corruptive government?
What kind of benefits the person is gaining by buying $25MM worth of taxes?
I thought so too.
Give that person a chance to reinvest these money into local economy, growing productive businesses instead of slapping the "filthy rich" label and suddenly there is a lots of capital are used for everyone's benefits instead of escaping.
What kind of benefits the person is gaining by buying $25MM worth of taxes?
I thought so too.
Give that person a chance to reinvest these money into local economy, growing productive businesses instead of slapping the "filthy rich" label and suddenly there is a lots of capital are used for everyone's benefits instead of escaping.
To add $25MM to anti-corruption budgets? Sure, governments are to varying degrees, quite corrupt, but isn't that in part due to the people with leverage and power (aka money)?
Example: Rich people > Shit newspapers > Misinformed populace > Shit political choices > Shit government > Corruption > Rich people now have more money.
Example: Rich people > Shit newspapers > Misinformed populace > Shit political choices > Shit government > Corruption > Rich people now have more money.
>What kind of benefits the person is gaining by buying $25MM worth of taxes?
Hmm there's so many hypotheticals there.
Perhaps they may fund the roads this persons company uses. Or the foodstamps this persons underpayed workers rely on. Perhaps they sustain the people that pay into his rentseeking scheme.
Perhaps that's not the question you should be asking because not a whole lot of people give a damn about this persons 25 million staying in his pocket. (This person him/herself being part of this 'not a whole lot of people')
and a whole lot of people on the other hand would rather this person be incentivized to avoid these taxes by investing in R&D and/or increasing the wages of the people he depends on so as to benefit society and to stimulate the economy.
Hmm there's so many hypotheticals there.
Perhaps they may fund the roads this persons company uses. Or the foodstamps this persons underpayed workers rely on. Perhaps they sustain the people that pay into his rentseeking scheme.
Perhaps that's not the question you should be asking because not a whole lot of people give a damn about this persons 25 million staying in his pocket. (This person him/herself being part of this 'not a whole lot of people')
and a whole lot of people on the other hand would rather this person be incentivized to avoid these taxes by investing in R&D and/or increasing the wages of the people he depends on so as to benefit society and to stimulate the economy.
They are contributing to the long term stability and prosperity of the society that provided the very environment that enabled them establish their wealth in the first place. Pay it forward as it were.
Unfortunately many people don't appear to think like that. Or are willfully blind/ ignorant. Take your pick.
Unfortunately many people don't appear to think like that. Or are willfully blind/ ignorant. Take your pick.
These all are good words but you cannot sweet talk millionaires and billionaires into investing and keeping money in the country.
A bit of simple math is needed to supplement decisions in terms of return on investment.
Overbloated government spending and useless wars are not a good arguments either.
If government cannot manage their budgets well, why would people who can manage their budgets better should listen?
A bit of simple math is needed to supplement decisions in terms of return on investment.
Overbloated government spending and useless wars are not a good arguments either.
If government cannot manage their budgets well, why would people who can manage their budgets better should listen?
> What kind of benefits the person is gaining by buying $25MM worth of taxes?
Avoiding guillotines?
Avoiding guillotines?
There are many people who would agree with your argument that taxation is extortion.
I mean carrots, not sticks.
People would be happy to pay 100% in tax to avoid guillotine but how much of a prosperous and productive society can be built with this approach?
People would be happy to pay 100% in tax to avoid guillotine but how much of a prosperous and productive society can be built with this approach?
To-may-to, to-mah-to.
The carrot is "you get to live in a prosperous, stable society made possible in part by your contributions via taxes".
The stick is what happens when you don't.
The carrot is "you get to live in a prosperous, stable society made possible in part by your contributions via taxes".
The stick is what happens when you don't.
>> The carrot is "you get to live in a prosperous, stable society made possible in part by your contributions via taxes".
The reality is that wealthy person can choose both (live where he wants and keep money safe from tax robbery) and poor can neither.
Inequality is brought by high taxation and not by filthy rich who refuses to obey government stupid policies.
The reality is that wealthy person can choose both (live where he wants and keep money safe from tax robbery) and poor can neither.
Inequality is brought by high taxation and not by filthy rich who refuses to obey government stupid policies.
There is that of course. That is also the reason why they leave and take their money with them.
If you fully want to renounce US citizenship, sure. You'll pay a hefty exit tax in doing so.
You can already do this, though. Monaco exists. That folks like Bezos, Musk, and Gates stick around in the US indicates some intangible benefits here that justify paying some tax.
You can already do this, though. Monaco exists. That folks like Bezos, Musk, and Gates stick around in the US indicates some intangible benefits here that justify paying some tax.
Keep mentioning guillotines and you'll see how quickly those benefits disappear.
The $100MM is the benefit. So they are giving back some of the benefit they already received. Yeah they call it waste when they have to give back but the true waste is the policies that allowed the $100MM in light of the overall inequality.
People who make $100MM are no smarter than those that don’t, I mean Einstein didn’t make that type of money right? It’s not merit either, it’s simply money...under our system money makes money, concentration of capital doesn’t benefit everyone it benefits the person with the capital.
Consider wealth management itself, you want to diversify your investments, you would never put 90% of your wealth into .1% of the assets you own. The rich know and live by this rule, well that same rule applies to society, you don’t want .1% controlling 90% of the wealth so investment is determined by .1% of the population. You want the wealth diversified and in the hands of many so no single person controls investment.
People who make $100MM are no smarter than those that don’t, I mean Einstein didn’t make that type of money right? It’s not merit either, it’s simply money...under our system money makes money, concentration of capital doesn’t benefit everyone it benefits the person with the capital.
Consider wealth management itself, you want to diversify your investments, you would never put 90% of your wealth into .1% of the assets you own. The rich know and live by this rule, well that same rule applies to society, you don’t want .1% controlling 90% of the wealth so investment is determined by .1% of the population. You want the wealth diversified and in the hands of many so no single person controls investment.
If they're reinvesting money, that money is not getting taxed. If they still have obscene amounts afterward, c'est la vie.
IMO a percentage which ensures that they don’t monopolize wealth. Their levels of money and resources are so large that it is game changing. Take startups, who do you think funds them? Is it a pension for teachers that’s goes out and gets those precious preferred shares in 5 startups per year or is it the venture arm of gates/below/zuckerberg/dell/..? The wealthy have monopolized wealth. That’s why we end up where one man owns most the farm land in the US.
Everyone is unlikely to agree, but I'm pretty sure we could find a range that the majority of people agree with.
When majority is agrees on something it doesn't make this automatically the right thing.
Especially if this is a majority of non-productive, lazy individuals unwilling to get educated, work and prefer to live by selling their votes for printed money of government grants.
Especially if this is a majority of non-productive, lazy individuals unwilling to get educated, work and prefer to live by selling their votes for printed money of government grants.
> When majority is agrees on something it doesn't make this automatically the right thing.
In a democracy, yes it does.
In a democracy, yes it does.
Prior to the 1860s, the majority agreed to some things that we find abhorrent today.
It's not the productive people who annoy me, its the people who live off investments they dont even have the skills to make themselves. They hire money managers and sip on trust funds while trying to combat the resultant boredom with drugged up sex parties. Their money is productive, not them.
Tax avoidance should be punished, that's all.
Oh, and in my country, it is punished, it's just that the team which must find about the culprit are totally under staffed, what-a-surprise.
Oh, and in my country, it is punished, it's just that the team which must find about the culprit are totally under staffed, what-a-surprise.
You're mistaking tax avoidance with tax evasion.
The top .1% own as much wealth as the bottom 90%.
For better or worse the only way that type of inequality happens is as a direct result of the policies of the country they live in, thus they should be grateful and thankful for living in a country that not only allows but promotes that type of concentration of wealth.
In exchange for the benefit of living in such a country that promotes such wealth inequality, they should pay a 90% tax rate to reflect the wealth inequality itself. They will bitch and moan of course, but they will still be far richer and better off than everyone else, and everyone else will be better off not living in a country with such high inequality and a country with tremendous national resources, as opposed to a country that is $28T in debt further decreasing the quality of life of those without the personal wealth to not need public services.
For better or worse the only way that type of inequality happens is as a direct result of the policies of the country they live in, thus they should be grateful and thankful for living in a country that not only allows but promotes that type of concentration of wealth.
In exchange for the benefit of living in such a country that promotes such wealth inequality, they should pay a 90% tax rate to reflect the wealth inequality itself. They will bitch and moan of course, but they will still be far richer and better off than everyone else, and everyone else will be better off not living in a country with such high inequality and a country with tremendous national resources, as opposed to a country that is $28T in debt further decreasing the quality of life of those without the personal wealth to not need public services.
Why do you want access to other people's riches?
Why does one person need $1bn?
If we can ensure that no single individual has to live below the poverty line then I'm less worried about individuals who attain huge stores of wealth.
If we can ensure that no single individual has to live below the poverty line then I'm less worried about individuals who attain huge stores of wealth.
Instead of chasing the person with $1Bn, wouldn't it be more productive to learn from that person and educate others how to earn good money and live a good, productive lifestyle?
Otherwise many are under the impression that looting and robbing is a way to go.
Otherwise many are under the impression that looting and robbing is a way to go.
> wouldn't it be more productive to learn from that person and educate others how to earn good money and live a good, productive lifestyle?
It might be, or at least a step in the right direction, if those billionaires were teaching free wealth acquisition classes as a full time job after they attain three commas.
Many of the wealthy are born into wealth and have family and institutions that help them maintain it. The poor won't have a start like that, so we might have to setup pools of money donated from these billionaires for the poor to start out with. It could even have a catchy slogan too. Something like, "No exploitation without education."
It might be, or at least a step in the right direction, if those billionaires were teaching free wealth acquisition classes as a full time job after they attain three commas.
Many of the wealthy are born into wealth and have family and institutions that help them maintain it. The poor won't have a start like that, so we might have to setup pools of money donated from these billionaires for the poor to start out with. It could even have a catchy slogan too. Something like, "No exploitation without education."
Educate them on what? How to be on top of a pyramid scheme?
>> Educate them on what?
"...educate others how to earn good money and live a good, productive lifestyle".
You may add to that many other educational resources and lots of them are free. People who are willing to learn will learn.
People who are unwilling to learn and prefer to rob and loot - will continue doing so.
"...educate others how to earn good money and live a good, productive lifestyle".
You may add to that many other educational resources and lots of them are free. People who are willing to learn will learn.
People who are unwilling to learn and prefer to rob and loot - will continue doing so.
You can't learn to be a billionaire. And the way capitalism works not everyone can be a billionaire, more importantly not everyone needs to be a billionaire. I would go so far as to say no one needs to be a billionaire. But if we are going to put an upper limit on personal wealth then $1bn seems like a good starting point.
Because poor people don't have time to learn, they have to struggle staying alive. And very often the billionaires business's model is based on poor people making bad financial decisions, like pay day loans or buying products they don't need but are told that they do by the billionaires ad agency.
Also, if the billionaires give a tiny amount of their money to fund schools, people will get educated, earn more money and be able to spend more.
Also, if the billionaires give a tiny amount of their money to fund schools, people will get educated, earn more money and be able to spend more.
Government has all the tools to make it worthwhile for billionaires to keep money within the economy.
And governments of course has a ways to convince them that doing that is not wise.
High taxes is the easiest way to deplete economy from productive individuals and their resources.
And governments of course has a ways to convince them that doing that is not wise.
High taxes is the easiest way to deplete economy from productive individuals and their resources.
Taxes are paid on profits, investing reduces your profits, so if they want to invest, they don't have to pay taxes.
Taxes literally are used as a tool to incentivize investing in the economy.
Taxes literally are used as a tool to incentivize investing in the economy.
>> Taxes literally are used as a tool to incentivize investing in the economy.
I'm sure taxes has all the good intentions but how well does it work so far if trillions of dollars are escaping in direct opposite directions?
If the tool doesn't work at all - in fact instead of building it just breaks stuff - wouldn't it be a good idea to try a different tool?
I'm sure taxes has all the good intentions but how well does it work so far if trillions of dollars are escaping in direct opposite directions?
