[HN Gopher] What lies beneath: Evidence from leaked account data...
___________________________________________________________________
What lies beneath: Evidence from leaked account data on offshore
banking use
Author : kemonocode
Score : 254 points
Date : 2021-05-24 15:18 UTC (7 hours ago)
(HTM) web link (www.brookings.edu)
(TXT) w3m dump (www.brookings.edu)
| mistrial9 wrote:
| discussed here https://news.ycombinator.com/item?id=27089906
| TOSSAWAY_1 wrote:
| If the IRS knows how much money I owe why dont they just send me
| a bill?
| seieste wrote:
| They can and they do if you don't file, and they'll charge you
| 5%/month for the convenience. The IRS can even file a return on
| your behalf, which they do to tax protestors. If you don't even
| have an SSN, they'll conveniently create one for you.
| tialaramex wrote:
| 1. There exist politicians who believe that forcing you to fill
| out the paperwork reminds you that taxes are evil. They're
| doing it for your own good, see?
|
| 2. There exist tax preparation companies which profit
| enormously from doing the paperwork for you and they'd miss out
| on that profit if the government just billed you.
| cle wrote:
| It's because they don't actually know how much taxes you owe.
| They aren't omniscient (thankfully) so they don't know e.g.
| how much in deductions you should have.
|
| (I agree that #2 is a big problem, but I don't think it's
| actually the reason we file taxes.)
| maxerickson wrote:
| People mostly take the standard deduction.
|
| (85-90% of households in recent years)
| jandrese wrote:
| Yes, but only because I got capped out on deductions
| before I exceeded what the standard deduction would give
| me. Increased my tax burden about 1.5% overall that year.
| Not as much the next year because I had much less
| charitable giving. Sure am glad I'm getting to pay for
| all of the stuff those rich people aren't anymore thanks
| to their massive tax break.
|
| Oh, and my taxes are supposed to increase even more once
| the Trump tax holiday for the middle class expires in
| 2025. Luckily for corporations it is permanent for them.
| That tax plan was the most blatant government handout to
| the 1% and for some reason 40% of Americans think it's
| the best tax plan ever.
| maxerickson wrote:
| A majority of people took the standard deduction prior to
| the changes too, just not quite such a big majority.
|
| In any case, the standard deduction does have the effect
| of significantly reducing the administrative burden of
| taxation, and it crosses off one of the arguments used in
| favor of pointlessly complex tax filing.
| bananabreakfast wrote:
| It will be far more now after the Trump tax bill as well.
|
| You now have to be able to deduct over $24k to not take
| the standard deduction.
| koheripbal wrote:
| The real reason is that Americans owe money on more income
| than the gov't is aware of, and if you're going to omit
| income, they want you to explicitly lie about it so you can
| be prosecuted for it.
| symlinkk wrote:
| They could still send you a bill that lists your income and
| has a note that says
|
| "If you had any income that is not reported here, report it
| on irs.gov/.... Failure to do so is punishable by ..."
|
| This would make things significantly easier for 90% of the
| population.
| toomanyrichies wrote:
| This is what I'd think as well. If they wanted to corner
| someone into explicitly lying in order to allow for
| prosecution, wouldn't they still be doing so by claiming
| non-standard deductions which they weren't actually
| eligible for?
| dragonwriter wrote:
| > they want you to explicitly lie about it so you can be
| prosecuted for it.
|
| Since "they" also define what you can be prosecuted for,
| that's a bit of an odd justification even before
| considering the fairly strong evidence from both tax prep
| lobbying and anti-tax candidate behavior (including
| occasionally saying the quiet part out loud directly about
| the pain in the process being necessary to keep tax burden
| front of mind for taxpayers) that the two reasons cited by
| the grandparent are, in fact, the dominant factors.
| Ekaros wrote:
| Now is the punishment important part or eventually
| reclaiming it? In systems where taxes are done by agency
| and unreported income is found they still have to pay. Was
| pretty common with cryptos some time ago here.
| notyourwork wrote:
| > 1. There exist politicians who believe that forcing you to
| fill out the paperwork reminds you that taxes are evil.
| They're doing it for your own good, see?
|
| Which ones? I don't agree or disagree, but I think it's a
| good practice to call out politicians when we make claims
| they do something. That way it gives a more clear line of
| sight to your claim.
| tialaramex wrote:
| Basically all followers of Grover Norquist. So, almost all
| Republicans who were around before Donald Trump.
| NovemberWhiskey wrote:
| You proceed from a fallacy.
|
| The IRS doesn't know how much tax you owe because Congress has
| created a massively complex system that includes using
| deductions to incentivize certain types of behavior, as well as
| using the tax system as a mechanism to deliver means-tested
| benefits.
| bb611 wrote:
| 90% of US taxpayers used the standard deduction in 2018, up
| from 70% in previous years.
|
| This has been a major topic of discussion in tax circles for
| decades, the vast majority of Americans do not benefit from
| deductions and the federal government's direct knowledge of
| your income is essentially identical to your own (because of
| mandatory reporting from employers, banks & other financial
| service entities).
|
| Specific deductions are written by and for high income
| individuals, and supported by lobbying from the tax industry
| which wouldn't exist without them, but they're not used by
| the vast majority of Americans, especially with raised SALT
| limits and doubled standard deduction.
| NovemberWhiskey wrote:
| Refer to my response to another comment below; it is
| absolutely wrong to assume "this person takes a standard
| deduction so they haven't any tax forms to fill".
|
| And this is not just limited to the Earned Income Tax
| Credit.
|
| There are also Child Credits, Child and Dependent Care
| Credits, Adoption Credits, Residential Energy Credits (for
| those who got solar), Low-Income Housing Credits (for low-
| income home owners), American Opportunity Tax Credits (for
| those with low/middle incomes paying college expenses) ...
| and all of these are relevant to non-itemizers.
|
| P.S. there are also above-the-line deductions available
| which reduce your AGI _even if you take the standard
| deduction_ - an important one being the one for Student
| Loan Interest.
| AnimalMuppet wrote:
| Yeah. For example, one year I bought double-pane windows for
| my house, which were eligible for a tax deduction (on the
| grounds of promoting energy conservation). Either I have to
| tell the IRS that I bought those windows, _or the IRS has to
| know that I bought windows_. The second option is too close
| to dystopian nightmares for my taste.
| Ekaros wrote:
| No system handles that kind of case. But they do handle one
| where person doesn't take the deductions. And is happy
| without them.
| NovemberWhiskey wrote:
| Precisely. For those playing along at home, that would be
| the Residential Energy Efficient Property Credit, Form
| 5695.
