Accidental Tax Break Saves Wealthiest Americans $100 Billion(bloomberg.com)
bloomberg.com
Accidental Tax Break Saves Wealthiest Americans $100 Billion
http://www.bloomberg.com/news/2013-12-17/accidental-tax-break-saves-wealthiest-americans-100-billion.html
15 comments
Yes, it's a beautiful hack of the tax laws.
What I've always wondered is why people don't load the tax code into the automatic proof systems and let it do some goal seeking. The idea of putting money into a trust and then taking it out took a while to occur to Covey. All the "useless" edge cases would be explored by a goal seeking system. There are probably a large number of these hacks out there already discovered, but taking it all the way through to a tax court decision is the real trick. I also vaguely remember a legal principle that if a transaction was entered into soley for the purpose of lowering taxes, and with no other business goal, it can be disallowed unless that was the intent of Congress.
There have been a number of conferences over the years on the general topic of AI and the law. I once read in a general book on business strategy about how a contract can be either a sale or a lease, but that it is often extremely valuable to make a sale appear to be a lease, and vice versa. Lawyers will craft twenty pages of dense legalese to hide the facts from the casual reader. Someday a sophisticated text processing system will ingest a contract and give the answer, along with the chain of inferences from the obfuscated language (to show the judge).
What I've always wondered is why people don't load the tax code into the automatic proof systems and let it do some goal seeking. The idea of putting money into a trust and then taking it out took a while to occur to Covey. All the "useless" edge cases would be explored by a goal seeking system. There are probably a large number of these hacks out there already discovered, but taking it all the way through to a tax court decision is the real trick. I also vaguely remember a legal principle that if a transaction was entered into soley for the purpose of lowering taxes, and with no other business goal, it can be disallowed unless that was the intent of Congress.
There have been a number of conferences over the years on the general topic of AI and the law. I once read in a general book on business strategy about how a contract can be either a sale or a lease, but that it is often extremely valuable to make a sale appear to be a lease, and vice versa. Lawyers will craft twenty pages of dense legalese to hide the facts from the casual reader. Someday a sophisticated text processing system will ingest a contract and give the answer, along with the chain of inferences from the obfuscated language (to show the judge).
I assure you that it was NOT accidental.
This is nothing more than yet another case of legal treason by congress.
In my opinion, ALL loopholes for the super-wealthy and companies (Double Irish) should be closed.
Reducing taxes should not be an option. If you make huge amounts of money or want to transfer huge amounts of money in the United States then you should pay tax on it to the United States government. There shouldn't be the option to hire people to find sneaky ways to "legally" (but unethically) reduce that tax without any consequences.
This is nothing more than yet another case of legal treason by congress.
In my opinion, ALL loopholes for the super-wealthy and companies (Double Irish) should be closed.
Reducing taxes should not be an option. If you make huge amounts of money or want to transfer huge amounts of money in the United States then you should pay tax on it to the United States government. There shouldn't be the option to hire people to find sneaky ways to "legally" (but unethically) reduce that tax without any consequences.
Seconding sanswork. The ability to tax retroactively is the ability to jail anyone and confiscate everything they have for any or no reason. But I guess ignorance of the future is no excuse?
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> The ability to tax retroactively is the ability to jail anyone and confiscate everything they have for any or no reason.
Any arguments why?
Any arguments why?
1. Decide who you don't like.
2. Create a massive, retroactive tax on something they did. Make sure it's big enough that they can't possibly pay it.
3. Why stop at retroactive taxes? Add in retroactive penalties and fees for late payment.
4. Confiscate whatever they have to pay the tax bill.
5. Charge them with tax avoidance for not paying those taxes, then throw them in jail.
It's pretty insane, but if you're going to allow laws to be changed retroactively then you're already into that territory.