If the tool doesn't work at all - in fact instead of building it just breaks stuff - wouldn't it be a good idea to try a different tool?
World governments spent over $35 trillion last year alone. I can assure you that the reason poverty continues to exist is not because $1 billion remains unconfiscated.
Who needs a TV?
Who needs more than one pair of shoes?
Who determines what other people need?
Maybe we should forget we are adults and have a governing body tell us why we need so we don’t have to think about it?
Who needs more than one pair of shoes?
Who determines what other people need?
Maybe we should forget we are adults and have a governing body tell us why we need so we don’t have to think about it?
"Most creative and productive people, entities and businessed did, do and will use any tools at their disposal to escape barbaric tax racket"
Would they prefer to do business in a society without benefits bought by taxes, where education is scant, crime is common, infrastructure and roads a crumbling and police is glorified mafia.
Guess what, Amazon doesn't work in Russia because they cant make money there
Would they prefer to do business in a society without benefits bought by taxes, where education is scant, crime is common, infrastructure and roads a crumbling and police is glorified mafia.
Guess what, Amazon doesn't work in Russia because they cant make money there
Direct PDF wasn't working for me. Here's the page with summary and link to PDF: https://www.brookings.edu/research/what-lies-beneath-evidenc...
Best is 4.
<< In the 1981 Mel Brooks comedyHistory of the World, Part I, King Louis XVI, reflectingon his outrageous privilege, exclaims, “It’s good to be the King!” Mr. Brooks was ontosomething >>
great!
<< In the 1981 Mel Brooks comedyHistory of the World, Part I, King Louis XVI, reflectingon his outrageous privilege, exclaims, “It’s good to be the King!” Mr. Brooks was ontosomething >>
great!
"Elite"? You mean kleptocratic oligarchy, right? Or robber plutocracy, maybe?
That's why i'm against high taxes.
We get a bunch of random political parties, promising to "tax the rich" and stuff, we get new laws... and what happens?
- The poor already pay very little tax - no change there
- The rich avoid the tax by doing shady stuff (who remembers the panama papers.. or this.. or many other stories like these)
- I, the middle class engineer get fucked by the taxes, and I get fucked hard, and not in fun way.
We get a bunch of random political parties, promising to "tax the rich" and stuff, we get new laws... and what happens?
- The poor already pay very little tax - no change there
- The rich avoid the tax by doing shady stuff (who remembers the panama papers.. or this.. or many other stories like these)
- I, the middle class engineer get fucked by the taxes, and I get fucked hard, and not in fun way.
> I, the middle class engineer get fucked by the taxes
Fwiw we feel like middle class but we’re really in the top 5% or higher. We’re the rich people these taxes and politicians talk about.
The ultra rich/wealthy are a red herring, there’s only a few 10k of them of them. Only 614 people are billionaires.
7 figure income (salary) puts you in top 0.35% ... that’s 1,120,000 Americans. Not a whole lot.
edit: top 10% starts at $125,000 salary
Fwiw we feel like middle class but we’re really in the top 5% or higher. We’re the rich people these taxes and politicians talk about.
The ultra rich/wealthy are a red herring, there’s only a few 10k of them of them. Only 614 people are billionaires.
7 figure income (salary) puts you in top 0.35% ... that’s 1,120,000 Americans. Not a whole lot.
edit: top 10% starts at $125,000 salary
> The ultra rich/wealthy are a red herring, there’s only a few 10k of them of them. Only 614 people are billionaires.
Have a look at what inconveniencing just 400 of them would do (they would still be billionaire after) https://mkorostoff.github.io/1-pixel-wealth/
Have a look at what inconveniencing just 400 of them would do (they would still be billionaire after) https://mkorostoff.github.io/1-pixel-wealth/
To save other people time, this is nothing but a gimmicky html box showing what a stack of money looks like compared to other stacks of money.
Do you mean data visualization?
Being a software engineer in a EU country, you're definitely not a classically rich person. In USA, maybe? In EU not so much. There's so many professions (quite common at that) that earn more, or even much more than us.
Why aren’t software engineers valued more in EU?
Matter of scale. A team of engineers working on building a Dutch marketplace has a potential customer base of 18 million. An American company doing the same can reach 300 million. Assuming equal complexity, the American engineer can deliver far more value because his target audience is much larger.
Scale can be like a force multiplier for engineers. Makes them deliver more value and employers are able to pay them more.
Scale can be like a force multiplier for engineers. Makes them deliver more value and employers are able to pay them more.
What is value in this context though?
Seems for Google the value is actual money and for a startup it is a potential future earning? Yet the startup developer in San Francisco is still (presumably) paid 200k or more? If that startup fails, was the developer overvalued?
Seems for Google the value is actual money and for a startup it is a potential future earning? Yet the startup developer in San Francisco is still (presumably) paid 200k or more? If that startup fails, was the developer overvalued?
No, it just means the startup's investors made a bad bet
If you use scaling up as an argument for paying a higher salary, wouldn’t scaling down do the same but in the opposite direction?
it's only the US (AFAIK) that pays developers so highly, and even then it's primarily in cities and companies amenable to venture capital. It's not about how valued the career is, it's about how profitable it is - and when you can take 10s or 100s of millions in investment to build a software platform using a couple dozen devs, it becomes pretty clear why they're paid so high in those areas.
I value the service of my local council's binmen more than most developers' output (including my own). Doesn't mean they get paid the big bucks.
I value the service of my local council's binmen more than most developers' output (including my own). Doesn't mean they get paid the big bucks.
Most people accept it's just another job which pays a bit (somewhere a lot more) better compared to alternatives.
Also the companies who employ these engineers aren't making that much money to burn. That's just my hunch, I haven't done a thorough research.
Also the companies who employ these engineers aren't making that much money to burn. That's just my hunch, I haven't done a thorough research.
I have asked this several times. I think the answer is because they can.
If you want to make more money you become a manager. Developers are just like electricians or brick layers.
They also don’t have the FAANG to create tons of value from software.
If you want to make more money you become a manager. Developers are just like electricians or brick layers.
They also don’t have the FAANG to create tons of value from software.
Here’s a thread with 900+ replies on that question: https://news.ycombinator.com/item?id=25766884
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Why are software engineers valued so highly in California?
Historically the very best software engineers outside the US simply immigrated to the US, joined a Silicon Valley company, and made a good living. The quality of those left behind, who didn’t have the same mobility, was on average lower. So companies didn’t have good reason to open an office elsewhere. This was especially true before the Internet, since collaboration was much more difficult. These days there are probably great engineers in many locations, but it takes time for their local tech economy to catch up to locations with concentrations of employers and employees like Silicon Valley. They need employers to open local offices (attracted by cheaper or better talent), and then for competing employers to also do so, in order to change the supply demand dynamics to favor software engineers. Then their salaries will rise accordingly.
Another part of the equation: in today’s age of massive aggregation around a few gigantic tech monopolies in the US, those few companies are able to pay large salaries because they derive a lot of value from their employees. But the reality of compensation is not very dissimilar between the US and other locations once you remove FAANG from the equation. FAANG companies employee a very highly selectively chosen segment of software developers who can command high value, but are also a tiny slice of the market. But the majority of software engineers in America are not employed in FAANG or compensated that way.
Another part of the equation: in today’s age of massive aggregation around a few gigantic tech monopolies in the US, those few companies are able to pay large salaries because they derive a lot of value from their employees. But the reality of compensation is not very dissimilar between the US and other locations once you remove FAANG from the equation. FAANG companies employee a very highly selectively chosen segment of software developers who can command high value, but are also a tiny slice of the market. But the majority of software engineers in America are not employed in FAANG or compensated that way.
Middle class engineers make 7 figure salaries?
No, that’s the top 0.35%
Where does the middle class top off? $125,000/year individual income puts you in top 10%. Pretty normal for a software engineer. Is that middle class?
Where does the middle class top off? $125,000/year individual income puts you in top 10%. Pretty normal for a software engineer. Is that middle class?
> Where does the middle class top off? $125,000/year individual income puts you in top 10%. Is that middle class?
Depends on the location and cost of living?
And no I'm not saying you should just offset income by exactly the CoL. Obviously being in a prime location has its own benefits too. But you can't just assume the benefits cancel the extra cost of living either; they certainly don't cancel for everybody. The balance is somewhere in between. (I don't have a formula.)
Depends on the location and cost of living?
And no I'm not saying you should just offset income by exactly the CoL. Obviously being in a prime location has its own benefits too. But you can't just assume the benefits cancel the extra cost of living either; they certainly don't cancel for everybody. The balance is somewhere in between. (I don't have a formula.)
With stock, bonus etc. the higher rungs of engineers in FAANG pull down 7 figures, yes.
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No, no, earning a salary is for poor people. Real rich people own things. They also happen to own most of the things.
* own things that make money
"there’s only a few 10k of them of them."
And they own half the country.
And they own half the country.
> Fwiw we feel like middle class but we’re really in the top 5% or higher.
I think middle class is about where your money comes from than the amount of your money. If you are primarily deriving your income from from working for a company you don’t control, then I think you are middle class.
I think middle class is about where your money comes from than the amount of your money. If you are primarily deriving your income from from working for a company you don’t control, then I think you are middle class.
> If you are primarily deriving your income from from working for a company you don’t control, then I think you are middle class.
That’s the classic definition of working class.
Having a roughly equal (in terms of importance) split between capital and labor dependence for income (such as by applying your labor to your own capital as an independent small-business owner or yeoman farmer) is the traditional middle class.
That’s the classic definition of working class.
Having a roughly equal (in terms of importance) split between capital and labor dependence for income (such as by applying your labor to your own capital as an independent small-business owner or yeoman farmer) is the traditional middle class.
What if you're one of those AI research folks making, say, $500,000/year in salary. Are you middle class?
What if you invest 70% of those 500,000 because your CoL is only 150,000. Still middle class?
Cold hard cash is an asset if you use it like an asset. Well okay, your cold hard lucrative skills are the asset in this case.
What if you invest 70% of those 500,000 because your CoL is only 150,000. Still middle class?
Cold hard cash is an asset if you use it like an asset. Well okay, your cold hard lucrative skills are the asset in this case.
> What if you're one of those AI research folks making, say, $500,000/year in salary. Are you middle class?
Assuming you are completely dependent on the salary for support, you are high income working-class intelligentsia.
> What if you invest 70% of those 500,000 because your CoL is only 150,000. Still middle class?
Assuming the returns from those investments are as important to your ability to get by (even if you aren’t touching them currently, but they ade backstopping your labor income), then you’ve achieved middle-class (petit bourgeios) status, instead of merely working class.
> Cold hard cash is an asset if you use it like an asset. Well okay, your cold hard lucrative skills are the asset in this case.
“Skills to do labor that is valued by capitalists” are assets, sure, but they are the assets determining success within (and perhaps at the extremes the potential to move out of) the working class. Ownership of transferrable capital assets defines the difference between the working class and the higher classes in a capitalist economy.
Assuming you are completely dependent on the salary for support, you are high income working-class intelligentsia.
> What if you invest 70% of those 500,000 because your CoL is only 150,000. Still middle class?
Assuming the returns from those investments are as important to your ability to get by (even if you aren’t touching them currently, but they ade backstopping your labor income), then you’ve achieved middle-class (petit bourgeios) status, instead of merely working class.
> Cold hard cash is an asset if you use it like an asset. Well okay, your cold hard lucrative skills are the asset in this case.
“Skills to do labor that is valued by capitalists” are assets, sure, but they are the assets determining success within (and perhaps at the extremes the potential to move out of) the working class. Ownership of transferrable capital assets defines the difference between the working class and the higher classes in a capitalist economy.
More than 1% of US households (something like 1.5M households with a total of ~3M people) have >$10M in household net worth. The primary target is that class, irrespective of its members’ earned income, in part because they can reliably earn mid-six-figures per year in returns to capital alone. https://www.forbes.com/sites/jackkelly/2019/10/22/the-number...