| jandrese wrote:
| Nobody is calling for a completely omniscient IRS.
|
| What should happen is you log in to irs.gov and see
| everything they know (number of kids, income, interest,
| reported charitable giving, etc...), you fill out the
| missing pieces (energy credits, when you bought and sold
| stocks, charitable giving not reported to them, etc...),
| and they run the calculation. It should take almost no time
| at all for people with simple returns and only a few
| minutes of inputting some basic figures for most everyone
| else, with of course a handful of people who have
| terminally complex returns and need an accountant.
|
| Instead you have to manually enter all of the information
| the IRS already knows because otherwise nobody would pay
| for TurboTax or H&R Block. Only real accountants would be
| necessary for those special cases where people have complex
| holdings.
| coderintherye wrote:
| You assume everyone itemizes deductions. There is a thing
| called the "standard deduction" which renders your point moot
| for the people using it which I suspect has a lot of overlap
| with the people who would like the IRS to do the calculation.
| NovemberWhiskey wrote:
| No; I am not assuming that. The standard deduction does
| cover a lot of people; but a lot of the people that it
| covers end up filling out other forms as part of their
| returns for tax credits.
|
| For example, the Earned Income Tax Credit is a means-tested
| benefit program that's delivered through the tax system.
| This is not a niche program - 25 million families benefit
| from it.
|
| It requires filers to identify how many qualifying children
| they have, which in turns depends on things like the
| educational status (is this child in school, college, are
| they a full-time student) and residency (child must
| generally live with you, but with exceptions for overseas
| military service, etc).
|
| In cases where multiple filers can claim a qualifying child
| (e.g. cohabiting single filers), you're required to make an
| election as to which return will claim the qualifying
| child.
|
| The EITC also encourages reporting of informal income
| (because it's only available to people who earned an
| income) which might not be on a W-2 / 1099, e.g. baby
| sitting, to qualify.
|
| None of that stuff is known to the IRS from W-2s, 1099s
| etc. and they are dependent on the filer to provide it
| every year, especially as circumstances change; and filers
| are strongly incentivized to provide it as the credit is
| _refundable_.
| seanp2k2 wrote:
| Unsure why this was downvoted as other countries do this and
| literally TurboTax lobbies against automated filing. Because in
| America, companies are people, and their free speech rights
| include the ability to influence legislation + make donations
| to support that influence.
| eli wrote:
| Because Intuit/TurboTax have successfully lobbied for decades
| to prevent the federal government from pre-filling tax forms.
|
| https://www.propublica.org/article/filing-taxes-could-be-fre...
| salawat wrote:
| Cash and other transactions without established reporting
| requirements is why. They only know what gets reported to them
| as a pre-requisite of being an employer or hiring entity in the
| United States. The burden is actually on the taxpayer to
| accurately report the entire detail of their taxable footprint
| as defined in the tax code, as the IRS would otherwise require
| a perfect surveillance infrastructure, wherein every movement
| of money is traceable to assure your tax liability is
| accurately assessed.
|
| The real question, in my mind, is that, knowing John Q.
| Taxpayer is burdened with understanding the tax code in it's
| entirety (in the spherical cow, in a vacuum sense), why in
| heaven's name are things written in such a manner whereby doing
| everything by the book is so hard?
|
| From my experience, most people get the income part, those who
| have good portfolios get capital gains, but most people don't
| even know where to start looking if they aren't guided to it by
| an adversarial audit, which are guaranteed to be
| counterproductive in fostering the any degree of goodwill
| between taxpayer and tax service. Obviously, an accountant is
| capable of learning the corpus of material to be able to work
| with it, but given both the licensure requirement, and the fact
| most accounting questions I've heard resulted in a lot of open
| to interpretation answers, I'm not at all confident saying it
| is reasonable to expect the taxpayer to accurately report
| things, and furthermore, to expect some group of experts to
| handle it for everyone else, we've not done a good job at
| treating tax expertise as a public good in the accessibility
| department.
|
| In short, at it's core an information propagation problem,
| suffering from perverse incentives present in private
| enterprise guarding and perpetuating information asymmetry to
| create opportunities for profit extraction at the expense of
| public process being rendered largely ineffectual.
| alasdair_ wrote:
| In part, they know a bunch of stuff but not everything, so they
| want to see if you lie about the stuff they DO know about
| because that suggests you are also lying about stuff they don't
| know about.
| everybodyknows wrote:
| It's a good theory, but is there supporting evidence?
| michael1999 wrote:
| In many countries they do.
| Layke1123 wrote:
| And people wonder why I make posts titled, "I hate capitalism, am
| I alone?"
| internetslave wrote:
| I have a conspiracy theory that there are far more rich people
| than we are lead to believe, also that most of us are just
| working to prop them up and keep them rich.
| admissionsguy wrote:
| Not sure about the first sentence, but how is "most of us are
| just working to prop them up and keep them rich" a conspiracy
| theory? Isn't that the whole basis of capitalism? I am asking
| honestly. The social order being a mostly immutable pyramid has
| always been the natural model of how things work in my mind.
| internetslave wrote:
| I just think the distribution of wealth that we are shown,
| "only .x% of the country have 50 million" is way off from
| reality.
| reedjosh wrote:
| > Isn't that the whole basis of capitalism?
|
| I think it's only exacerbated by government intervention
| (corruption) and regulatory capture.
|
| I do agree that human nature tends to winners and losers, but
| right now the losers are being bashed over the head by a tool
| they think is helping them.
| jandrese wrote:
| At the same time, the natural flow of capital is upward.
| Without government intervention you end up back at
| feudalism as a very small percentage of the population
| controls effectively all of the wealth. The way to combat
| this is progressive taxation and government spending on
| social programs and infrastructure.
| BLKNSLVR wrote:
| In Australia they appear to be voting in favour of
| continued bashing.
|
| I think there's some kind of analogy to the Dunning-Kruger
| effect where people are deluded that they are in fact in
| the group of people that will be advantaged by lowering
| corporate tax rates, for example.
| admissionsguy wrote:
| I mean fundamentally, accumulating capital would be pretty
| pointless if not for legions of poor(er) people willing to
| do whatever the owner of the capital wants them to.
| makomk wrote:
| One of the standard anti-capitalist arguments for
| redistributing wealth is that the super-wealthy do not,
| in fact, use their wealth to have others at their beck
| and call to an extent even remotely proportional to how
| much better off they are. The usual framing is that less
| wealthy people spend far more of their money on goods and
| services, therefore we're better off if they have the
| money instead of the super-wealthy, but of course it's
| the same thing really.
