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How to encourage tax cheating by the very wealthy

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34 minutes ago, RobertMBlevins said:

Yes, I agree the super wealthy should pay their fair share. 

It HAS happened before that a few select people controlled most of the wealth in America. And it was probably a lot worse back then. 

The era of the Robber Barons and the bankers. Think industrialization, railroads, and the Gilded Age. A few people damned near owned everything that was possible to own. Including most of the labor force. 

Think today.

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20 hours ago, JoeWeber said:

Nothing he is doing is illegal, that's sure. But when you use the system and the tax code to nearly double your $65 Billion while pretending to mostly give it away in your lifetime you sort of beg the question of whether you are being undertaxed.

Thanks to you and Phil. I guess I've just had my head buried in the sand about it. I support a flat tax or strongly revised tax code, but for a simpler reason - I don't think I should have had to pay tax attorneys to prove my innocence. Of course, the legal fees were tax deductible, but that's not the same as using the money to grow the business.

Nor, do I "blame" the Bills' & Jeffs' of the world. Accountants get very caught up in meeting the challenge of helping their clients/employers to avoid taxes. It's like a game of chess to them. 

 

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(edited)
9 hours ago, RobertMBlevins said:

Very few people are actually super-rich. If you want to be fair and raise more money, the answer is a sliding scale flat tax without a deduction list and a tax code longer than three typical Bibles. The more they make changes to the tax code, the more the lawyers figure out ways to get around it. A straight-up flat tax on everyone with very limited deductions, has always been the best way. 

But it's been proposed a boatload of times...and just as many times it has been rejected. 

Deduction will always have to be a part of the equation. Otherwise some business could not exist. For some corporations profits are not realized for years. Others operate on very seasonal basis. But simplification is necessary.

9 hours ago, billvon said:

Why not keep the current progressive scale and just simplify the tax code?  The complexity of the tax code has nothing to do with how basic tax is calculated.  (And a "sliding scale flat tax" is still progressive; it just uses a different formula.)

(Needless to say there will ALWAYS be ways to get around paying taxes - but a simplified tax code would help reduce the number of people who avoid taxation.)

YES, as per my suggestion above. Tax codes typically arise because some genius politician has an idea on how to "incentivize" a corporations, or individuals actions.

8 hours ago, JoeWeber said:

This is nothing short of arrogant assholeishness but I have always welcomed confusion in the tax code. Some years ago I sorted out a way to distribute fully tax deferred assets into LLC's and then break them into separate parts and then bundle some bits into assets, under separate contracts, to be distributed into other LLC's so they could be used to purchase, tax deferred. other assets that, go figure, passed the IRS smell test. So yes, just like any other game if your opponent leaves an opening you are a moron if you don't take it. But I'm a small potatoes douchebag. At 50 million things should be different.

Human behavior as its always worked. In sports, taxation, life, etc. writing on the wall is interpreted in different ways.

The statutes around taxation need to be more agile. So unintended consequences can be quickly addressed. The code simplified. To raise more money the slope of the marginal rate increased. More enforcement is needed.

The US is 1/2 way between Greece and the Nordic countries. Concerning outright cheating and the citizens who think the tax systems are fair and just.

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As a part of this equation is the entire idea that government supplies needed services. That government is efficient. When government is painted as "evil" and "enemy", a swamp of waste, corruption, etc. Its citizens are more likely to cheat and go to extreme lengths to avoid paying taxes.

Edited by Phil1111
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14 hours ago, billvon said:

Why not keep the current progressive scale and just simplify the tax code?  The complexity of the tax code has nothing to do with how basic tax is calculated.  (And a "sliding scale flat tax" is still progressive; it just uses a different formula.)

(Needless to say there will ALWAYS be ways to get around paying taxes - but a simplified tax code would help reduce the number of people who avoid taxation.)

Hi Bill,

Re:  Why not keep the current progressive scale and just simplify the tax code? 