Great, but there are many more mid-six-figure earners who don't have >$10M in household net worth. And if you tax mid-six-figure earners, you get them, too. If you want to target wealth over $10M, tax wealth over $10M.
IMO, the strategy is to tax the net worth itself. Salaries are sufficiently taxed. It's almost disingenuous, at this point, to think of salary taxes as indistinct from income taxes broadly. With a salary, people actually pay the tax rate.
Are you excluding primary residence? A lot of paper millionaires due to lucky real estate
I'd prefer it excludes nothing. No matter what the rules are, they will be unfair or harsh on some people in some circumstances. This is true of every kind of tax. It's true of simple rulesets, and complex ones. It's certainly true of the current de facto ruleset around capital gains and corporate income taxes.
$10m is a substantial bound. Above that threshold, we can expect financial fortitude.
$10m is a substantial bound. Above that threshold, we can expect financial fortitude.
How many not-otherwise-rich people have primary residences worth $10 million? I'm going to guess "not very many".
> paper millionaires
Is there some other kind of millionaire?
Is there some other kind of millionaire?
I'd imagine in this case it's more a matter of liquidity.
It's one thing to say you have a million dollars to your name. The difference is that one person has to sell everything they own to command that value while someone else just calls their broker to have it liquidated from their rainy day fund.
It's one thing to say you have a million dollars to your name. The difference is that one person has to sell everything they own to command that value while someone else just calls their broker to have it liquidated from their rainy day fund.
Indeed, and in 2021 I think it’s pretty clear that owning a residence means you have a reasonably liquid asset.
But more to the actual point. To the extent a concept of “paper wealth” exists it should be confined to things that are genuinely unable to be converted into real money at all. For example stock options in a seed stage company are genuinely illiquid and may never be worth anything ever to anyone.
People living in a million dollar house and saying it’s not really wealth and shouldn’t count sound pretty out of touch to the rest of the world that doesn’t get to live in a million dollar house.
But more to the actual point. To the extent a concept of “paper wealth” exists it should be confined to things that are genuinely unable to be converted into real money at all. For example stock options in a seed stage company are genuinely illiquid and may never be worth anything ever to anyone.
People living in a million dollar house and saying it’s not really wealth and shouldn’t count sound pretty out of touch to the rest of the world that doesn’t get to live in a million dollar house.
The whole concept of paper wealth is literally around what you could hypothetically have, though. That's the whole point.
https://en.wikipedia.org/wiki/Paper_wealth
If you're sitting in a house and it has appreciated in value because it's 2005 and you are in Sunnyvale then you've acquired paper wealth. You didn't upgrade your home, you didn't make it nicer. It's the same home you bought for $300k. It's just now magically worth $1.2m because the world continued spinning.
Sure, that probably sounds great if the person wanted to sell the home and move into a place where home values have remained largely unchanged. But if that person either likes where they live or wants to stay reasonably close, the increased value of their home basically doesn't affect their life - they purchased something that was of modest wealth and now people think it's worth more.
If you bought a gumball for $0.25 and now people think it's worth $1m should you get taxed as a millionaire even if you never intend to sell it? Would it seem reasonable that the rest of the world thinks that you're out of touch because they don't get to have million dollar gumballs?
https://en.wikipedia.org/wiki/Paper_wealth
If you're sitting in a house and it has appreciated in value because it's 2005 and you are in Sunnyvale then you've acquired paper wealth. You didn't upgrade your home, you didn't make it nicer. It's the same home you bought for $300k. It's just now magically worth $1.2m because the world continued spinning.
Sure, that probably sounds great if the person wanted to sell the home and move into a place where home values have remained largely unchanged. But if that person either likes where they live or wants to stay reasonably close, the increased value of their home basically doesn't affect their life - they purchased something that was of modest wealth and now people think it's worth more.
If you bought a gumball for $0.25 and now people think it's worth $1m should you get taxed as a millionaire even if you never intend to sell it? Would it seem reasonable that the rest of the world thinks that you're out of touch because they don't get to have million dollar gumballs?
> the increased value of their home basically doesn't affect their life
Yes it does. They don’t have to move. The people who aren’t rich and haven’t been able to own real estate have to leave the area when property values skyrocket.
Yes it does. They don’t have to move. The people who aren’t rich and haven’t been able to own real estate have to leave the area when property values skyrocket.
Wealth taxes are the real answer here, and for that reason they are unlikely to happen in the anglosphere unless there is some major political shift. In fact the United States does the opposite of a wealth tax, by taxing capital gains at a lower rate than regular income. Because the ruling class gets essentially all of their income from capital gains, they don't actually care about the tax rate on regular income. They can support progressive income taxes as a form of left-wing posturing, or as a way to pit high- and low-income workers against each other, knowing that the taxes won't hurt them. Raising the capital gains tax rate (even just to match the regular income tax rate) is never seriously discussed, and any suggestion of a wealth tax is completely out of the question.
How do you tax their offshore wealth?
The same way you tax everything else, with the IRS.
I don't think so. It seems to me that are policies are very clearly targeted to tax income earners, not capital owners.
You need to reframe it. How many $ do the top 0.35% own vs the next 5%.
You're right. Considering we just budgeted about 750 billion for the military, more than the next 7 or 10 countries combined depending on who you ask, me thinks even if they do get their hands on this money its not going to end up in the right place.
> I, the middle class engineer get fucked by the taxes, and I get fucked hard, and not in fun way.
You will be fine. Just like everyone else in pretty much the entirety of the rest of the civilized world.
You will be fine. Just like everyone else in pretty much the entirety of the rest of the civilized world.
I made a post about this yesterday and got torn apart for it. It’s the hard working professional class that suffers from high taxes. The people who do everything right. The rich evade
And the taxes they take from you get spent as poorly as possible. And the solution is always more taxes.
My impression is that GWB and DJT delivered some very large tax breaks and that the “more” taxes would be more accurately described as a return to normal taxation levels, provided how much one agrees that post-Reagan establishes the level of normalcy.
I do agree though that the spending could be improved. That position varies group by group.
I do agree though that the spending could be improved. That position varies group by group.
“normal taxation levels” - a word salad without peer.
Those tax breaks happened to catalyze massive tax receipts nonetheless, but taxes are politically justified by who they poleaxe, not by the consequences that result.
Those tax breaks happened to catalyze massive tax receipts nonetheless, but taxes are politically justified by who they poleaxe, not by the consequences that result.
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Better that spending them golfing in your golf courts while grifting tens of millions per year by forcing the secret service to stay there paying an exorbitant price...
If you’re arguing our elected officials receive exorbitant benefits on the taxpayer dime, you’ve got a friend in me. But unfortunately that is but a drop in the bucket of the grift involved in entitlement fraud, tax fraud, foreign aid fraud, military-industrial hustle, and the Trillions of other ways our “representatives” by favor and votes with other people's money.
This is a really bad argument. There’s probably a very large segment of the population that would avoid paying any taxes no matter how low you set them. What you’re arguing for is basically a pay what you want model for the rich, where if they feel like they’re getting taxed too much they can just utilize these loopholes.
It may feel this way but it’s easy to see that this isn’t the case by looking at tax revenues. They dropped a lot after the bush tax cuts and again after the trump tax cuts. Saying that tax policy doesn’t matter is simply not true.
During Clinton we were set to be debt free in 2013... the bush passed his cut. Tax policy matters.
During Clinton we were set to be debt free in 2013... the bush passed his cut. Tax policy matters.
for the same reason i believe that entertainment companies should have reasonable prices/practices if they don't want me to pirate movies, governments should keep taxes low if they want the rich to pay them.
I don't think we should count on the rich to not try to find loopholes anyway while keeping their taxes low. I'm pretty sure they would do so whether their taxes are low or not.
Trying to stay on their good side hoping they will "do the right thing and pay more taxes", won't really make that much of a difference.
Trying to stay on their good side hoping they will "do the right thing and pay more taxes", won't really make that much of a difference.
it's a bell curve, taxes too low and govt doesn't make enough, taxes too high and people are disincentivized to pay taxes, invest, start businesses, etc.
> won't really make that much of a difference
is that you hunch or you have data? I remember seeing the bell curve in an undergrad business class.
I'd imagine a 20% vs 45% tax will absolutely have different outcomes.
If someone is already dodging taxes then they will probably continue but the next generation of millionaires should never start.
That's why I think it's related to pirating movies, it's a similar dynamic.
> won't really make that much of a difference
is that you hunch or you have data? I remember seeing the bell curve in an undergrad business class.
I'd imagine a 20% vs 45% tax will absolutely have different outcomes.
If someone is already dodging taxes then they will probably continue but the next generation of millionaires should never start.
That's why I think it's related to pirating movies, it's a similar dynamic.
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Focusing in tax rates is a distraction because no matter what they are the rich don’t pay them.
Until you can get to a point where the rich actually pay taxes then we can talk about rates.
Until you can get to a point where the rich actually pay taxes then we can talk about rates.
It’s funny how everyone thinks that the threshold for any tax on the rich should always be a bit higher than their own circumstances!
Don’t tax you, don’t tax me, tax that fellow behind the tree.
> The poor already pay very little taxno change there
And in many developed nations also (naturally) get the biggest net benefits.
And in many developed nations also (naturally) get the biggest net benefits.
Need to save at least 50% of take-home salary into a high-yield investment account. One-way street. Even during retirement, you'd be scraping out only the interest/DRIP. Further, always pay cash (ie, avoid debt). Even for a car. Even for an education. Even for a house.
Then you can see the truth.
Then you can see the truth.
You could also just fund enforcement and have real penalties with teeth. You get a few hundred multi millionaires going to prison and the problem will go away. When you're at that level, it's simply not worth taking the chance if the risk is real.
IMO the high taxes should be only for people worth tens of millions of dollars or more.
Those high taxes were never about revenue, they were all about keeping corporate managers from looting the companies that employed them.
I think I should have said 'very high taxes'.
Doesn't matter even with the high marginal tax rates of the 1940's the amount of revenue generated from those taxes was small. Most wealthy people choose to reinvest profits rather than converting them to personal income.
YES!
If the politicians actually wanted to tax the rich then they'd be closing loopholes, not raising the marginal rates.
If the politicians actually wanted to tax the rich then they'd be closing loopholes, not raising the marginal rates.
> I, the middle class engineer get fucked by the taxes, and I get fucked hard, and not in fun way.
And predictably, the responses are whether or not you are actually middle class. Because somehow if you're not, you deserve to be f**d hard I guess...?
And predictably, the responses are whether or not you are actually middle class. Because somehow if you're not, you deserve to be f**d hard I guess...?
These taxes affect people who are making $400k+, so yeah, they can handle paying more taxes.
I'm not from US, so these taxes don't affect me.
I'm talking about earning 2x-3x national average pay and getting fucked by that here, in a small EU country.
5k(eur) gross monthly here (current gross average is ~1950eur), after taxes and social/medical (they're a "tax" here, divided between worker and employer) gives me 2922eur net, and I cost my employer 5805eur. With VAT (22%) our customers pay 7082eur, for me to get 2922eur, and the government gets 4160eur. That's without any actual cost, my chair, my computer, toilet paper, office rent,...
I'm talking about earning 2x-3x national average pay and getting fucked by that here, in a small EU country.
5k(eur) gross monthly here (current gross average is ~1950eur), after taxes and social/medical (they're a "tax" here, divided between worker and employer) gives me 2922eur net, and I cost my employer 5805eur. With VAT (22%) our customers pay 7082eur, for me to get 2922eur, and the government gets 4160eur. That's without any actual cost, my chair, my computer, toilet paper, office rent,...
Otherwise known as "the people who employ and invest".
In the same way corporate taxes trickle down to the consumer (otherwise known as "everybody else"), the same is true of taxes on wealthy incomes.
And even our discussion over who pays taxes and how much they pay is moot since the problem is actually spending. The best thing that could happen is that everyone has a real tax burden and everyone pays it directly (not via payroll deduction). Because then more people might be interested in how their taxes are being spent.
In the same way corporate taxes trickle down to the consumer (otherwise known as "everybody else"), the same is true of taxes on wealthy incomes.