| dillondoyle wrote:
| 100% true. bill hwang is a recent example he was on paper >$20
| billion. though levered to the gills and it blew up. But there
| are a lot more examples that aren't big headlines.
| vixen99 wrote:
| Perhaps I'm missing something but how am I working to keep rich
| people rich? There must be specific instances but is this a
| general rule?
| BLKNSLVR wrote:
| You provide labour to earn your living as opposed to
| providing capital.
|
| If you're providing labour then it's likely that you're
| providing a small percentage of the return that those
| providing capital receive as dividend.
|
| Value of labor provider being transformed into profit for
| capital provider.
| cool_dude85 wrote:
| Sure. You know those police officers and courts of law and
| militaries you pay for? Those are the guys whose job it is to
| keep you from grabbing things from rich people.
| Cyril_HN wrote:
| What sort of evidence would we expect to see if that was true?
| Daishiman wrote:
| It's not really a conspiracy. You just need to know the right
| people intimately.
|
| I live in a country with a thoroughly dysfunctional banking
| system which, by most accounts, fall right in the middle of
| the global income bracket.
|
| Yet I know a ton of people in the upper-middle and lower-
| upper class and they all have the following characteristics
| of their wealth, which _do not_ appear in most wealth
| statistics:
|
| * One or multiple bank accounts in offshore tax havens, with
| the US being the most important
|
| * Multiple properties, whose real ownership is hidden by
| being assigned to family members, friends, and relatives
|
| * A lot of overseas trips to buy things that are normally
| horribly expensive due to to import restrictions.
|
| * A deep, thorough understanding not only of tax law, but
| also personal connections with people who work in tax
| agencies to understand when to avoid (legally), when to evade
| (knowing the tax agency won't pursue evasions under a certain
| currency amount) and when to get into convenient tax amnesty
| regimes.
|
| Again, these aren't phenomenally rich people and they're
| easily hiding away 50-85% of their net wealth. By most
| metrics these people's income would, in theory, put them in
| median American lifestyle. Yet it's obvious that their
| standard of living _easily_ puts them in the top 2-5% of a
| developed country, with the addition that labor costs are so
| cheap that they can afford services even pretty wealthy
| people in other places cannot.
|
| This is a classic in Latin America, and I have no reasons to
| believe it's any different elsewhere; the instruments are
| just different.
| internetslave wrote:
| Basically this. I spent some time in the Bahamas with
| connected people. Really opened my mind up to a hidden
| world that's actually quite big.
| dboreham wrote:
| Widespread support for tax cuts for rich people?
| internetslave wrote:
| I just don't buy the wealth distribution that they are
| showing us. I don't think the government even knows the true
| wealth distribution. I think it's also partly political, they
| can't go, "hey! Look how many people have 100 million!"
| edouard-harris wrote:
| > there are far more rich people than we are lead to believe
|
| This is almost certainly true -- apart from oligarchs,
| dictators, and crypto billionaires, it's broadly understood
| that "500 richest" lists also miss a fair number of anonymous
| Omaha residents, for example.
|
| > most of us are just working to prop them up and keep them
| rich
|
| I think this part is probably a mischaracterization (though I
| could also just be misinterpreting what it means). To take the
| limit case, consider a wealthy dictator who stole absolutely
| everything he owns, and who flees his ruined country. In this
| scenario, the aggrieved parties are _the people he stole his
| wealth from_ , as opposed to, e.g., the waitress who ends up
| serving him drinks on a Caribbean island.
|
| That means to the extent you believe the "prop them up" part of
| the theory, you must also believe that most wealth
| concentrations arise more from things like theft, and less from
| things like value creation. My experience has been that this
| seems untrue today and almost certainly becomes more untrue
| every year (but I do understand that reasonable observers may
| disagree).
| dmcgee wrote:
| > you must also believe that most wealth concentrations arise
| more from things like theft, and less from things like value
| creation.
|
| Maybe, maybe not. [1]
|
| [1] https://www.nbcdfw.com/news/tech/cybercrime-to-
| top-6-trillio...
|
| As a side note I appreciate the urgency in the tone of the
| quoted here.
| mhuffman wrote:
| >That means to the extent you believe the "prop them up" part
| of the theory, you must also believe that most wealth
| concentrations arise more from things like theft, and less
| from things like value creation. My experience has been that
| this seems untrue today and almost certainly becomes more
| untrue every year (but I do understand that reasonable
| observers may disagree).
|
| It is pretty well demonstrated and accepted that both IQ and
| talent (in anything, business, sports, art, whatever) have a
| Gaussian (normal) distribution, but wealth does not. It has a
| Pareto (power) distribution.
|
| So there is something more than just offering value (ie. the
| results of talent or IQ or even work) that contributes to the
| accumulation of wealth.
|
| Some of this has to do with the "Snowball Effect" where it is
| easier to make more money at a faster rate, the more money
| you have.
|
| But even that doesn't really get to the heart of the issue.
|
| There is another surprising effect at play!
|
| In a non-sophisticated version (ie. the version everyone is
| taught in the beginning economics classes) of economics,
| there is an assumption that someone pays money that they
| believe is equal to value of some thing that they want. And
| if this is true, no wealth actually changes hands. You paid
| $X for something that is worth $X to you ... and maybe others
| and the person that sold it to you got $X of value which is
| what they thought it was worth selling it at. The seller is
| richer by $X but you are richer by something worth $X, so it
| is really a wash.
|
| But we have to pretend in this case that both sides know the
| worth of the item in question. And this is almost never the
| case!
|
| If we allow for whoever "misjudges" the value to be the
| "loser" and the other to be the "winner" in the exchange as
| measured by one or the other getting a little more value out
| of the deal than the other, then something magical happens.
|
| If you play out this scenario (and you can model it yourself
| in your favorite software) with many "agents" doing these
| deals, and if you give every single transaction a completely
| blind and fair chance of 50/50 of being the winner and loser
| in the transaction, and you do this many, many times ... one
| agent will always end up with ALL the money in the end!
|
| And this is without theft (as the gp comment insinuated) and
| is also without there necessarily being any "real value"
| created (as you suggested).
|
| There is very interesting and recent research in this
| area[1].
|
| BTW, I used to think more like you than the GP comment (and I
| still don't really agree with the GP comment) but if you take
| the time to look into the research and understand the math
| behind what is going on, it is a real eye-opener and a
| different perspective on why wealth inequality seems to show
| up in basically every type of economy and society given
| enough time.
|
| https://www.scientificamerican.com/article/is-inequality-
| ine...
| monkeycantype wrote:
| hello Edouard,
|
| > the aggrieved parties are the people he stole his wealth
| from, as opposed to, e.g., the waitress who ends up serving
| him drinks on a Caribbean island.