I agree with this with one exception.  The current system of progressive scale is a plateau system.  This what I do not like.  If you make just one dollar more in income, it can change your taxes from 18% to 26% ( I think those are correct numbers - if they are not, I am sure you know what I am talking about ).  IMO it should be an increasing slope system where that one dollar of income does not impact you so much.

Jerry Baumchen

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51 minutes ago, JerryBaumchen said:

Hi Bill,

Re:  Why not keep the current progressive scale and just simplify the tax code? 

I agree with this with one exception.  The current system of progressive scale is a plateau system.  This what I do not like.  If you make just one dollar more in income, it can change your taxes from 18% to 26% ( I think those are correct numbers - if they are not, I am sure you know what I am talking about ).  IMO it should be an increasing slope system where that one dollar of income does not impact you so much.

Jerry Baumchen

In a truly progressive taxation system, you would only pay 26% on that portion of your income earned above the threshold. For example, if the threshold was $10,000 and you earned $10,100 you'd pay $1,600 for the income up to and including $10,000 and an additional $26 on the $100 over and above the threshold, in total $1,626.

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(edited)

I think what it comes down to is how much the majority of people want their government to provide, and how the government will pay for all of it. Do you want a system where you are pretty much on your own regarding things like medical care, Social Security payments you can actually live on, good bridges, roads, national defense, care for the poor and infirm, etc. This battle has been going for a long time. Or at least since FDR was President. 

One bloc of people want less government and believe you should mostly worry about your own problems, your own retirement, your own medical care. And the poor can get just enough to avoid starving in the street. And only get that because it is embarrassing to see people starving in the street, not for any moral reason, or because they have a conscience. You could describe this bloc as basically conservative. 

The other bloc believes that working people should get a fair shake on things and that if we elect a government, that this government's job should be focused on defense and taking care of people properly as a reward for hard work, or just for being a citizen in America. You could describe this bloc as progressive. 

The problem is that when just a few corporations and a select number of people control all the wealth, then the playing field becomes tilted. None of these entities get rich by just investing in the stock market. They got that way on the backs of working people, and after they do...they tend to ignore those people. They just want them to keep working. 

This kind of thinking was what created communism, at least the original idea of it, which people think of as repressive, but in its original form...was progressive taken WAY too far. And it was soon corrupted into a very repressive form of government. Communism showed that both viewpoints on government can be taken to extremes, and that extremism on either side never works. What is needed is a happy medium between the two viewpoints...and if you ask me...TERM LIMITS. If they are going to do term limits on the US Presidency, it should be done with the other major government offices. 

This brings in fresh ideas regularly, and avoids putting people in office whose sole *real* goal is to simply REMAIN in office. Public service in those offices should always be a temp job, not a permanent career. 

Edited by RobertMBlevins

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3 hours ago, rifleman said:

In a truly progressive taxation system, you would only pay 26% on that portion of your income earned above the threshold. For example, if the threshold was $10,000 and you earned $10,100 you'd pay $1,600 for the income up to and including $10,000 and an additional $26 on the $100 over and above the threshold, in total $1,626.

I think that’s how it works. Software does my taxes now, but when i did them by hand it was that way. 
Wendy P. 

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18 hours ago, JoeWeber said:

Just like any other game if your opponent leaves an opening you are a moron if you don't take it. But I'm a small potatoes douchebag. At 50 million things should be different.

Well, right, everyone thinks things should be different at some level above what they are worth.  But I assure you that everyone thinks like you do - the DZO's think what they do is just "not being stupid" but the rich Chemical Bank VP's should pay their fair share.  The Chemical Bank VP's think that what they are doing is just not being a moron, but those hedge fund managers should pay their fair share.  They make MILLIONS!  The hedge fund managers think that what they are doing is just good business sense - no reason to pay an extra million in taxes, that's for sure! - but the Bill Gates of the world are just abusing the system.  Etc etc.

You have a level of wealth that 99.9% of the people on the planet will never, ever see.  (Not an attack on you; I am similar.)  But you think "hey, I am small potatoes; go after the rich people."  Everyone thinks that.  Well, everyone except Bezos and Gates perhaps; but even doubling their taxes would change the overall budget situation in the US government by approximately zero.