And even our discussion over who pays taxes and how much they pay is moot since the problem is actually spending. The best thing that could happen is that everyone has a real tax burden and everyone pays it directly (not via payroll deduction). Because then more people might be interested in how their taxes are being spent.
That's because "tax the rich" usually begins and ends with income taxes. More creativity, such as a financial transaction tax, increased capital gains taxes, or a wealth tax paired with capital controls, would let us capture more from the big boys and less from the high earning engineer/small business owner.
That's not a result of high taxes but of either badly designed/balanced taxes or of lack of enforcement.
I understood parent's point to be that we obviously can't trust them to do better than this. In any case it seems clear that this is exactly why high tax rates hurt the middle class more than the rich. And everyone know it, and yet it persists.
Typically it's because taxing the super rich wouldn't be enough, so you tax a broad swath of the population.
Billionaires (put together) in the US hold something similar to 1 year of federal tax receipts, for example. Tax them into the ground and you get 1 year of revenue.
Billionaires (put together) in the US hold something similar to 1 year of federal tax receipts, for example. Tax them into the ground and you get 1 year of revenue.
For the US it doesn't so much matter who is taxed or how much. We cannot break even if you take into account unfunded liabilities.
This is one of the more interesting points that gets lost in the "tax the rich" talk. I believe this is because people's general political point of reference is their individual situation and not the overall system - but from the system point of view it truly is just a drop in the bucket.
Eh, the top 1% of earners are responsible for c15% of income. Bear in mind that these will be on a higher tax band too, so a figure of c25% of income tax revenue is pretty likely - hardly a drop in a budget.
But the conversation is always towards higher taxes rather than fixing enforcement, design, etc.
Edit: I think I hit a nerve.
Edit: I think I hit a nerve.
Not really. The Biden administration’s proposals include more funding and organisational reform for the IRS. Democrats have been talking for some time about how the steady defunding of the IRS has resulted in less tax collection from the rich and powerful.
Reforming the IRS as an organization doesn't work when it's tax law that's the problem.
Tax law has issues, but deficient analysis, audit and enforcement against richer, more complex files is a huge issue.
Why fail to fix one over the other?
Why fail to fix one over the other?
It’s part of a solution, not the entire solution. But even if you improved tax law you’re still going to need a well-resourced and highly skilled IRS capable of properly auditing multinationals and the very wealthy.
What leads you to believe increased funding would be directed toward regulating the richest and most powerful people/companies (i.e. the biggest financiers of political campaigns on both sides of the aisle)?
The OPs statement was that more focus needs to be on improving enforcement. I simply pointed out that improving enforcement, by reversing the budget cuts and consequent drop in audit capability within the IRS, was part of the current administration’s policy.
Whether their proposed changes will actually work is another question, but it’s wrong to say there’s no attention there and that the debate is only about raising taxes.
I can’t say I understand the downvotes I received for saying that.
Whether their proposed changes will actually work is another question, but it’s wrong to say there’s no attention there and that the debate is only about raising taxes.
I can’t say I understand the downvotes I received for saying that.
Which high taxes are part of.
Raising taxes is an admission that current tax policy, and the other side of the coin, the government spending policy, are awfully designed.
Of course there has never been a competent design since taxes always need to be higher to "reduce" the ever increasing wealth gap higher taxes were supposed to be tackling in the first place.
Just for once we could try something different maybe?
Raising taxes is an admission that current tax policy, and the other side of the coin, the government spending policy, are awfully designed.
Of course there has never been a competent design since taxes always need to be higher to "reduce" the ever increasing wealth gap higher taxes were supposed to be tackling in the first place.
Just for once we could try something different maybe?
This doesn't seem to make much sense: You're against a policy because someone lied and didn't implement it when they said they would? You can be for taxing the rich and against people who do otherwise simultaneously.
I think the point is that beyond total and complete global totalitarianism there isn't a great way for any government to truly tax the rich to the extent desired because there were always be another safe haven for it overseas.
It is harder and harder for US persons to put their money abroad. All foreign banks must declare US Persons to the US authorities.
I am sure some figure out ways, but you have to go in dodgier places.
This is a new development is the last 10-20 years, so there is progress. It should help people trust the system is getting fairer.
If one is against taxes, and uses lack of enforcement as a reason, I smell dishonesty.
I am sure some figure out ways, but you have to go in dodgier places.
This is a new development is the last 10-20 years, so there is progress. It should help people trust the system is getting fairer.
If one is against taxes, and uses lack of enforcement as a reason, I smell dishonesty.
Can't you make it expensive to move money overseas by taxing such moves?
> there isn't a great way for any government to truly tax the rich
The burden of proof is on you then. For you to be able to say that, you'd have to enumerate all possibilities and then provide evidence why each wouldn't work. In the meantime, it seems obvious things could be better without needing to be perfect.
The burden of proof is on you then. For you to be able to say that, you'd have to enumerate all possibilities and then provide evidence why each wouldn't work. In the meantime, it seems obvious things could be better without needing to be perfect.
Unless you are making more than $400,000, the new tax proposals would not affect you.
What is your definition of "middle class"? Someone making $400k is most certainly in the top 1%.
What tax changes have occurred so far in the past few decades that are significantly affecting you? I would genuinely like to know
What is your definition of "middle class"? Someone making $400k is most certainly in the top 1%.
What tax changes have occurred so far in the past few decades that are significantly affecting you? I would genuinely like to know
There's quite a few of us here making more more than 400k/year but less than Billion dollar money.
My effective tax rate between state and federal is something like 55% before including sales taxes.
These Billionaires find ways to pay basically nothing in tax because their wealth comes from capital gains and not from RSU + salary compensation which are taxed as normal salary.
The bulk of the burden of new tax increases will fall on people like me who make more than 400k but make it in easy to tax ways instead of changing the law and making it easier to heavily tax people in the 100M/yr+ category
These aren't complaints, just facts.
My effective tax rate between state and federal is something like 55% before including sales taxes.
These Billionaires find ways to pay basically nothing in tax because their wealth comes from capital gains and not from RSU + salary compensation which are taxed as normal salary.
The bulk of the burden of new tax increases will fall on people like me who make more than 400k but make it in easy to tax ways instead of changing the law and making it easier to heavily tax people in the 100M/yr+ category
These aren't complaints, just facts.
There should definitely be efforts made to figure out how to tax those billionaires (and there are!), but that doesn’t mean that those making $400k shouldn’t be taxed way more as well. Let’s be honest, your life won’t change in any meaningful way because of this.
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> My effective tax rate between state and federal is something like 55% before including sales taxes.
That seems extremely high, what state is this? Do you mean the top marginal rate, or is that literally the effective rate when you file your 1040?
That seems extremely high, what state is this? Do you mean the top marginal rate, or is that literally the effective rate when you file your 1040?
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And my effective tax rate on the total my employer pays is 52% (excluding VAT), and I earn at least 6 times less than you. I’m in Europe so public services include more than the US, but paying 55% on $400k isn’t something to complain about. You’re very rich, you get taxed as such.
The fact that there are people making 10,000 times as much as the highest bracket in a single year suggests whoever is proposing these tax laws does not actually want to solve the problem. There should be brackets going up to a billion dollars, adjusted every time someone makes an order of magnitude more than the highest bracket.
Also, making 400K does not make you rich. In California, you are actually bringing home around 200K with high cost of living in areas where an engineer might make that much, whereas the top 1% (measured by household wealth instead of income) still has a net worth of ~$10M.
Also, making 400K does not make you rich. In California, you are actually bringing home around 200K with high cost of living in areas where an engineer might make that much, whereas the top 1% (measured by household wealth instead of income) still has a net worth of ~$10M.
Are you serious? 400K definitely makes you rich. As if you do that for 10 years you have 4M dollars, 20 years? $8M I get that COL lowers that, but if you are making 400K you're not renting.
If you are making $400k in California, in places where you are likely to make that much, quite a lot of that is going to taxes and expenses. Sure, you might be able to save $2M over a decade, which makes you well off for sure, but "rich" is a bit of a stretch when all it affords you is paying a mortgage on a mid-century formerly middle-class house vaguely within commuting distance.
Calling that lifestyle "rich" just serves to muddy the water. This is soundly in the category of upper-middle class and decades away from being financially independent.
Calling that lifestyle "rich" just serves to muddy the water. This is soundly in the category of upper-middle class and decades away from being financially independent.
This is a staggering lack of perspective. The average American takes around ten years to make that amount of money.
Tell them at the end of the year you’re going to give them the next nine years of paychecks as a Christmas bonus and then ask them if they feel financially independent.
Tell them at the end of the year you’re going to give them the next nine years of paychecks as a Christmas bonus and then ask them if they feel financially independent.
This is a bizarre take. The average American is more likely to live in the equivalent of Flyover, Kansas than Sunnyvale, California. I've lived in both, more the former than the latter. I'm sure the person living in Sunnyvale would love to pay $55k for a nice brick two-story house (current price for one I grew up in) but that doesn't seem to be an option in Sunnyvale.
Tell that hypothetical average American to buy a mediocre house in Sunnyvale and see what reaction you get.
Nobody cares what lifestyle $400k can buy in Mississippi because very few people are making that much in a locale that cheap.
Tell that hypothetical average American to buy a mediocre house in Sunnyvale and see what reaction you get.
Nobody cares what lifestyle $400k can buy in Mississippi because very few people are making that much in a locale that cheap.
But in your previous post you noted the idea that you could save $2M in a reasonable time frame.
This is completely independent of CoL. There are very, very few Americans who will ever be able to seriously consider doing this.
This is completely independent of CoL. There are very, very few Americans who will ever be able to seriously consider doing this.
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> The average American is more likely to live in the equivalent of Flyover, Kansas than Sunnyvale, California.
Or, 90 minutes from Sunnyvale, an amount of time they are keenly aware of as they commute there every day to clean the clothes, cook the food, and maintain the real estate of the “not rich” people you are describing.
> Tell that hypothetical average American to buy a mediocre house in Sunnyvale and see what reaction you get.
They would say I’m sorry I can’t, because the prices of those houses have been bid up by the rich people who currently live there and make $400k a year.
> Nobody cares what lifestyle $400k can buy in Mississippi
People in Mississippi do. They also get a say in setting tax policy for the U.S. which is the topic of current discussion.
Or, 90 minutes from Sunnyvale, an amount of time they are keenly aware of as they commute there every day to clean the clothes, cook the food, and maintain the real estate of the “not rich” people you are describing.
> Tell that hypothetical average American to buy a mediocre house in Sunnyvale and see what reaction you get.
They would say I’m sorry I can’t, because the prices of those houses have been bid up by the rich people who currently live there and make $400k a year.
> Nobody cares what lifestyle $400k can buy in Mississippi
People in Mississippi do. They also get a say in setting tax policy for the U.S. which is the topic of current discussion.
You're ignoring the people who make nowhere near 400k who also work in California, but have to do things like living in a trailer park, or winning a FAANG lottery for teachers in the local school district to have subsidised housing, or commute dozens of miles.
A little perspective is always a good thing.
A little perspective is always a good thing.
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It's all relative. But no, making 400K after 10 years does not result in $4M. If you make that 400K as an engineer in a coastal tech hub and put all the savings in the bank after taxes and expenses, you have 1M after 10 years. Not much more than the median price of a home in LA county, and far below the median in SF.
In other words, you have accumulated 1/10000 the wealth of your FAANG employer.
In other words, you have accumulated 1/10000 the wealth of your FAANG employer.
This is the problem. Income and cost-of-living is a spectrum and varies wildly from place to place. And everyone wants to put some kind of hard line on tax rates, etc. To me, this just underscores that income tax, as a concept, is completely fucked. You can offshore your earning and shelter them if you're savvy enough. If you earn your income from capital gains, you're paying lower rates regardless, from whatever percentage of those gains happen to fall in your particular jurisdiction.
A federal sales tax with exemptions for basic necessities (food, rent, school supplies, etc.) would make so much more sense, as already exists in 7 states at the state level.