|
| I understand your logic here, but I think in these scenarios
| we are all losing - if the dictator's money is the only game
| in town you have to play his game and by his rules.
|
| When the efforts of the waitress, and all the other effort
| and resources directed to fulfilling the dictators whims, it
| creates a network of economic activities around a single
| person's will.
|
| If that money was being spent by the population he stole it
| from, the choices of the spenders will be more diverse,
| reflecting the desires of a that whole population, this
| creates a more complex network of economic activity and it
| also means that people supplying that demand have greater
| choice in how they participate.
|
| it reminds me of the ant article from the other day.
|
| https://www.theatlantic.com/science/archive/2021/05/ant-
| tape...
| akiselev wrote:
| That contrast of value creation against theft is a false
| dichotomy. Reframing the latter as "value capture" or "wealth
| extraction" and treating it separately from value creation
| gives way to a far more robust analysis.
| devmunchies wrote:
| the value of gold has gone up 30x (in USD) since the 70s.
|
| There must be some old noble families with vaults of gold that
| are "off the books".
| the_optimist wrote:
| You'll never see rich people argue for a wealth tax, but they
| sure as hell will parade demanding that we raise taxes on
| income of the service class.
| javert wrote:
| Which raises a subsequent question:
|
| Why does the middle class clamor to raise taxes on the rich,
| which won't appreciably benefit themselves, when they could
| instead push to lower taxes on themselves, which will benefit
| themselves?
|
| Maybe different in Europe, but in the USA tax increases do
| not find their way back to benefits for the public.
|
| I mean unless by "public" you mean the next country we want
| to "liberate" and bring "democracy" to...
| medvezhenok wrote:
| I'll copy my answer from above since I think it's an
| important point and relates to your question:
|
| "Money at the top levels is not at all like money for the
| rest of us. For a middle class citizen, money is about
| consumption and freedom to do what you want (with enough of
| it).
|
| At the top end of the distribution, money is no longer
| about consumption or freedom (since you can never
| realistically consume as much as they have, and you don't
| have to work after you've saved like $10M). Money at that
| level is a proxy for power - a group of oligarchs can
| basically have the power of a shadow government, but
| unelected. And the real question to ask is "how much
| power/leverage do we want an individual (or a group of rich
| oligarchs) to have in a democracy."
|
| So taxing the rich is not even about spreading the wealth,
| necessarily - if you redistributed it directly you might
| get inflation by redirecting investment money into
| consumption. It's more about limiting the amount of power
| that a person can accumulate over others."
| javert wrote:
| If you take away rich people's money, other kinds of
| "insiders" will still pull the levers to enrich
| themselves and benefit their cronies at the expense of
| the public well-being.
|
| The regulatory state, even if democratic, is
| fundamentally self-disregulating (as opposed to self-
| regulating).
| alistairSH wrote:
| Anecdotal... my peers (upper middle-class in the US)
| generally realize the taxes they pay fund all the stuff we
| rely upon to stay upper middle-class. Good public schools,
| roads, etc. We just want the rich to pay their fair share
| too.
|
| Or, if you're a jaded cynic, the rich are mostly just
| greedy sociopaths. They want to minimize their own tax
| burden and give zero fucks about the betterment of society.
| They got theirs, screw everybody else.
| javert wrote:
| Both of those things are definitely untrue.
|
| When I lived in the US, the vast majority of my taxes
| went to the federal government and didn't come back in
| local benefits like schools and roads.
|
| (Sure, federal money comes back to universities in the
| form of research grants which pay for foreign PhD
| students to work in bullshit paper mills. I've seen that
| firsthand. The wastage of federal money is near 100%.)
|
| Separately, I've known lots of rich people. Of course,
| they are just like other people. They are not all greedy
| sociopaths. Grow up.
| gaoshan wrote:
| In fact they will use media, culture, religion and politics
| to get sufficient numbers of the service class, as you call
| it, to do that for them.
| macintux wrote:
| Never, eh?
|
| https://www.cnbc.com/2019/02/19/bill-gates-taxes-on-rich-
| sho...
|
| https://www.theguardian.com/news/2020/jul/13/super-rich-
| call...
|
| https://www.newyorker.com/magazine/2020/01/06/the-ultra-
| weal...
| the_optimist wrote:
| None of these are calls for wealth taxes. These are calls
| for income taxes.
|
| This is called "pulling up the ladder."
| ZeroGravitas wrote:
| At least two of the articles specifically mention
| increasing non-income taxes to tax wealth specifically.
| It seems likely the third one does too, since it's
| specifically about inherited wealth, but I didn't see a
| specific reference either way at a glance.
| macintux wrote:
| Bill is calling for higher capital gains and inheritance
| taxes, so not income taxes anyway.
|
| The 'Millionaires for Humanity' don't specify what taxes
| they'd like to see raised, but they emphasize they want
| it on themselves.
|
| And from the third article:
|
| > Several members, including Molly Munger, the daughter
| of Charlie Munger, the longtime vice-chairman of Warren
| Buffett's firm, Berkshire Hathaway, have spoken in favor
| of a wealth tax.
| fit2rule wrote:
| If we taxed expenditure, rather than revenue, they wouldn't
| have a chance to hide a damn thing.
| eloff wrote:
| That's factually incorrect. It's easy to make a list of rich
| people specifically saying tax the rich more.
|
| Leaving that aside, the 1% pay 38.5% of taxes, which seems
| quite fair as is. We already tax the rich quite heavily.
|
| I'd rather the focus be on compliance. Close the loopholes
| and catch the tax evaders.
|
| Wealth taxes, if you look at examples elsewhere both present
| and historically, are hard to do well. I worry the government
| is not sufficiently competent ( now or in the future) to
| implement it correctly and it does more harm than good. It's
| very easy to drive capital offshore and take the potential
| investment and job creation with it.
| geggam wrote:
| > Leaving that aside, the 1% pay 38.5% of taxes, which
| seems quite fair as is. We already tax the rich quite
| heavily.
|
| Given the fact the top 1% hold 43% of the global wealth I
| think they aren't paying their fair share...
|
| There is no need for someone to have 100 billion dollars
| they an struggle by with 10 billion easy enough .. or even
| 1 billion
|
| https://www.trtworld.com/magazine/top-1-percent-of-
| household...
| ccn0p wrote:
| so what's fair? 50%? 60? who decides? when does it stop?