2. Create a massive, retroactive tax on something they did. Make sure it's big enough that they can't possibly pay it.
3. Why stop at retroactive taxes? Add in retroactive penalties and fees for late payment.
4. Confiscate whatever they have to pay the tax bill.
5. Charge them with tax avoidance for not paying those taxes, then throw them in jail.
It's pretty insane, but if you're going to allow laws to be changed retroactively then you're already into that territory.
Isn't this why you would hope that congress would be a diverse group of rational and ethical people?
All I'm proposing is a discussion on closing loopholes and how to prevent people from actively trying to take advantage of the United States unreasonably complex tax system. If you are suppose to pay X% of the income you make from transactions in the US or money transferred to heirs then you should pay that X%.
The law says that you have to pay X% when passing money to heirs. If my lawyers and accountants discover a way to reduce that amount because of a technicality, then why should that hold up in court?
If there was a loophole in the law that allowed me to murder someone if X conditions are met, should I be allowed to go free?
I see your point about why retroactive laws would be a slippery slope.
All I'm proposing is a discussion on closing loopholes and how to prevent people from actively trying to take advantage of the United States unreasonably complex tax system. If you are suppose to pay X% of the income you make from transactions in the US or money transferred to heirs then you should pay that X%.
The law says that you have to pay X% when passing money to heirs. If my lawyers and accountants discover a way to reduce that amount because of a technicality, then why should that hold up in court?
If there was a loophole in the law that allowed me to murder someone if X conditions are met, should I be allowed to go free?
I see your point about why retroactive laws would be a slippery slope.
I don't disagree, but the problem is that writing laws is really damned hard. There is a lot of complexity in the real world, a whole lot of special cases to think about, and also a lot of people who stand to make a lot of money if they can find the holes. Intuitively you would think that writing a really simple law like "each person must pay X% of income in taxes, no exceptions" would work, except that that's how we got the almost-universally-despised Alternative Minimum Tax. This is also why laws also tend to have lots of unintended consequences.
>> If you are suppose to pay X% of the income you make from transactions in the US or money transferred to heirs then you should pay that X%.
Just for fun, let's see if I can avoid that tax... 1) What if I transfer the money overseas, put it in a trust, then transfer control of the trust to my heirs? It's not a transaction in the US.
2) What if I create a tiny, worthless company, give my heirs all the stock, pay the miniscule taxes on that value, and then contrive to make the company worth more? eg, lend it a bunch of money at no interest, or buy a bunch of stock, or purchase a lot of whatever it ostensibly makes?
3) How about if I just buy a ton of life insurance on myself with my heirs as the beneficiaries? Sure, it'll cost a lot, but as long as the overhead is less than the tax bill it's a net win.
That's off the top of my head. Pay me a few millions bucks to do this and I guarantee I can do better. :)
>> If you are suppose to pay X% of the income you make from transactions in the US or money transferred to heirs then you should pay that X%.
Just for fun, let's see if I can avoid that tax... 1) What if I transfer the money overseas, put it in a trust, then transfer control of the trust to my heirs? It's not a transaction in the US.
2) What if I create a tiny, worthless company, give my heirs all the stock, pay the miniscule taxes on that value, and then contrive to make the company worth more? eg, lend it a bunch of money at no interest, or buy a bunch of stock, or purchase a lot of whatever it ostensibly makes?
3) How about if I just buy a ton of life insurance on myself with my heirs as the beneficiaries? Sure, it'll cost a lot, but as long as the overhead is less than the tax bill it's a net win.
That's off the top of my head. Pay me a few millions bucks to do this and I guarantee I can do better. :)
Yes, of course. That exact thing happens not infrequently. A common condition is "I had the reasonable belief that he was threatening my life". Or even "I had the reasonable belief that he was threatening the life of a third party unknown to me".
> Isn't this why you would hope that congress would be a diverse group of rational and ethical people?
This is, to say the least, not a common viewpoint.
> Isn't this why you would hope that congress would be a diverse group of rational and ethical people?
This is, to say the least, not a common viewpoint.