In this way you don't have to worry about whether income was earned offshore or onshore, if you're buying stuff or services here or importing stuff, you get taxed on it.
A federal sales tax with exemptions for basic necessities (food, rent, school supplies, etc.) would make so much more sense, as already exists in 7 states at the state level.
In this way you don't have to worry about whether income was earned offshore or onshore, if you're buying stuff or services here or importing stuff, you get taxed on it.
Sales taxes are completely regressive, because the rich do not spend much of their income.
Even with the exemption for basic necessities, a person who earns 100x what you do will probably spend on the order of 5-10x more than you, thus making the tax very regressive.
Even with the exemption for basic necessities, a person who earns 100x what you do will probably spend on the order of 5-10x more than you, thus making the tax very regressive.
Not at all, especially if you exempt basic necessities. Poor would still pay low to zero tax because those costs are a greater percentage of their income. And you could even subsidize the taxes with a universal monthly payout.
Such a scheme doesn't change things for the poor (defined by those who don't earn enough to pay any taxes). But it does change the effective tax rate ratio between the middle class and truly rich. The middle class will pay a higher effective tax rate than the truly rich, because the middle class spend more of their income.
Except the tax code doesn’t care if that was a one time thing vs something that actually does happen for 10 years.
If you make $50k plus COLA for your entire career but one year your stock options materialize and pay $400k, are you rich?
If you make $50k plus COLA for your entire career but one year your stock options materialize and pay $400k, are you rich?
Moreover you can slum it by scraping by on $100k and bank the remainder every year. Most Americans don't have that luxury.
> As if you do that for 10 years you have 4M dollars, 20 years?
If you're making 400k post-tax, sure. If that's pre-tax income, however, you're not making 4M after 10 years.
After federal taxes you're making closer to $286k, roughly. This is just for the privilege of being a US citizen - even if you don't necessarily spend the majority of your time in the country.
Assuming this is a CA software engineer, it's closer to $250k. This is just for the privilege of having a tax basis in CA.
Assuming you actually do live in the Bay Area as a single bachelor and would like the privilege of having your own apartment that you don't have to share with others (remember, you're "rich") a nice unit to yourself will run you roughly $3k/m -> $24k/y. So we're much closer to $225k/y.
Even assuming this person has no car, no social life, and no metabolism we're still running at roughly half of your projections. Which is still a fair chunk, to be sure. But it's still half of their money going towards the privilege of obtaining money.
EDIT: just saw this bit
> I get that COL lowers that, but if you are making 400K you're not renting
This depends, as buying is not always superior to renting, especially when you're talking a house. A house is a pretty big investment - so much so that a lot of financial circles still spend a lot of time between "get a home, what isn't equity is a tax write off" and "just rent, no surprise expenses, remain more liquid, invest the difference between your rent and a typical mortgage in the market".
The last time I was looking in the South Bay area, average prices for a 2 bedroom home in a suburb were ~$1.2m. This is a $240k down payment and ~$7.3k monthly (15 year conventional, down to ~$4.7 for 30 year but we're outside of the "10/20 years" we described above and paying more interest for it besides).
If we account for all that, we're looking at much closer to $190k being available to us after the privilege of living and working (that's adjusting for the taxes, but it's not so clean as interest is a sliding scale over the years) - just now we have a place to ourselves that cost us around a year or two of savings time just to start the house purchase and a recurring expense that's over double the nearby rent. This is largely not favorable to the majority of people unless they're wanting to lay roots. That said, given people seem to be leaving I'd imagine housing prices will become less steep in a matter of years; albeit whether it makes it more reasonable to buy than rent for those not looking to stay for 15+ years remains something of an open question.
If you're making 400k post-tax, sure. If that's pre-tax income, however, you're not making 4M after 10 years.
After federal taxes you're making closer to $286k, roughly. This is just for the privilege of being a US citizen - even if you don't necessarily spend the majority of your time in the country.
Assuming this is a CA software engineer, it's closer to $250k. This is just for the privilege of having a tax basis in CA.
Assuming you actually do live in the Bay Area as a single bachelor and would like the privilege of having your own apartment that you don't have to share with others (remember, you're "rich") a nice unit to yourself will run you roughly $3k/m -> $24k/y. So we're much closer to $225k/y.
Even assuming this person has no car, no social life, and no metabolism we're still running at roughly half of your projections. Which is still a fair chunk, to be sure. But it's still half of their money going towards the privilege of obtaining money.
EDIT: just saw this bit
> I get that COL lowers that, but if you are making 400K you're not renting
This depends, as buying is not always superior to renting, especially when you're talking a house. A house is a pretty big investment - so much so that a lot of financial circles still spend a lot of time between "get a home, what isn't equity is a tax write off" and "just rent, no surprise expenses, remain more liquid, invest the difference between your rent and a typical mortgage in the market".
The last time I was looking in the South Bay area, average prices for a 2 bedroom home in a suburb were ~$1.2m. This is a $240k down payment and ~$7.3k monthly (15 year conventional, down to ~$4.7 for 30 year but we're outside of the "10/20 years" we described above and paying more interest for it besides).
If we account for all that, we're looking at much closer to $190k being available to us after the privilege of living and working (that's adjusting for the taxes, but it's not so clean as interest is a sliding scale over the years) - just now we have a place to ourselves that cost us around a year or two of savings time just to start the house purchase and a recurring expense that's over double the nearby rent. This is largely not favorable to the majority of people unless they're wanting to lay roots. That said, given people seem to be leaving I'd imagine housing prices will become less steep in a matter of years; albeit whether it makes it more reasonable to buy than rent for those not looking to stay for 15+ years remains something of an open question.
For most, newfound income does not materialise itself as wealth but rather an increase in living standards.
$400k can buy you an entry-level home in cash, or a 10% deposit on that $4M mansion across town. Most choose the latter.
$400k can buy you an entry-level home in cash, or a 10% deposit on that $4M mansion across town. Most choose the latter.
I see multiple people in this thread talking about high taxes without knowing how tax brackets actually work in reality. I wish people understood them. It's very easy to senationalize high taxes.
I'll make up some numbers to make it simple. Let's say there's 2 brackets. Everyone who makes under $399,999.99 pays 0% tax. And everyone who makes over $400k pays 90% tax. You make $400k. How much do you owe the taxman? Did you know it's only 90 pennies out of $400k? The first $399,999.99 you make is in the 0% bracket. It will always be taxed at that rate. Only the amount over that ($1) will be taxed in the next bracket.
Now in reality, we have 7 tax brackets. This is how much you really pay, assuming filing single for 2020.
$9875 of $400k @ 10%
$30,250 of $400k @ 12%
$45,399 of $400k @ 22%
$77,775 of $400k @ 24%
$44,049 of $400k @ 32%
$192,649 of $400k @ 35%
You wouldn't even make enough to pay anything into the 7th bracket @ 37%.
Personally, I believe yes, we need to raise taxes on the uber rich just to slow their growth. NO, it will not affect you who make $400k (which is already wealthy compared to most of America!) And add more brackets while we're at it. There was a time in America where the uber rich had a 94% tax bracket. I'm not saying we need to go that high. But 37% and too many deductions is a joke.
I'll make up some numbers to make it simple. Let's say there's 2 brackets. Everyone who makes under $399,999.99 pays 0% tax. And everyone who makes over $400k pays 90% tax. You make $400k. How much do you owe the taxman? Did you know it's only 90 pennies out of $400k? The first $399,999.99 you make is in the 0% bracket. It will always be taxed at that rate. Only the amount over that ($1) will be taxed in the next bracket.
Now in reality, we have 7 tax brackets. This is how much you really pay, assuming filing single for 2020.
$9875 of $400k @ 10%
$30,250 of $400k @ 12%
$45,399 of $400k @ 22%
$77,775 of $400k @ 24%
$44,049 of $400k @ 32%
$192,649 of $400k @ 35%
You wouldn't even make enough to pay anything into the 7th bracket @ 37%.
Personally, I believe yes, we need to raise taxes on the uber rich just to slow their growth. NO, it will not affect you who make $400k (which is already wealthy compared to most of America!) And add more brackets while we're at it. There was a time in America where the uber rich had a 94% tax bracket. I'm not saying we need to go that high. But 37% and too many deductions is a joke.
I don't think anyone on either side of this thread is confused by this simple concept. But perhaps in writing your own comment you realize how unprogressive these tax brackets are. You start paying pretty close to the top rate on income over 44,000. And then it stops increasing at a tiny fraction of the incomes of the truly wealthy (the wealthiest of whom don't need help from offshore tax gymnastics -- they just pay the highest rate on the capital gains bracket which is even LESS progressive). Not to mention people making ~400K are also significantly affected by employment taxes (social security and medicare) which are extremely anti-progressive.
So a tax increase at 400K will indeed affect someone who makes 400K (or maybe ~450K, or someone who files jointly) now or in the ensuing years when they get raises to combat inflation. The brackets never keep up with inflation, because the government uses CPI to pretend like there isn't much inflation. The highest bracket in 1913 was 1 million dollars (NOT ADJUSTED FOR INFLATION).
So a tax increase at 400K will indeed affect someone who makes 400K (or maybe ~450K, or someone who files jointly) now or in the ensuing years when they get raises to combat inflation. The brackets never keep up with inflation, because the government uses CPI to pretend like there isn't much inflation. The highest bracket in 1913 was 1 million dollars (NOT ADJUSTED FOR INFLATION).
Sure, the tax bracket in 1913 might have been 1 million USD (not adjusted for inflation). The highest tax bracket was also paying 67 percent in 1917 and 77 percent in 1918 [1]. During WW2, the tax rate for the highest bracket jumped to a whopping 94% [1]. Most people don't realize how low the rates have gotten compared to previous times. Subsequently, as rates have gotten lower, the income inequality gap is near all-time highs [2].
[1] https://bradfordtaxinstitute.com/Free_Resources/Federal-Inco...
[2] https://www.pewresearch.org/social-trends/2020/01/09/trends-...
Note: I'm not saying correlation = causation; just an interesting phenomenon to notice.
[1] https://bradfordtaxinstitute.com/Free_Resources/Federal-Inco...
[2] https://www.pewresearch.org/social-trends/2020/01/09/trends-...
Note: I'm not saying correlation = causation; just an interesting phenomenon to notice.
I'm in agreement. But to tax people 67% starting at 400K is ludicrous to me, barring emergency wartime measures (although nowadays the Fed would just print the money and dissolve the value of USD). That 67% rate was for income over TWO MILLION (not inflation adjusted). Using the extremely conservative CPI figure, that's over $25M USD today. Using the median price of a home in the US for inflation, that's nearly $100M. A much more sensible maximum bracket than what we have today.
The point is that the distribution of tax rates is broken, with no statement made about the rates themselves.
The point is that the distribution of tax rates is broken, with no statement made about the rates themselves.
This is the best lie ever told, "don't worry, these taxes wont affect YOU!". Every new tax inevitably falls onto the middle class, because they can't hire people to restructure their wealth and the poor pay no taxes.
Lower taxes makes it less expensive for the rich to pay the government.
Look at housing and food costs to see how the middle class are affected, they don't get welfare, social housing, or food stamps.
Lower taxes makes it less expensive for the rich to pay the government.
Look at housing and food costs to see how the middle class are affected, they don't get welfare, social housing, or food stamps.
Aren't you completing dodging the fact that the comment/s above you are pretty obviously talking about income taxes?
If you are in between (say) my salary and 400k, no amount of increase in the price of food is going to be a problem for you unless you are ludicrously bad with money. I'm not in favour of wanton taxes aimed at "the rich" as a political manoeuvre, but let's not be blinkered here.
If you are in between (say) my salary and 400k, no amount of increase in the price of food is going to be a problem for you unless you are ludicrously bad with money. I'm not in favour of wanton taxes aimed at "the rich" as a political manoeuvre, but let's not be blinkered here.
"Restructure their wealth" poor phrase. Income isn't only salary, you're getting stocks/options. Consultants, not available to the middle class, can optimize your income.
CoL increase maybe not a problem, but its still an increase, if you're trying to tax the rich, you've hit the wrong target.