 

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4 hours ago, JerryBaumchen said:

I agree with this with one exception.  The current system of progressive scale is a plateau system.  This what I do not like.  If you make just one dollar more in income, it can change your taxes from 18% to 26%.

Nope.  It just changes your taxes from 18% to 26% (for example) on the amount you make over the threshold.

Let's use a real world example.

If you make $40,125 you are in the 12% tax bracket.  If you make $40,126 the next year you move into the 22% tax bracket.  But your taxes do not go up by 10% overall - they go up by 22% of $1, or $0.22.

 

 

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1 hour ago, billvon said:

Nope.  It just changes your taxes from 18% to 26% (for example) on the amount you make over the threshold.

Let's use a real world example.

If you make $40,125 you are in the 12% tax bracket.  If you make $40,126 the next year you move into the 22% tax bracket.  But your taxes do not go up by 10% overall - they go up by 22% of $1, or $0.22.

 

 

Hi Bill,

I know someone who had a somewhat 'huge' tax increase due to a 'small' increase in income.  However, it may have been an overall tax increase.  The result of both federal taxes & Oregon state income taxes.

Jerry Baumchen

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5 minutes ago, JerryBaumchen said:

I know someone who had a somewhat 'huge' tax increase due to a 'small' increase in income.  However, it may have been an overall tax increase.  The result of both federal taxes & Oregon state income taxes.

Yes, there are all sorts of cases where a slight increase in income can have a huge effect.  But for the most part that's due to other things kicking in, like triggering the AMT - not due to simple progressive taxation.

 

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6 hours ago, JerryBaumchen said:

The current system of progressive scale is a plateau system.  This what I do not like.  If you make just one dollar more in income, it can change your taxes from 18% to 26% ( I think those are correct numbers - if they are not, I am sure you know what I am talking about ). 

Jerry, Google the term "marginal tax rate". But by now you probably know.

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17 hours ago, gowlerk said:

Jerry, Google the term "marginal tax rate". But by now you probably know.

Hi Ken; and all of you,

Re:  But by now you probably know.

Let's just say I learned a lot - Now to merely leave with my tail between my legs.  :`o

Jerry Baumchen

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3 hours ago, JerryBaumchen said:

Hi Ken; and all of you,

Re:  But by now you probably know.

Let's just say I learned a lot - Now to merely leave with my tail between my legs.  :`o

Jerry Baumchen

Been there, know the feeling. Kinda scratchy there, isn’t it?

Wendy P. 

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On 5/9/2021 at 6:43 PM, billvon said:

Well, right, everyone thinks things should be different at some level above what they are worth.  But I assure you that everyone thinks like you do - the DZO's think what they do is just "not being stupid" but the rich Chemical Bank VP's should pay their fair share.  The Chemical Bank VP's think that what they are doing is just not being a moron, but those hedge fund managers should pay their fair share.  They make MILLIONS!  The hedge fund managers think that what they are doing is just good business sense - no reason to pay an extra million in taxes, that's for sure! - but the Bill Gates of the world are just abusing the system.  Etc etc.

You have a level of wealth that 99.9% of the people on the planet will never, ever see.  (Not an attack on you; I am similar.)  But you think "hey, I am small potatoes; go after the rich people."  Everyone thinks that.  Well, everyone except Bezos and Gates perhaps; but even doubling their taxes would change the overall budget situation in the US government by approximately zero.

 

All true but this is Speakers Corner. I have, admittedly, achieved a certain degree of financial security through an odd combination conflicting of galling hypocrisies and inadvertent good works. From what I hear, you went to school. Happy though we each are with our respective outcomes I, as humbly as I can, respectfully submit that those among and above us who are somehow able to scrape together another $50 Billion or so while my favorite sushi chef is collecting dinner at the local food bank ought to be paying a crap load more. Especially if it is futile and punitive.

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