There is no inherent morality attached to paying taxes. And there is no inherent morality that dictates what amount of tax one should pay. There is a legal obligation to pay taxes, and a moral obligation to follow the law, but there is not a moral obligation to pay more in taxes than what the State requires.
Put another way: there is an intrinsic moral responsibility to not murder, but there is not an intrinsic moral responsibility to pay taxes. One could imagine a country in which there were no taxes, and such a state would not be immoral. And those who lived there and did not pay taxes would not be viewed as immoral. But if this same country did not have an explicit statute outlawing murder, we would still call people who murdered others (e.g., killed for pleasure) immoral.
Given that we are morally obligated to pay taxes strictly on the virtue that a law exists that says "You must pay this tax", how is it morally problematic to determine what you owe under the legal structure that has imposed the tax? Your moral obligation is to pay the tax as it is defined, it is not your moral obligation to pay more tax than the tax code requires.
That seems to me to be an obvious tautology: you owe in taxes what the tax code says you owe. If the tax code allows you to limit your tax responsibility by moving money through trusts, so be it. It doesn't seem any different than parts of the tax code that limit your tax responsibility for buying a home, having kids, or making under a certain threshold of money.
Whether or not the tax code, as constituted, is fair, equitable, desirable, or is having its intended effect are fair questions. But calling people immoral because they find legally sanctioned ways to reduce their tax liabilities is troubling.
I don't make enough to really worry about these structures, but I can guarantee you that if I did I would do whatever I could to reduce my legal tax responsibility.
Put another way: there is an intrinsic moral responsibility to not murder, but there is not an intrinsic moral responsibility to pay taxes. One could imagine a country in which there were no taxes, and such a state would not be immoral. And those who lived there and did not pay taxes would not be viewed as immoral. But if this same country did not have an explicit statute outlawing murder, we would still call people who murdered others (e.g., killed for pleasure) immoral.
Given that we are morally obligated to pay taxes strictly on the virtue that a law exists that says "You must pay this tax", how is it morally problematic to determine what you owe under the legal structure that has imposed the tax? Your moral obligation is to pay the tax as it is defined, it is not your moral obligation to pay more tax than the tax code requires.
That seems to me to be an obvious tautology: you owe in taxes what the tax code says you owe. If the tax code allows you to limit your tax responsibility by moving money through trusts, so be it. It doesn't seem any different than parts of the tax code that limit your tax responsibility for buying a home, having kids, or making under a certain threshold of money.
Whether or not the tax code, as constituted, is fair, equitable, desirable, or is having its intended effect are fair questions. But calling people immoral because they find legally sanctioned ways to reduce their tax liabilities is troubling.
I don't make enough to really worry about these structures, but I can guarantee you that if I did I would do whatever I could to reduce my legal tax responsibility.
Given that murder specifically refers to an unlawful killing it's kind of an impossible thing to happen.
If we change murder to kill however then there are already conditions that allow you to go free when killing someone.
If we change murder to kill however then there are already conditions that allow you to go free when killing someone.
Yes. At least in the U.S., where the Constitution contains vague language like No Bill of Attainder or ex post facto Law shall be passed. and No State shall ... pass any Bill of Attainder, ex post facto Law,.
> Charge them with tax avoidance for not paying those taxes, then throw them in jail.
Tax avoidance isn't a crime (or even illegal.)
Tax evasion is a crime, but consists of concealing or misrepresenting material facts to avoid an assessment of liability, which isn't what your scenario presents.
Willful failure to pay taxes is also a crime, but mere inability isn't willfulness.
Your argument that retrospective taxes (which aren't retroactive unless the tax becomes due in the past) being a license for arbitrary imprisonment rests on a misrepresentation of criminal laws associated with taxes (and would require them to be applied in a manner not only inconsistent with existing law, but in a manner which I'm fairly certain has been held unconstitutional as a violation of due process rights even outside the context of retrospective taxation.)
Tax avoidance isn't a crime (or even illegal.)