After a certain rate, as taxes rise, revenue falls. Feds keep spending, when they realize projected income will fall short, the goal line moves from 400K to 200K, then 100K, etc.
We should lower taxes and close the 1000's of loopholes, I would bet revenue goes up.
And I learned a new word today, "wanton"!
CoL increase maybe not a problem, but its still an increase, if you're trying to tax the rich, you've hit the wrong target.
After a certain rate, as taxes rise, revenue falls. Feds keep spending, when they realize projected income will fall short, the goal line moves from 400K to 200K, then 100K, etc.
We should lower taxes and close the 1000's of loopholes, I would bet revenue goes up.
And I learned a new word today, "wanton"!
>Every new tax inevitably falls onto the middle class, because they can't hire people to restructure their wealth and the poor pay no taxes.
That might be true of new taxes/tax increases created by those doing the bidding of the truly wealthy. In fact, it is true.
But that's true of all possible new taxes, and increasing taxes on those with earned income over $400k will have ZERO impact on those who earn less (in terms of their own taxation).
That might be true of new taxes/tax increases created by those doing the bidding of the truly wealthy. In fact, it is true.
But that's true of all possible new taxes, and increasing taxes on those with earned income over $400k will have ZERO impact on those who earn less (in terms of their own taxation).
I guess my point is those $400K+ people will have more incentive to avoid the taxes, and when theres a shortfall ... the fed will move to taxing the next group down $400K -> 200K -> 100K -> 50K, etc.
We should put effort into compliance, instead of increases.
We should put effort into compliance, instead of increases.
Not OP, but the removal of the SALT deduction hurt.
Yeah that was a good one; promise a tax cut for the rich, and give a slight tax cut to the rich in low tax states and screw people in high tax states (which happen to mostly be were the proposer of the tax cut didn't get votes anyway).
On the plus side, between the limit on SALT deduction and the increased standard deduction, the mortgage interest deduction is almost effectively dead; which is something that has needed to get removed, but nobody wanted to do it. Now it's technically there, but almost useless, so best of both worlds.
On the plus side, between the limit on SALT deduction and the increased standard deduction, the mortgage interest deduction is almost effectively dead; which is something that has needed to get removed, but nobody wanted to do it. Now it's technically there, but almost useless, so best of both worlds.
Except for the fact that landlords still have the full mortgage interest deduction (as is proper for any business loan in a system that taxes income/profit) meaning it’s harder for owner-occupants to bid against them for housing.
Why should people in states that do not have an income tax have to effectively subsidize the SALT tax deduction?
Maybe it will make ca/ny think twice about having such high tax rates…
Maybe it will make ca/ny think twice about having such high tax rates…
Do they fund the SALT deduction? NY and CA pay more in taxes to the Federal government than they receive back in inward investment. Sounds like it's the states with no state tax that are being subsised to me.
WA/TX/FL do not have an income tax and still pay more to the Federal Government than they receive.
IMO the SALT deduction is a horrible thing and allows state governments to become way too bloated.
IMO the SALT deduction is a horrible thing and allows state governments to become way too bloated.
[deleted]
Can you expand on that please?
The 2017 “tax cuts” partially eliminated deductions for state and local taxes, capping them at 10k. This means people in high cost of living, high tax states effectively get taxed on income multiple times instead of being able to discount the money they already paid to state and local taxes above 10k.
https://taxfoundation.org/tax-basics/salt-deduction/
https://taxfoundation.org/tax-basics/salt-deduction/
SALT is “state and local tax”... you can deduct state and local taxes from your federal taxes, but a few years ago they put a cap on it so you can only deduct $10,000. This really hurt tax payers in higher tax states.
Let's be precise here. It only hurt tax payers whose itemized deductions exceeded the (new) standard deduction of $12k. There were more them in higher tax states because SALT was part of their itemized deduction. It had no impact on tax payers whose itemized deductions were below $12k, or who did not itemize.
I pay more now because of the SALT cap, but I still support the idea - why should residents of low tax states subsidize residents of high tax states, all other things being equal?
> I pay more now because of the SALT cap, but I still support the idea - why should residents of low tax states subsidize residents of high tax states, all other things being equal?
Under a federalist, state-first system, the federal government shouldn’t consider mandated transfers to state (including administrative subdivisions) government which plays the primary role in the conditions of local commerce which enables income as part of the free income of a taxpayer subject to taxation (this also avoids federal taxes altering the calculus of net benefit in state democratic decisionmaking on tax and spending.) In a federal-first, centralized system, ignoring state taxes consistently makes sense. In either case, a limited SALT deduction has no principled justification, and is simply an effort to use the power of federal tax policy to put a federal thumb on the scales of state decisionmaking to get the successful states whose economic success makes them net contributors to the federal government to adopt tax and spending policies more like those characterizing the politically-overrepresented but less successful states that are net drains on federal resources, leveling the playing field by making every place suck equally, so at least the former can’t make the latter look so bad any more, while advancing the Norquistian vision of shrinking the size of government to where it can be drowned in a bathtub, without concern for thr consequences, because ideology.
Under a federalist, state-first system, the federal government shouldn’t consider mandated transfers to state (including administrative subdivisions) government which plays the primary role in the conditions of local commerce which enables income as part of the free income of a taxpayer subject to taxation (this also avoids federal taxes altering the calculus of net benefit in state democratic decisionmaking on tax and spending.) In a federal-first, centralized system, ignoring state taxes consistently makes sense. In either case, a limited SALT deduction has no principled justification, and is simply an effort to use the power of federal tax policy to put a federal thumb on the scales of state decisionmaking to get the successful states whose economic success makes them net contributors to the federal government to adopt tax and spending policies more like those characterizing the politically-overrepresented but less successful states that are net drains on federal resources, leveling the playing field by making every place suck equally, so at least the former can’t make the latter look so bad any more, while advancing the Norquistian vision of shrinking the size of government to where it can be drowned in a bathtub, without concern for thr consequences, because ideology.
Canadian here can’t really comment on US taxes but our PM Justin Trudeau elected on demonizing the 1% but then promptly cut tax credits on children sports, public transit, child credits, etc while doing nothing to his billionaire buddies so certainly sounds familiar from up here.
Don't forget "raised taxes on the highest income Canadians while claiming that he was raising taxes on the wealthiest Canadians". He has been repeating that lie for five years now.
Owns a reasonable home in a decent school district with a commute around 30 minutes. Eats out a few times a month. Takes 1-2 vacations a year. If upper middle class, savings adequate to gradually upgrade housing, send kids to University of State, etc. If regular middle class, home will be maintained against entropy and kids will take out student loans. Either way, will retire at the usual time.
In some places $400k can give 8 families this life. In others not even one. It depends.
In some places $400k can give 8 families this life. In others not even one. It depends.
> In some places $400k can give 8 families this life. In others not even one. It depends.
Ummm, where exactly in the world is $400k per year not enough to survive? Monaco?
If you earn $400k year after year, then you are earning enough to be "rich". But true, it's still possible to live beyond your means regardless of how much you earn and incur financial difficulty.
Ummm, where exactly in the world is $400k per year not enough to survive? Monaco?
If you earn $400k year after year, then you are earning enough to be "rich". But true, it's still possible to live beyond your means regardless of how much you earn and incur financial difficulty.
There’s a wide world between “survive” and the lifestyle I described. A wider universe between that lifestyle and “rich.”
In San Francisco it's just about striking distance to the lifestyle I described. The commutes and the housing are generally a little worse.
In San Francisco it's just about striking distance to the lifestyle I described. The commutes and the housing are generally a little worse.
In San Francisco a family can absolutely make do with $400k annual income, have a home, go to decent schools, put kids through college, save for retirement, etc. You wouldn't have to live in and commute from Oakland. You could still amass sufficient wealth to be considered "rich" by the time you retire. Average household income in SF is something near $135k. $400k is well well above that.
However, as I mentioned above, that same family (or even one that earns millions more) could easily put themselves into financial difficulty if they live beyond their means.
With $400k annual income you couldn't buy a single family home in the Pacific Heights neighborhood and if you had many children perhaps you couldn't afford to send them all to Harvard, but if you lived reasonably within your means you could certainly still be considered "rich".
However, as I mentioned above, that same family (or even one that earns millions more) could easily put themselves into financial difficulty if they live beyond their means.
With $400k annual income you couldn't buy a single family home in the Pacific Heights neighborhood and if you had many children perhaps you couldn't afford to send them all to Harvard, but if you lived reasonably within your means you could certainly still be considered "rich".
> In some places $400k can give 8 families this life. In others not even one. It depends.
Can you name a place, anywhere in the world, where $400k/yr is not enough to survive for one family?
Can you name a place, anywhere in the world, where $400k/yr is not enough to survive for one family?
inside a volcano
As noted this is not really true in most locations, but I still would not feel bad about the person earning $400k. They live in a desirable location. They can move if they wish.
They live in a productive location. When they leave it their productivity collapses.
I understand it’s emotionally satisfying to see them deprived, but the government also ends up with less revenue when they apply their skills to lower impact projects.
I understand it’s emotionally satisfying to see them deprived, but the government also ends up with less revenue when they apply their skills to lower impact projects.
This is a specious argument. You can't measure expenditures that go solely to retaining the exclusive use of desirable land as productivity.
Large engineering firms have offices in various Midwestern states that are just as productive as SV, NY, what have you.
Large engineering firms have offices in various Midwestern states that are just as productive as SV, NY, what have you.
High-wage-high-cost and medium-wage-medium-cost arrangements are on balance pretty similar for the employee. Dramatically higher taxes on the former will push people to the latter. Which, as you note, they can do without even changing employers. There might be some lens through which this is good. Decentralization, or inequality. But tax revenue from this cohort will go down, not up, because there’s so much less income to tax in the first place.
"Unless you are making more than $400,000, the new tax proposals would not affect you."
That's not true. If your combined income with your spose is more than 400k the tax increase will affect you. so it will affect individuals making as little as 200k if you assume income is divided equally between two spouses.
That's not true. If your combined income with your spose is more than 400k the tax increase will affect you. so it will affect individuals making as little as 200k if you assume income is divided equally between two spouses.
In my state (MA), it takes $473K in individual income to crack the top 1%. Household, the figure is $678K to make top 1%. Figures for CA seem only slightly lower.
> Unless you are making more than $400,000, the new tax proposals would not affect you.
Someone making over $400k might want to invest some of that money. The businesses in which that person would have invested would hire people. And pay wages. And taxes. If you take more of the “rich” money. They won’t invest as much. And thus won’t create value. Giving that money to the government doesn’t create value — or if it does, there is still the issue of deadweight loss. The private sector always spends more efficiently than government.
Every rich person I know doesn’t put their money under the mattress; they invest it in something.
As far as tax changes that affect me: well the very high rates of California taxation led me to moving my residence and business to Texas. When I lived overseas, the Biden-supported, Obama-signed FACTA legislation (which was ultimately a tax law) had a very significant impact. I couldn’t open business bank accounts in the UK which led me to not being able to expand my (then) consulting business because our potential client required a UK company and that company needed a UK bank account in order to get anything done. Since I wasn’t a UK resident, it made it even harder. I am not super rich so Barclays and friends weren’t going to go through all the FATCA hoops just for my £100k per year in turnover.
And in terms of tax changes that helped? The Trump tax cuts resulted in a significant amount of savings that led to buying an airplane and significant production equipment, for example, being able to deduct a significant amount on an aircraft purchase — an aircraft that we wouldn’t have been able to afford without the change in the tax laws. That aircraft enabled my business to expand into smaller markets, which benefited those smaller markets in which we entered (they could get our product cheaper and resell it at a greater profit.) We could also target smaller towns that would have otherwise required flying commercial and then driving all day — then there was the issue of moving cargo quickly. Also the tax savings on equipment purchases allowed us to not have to pay copackers and instead set up our own bottling facility. Which lowered our cost per unit, allowing us to lower our wholesale prices, which led to our customers being able to make a larger profit. (Our business is making specialized fitness cleaning products and our customers are small boutiques and fitness studios.)