| lapinot wrote:
| I think any wealth (not income!) over something like 1M
| should be confiscated. :) There's no reason to have that
| much money and there's no way you personally have
| generated that wealth, most likely you just invested
| money early enough in something sucessful to extort money
| from it. This may sound provocating but it's actually
| quite a sound model, but which would also mean
| reconstructing what we mean by the economy... No
| capitalistic ownership (eg investment is at most a loan,
| you don't get propriety shares in exchange), no for-
| profit renting, ...
|
| And obviously funnelling all that money and economic
| capital to some central state isn't gonna go well so
| levels below and above the state need to be reinforced.
| eloff wrote:
| This is a terrible idea put forward by people with no
| grasp of either economics or history.
|
| First off you can't buy a home in some parts with that
| kind of money. But that aside, you'd stifle most
| incentive to innovate, provide jobs, and live in your
| country. Anyone who thought they might pass your 1M limit
| will just leave to a country that doesn't do that. No
| offense, but I've never been interested in living in the
| US and you'd have to pay me quite a lot to accept a green
| card. I certainly wouldn't take it if offered freely,
| because it comes with a major tax liability. There are
| nicer places in the world by a variety of metrics.
|
| So if you chase away everyone with wealth you'll be left
| paying 100% of the taxes instead of 60% and with no jobs
| to pay them with. Good luck with that!
|
| Look to Soviet Russia, Cuba, Venezuela for examples of
| how that plays out.
| lapinot wrote:
| > This is a terrible idea put forward by people with no
| grasp of either economics or history.
|
| Thanks for the compliment. I guess you must know better
| than Picketty (he doesn't exactly say what i said, but
| does promote _very_ aggressive taxation of capital, which
| is the same goal more gently said). Go study for
| yourselve before insulting right and left. I know i did,
| i 'm reading monthly issues of "le monde diplomatique".
|
| > First off you can't buy a home in some parts with that
| kind of money.
|
| Perhaps instead of 1M$ you'd prefer if i say "the
| equivalent of 100K ton of wheat at retail price"?
| Obviously i'm talking from the perspective of my local
| living standard which is west-european 500M people city.
|
| > No offense, but I've never been interested in living in
| the US
|
| None taken, me neither.
|
| > So if you chase away everyone with wealth you'll be
| left paying 100% of the taxes instead of 60% and with no
| jobs to pay them with. Good luck with that!
|
| Ok so that's the only argument of your comment. It has
| been debunked time and time again that for individuals,
| fleeing a country because of taxes is minimal.
| Corporations do that. And it can be fought by taxing
| international transactions (which every sane economy but
| the EU does anyway). Yes, in the end, it becomes a
| frontal fight between the financial and industrial
| establishment and your local economy, which obviously
| will need some negotiation because they can hurt you, but
| let it be clear that without them, it would work quite
| well (and in reverse, in my economy, it would be quite
| hard to practically be capitalistic). I don't even want
| to eradicate capitalism, i'd just want to not mainly
| depend on it for living and tip the balance to a much
| more reasonable state.
|
| > Look to Soviet Russia, Cuba, Venezuela for examples of
| how that plays out.
|
| You realize that my arguments were communist-ish? You're
| not gonna scare me off pointing at these countries!
| Obviously things went bad because the liberals virtually
| control the world, so these countries had to fight for
| everything, which breaks at some point. And obviously i'm
| not defending dictatorship (and please note i'm not using
| this strawman of the numereous capitalistic dictatorship
| against you).
| Tarsul wrote:
| we should look at the big picture not just the
| percentages that those people are taxed at the end.
| Because in many cases the leading question is: How come
| they earn so much more than every one else? Is it through
| sheer talent and grit or is there something else going
| on? Inheritance, structures that benefit those with
| capital over those who labor, connections with the right
| people etc. etc. And after analyzing all that coming back
| to the question whether someone should earn 10.000 as
| much as another person who works the same hours? Should
| someone earn billions in a year and then use it for moon
| shots like going to mars? Is that what the society needs
| or can afford right now? Maybe. But for as long as there
| are people who work 40 hours a week and cannot afford a
| healthy life (e.g. having no trouble coming up with
| emergency money, dont have to commute 2h just to get to
| their minimum wage job etc.), there certainly is a
| structural problem going on. This structural problem can
| only be solved if - and that's the most important point -
| wealth is shared more equally. Meaning taxation (and all
| the structures that lead to income) has to take more from
| those who earn more and give to those who cannot give
| more. Well, that's if we want to live in a social
| society, if not forget what I said.
| eloff wrote:
| Don't compare global wealth to share of US taxes. That
| makes no sense.
| watertom wrote:
| The tax code is lopsided in favor of the rich, it's not
| about paying a fair share, it's about the burden of the
| taxes. The burden of taxes on the non-rich is significantly
| greater than it is on the rich.
|
| If I make $400K and I only need $75K to live, the burden of
| my taxes is negligible.
|
| If however I make $80K and I need $75K to live, taxes are
| an unimaginable burden.
|
| We fix the problem by evening out the burden, forget about
| loopholes, eliminate all but 2 deductions, dependents and
| primary residence, that's it.
|
| Because the deductions have been eliminated lower the tax
| rate for each bracket to the effective tax paid for each
| bracket, the IRS has this data.
|
| Then end capital gains tax, all income is taxed as earned
| income.
|
| These changes will give 99+% of the population a tax break,
| and it will simplify taxes drastically for everyone.
|
| The final step is to add 2 new brackets,
|
| >$5M with a tax of 45% >$10M with a tax of 69%
|
| The rich won't need to be making decision about if and when
| to eat, but the burden of taxes will get leveled out.
|
| We'll also have enough money to pay for Universal
| Healthcare, and probably college tuition for everyone.
|
| Go lookup the charts for income inequality for the U.S.
| When the GOP tax cuts from Reagan's first term took effect
| the income inequality gap started in earnest.
|
| https://en.wikipedia.org/wiki/Income_inequality_in_the_Unit
| e...
| medvezhenok wrote:
| I think we're missing the forest for the trees by focusing
| on exactly what the tax rates are and how much is "fair".
|
| Money at the top levels is not at all like money for the
| rest of us. For a middle class citizen, money is about
| consumption and freedom to do what you want (with enough of
| it).
|
| At the top end of the distribution, money is no longer
| about consumption or freedom (since you can never
| realistically consume as much as they have, and you don't
| have to work after you've saved like $10M). Money at that
| level is a proxy for power - a group of oligarchs can
| basically have the power of a shadow government, but
| unelected. And the real question to ask is "how much
| power/leverage do we want an individual (or a group of rich
| oligarchs) to have in a democracy."
|
| So taxing the rich is not even about spreading the wealth,
| necessarily - if you redistributed it directly you might
| get inflation by redirecting investment money into
| consumption. It's more about limiting the amount of power
| that a person can accumulate over others.