Tax evasion is a crime, but consists of concealing or misrepresenting material facts to avoid an assessment of liability, which isn't what your scenario presents.
Willful failure to pay taxes is also a crime, but mere inability isn't willfulness.
Your argument that retrospective taxes (which aren't retroactive unless the tax becomes due in the past) being a license for arbitrary imprisonment rests on a misrepresentation of criminal laws associated with taxes (and would require them to be applied in a manner not only inconsistent with existing law, but in a manner which I'm fairly certain has been held unconstitutional as a violation of due process rights even outside the context of retrospective taxation.)
And you're saying that retroactive taxation is the only way to legally "remove" people? With the recent news, I'm not quite convinced...
I am pretty sure that's what happened to Mikhail Khodorkovsky.
Allowing the government to change tax laws and demand retroactive payment is extremely dangerous.
Allowing the government to charge businesses that paid into an unemployment trust for the administrative failure of that trust is dangerous.
I can't find a link right now but it was on CBS nightly news yesterday. The New York State government is suing thousands of small-business owners because they failed to recognize early that one of the legal, state-sanctioned trusts that was in charge of collecting and paying into the state's unemployment fund was (committing fraud and) failing, went belly up.
I can't find a link right now but it was on CBS nightly news yesterday. The New York State government is suing thousands of small-business owners because they failed to recognize early that one of the legal, state-sanctioned trusts that was in charge of collecting and paying into the state's unemployment fund was (committing fraud and) failing, went belly up.
> I assure you that it was NOT accidental.
Based on what?
If you read the link I posted, these particular tax shelters are the result of large spreads between the interest rates used in certain IRS calculations, which are at historical lows for reasons unrelated to tax policy, and the actual achievable investment returns.
Based on what?
If you read the link I posted, these particular tax shelters are the result of large spreads between the interest rates used in certain IRS calculations, which are at historical lows for reasons unrelated to tax policy, and the actual achievable investment returns.
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> In my opinion, ALL loopholes for the super-wealthy and companies (Double Irish) should be closed.
This is completely unrealistic. The biggest issue is that you can't compel other countries to follow along. Half the rules in the commercial tax code are geared towards allowing companies to compete in the international world.
> I assure you that it was NOT accidental.
THis just seems foolish. No one person fully understands the tax code. If it was intended, why did people take so long to exploit it ? The law was passed in 1990, but no GRATS appeared anywhere near then. You are really, really stretching here.
This is completely unrealistic. The biggest issue is that you can't compel other countries to follow along. Half the rules in the commercial tax code are geared towards allowing companies to compete in the international world.
> I assure you that it was NOT accidental.
THis just seems foolish. No one person fully understands the tax code. If it was intended, why did people take so long to exploit it ? The law was passed in 1990, but no GRATS appeared anywhere near then. You are really, really stretching here.
Judging by the other responses, I'm probably a bit of a contrarian, but all in all: "meh". I honestly don't care.
Wealth is not a zero sum game, and all talk about the horrors of wealth inequality are completely ignorant of that fact. I think gift taxes are bullshit. If I earned and paid taxes on income/capital gains, I should be able to give the balance to whom ever I wish. Double taxation is bullshit.
Wealth is not a zero sum game, and all talk about the horrors of wealth inequality are completely ignorant of that fact. I think gift taxes are bullshit. If I earned and paid taxes on income/capital gains, I should be able to give the balance to whom ever I wish. Double taxation is bullshit.
I think gift taxes are bullshit.
If I earned and paid taxes on income/capital gains,
I should be able to give the balance to whom ever I wish.
1. It's spring 1997, life is good, you just got a huge bonus and decided to buy shares in a flailing tech company called Apple Computer.
2. With your $250,000 bonus, you buy 62,500 shares at $4/share.
3. You and your wife live a happy life and in 2013, you pass away, content with your impact on humanity. Fortunately your wife will be taken care of since you hadn't touched any of those Apple shares.