It’s very short sighted to see taxes that are paid only by “someone else.” If you run any sort of business at all, the effects of tax policy can be immediately evident. The typical wage worker doesn’t see it because they limit themselves to their immediate viewpoint: they fail to see the chain of transactions that lead to them having a job in the first place. An employed person has more economic impact than an unemployed person. That’s just a fact.
So yes, tax policy is felt by everyone, even those that don’t pay taxes.
Someone making over $400k might want to invest some of that money. The businesses in which that person would have invested would hire people. And pay wages. And taxes. If you take more of the “rich” money. They won’t invest as much. And thus won’t create value. Giving that money to the government doesn’t create value — or if it does, there is still the issue of deadweight loss. The private sector always spends more efficiently than government.
Every rich person I know doesn’t put their money under the mattress; they invest it in something.
As far as tax changes that affect me: well the very high rates of California taxation led me to moving my residence and business to Texas. When I lived overseas, the Biden-supported, Obama-signed FACTA legislation (which was ultimately a tax law) had a very significant impact. I couldn’t open business bank accounts in the UK which led me to not being able to expand my (then) consulting business because our potential client required a UK company and that company needed a UK bank account in order to get anything done. Since I wasn’t a UK resident, it made it even harder. I am not super rich so Barclays and friends weren’t going to go through all the FATCA hoops just for my £100k per year in turnover.
And in terms of tax changes that helped? The Trump tax cuts resulted in a significant amount of savings that led to buying an airplane and significant production equipment, for example, being able to deduct a significant amount on an aircraft purchase — an aircraft that we wouldn’t have been able to afford without the change in the tax laws. That aircraft enabled my business to expand into smaller markets, which benefited those smaller markets in which we entered (they could get our product cheaper and resell it at a greater profit.) We could also target smaller towns that would have otherwise required flying commercial and then driving all day — then there was the issue of moving cargo quickly. Also the tax savings on equipment purchases allowed us to not have to pay copackers and instead set up our own bottling facility. Which lowered our cost per unit, allowing us to lower our wholesale prices, which led to our customers being able to make a larger profit. (Our business is making specialized fitness cleaning products and our customers are small boutiques and fitness studios.)
It’s very short sighted to see taxes that are paid only by “someone else.” If you run any sort of business at all, the effects of tax policy can be immediately evident. The typical wage worker doesn’t see it because they limit themselves to their immediate viewpoint: they fail to see the chain of transactions that lead to them having a job in the first place. An employed person has more economic impact than an unemployed person. That’s just a fact.
So yes, tax policy is felt by everyone, even those that don’t pay taxes.
Those taxes will be passed onto the majority in the form of price hikes.
Further, with current inflation rates, $400k will be solidly middle-upper class in a few years from now.
Further, with current inflation rates, $400k will be solidly middle-upper class in a few years from now.
So what you are against is rich people not paying the taxes they are supposed to be paying, not against 'higher taxes'.
I used to think like you, until I realized that the people sinking millions of dollars in every electoral campaign to push candidates friendly to 'lower taxes' are the ones who are already taking advantage of every loophole.
I used to think like you, until I realized that the people sinking millions of dollars in every electoral campaign to push candidates friendly to 'lower taxes' are the ones who are already taking advantage of every loophole.
fortran77(5)
This book argues actually its western countries like UK, US, and FR that benefit as rulers buy London, Paris or NYC flats in the names of offshore companies.
https://www.amazon.com/Dictators-Without-Borders-Power-Centr...
Personally I think the correct response is to tax things rich people like in those countries. Specifically housing, high end cars etc.
Putting beneficial owners on real estate makes total sense.
https://www.amazon.com/Dictators-Without-Borders-Power-Centr...
Personally I think the correct response is to tax things rich people like in those countries. Specifically housing, high end cars etc.
Putting beneficial owners on real estate makes total sense.
The book looks interesting but I'm not a fan on the spin you're apparently putting on it.
The London real estate market and maybe real estate dealers perhaps benefit. Most citizens of UK don't benefit from parts of London being actually empty for purposes of investment.
The recycling of third world dollars back to the West has been ongoing since the "patrodollars" of the 1970s. Those who get a piece of those dollars benefit, the average citizen Western nations haven't benefited from the tremendous economic imbalance this has created.
The London real estate market and maybe real estate dealers perhaps benefit. Most citizens of UK don't benefit from parts of London being actually empty for purposes of investment.
The recycling of third world dollars back to the West has been ongoing since the "patrodollars" of the 1970s. Those who get a piece of those dollars benefit, the average citizen Western nations haven't benefited from the tremendous economic imbalance this has created.
I think they agree with you. Beneficial ownership is a legal term. Putting beneficial owners on real estate means not letting buyers hide their identities with shell companies.
This is changing. UK law will soon require property bought through companies to reveal the names and details of significant shareholders.
Just bought the book, thanks for the suggestion!
So a report by the elite (Brookings is essentially Rockefeller) is telling us how elites are evading taxes.
Sorry, I expect this PDF to be full of BS.
Sorry, I expect this PDF to be full of BS.
I think the Rockefellers became so powerful that material wealth doesn't mean much for them.
> I conclude with recommendations on how reporting requirements need to change to improve the
ability of regulators and the research community to detect and counter illicit finance.
LOL
LOL
Throwaway for obvious reasons
Since the world is lacking in the department of opinion of wealthy men, let me add something to this discussion:
I'm currently in the situation of becoming rich (from a global standpoint, unicorn early employees would laugh at my near future net worth) due to selling my company. I'm having conversations with both tax lawyers and private bankers who are interested in helping me manage my future money. It's very clear for both sides that:
a) I never want not to be rich again
b) Paying less taxes is better than paying more taxes
Even so, all the professionals I talked to were very straightforward with saying that trying to avoid taxes would bring more headaches than it was worth it. Deferring taxes is considered kosher even for tax authorities as long as I declare everything I have correctly and it wouldn't be that bad after the first uh, let's say bite after the liquidation event.
Still, they insisted that an offshore structure would be useful to me for the rest of my life. I'm not American, I'm a citizen of a developing country that isn't a total mess, but it's... developing. And let's leave it at that. A few cases that convinced me:
1) Tax officers have no downside to suing even completely transparent transactions. It's completely possible to get a tax bill with a heavy fine on top years after the fact because suddenly someone thought something was off. One of the tax lawyers I talked to mentioned* how he nullified a ~hundreds of millions fine/reassessment, but only after a long (+expensive) legal battle and a lot of stress for the sellers. Totally unfounded, and he mentioned it happened more than once.
2) I almost* lost my exit because the government bureaucracy was not working due to covid and the buyer had a hard deadline for Q1. Said bureaucratic procedure would be a single docusign in a business-friendly jurisdiction (aka tax heaven)
3) American private bankers find it a hassle to deal with developing country clients directly, handling their money through offshore accounts (as a business client, that is, the shell corp is the private banking client) is a lot easier.
4) This is not a case, but: I don't love paying taxes, but I understand that I live in a poor country and of course taking a tax dollar from me is a lot fairer than taking a tax dollar from my poor neighbor. Still, it is not beyond the realm of possibility that my government, or at least a few unsavory parties that could be in charge one day, decides that it wants to set a high wealth tax or outright confiscate investments and I don't plan on making that easy (see point a above).
So, there's that. No need to feel sympathies for the (future) millionaire here, just want to share that avoiding taxes is not my primary concern, and could not be for others, too.
* Yes, this is a joke * Later I confirmed with said client, he was still angry at it
Since the world is lacking in the department of opinion of wealthy men, let me add something to this discussion:
I'm currently in the situation of becoming rich (from a global standpoint, unicorn early employees would laugh at my near future net worth) due to selling my company. I'm having conversations with both tax lawyers and private bankers who are interested in helping me manage my future money. It's very clear for both sides that:
a) I never want not to be rich again
b) Paying less taxes is better than paying more taxes
Even so, all the professionals I talked to were very straightforward with saying that trying to avoid taxes would bring more headaches than it was worth it. Deferring taxes is considered kosher even for tax authorities as long as I declare everything I have correctly and it wouldn't be that bad after the first uh, let's say bite after the liquidation event.
Still, they insisted that an offshore structure would be useful to me for the rest of my life. I'm not American, I'm a citizen of a developing country that isn't a total mess, but it's... developing. And let's leave it at that. A few cases that convinced me:
1) Tax officers have no downside to suing even completely transparent transactions. It's completely possible to get a tax bill with a heavy fine on top years after the fact because suddenly someone thought something was off. One of the tax lawyers I talked to mentioned* how he nullified a ~hundreds of millions fine/reassessment, but only after a long (+expensive) legal battle and a lot of stress for the sellers. Totally unfounded, and he mentioned it happened more than once.
2) I almost* lost my exit because the government bureaucracy was not working due to covid and the buyer had a hard deadline for Q1. Said bureaucratic procedure would be a single docusign in a business-friendly jurisdiction (aka tax heaven)
3) American private bankers find it a hassle to deal with developing country clients directly, handling their money through offshore accounts (as a business client, that is, the shell corp is the private banking client) is a lot easier.
4) This is not a case, but: I don't love paying taxes, but I understand that I live in a poor country and of course taking a tax dollar from me is a lot fairer than taking a tax dollar from my poor neighbor. Still, it is not beyond the realm of possibility that my government, or at least a few unsavory parties that could be in charge one day, decides that it wants to set a high wealth tax or outright confiscate investments and I don't plan on making that easy (see point a above).
So, there's that. No need to feel sympathies for the (future) millionaire here, just want to share that avoiding taxes is not my primary concern, and could not be for others, too.
* Yes, this is a joke * Later I confirmed with said client, he was still angry at it
For some reason edit is not working here's with the format fixed:
Throwaway for obvious reasons
Since the world is lacking in the department of opinion of wealthy men[1], let me add something to this discussion:
I'm currently in the situation of becoming rich (from a global standpoint, unicorn early employees would laugh at my near future net worth) due to selling my company. I'm having conversations with both tax lawyers and private bankers who are interested in helping me manage my future money. It's very clear for both sides that:
a) I never want not to be rich again
b) Paying less taxes is better than paying more taxes
Even so, all the professionals I talked to were very straightforward with saying that trying to avoid taxes would bring more headaches than it was worth it. Deferring taxes is considered kosher even for tax authorities as long as I declare everything I have correctly and it wouldn't be that bad after the first uh, let's say bite after the liquidation event.
Still, they insisted that an offshore structure would be useful to me for the rest of my life. I'm not American, I'm a citizen of a developing country that isn't a total mess, but it's... developing. And let's leave it at that. A few cases that convinced me:
1) Tax officers have no downside to suing even completely transparent transactions. It's completely possible to get a tax bill with a heavy fine on top years after the fact because suddenly someone thought something was off. One of the tax lawyers I talked to mentioned[2] how he nullified a ~hundreds of millions fine/reassessment, but only after a long (+expensive) legal battle and a lot of stress for the sellers. Totally unfounded, and he mentioned it happened more than once.
2) I almost lost my exit because the government bureaucracy was not working due to covid and the buyer had a hard deadline for Q1. Said bureaucratic procedure would be a single docusign in a business-friendly jurisdiction (aka tax heaven)
3) American private bankers find it a hassle to deal with developing country clients directly, handling their money through offshore accounts (as a business client, that is, the shell corp is the private banking client) is a lot easier.
4) This is not a case, but: I don't love paying taxes, but I understand that I live in a poor country and of course taking a tax dollar from me is a lot fairer than taking a tax dollar from my poor neighbor. Still, it is not beyond the realm of possibility that my government, or at least a few unsavory parties that could be in charge one day, decides that it wants to set a high wealth tax or outright confiscate investments and I don't plan on making that easy (see point a above).
So, there's that. No need to feel sympathies for the (future) millionaire here, just want to share that avoiding taxes is not my primary concern, and could not be for others, too.