| etherael wrote:
| > It's more about limiting the amount of power that a
| person can accumulate over others.
|
| Does this not beg the question why not just limit power
| itself rather than limiting wealth with the target side
| effect that the wealthy will not easily purchase power as
| a result?
|
| Why is almost the entire species seemingly addicted to
| the idea that the power itself is not the problem? You
| can erect regulations on the corrosive influence of money
| in politics until the cows come home but as long as the
| ROI on lobbying is positive, it's a given that's going to
| be the result.
|
| On the other hand when there's no power to buy nobody
| buys it by definition. Adjust above extreme observation
| appropriately in order to justify the minimal possible
| tolerable conglomeration of power availability in any
| given system to find whatever tolerable level the reader
| ends up comfortable with. Or viewed uncharitably, arrive
| at the conclusion that's exactly what's already happened
| and the human affliction of slavish devotion to power is
| near universal and continuously growing and there's no
| way to escape it short of completely opting out of modern
| global civilization given the observed distribution of
| the population constantly seeking to increase it.
| gwright wrote:
| One rationale for limited government is that there is a
| direct, positive correlation between the power ceded to
| government and the incentive to control/steer that power.
| By limiting the power of government you reduce the
| incentive to usurp or corrupt that power.
|
| An extreme example of this would be a dictatorial regime
| where control of the government becomes a life-or-death
| concern for warring groups.
| etherael wrote:
| I agree, that's what I'm getting at. But instead contrast
| that idea with the more broadly accepted one that it's
| wealth that's the problem not power even though the
| former seems like a much more accurate description than
| the latter.
|
| Maybe it's just a bug in humanity; control the world with
| this one weird trick.
| hanniabu wrote:
| No idea why you're being downvoted
| TAForObvReasons wrote:
| Rich != Wealthy. "Rich" tends to refer to people who are
| generating lots of cash, oftentimes through labor (like
| doctors or lawyers or athletes). "Wealthy" tends to refer
| to people who own lots of assets and generate cash through
| asset appreciation/sales and real property.
|
| Wealthy people will push for income taxes while trying to
| eliminate capital gains and inheritance taxes.
|
| This conversation came up years ago when Bill Gates Sr
| tried to push for income taxes in Washington state and
| critics pointed out that it would not affect wealthy
| people.
| devmunchies wrote:
| yes, this is why people calling states with no income tax
| as a "regressive" tax structure seems like a psyop.
|
| Income tax taxes people who work for a living. Property +
| capital gains tax both tax assets appreciation and rent
| seekers (unless the investment is a high risk venture
| into a startup or something ambitious).
| Spooky23 wrote:
| Maybe, but they are less regressive.
|
| States without income taxes usually rely on sales or
| excise taxes. In a "high tax" state like New York, poor
| people don't pay income tax nor sales tax on food or
| clothing. (A significant expense) Usually high tax
| pressure is from property tax.
|
| In a state like South Carolina, you have income tax, but
| property taxes are very low. They make up for that by
| taxing food, which results in higher taxation for poor
| and elderly people.
| Spooky23 wrote:
| There is a third category of people who are resource
| rich. People who owe oil wells, mines, some farms, etc.
|
| Because of consolidation and the unique governance
| structure of the US, these folks are enormously powerful
| today.
| [deleted]
| ZeroGravitas wrote:
| I didn't downvote, but the comment did confuse me as it's
| an oddly specific complaint.
|
| If indeed there are lots of very wealthy people who are
| calling for higher income taxes on high earners (and I
| personally didn't think that was something so common as to
| be a stereotype) then that's hardly the worst thing they're
| doing.
|
| It comes across as someone who really doesn't like taxes,
| probably because they've listened to too much propaganda
| generated by very wealthy people who have a vested interest
| in taxes being seen as a universally bad thing.
| importantbrian wrote:
| I've lived in Fort Lauderdale which is sometimes called the
| world's yachting capitol. After seeing my first boat show I was
| actually kind of shocked by the number of people in the "own a
| large yacht" wealth bracket.
| slifin wrote:
| I have a conspiracy theory that Forbes created the rich list
|
| Which intentionally does not have despots oligarchs or royals
| to skew the conversation to a business matter which can get
| lost in the left/right divide
| [deleted]
| sig-reduction wrote:
| OP's conspiracy theory is absolutely true. There is a whole
| thread of academic research estimating the right tail of the
| wealth distribution (spoiler: the Fed household finances
| microdata is garbage).
|
| Diff the Bloomberg and Forbes rich lists... they're not the
| same list. One oligarch on those lists had their estimated
| net worth double after the Appleby leaks turned up some
| trusts. I'm pretty sure Bloomberg just calls people up and
| asks them how much they have.
| azinman2 wrote:
| I guess it depends on where peoples wealth comes from. It's
| probably far easier to estimate Zuckerberg and Bezos when
| you know it's tied to a publicly traded company than if
| it's all private. I have a good friend who is a billionaire
| that laughs at these lists knowing they know nothing about
| his money (not a public company), where it comes from, and
| where it lives.
| raziel2701 wrote:
| Yup, Mexico has a ton of wealthy people because of drugs,
| you don't see their names on these lists.
| lifeisstillgood wrote:
| Now that is a good conspiracy theory :-)
| YinglingLight wrote:
| The investor class, the salary class (us), the wage class,
| the welfare class.
|
| Every outcry for equality that doesn't speak in these terms
| is manufactured by the investor class. Occupy WallStreet
| scared the bejeezus out of them. We now have Critical Race
| Theory to divide us, Woke-ism, etc.
| michael1999 wrote:
| The don't list family trusts either. So multi-billionaire
| families like the Rockafellers and the Rothchilds aren't
| there.
| vmception wrote:
| The Forbes rich list has some criteria such as from their own
| revenue or share prices. Basically private market generated
| wealth. There are exceptions and the line gets blurred really
| quickly, but thats their stated goal.
| Ekaros wrote:
| Pretty simple with public companies. With private companies
| and current market it really does get messy. I'm thinking
| about Valve and how much higher it would be priced on
| public market compared to private... And that can't be only
| case. So the private market is quite dark place...
| vmception wrote:
| Hey everyone, the wording dictates how you are misled.
|
| Think about the alternate title for these benign actions:
|
| Annual Report on Isle of Man financial sector
|
| Hackers breach Cayman National Bank and Trust's Isle of Man
| subsidiary, the second of major breaches for this institution
|
| Post-Mortem, Cayman National Bank and Trust breach and client
| behavior
|
| Aggregating Customer trends sourced from hacked bank, using
| pytorch
| metalliqaz wrote:
| misled how?