That stock is now worth $550/share, and your wife's 62,500 shares are worth $35 million. A gain of $34,750,000.
So your wife should get that $34mm without strings? Even though no tax was ever paid on it?
Double taxation is bullshit.
The number of times you're taxed should be irrelevant as long as it's fair and equitable.
1. you'd be paying income tax on the $250k bonus
2. if I understand correctly, you/your wife would have to pay capital gains on the stock when it is sold (the value realized).
if I understand correctly, you/your wife would have to pay capital
gains on the stock when it is sold
Because of this provision, any appreciation of the affected property
that occurred during the decedent's lifetime will never be taxed.
Thus, this provision provides an incentive for taxpayers to retain
appreciated property until death and sell depreciated property while
they are alive.
Hence why there's an estate tax.
[1] http://en.wikipedia.org/wiki/Stepped-up_basis
(Note: Wife may have been a bad example to start with due to legally shared property and all that, but this would be true if you left it to your children)
What if you earned the money through a company using the Double Irish Dutch Sandwich tax shelter and didn't pay your fair share when you earned it? That is why wealth inequality is a problem. Our government is owned by the people that can afford to make donations, which are the same people that benefit from these tax games.
If you have a problem with a double Dutch sandwich, then lobby for fixing that, but don't hose a hard working farmer and his family by nailing them with a 40% estate tax. There are a lot of millionaires who have paid taxes on every penny they've made.
but don't hose a hard working farmer and
his family by nailing them with a 40% estate tax.
The Tax Policy Center found 20 (!) farms in the country that would have to pay any sort of estate tax, and the average tax paid by those 20 (out of several thousand farms) would be under 5%.[1]
- See Myth 5 - http://www.cbpp.org/cms/?fa=view&id=2655
I have a problem with all of these tax loopholes. The tax code already has a rule in it about estate tax, which means that estate tax should be collected. To not close this loophole is unfair, that is what I am saying.
Finally, how many hardworking farmers do you know that would just straight-up hand their kids something for nothing? If we are going to work with stereotypes like that, I would be willing to bet that the farmer would be happy to sell his successful farm to his kids for fair market value so they could work as hard as he did to make a living for their families.
Finally, how many hardworking farmers do you know that would just straight-up hand their kids something for nothing? If we are going to work with stereotypes like that, I would be willing to bet that the farmer would be happy to sell his successful farm to his kids for fair market value so they could work as hard as he did to make a living for their families.
Why not fix circumvented corporate and income taxes so that everyone does pay a fair share, instead of taxing elsewhere where it would affect both those who did and did not previous pay their fair share?
Option A - Give money to your children (as much of it as you can).
Option B - Give money to a government who spends $5 to be able to spend $1. Then waistes that $1 (on polices that you don't agree with).
Option C - Give money to people who hate you for having money (a.k.a "trickle it down", "guaranteed minimal income", "anyone off the street can be a CEO", "lets retroactivly tax the rich", etc).
I know what I would do.
Option B - Give money to a government who spends $5 to be able to spend $1. Then waistes that $1 (on polices that you don't agree with).
Option C - Give money to people who hate you for having money (a.k.a "trickle it down", "guaranteed minimal income", "anyone off the street can be a CEO", "lets retroactivly tax the rich", etc).
I know what I would do.
Option D - Get merc'd when the rest of us have had enough.
Option E - Realize that we have enough food and resources so that noone should have to do without, and create a society that reflects that.
Funny how these last two options contain the one option that will solve this problem permanently, and the one option that humanity always ends up at.
Option E - Realize that we have enough food and resources so that noone should have to do without, and create a society that reflects that.
Funny how these last two options contain the one option that will solve this problem permanently, and the one option that humanity always ends up at.
So your options are to -
1. Murder them out of spite.
2. Make them shelter and feed the poor of the world, so the poor multiplies/reproduces geometrically, and requires geometrically more resources to shelter and feed.