[1] Yes, this is a joke [2] Later I confirmed with said client, he was still angry at it
Throwaway for obvious reasons
Since the world is lacking in the department of opinion of wealthy men[1], let me add something to this discussion:
I'm currently in the situation of becoming rich (from a global standpoint, unicorn early employees would laugh at my near future net worth) due to selling my company. I'm having conversations with both tax lawyers and private bankers who are interested in helping me manage my future money. It's very clear for both sides that:
a) I never want not to be rich again
b) Paying less taxes is better than paying more taxes
Even so, all the professionals I talked to were very straightforward with saying that trying to avoid taxes would bring more headaches than it was worth it. Deferring taxes is considered kosher even for tax authorities as long as I declare everything I have correctly and it wouldn't be that bad after the first uh, let's say bite after the liquidation event.
Still, they insisted that an offshore structure would be useful to me for the rest of my life. I'm not American, I'm a citizen of a developing country that isn't a total mess, but it's... developing. And let's leave it at that. A few cases that convinced me:
1) Tax officers have no downside to suing even completely transparent transactions. It's completely possible to get a tax bill with a heavy fine on top years after the fact because suddenly someone thought something was off. One of the tax lawyers I talked to mentioned[2] how he nullified a ~hundreds of millions fine/reassessment, but only after a long (+expensive) legal battle and a lot of stress for the sellers. Totally unfounded, and he mentioned it happened more than once.
2) I almost lost my exit because the government bureaucracy was not working due to covid and the buyer had a hard deadline for Q1. Said bureaucratic procedure would be a single docusign in a business-friendly jurisdiction (aka tax heaven)
3) American private bankers find it a hassle to deal with developing country clients directly, handling their money through offshore accounts (as a business client, that is, the shell corp is the private banking client) is a lot easier.
4) This is not a case, but: I don't love paying taxes, but I understand that I live in a poor country and of course taking a tax dollar from me is a lot fairer than taking a tax dollar from my poor neighbor. Still, it is not beyond the realm of possibility that my government, or at least a few unsavory parties that could be in charge one day, decides that it wants to set a high wealth tax or outright confiscate investments and I don't plan on making that easy (see point a above).
So, there's that. No need to feel sympathies for the (future) millionaire here, just want to share that avoiding taxes is not my primary concern, and could not be for others, too.
[1] Yes, this is a joke [2] Later I confirmed with said client, he was still angry at it
That's a very important perspective, thanks for sharing. Your comment is actually the most interesting one I've read in this entire thread - it challenges my currently held beliefs. My current assumption was that, "all that offshoring and tax optimization stuff costs a lot of money and requires specialized skills, surely the rich would only do that to pay less taxes and keep more for themselves". But I see some very important additional factors in your comment, which I'll itemize:
> all the professionals I talked to were very straightforward with saying that trying to avoid taxes would bring more headaches than it was worth it
Good to know that the difficulty curve of tax avoidance is steep in the millionaire region, and that it's not obvious there's even a point in trying hard.
> Tax officers have no downside to suing even completely transparent transactions.
Minimizing risk of tax officers making mistakes or acting in bad faith.
> Said bureaucratic procedure would be a single docusign in a business-friendly jurisdiction (aka tax heaven)
Streamlining of legal/tax procedures.
> American private bankers find it a hassle to deal with developing country clients directly
Outsourcing the hassle to someone better suited to handling it.
> it is not beyond the realm of possibility that my government, or at least a few unsavory parties that could be in charge one day, decides that it wants to set a high wealth tax or outright confiscate investments and I don't plan on making that easy
Mitigating risk of unfriendly governance, similar to point 1.
I find points 2 and 3 particularly convincing - I can see "outsourcing hassle" to be a reason enough to create "an offshore structure". After all, quite a lot of things in a business is just finding way to outsource some hassle (and associated liability) onto someone better equipped for handling it. Taking all your points together, I can imagine a millionaire wanting to do this even if it would be a net loss of money for them. Time, peace of mind, lowered personal risk and less bureaucratic inertia in business activities are all worth a lot too (even if it's hard to estimate their dollar value).
You gave me something to think about.
> all the professionals I talked to were very straightforward with saying that trying to avoid taxes would bring more headaches than it was worth it
Good to know that the difficulty curve of tax avoidance is steep in the millionaire region, and that it's not obvious there's even a point in trying hard.
> Tax officers have no downside to suing even completely transparent transactions.
Minimizing risk of tax officers making mistakes or acting in bad faith.
> Said bureaucratic procedure would be a single docusign in a business-friendly jurisdiction (aka tax heaven)
Streamlining of legal/tax procedures.
> American private bankers find it a hassle to deal with developing country clients directly
Outsourcing the hassle to someone better suited to handling it.
> it is not beyond the realm of possibility that my government, or at least a few unsavory parties that could be in charge one day, decides that it wants to set a high wealth tax or outright confiscate investments and I don't plan on making that easy
Mitigating risk of unfriendly governance, similar to point 1.
I find points 2 and 3 particularly convincing - I can see "outsourcing hassle" to be a reason enough to create "an offshore structure". After all, quite a lot of things in a business is just finding way to outsource some hassle (and associated liability) onto someone better equipped for handling it. Taking all your points together, I can imagine a millionaire wanting to do this even if it would be a net loss of money for them. Time, peace of mind, lowered personal risk and less bureaucratic inertia in business activities are all worth a lot too (even if it's hard to estimate their dollar value).
You gave me something to think about.
>Since the world is lacking in the department of opinion of wealthy men
You're serious aren't you?
You're serious aren't you?
I was joking, the formatting ruined it :(
[deleted]
For future reference, though I see you figured it out: asterisks mark italics, two spaces in front of an empty paragraph mark a code block, URLs in comments gets turned into links automatically. That's about all HN offers in terms of formatting. So, for bullet lists and footnotes, you have to use characters other than asterisks.
The format you picked in your edit is one of the typical people arrive at. Myself I do like you[0], but some use daggers instead†, or rarely, superscripts².
--
[0] - Though I start my footnotes at 0, because https://en.wikipedia.org/wiki/Zero-based_numbering.
† - Once you get to ‡ and ⸸ it's getting tricky to pick a new one.
² - More often seen in mathematical formulas.
The format you picked in your edit is one of the typical people arrive at. Myself I do like you[0], but some use daggers instead†, or rarely, superscripts².
--
[0] - Though I start my footnotes at 0, because https://en.wikipedia.org/wiki/Zero-based_numbering.
† - Once you get to ‡ and ⸸ it's getting tricky to pick a new one.
² - More often seen in mathematical formulas.
Ye, and poor peoples are not allowed to use encryption like in Australia :> From when "wispering" make you a criminal ?
These people figure they can't attract legitimate investment so instead they index on how to bar the exits. It is more conspicuous who doesn't get the scrutiny of Brookings, ICIJ, TJN, and organizations like them. (hint: you elected them) These places are just fronts for post-hoc policy justification, and papers like these are pseudo-intellectual activism masquerading as scholarship.
I see a similar authoritarian nerd attitude in security all the time, where someone finds an unexpectedly invasive surveillance method and then tries to ingratiate themselves to the institutions who can mandate it. They think they have made something people want, when in fact they have only invented a new way to betray their fellow citizens to the insatiable will to power of bureaucracies. (Contrary to the talking points of their apologists, bureaucracies are in fact not made of people, they are made of bureaucrats)
Let's look at a problem these organizations don't care about, like the real social issue that is domestic money laundering, which not only converts the proceeds of really harmful crimes into legit bank deposits, it harms communities directly with real estate and rental bubbles, diseconomic businesses, dumping, political and police corruption, all of which their anti-capital policies directly create. The revenue-gap nerds are fine with laundering because some of it comes into the tax net, social consequences be damned.
While I have never earned enough to hide it in my life, I wish the class of people who think governments have a revenue problem but not a spending or scope problem would try solving a problem they didn't first cause for a change instead of thinking the world needs more of their concern and facilitation.
I see a similar authoritarian nerd attitude in security all the time, where someone finds an unexpectedly invasive surveillance method and then tries to ingratiate themselves to the institutions who can mandate it. They think they have made something people want, when in fact they have only invented a new way to betray their fellow citizens to the insatiable will to power of bureaucracies. (Contrary to the talking points of their apologists, bureaucracies are in fact not made of people, they are made of bureaucrats)
Let's look at a problem these organizations don't care about, like the real social issue that is domestic money laundering, which not only converts the proceeds of really harmful crimes into legit bank deposits, it harms communities directly with real estate and rental bubbles, diseconomic businesses, dumping, political and police corruption, all of which their anti-capital policies directly create. The revenue-gap nerds are fine with laundering because some of it comes into the tax net, social consequences be damned.
While I have never earned enough to hide it in my life, I wish the class of people who think governments have a revenue problem but not a spending or scope problem would try solving a problem they didn't first cause for a change instead of thinking the world needs more of their concern and facilitation.
It sounds like you have strong opinions which might be interesting but I found this comment incomprehensible. Who exactly are you talking about? What do you mean by domestic money laundering and “really harmful crimes”? Are you talking about drug dealing? White collar crime?
The comments here are like a bad reddit thread. For shame HN!
[deleted]
"New estimates by Congress’s official forecasters show Democrats’ tax cuts — included in their March stimulus package — will drive down tax rates on low- and middle-income people so much this year that those earning less than $75,000, on average, will owe nothing in federal income taxes."
"Those making between $75,000 and $100,000 will pay a scant 1.8 percent average tax rate this year, the nonpartisan Joint Committee on Taxation predicts."
"That will shift the relative burden to the wealthy, at least temporarily, with those earning more than $500,000 expected to pay more than two-thirds of all income taxes this year... Those making between $500,000 and $1 million will pay 20.8 percent of their earnings in income taxes. People earning more than $1 million will pay 25.8 percent."
https://www.politico.com/news/2021/04/25/dems-tax-cuts-biden...
"Those making between $75,000 and $100,000 will pay a scant 1.8 percent average tax rate this year, the nonpartisan Joint Committee on Taxation predicts."
"That will shift the relative burden to the wealthy, at least temporarily, with those earning more than $500,000 expected to pay more than two-thirds of all income taxes this year... Those making between $500,000 and $1 million will pay 20.8 percent of their earnings in income taxes. People earning more than $1 million will pay 25.8 percent."
https://www.politico.com/news/2021/04/25/dems-tax-cuts-biden...
So here’s several things I’m in favor of:
1. A loan is treated as repatriating any offshore foreign income that you might have;
2. We need to eliminate it at least tackle transfer pricing / profit shifting. One way to do that is to apportion profits based on revenue.
3. Residential units owned by corporations need to be taxed higher; and
4. Owning property in a country or state should make you a tax resident of that jurisdiction.
1. A loan is treated as repatriating any offshore foreign income that you might have;
2. We need to eliminate it at least tackle transfer pricing / profit shifting. One way to do that is to apportion profits based on revenue.
3. Residential units owned by corporations need to be taxed higher; and
4. Owning property in a country or state should make you a tax resident of that jurisdiction.
>4. Owning property in a country or state should make you a tax resident of that jurisdiction.
How should that work in practice?
Should a person who owns homes in Connecticut, California, New York, D.C., Virginia, Florida, Alps, Paris, Hong Kong, London, Etc be paying state taxes in every jurisdiction? I'm asking in earnest, and want billionaires to pay significantly more in taxes per dollar of gains and wealth than, e.g. Americans making median income, but how can that be enforced when it's less expensive to bribe/extort a politician/party than it is to pay their fair share?
How should that work in practice?
Should a person who owns homes in Connecticut, California, New York, D.C., Virginia, Florida, Alps, Paris, Hong Kong, London, Etc be paying state taxes in every jurisdiction? I'm asking in earnest, and want billionaires to pay significantly more in taxes per dollar of gains and wealth than, e.g. Americans making median income, but how can that be enforced when it's less expensive to bribe/extort a politician/party than it is to pay their fair share?
Yes, they would have a tax liability in each location, with foreign tax credit offsets. So they end up paying whatever is the highest tax rate.
This is a complex problem and I think the best we can hope for is to close any loopholes and manage with taxes and laws for the effects of negative externalities from high net worth individuals.
The also know what they are doing instead of trying to reverse engineer it like these studies are.