|
| "man dies after impact with car"
|
| is rightly reported as
|
| "man booked for manslaughter after hit-and-run"
|
| the technical details are perhaps not as important than the
| criminality that transpired
| vmception wrote:
| following the analogy, this article and many others like it
| conflate offshore with criminality while occasionally saying
| "although use of licensed banks in these countries is not
| illegal [in the host country and the client's country of
| residence]" and then glossing over that for the rest of the
| research paper, never quantifying any use case even with
| leaked data, all to steer your emotions.
|
| The internet is a mirror, it tells you what you want to see.
| You should be most skeptical when things match your worst
| nightmare.
| metalliqaz wrote:
| it is not technically criminal but deeply unfair. that's
| what people care about
| vmception wrote:
| I can see that perspective
|
| From my view the absurdity is that people are concerned
| about why they arent being hosed equally by their own
| government's revenue efforts instead of why they are
| being hosed at all
|
| This leads to a greater absurdity of demanding that
| another country - that has a balanced budget - take money
| that it doesnt need by taxing its customers and being mad
| when they say no.
|
| This requires a very special kind of hubris that I think
| people need to 1) recognize they have bought into 2)
| recognize that their neighbors don't subscribe to that
| train of thought and have been operating by a much more
| effective set of rules. So whatever you've been told is
| probably just a lie if it bothers you that this is
| usually legal.
|
| I'm not saying it is practical for their own country to
| balance their budget, or that their own country and
| citizens/representatives have a consensus mechanism for
| having a more fair revenue system whether by taxation or
| otherwise. I am saying that has nothing to do with
| countries that have figured out how to fund themselves by
| offering financial services, or the people that use them.
| clucas wrote:
| You're saying "doing business with these banks is not
| illegal, so there's nothing to be concerned about."
|
| The author is saying "doing business with these banks is
| not illegal, but they lack certain reporting requirements
| that have been very helpful in revealing illegality, and we
| should be concerned about that."
|
| The author has given multiple reasons and cited other
| studies showing why we should be concerned. At this point,
| I think the burden of proof is on you to explain why the
| author's concerns are unfounded. Why do you think
| beneficial ownership registries and similar reporting
| requirements are not needed?
| vmception wrote:
| I haven't addressed the author so my role isn't to make
| an opinion on their conclusions, only the wording. For
| example "Evidence" is used in the title as opposed to
| "Transparency Report" or "Data from server breach", or
| any of my other working titles which would be used for
| literally any other industry.
| samstave wrote:
| I find it odd that the IRS does a lot of heavy lifting to go
| after Joe-Blue-Collar but completely seems blind to the thousands
| of money launderers both individuals and corps.
|
| Personally, I think the entire financial system is broken and
| should be squashed.
| sig-reduction wrote:
| > Personally, I think the entire financial system is broken and
| should be squashed.
|
| It's uglier than you can imagine.
| wpietri wrote:
| You might consider that your "it's all broken" feelings are
| exactly what is desired by the people who have worked to
| hamstring the IRS and generally tilt things in their favor.
|
| The more cynical individual voters are about the system, the
| easier it is for people with money and power to shift outcomes
| to the ones that benefit them. It's the political equivalent of
| a FUD strategy.
| germinalphrase wrote:
| Next, you're going to tell me that social security isn't
| going to collapse any day now...
| pydry wrote:
| They've been saying it since the 30s. I guess eventually it
| has to collapse!
| [deleted]
| LorenPechtel wrote:
| The IRS doesn't do a lot of heavy lifting.
|
| The IRS does a lot of stuff that can be easily handled by a
| computer--matching up data from various sources to make sure it
| agrees. Once it needs a human eyeball, though, they do very
| little.
|
| It's just your Joe-Blue-Collar guy has most of his finances
| already reported to the IRS, anything wrong and the matching
| computer will catch it.
| NovemberWhiskey wrote:
| This is the truth of the matter. Most errors/fraud for Joe-
| Blue-Collar revolves around refundable tax credits as there's
| a pretty good chance he's not even paying any income tax.
|
| The EITC is particularly complex (blame Congress) and
| therefore error/fraud-prone, but many aspects of typical
| errors/fraud can be mechanically detected (is this a
| qualifying child? is this qualifying child being claimed on
| another return? is there undocumented non-W2/1099 income
| being used to support this claim?).
| TechBro8615 wrote:
| They can also hire private companies to help, like they're
| doing with crypto and some chain analysis company (I forget
| which, maybe multiple).
|
| It's a bit frightening that the IRS can deputize a
| corporation but I guess with crypto you live by the sword,
| die by the sword. Maybe the dystopia imagined by crypto
| enthusiasts is a self-fulfilling prophecy. You get the
| government you prepare for?
| FredPret wrote:
| Yes, lets go back to the old ways. We'll exchange seashells
| instead
| not2b wrote:
| The IRS was made to lay off of the rich by their friends in
| Congress. Their enforcement budgets have been cut.
| dragosmocrii wrote:
| Most countries around the world did not have an income tax for
| people before the WWI. It was introduced as a way to fund the
| wars (defense, akhem), and as a way to come out of the ruins.
| It was only meant to be a temporary measure. A century later,
| we're still paying the income tax, and for some countries
| that's still funding defense/wars...
|
| https://www.investopedia.com/articles/tax/10/history-taxes.a...
| lbriner wrote:
| There is probably an easier conclusion and that is the
| cost/benefit analysis of chasing illegal money.
|
| Firstly, a lot of what is happening is legal or at least a
| grey-area. Secondly with the complexities of multi-juristiction
| money and 100s of layers of obscurity that a rich person can
| afford to put between them and their money (legally), would
| _you_ bother spending 100s of 1000s of dollars looking into it
| after which you might not find anything that can be prosecuted?
|
| It costs little to look at a much simpler Joe-Blue-Collar
| worker. Sad but true.
|
| The only way I can imagine it being resolved is by requiring
| full traceability for all financial transactions so I can
| literally tell where all the money in an account originated
| from. Can't see that happening.
| varispeed wrote:
| Even if Joe manages to evade $1000 in taxes, that won't even
| buy a good meal in a posh restaurant to even discuss the matter
| with a local politician. They are the easy target and they have
| no bribing power, so the have no sympathy of powers that be.
| ceejayoz wrote:
| Intentional budget cuts and a harder target.
|
| https://www.propublica.org/article/irs-sorry-but-its-just-ea...
|
| > For now, the IRS says, while it agrees auditing more wealthy
| taxpayers would be a good idea, without adequate funding
| there's nothing it can do. "Congress must fund and the IRS must
| hire and train appropriate numbers of [auditors] to have
| appropriately balanced coverage across all income levels," the
| report said.