1. Murder them out of spite.
2. Make them shelter and feed the poor of the world, so the poor multiplies/reproduces geometrically, and requires geometrically more resources to shelter and feed.
No, they need to educate, shelter, and feed the poor of the world. Experience shows us that educated and healthy populations actually start to shrink as time goes on without intervention.
You're making the mistake of assuming malice, while we're just talking about cold hard fact: people who amass a lot of power always lose it, if not by choice or natural death, then violently.
You're making the mistake of assuming malice, while we're just talking about cold hard fact: people who amass a lot of power always lose it, if not by choice or natural death, then violently.
"No one should have to do without"
Do without what? What are people not able to get right now that they really need?
Do without what? What are people not able to get right now that they really need?
Option D - Sign the giving pledge and stop being concerned that your children can't live on less than 8 billion dollars.
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Yet the punitive AMT still exists and ensnares basically everyone making between 150-400K and who lives in a high-tax state (which, conveniently, are where most of the jobs paying that amount are.)
But don't worry, as usual, if you're rich enough, you play by a different set of rules and can hide your money in shell trusts and schemes and pay nothing. Disgusting - give us the FairTax already.
But don't worry, as usual, if you're rich enough, you play by a different set of rules and can hide your money in shell trusts and schemes and pay nothing. Disgusting - give us the FairTax already.
FairTax is totally unfair.
The rich pay less because they spend less as a proportion of their income than the middle classes.
The poor pay less because they are given exemptions, or a pay boost equivalent to the tax they pay.
The government needs the same amount of money and can you guess who gets to bear the brunt of that? That's right, the middle classes get to shoulder even more of the tax burden.
No thanks!
The rich pay less because they spend less as a proportion of their income than the middle classes.
The poor pay less because they are given exemptions, or a pay boost equivalent to the tax they pay.
The government needs the same amount of money and can you guess who gets to bear the brunt of that? That's right, the middle classes get to shoulder even more of the tax burden.
No thanks!
> The rich pay less because they spend less as a proportion of their income than the middle classes.
Yes but this is already happening right? Isn't it far easier for them to keep lobbying for new tax loopholes as older ones get closed, than it is to avoid a flat tax? Am I missing something?
> The poor pay less because they are given exemptions, or a pay boost equivalent to the tax they pay.
I've never heard about this. Can you give more details?
Yes but this is already happening right? Isn't it far easier for them to keep lobbying for new tax loopholes as older ones get closed, than it is to avoid a flat tax? Am I missing something?
> The poor pay less because they are given exemptions, or a pay boost equivalent to the tax they pay.
I've never heard about this. Can you give more details?
>> Yes but this is already happening right?
Not to the extent it would under "Fair Tax", no.
>> Isn't it far easier for them to keep lobbying for new tax loopholes as older ones get closed, than it is to avoid a flat tax? Am I missing something?
It makes it far easier for far more people at the higher end of the income scale to pay a lot less tax and codifies regressive taxation as the intent of law.
Make no mistake, the people who came up with the scheme would not be supporting it if they didn't stand to benefit from it, significantly. It puts their 'loophole' way out front and legitimises it.
>> I've never heard about this. Can you give more details?
Fundamental to the scheme is that the poor would get some sort of tax credit, possibly an annual payment, in order to offset the new sales tax, where previously they would have paid little to no income tax. This is not the part of the scheme I object to. The re-balancing of burden onto the middle classes, and in a way that affects those with lower incomes more than higher incomes, is why I think the scheme is a failure from its very conception.
You may have the kind of economic ethics that support a tax that declines as a percentage of income as income rises, or even argue that all people should pay the same lump sum in tax, that's up to you. Personally I can't get behind that.
Not to the extent it would under "Fair Tax", no.
>> Isn't it far easier for them to keep lobbying for new tax loopholes as older ones get closed, than it is to avoid a flat tax? Am I missing something?
It makes it far easier for far more people at the higher end of the income scale to pay a lot less tax and codifies regressive taxation as the intent of law.
Make no mistake, the people who came up with the scheme would not be supporting it if they didn't stand to benefit from it, significantly. It puts their 'loophole' way out front and legitimises it.
>> I've never heard about this. Can you give more details?
Fundamental to the scheme is that the poor would get some sort of tax credit, possibly an annual payment, in order to offset the new sales tax, where previously they would have paid little to no income tax. This is not the part of the scheme I object to. The re-balancing of burden onto the middle classes, and in a way that affects those with lower incomes more than higher incomes, is why I think the scheme is a failure from its very conception.
You may have the kind of economic ethics that support a tax that declines as a percentage of income as income rises, or even argue that all people should pay the same lump sum in tax, that's up to you. Personally I can't get behind that.
> Not to the extent it would under "Fair Tax", no.
Ok what percentage of their income do they pay now compared to what they would pay under Fair Tax?
What percentage of income do middle class households pay before and after a Fair Tax?
> It puts their 'loophole' way out front and legitimises it.
Yes but what happens when the government decides to increase the flat tax?
Ok what percentage of their income do they pay now compared to what they would pay under Fair Tax?
What percentage of income do middle class households pay before and after a Fair Tax?
> It puts their 'loophole' way out front and legitimises it.
Yes but what happens when the government decides to increase the flat tax?
>> Ok what percentage of their income do they pay now compared to what they would pay under Fair Tax?
This is pretty irrelevant as we agree they're dodging now, and the Fair Tax would encode that as the law. Better to attempt to close the loopholes or imagine a third system than to move to a system that's regressive by design.
As for the general rule - the proposal requires a roughly 30% national sales tax. If I earn more then I spend less as a proportion of my earnings (this is a recorded economic phenomenon, not posturing), therefore my Fair Tax percentage is lower than people who earn less, even within similar socio-economic strata.
I'm not sure there's anything hard to understand here.
>> Yes but what happens when the government decides to increase the flat tax?
Not sure what you're driving at with this question. The obvious answer is "everyone pays more".
--edit-- If you don't think those on high incomes should pay the same or higher percentage of their income as those on lower earnings, that's a different argument entirely. I'm arguing that given the position that those on higher incomes should pay the same percentage or higher in tax as those on lower incomes Fair Tax is a bad idea. If your politics don't match to this assumption then you might as well say because we're not going to come to any sort of agreement!
This is pretty irrelevant as we agree they're dodging now, and the Fair Tax would encode that as the law. Better to attempt to close the loopholes or imagine a third system than to move to a system that's regressive by design.
As for the general rule - the proposal requires a roughly 30% national sales tax. If I earn more then I spend less as a proportion of my earnings (this is a recorded economic phenomenon, not posturing), therefore my Fair Tax percentage is lower than people who earn less, even within similar socio-economic strata.
I'm not sure there's anything hard to understand here.
>> Yes but what happens when the government decides to increase the flat tax?
Not sure what you're driving at with this question. The obvious answer is "everyone pays more".
--edit-- If you don't think those on high incomes should pay the same or higher percentage of their income as those on lower earnings, that's a different argument entirely. I'm arguing that given the position that those on higher incomes should pay the same percentage or higher in tax as those on lower incomes Fair Tax is a bad idea. If your politics don't match to this assumption then you might as well say because we're not going to come to any sort of agreement!
> This is pretty irrelevant as we agree they're dodging now
I would strongly disagree. Conservative estimates say the wealthy pay an 18% tax rate. Less conservative estimates put it at around 10-11%. It does matter. It's a lot easier to lobby for new loopholes when everything is less transparent. What FairTax does is make things more transparent than they were before.
> Not sure what you're driving at with this question. The obvious answer is "everyone pays more".
Yes... including the extremely wealthy. It's very difficult to lobby for new loopholes against something is that is really easy to understand.
> If you don't think those on high incomes should pay the same or higher percentage of their income as those on lower earnings,
I agree with you. They should pay more. However I strongly disagree just going down the same path of closing loop holes. It doesn't work. The middle class isn't smart enough as a whole to organize and hire lobbyists. I'm just being realistic with what's possible before I get ancient.