|
| > Since 2011, Republicans in Congress have driven cuts to the
| IRS enforcement budget; it's more than a quarter lower than its
| 2010 level, adjusting for inflation.
| nostromo wrote:
| Budget increases will not increase enforcement of rich,
| politically connected individuals. It will just increase the
| number of "low hanging fruit" middle-class people they will
| go after.
|
| Besides, many of the best tax evasion strategies are legal --
| you just need an army of lawyers and a large pile of cash to
| deploy them.
| eli wrote:
| > _many of the best tax evasion strategies are legal_
|
| Isn't the premise of the linked paper that the wealthy use
| these foreign banks to avoid getting caught underreporting
| their income and assets? That's not legal.
| froh wrote:
| interesting. what makes you think so?
| ipaddr wrote:
| With enough lawyers you can get a low settlement value if
| you are found wrong.
|
| Your average middle class person can't afford to risk
| taking the irs to court.
| [deleted]
| nostromo wrote:
| If you doubled or tripled the number of cops in LA, would
| they solve more difficult crimes in the monied and
| lawyered Hollywood Hills? Or would they go after more
| petty crime in South Central, where it's easy to get a
| conviction?
| froh wrote:
| ok, so where I from tax fraud is also known as tax sin
| Steuersunde. it's not like an obstacle that you evade or
| a game where you dodge the ball. it's fraud and a crime,
| and not a game to win.
|
| consequentially the German IRS has bought data from Swiss
| and Liechtenstein tax haven whistleblowers. several times
| so. and to the amazement and applause of the public, very
| prominent figures went to jail. like soccer legend Uli
| Hoeness.
|
| the corresponding Wikipedia article is surprisingly not
| available in English yet:
|
| https://de.m.wikipedia.org/wiki/Steuers%C3%BCnder-CD
|
| long story short: if you, the American people, elect
| representatives who want a fair system, you will get a
| fair system.
|
| of course IRS will go after tax fraud at scale if you
| make them do that.
| bananabreakfast wrote:
| that's a poor comparison. The IRS are not cops, and the
| monied and lawyered do not commit petty crime at a high
| level whereas they do commit tax evasion at a much higher
| level.
| daniellarusso wrote:
| https://en.m.wikipedia.org/wiki/IRS_Criminal_Investigatio
| n
| gundmc wrote:
| Why is Brookings eligible for a .edu TLD?
| mushufasa wrote:
| Registrars don't enforce TLDs in the way you implicitly assume.
| will4274 wrote:
| Care to explain or just snark?
|
| As best I can tell, Brookings would not be eligible since the
| rule change in 2001 but was grandfathered in before this
| (domain goes back to 1996). It's not clear why they weren't
| purged with the other non-universities squatting on edu in
| 2003 - I'd guess Brookings's political connections, frankly.
| [deleted]
| [deleted]
| lgats wrote:
| https://en.wikipedia.org/wiki/.edu#Grandfathered_uses Domains
| that were already registered in edu as of October 29, 2001,
| were grandfathered into the system. Holders of such domain
| names can retain their edu domain names without regard to the
| current eligibility criteria.
|
| Brookings.edu was first registered 07-Sep-1996, so it would
| appear they are grandfathered in. Similar case for the S.F.
| museum, the exploratorium.edu
| https://domain.glass/Brookings.edu
| xxpor wrote:
| "Please note: The .edu Cooperative Agreement allows registrants
| that registered .edu domain names prior to the Agreement taking
| effect October 29, 2001, to retain those registrations
| regardless of whether the registrants meet the current .edu
| eligibility requirements, so long as they renew their
| registrations and otherwise follow domain policy"
|
| https://net.educause.edu/eligibility.htm
|
| FWIW the Smithsonian also has a .edu address.
| gundmc wrote:
| Thanks, makes sense. I guess the number of legacy exceptions
| that are still relevant is vanishingly small so I haven't
| encountered many.
| supernova87a wrote:
| Can someone ELI5, what entities or convoluted mechanisms or
| businesses do very rich people create / have access to that they
| can minimize taxes, which the rest of us simply cannot take
| advantage of here in regular life?
| eli wrote:
| This paper is mostly about tax fraud. It's "tax minimization"
| in the same sense that you can get as job that pays cash and
| you don't declare the income.
| charlesdm wrote:
| Depends on your citizenship. If you hold non US citizenship, it
| is generally easy to avoid most taxes by physically relocating
| to a tax haven (low or no tax). But that is perfectly legal,
| not fraud.
| eli wrote:
| If people genuinely reside in these places they wouldn't need
| the shell companies and bank secrecy described in the paper.
| I don't have a problem with someone moving to a low-tax
| jurisdiction in order to get lower taxes, but I think that is
| really the exception.
| dathinab wrote:
| > But that is perfectly legal, not fraud.
|
| Except if you don't actually relocate there, in which case
| it's fraud.
| sumtechguy wrote:
| You can have the same tools but not necessarily the same
| connections. The issue is usually capital. Most people do not
| have it.
|
| For example take Paris Hilton. When she had her DUI a few years
| ago her 500k car got repo'd. Wah? She stopped making payments
| on it. Payments?! Because she probably had it going through
| some business expense structure and was probably literally
| writing off the interest and payments. More than likely the
| original money was borrowed against an existing capital asset.
| If the sale price of the car did not make up the difference
| they had to come up with whatever cash was left over. Like most
| repos. But in this case it was a fairly flashy car that held
| its value decently well. So they probably took a small loss.
| But there was never any real risk to owning it.
|
| Think of getting a HELEOC but running everything through that
| type of borrowing structure. But since you 'know a guy' you get
| the super awesome low interest rates. Which are business
| expenses. That flashy show of hers was a way to write a bunch
| of stuff off. Everything is an expense and a way to write it
| off your taxes. In some cases it does not even affect your
| taxes if you bury it in another company that is doing something
| similar that you control 100% of and just happens to be in a
| lower tax bracket. But gave you a sweetheart deal of leasing a
| yacht for a small amount per year for being such a good
| customer!
| atweiden wrote:
| See also: non-profit hijinks, e.g. individually managed funds
| and supporting organizations. With enough upfront capital and
| some administrative legwork, tax-free wealth management turns
| into "philanthropy".
| Ekaros wrote:
| Also in some cases with cars by my understanding leasing
| makes lot more sense than buying. Like Rolls Royces where
| lease payments might be lower than depreciation. So do you
| actually buy this thing, or just the use of it. When later
| might overall be cheaper. It's get bit weird with some
| commodities.
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