I would strongly disagree. Conservative estimates say the wealthy pay an 18% tax rate. Less conservative estimates put it at around 10-11%. It does matter. It's a lot easier to lobby for new loopholes when everything is less transparent. What FairTax does is make things more transparent than they were before.
> Not sure what you're driving at with this question. The obvious answer is "everyone pays more".
Yes... including the extremely wealthy. It's very difficult to lobby for new loopholes against something is that is really easy to understand.
> If you don't think those on high incomes should pay the same or higher percentage of their income as those on lower earnings,
I agree with you. They should pay more. However I strongly disagree just going down the same path of closing loop holes. It doesn't work. The middle class isn't smart enough as a whole to organize and hire lobbyists. I'm just being realistic with what's possible before I get ancient.
> Yes but this is already happening right? Isn't it far easier for them to keep lobbying for new tax loopholes as older ones get closed, than it is to avoid a flat tax?
The point-in-time adoption of a flat tax doesn't make it harder for them to lobby for tax loopholes after that adoption than it was before that adoption.
You can't compare flat tax to the status quo tax system on the assumption that in the former system the rich will magically lose their ability to lobby for changes to the existing tax code when nothing in the change proposed does anything to make that happen.
The point-in-time adoption of a flat tax doesn't make it harder for them to lobby for tax loopholes after that adoption than it was before that adoption.
You can't compare flat tax to the status quo tax system on the assumption that in the former system the rich will magically lose their ability to lobby for changes to the existing tax code when nothing in the change proposed does anything to make that happen.
I'm just guessing that it'll be much harder for them to lobby when the issue is more transparent and easier to grasp, as oppose to thousands of complicated laws where only tax lawyers and accountants can truly see the big picture. What we have now doesn't work. What makes you think going down the same path will magically fix things?
10 times the U.S. median income isn't "rich enough"?
My wife and I together make $150k in the DC suburbs. I'm trying to convince her that we need to move so we could afford to live on one income and maybe have kids some day.
For sure, we aren't hurting. The only debt we have is the one-bedroom condo next to a highway and in the flight path of an airport we live in (well, and a car, but we could pay it off in cash tomorrow if need be, which would be stupid because the APR on the loan is less than 1%). But it's extremely frustrating that this condo would translate to a 5 bedroom house with an acre of land where I grew up a mere 3 hours from here.
And that's really only because, for the first 15 years of our careers we've lived within our means and have not had children. $150k is not what it's cracked up to be. If one of us lost our jobs, we would definitely have to move. Unfortunately, hers is tied to this area, so if it were me to lose the job, we'd be royally screwed.
For sure, we aren't hurting. The only debt we have is the one-bedroom condo next to a highway and in the flight path of an airport we live in (well, and a car, but we could pay it off in cash tomorrow if need be, which would be stupid because the APR on the loan is less than 1%). But it's extremely frustrating that this condo would translate to a 5 bedroom house with an acre of land where I grew up a mere 3 hours from here.
And that's really only because, for the first 15 years of our careers we've lived within our means and have not had children. $150k is not what it's cracked up to be. If one of us lost our jobs, we would definitely have to move. Unfortunately, hers is tied to this area, so if it were me to lose the job, we'd be royally screwed.
I don't think "royally screwed" is the phrase you are looking for. There may not be comparably nice homes for cheaper in the area near your wife's work, but there are millions living on < 150k near you.
Yes, quite near me, as there is a Section 8 housing zone just two blocks from us.
And you have to define your terms here. What do you mean by "living"? If you mean, "able to feed themselves and live under a roof", that's not living, that's subsisting. I'm talking about being more than just a serf and actually making forward progress in life. Sure, the bartender at the insanely overpriced place a few blocks from us probably only makes $60k, but he also probably lives with a roommate in a tiny apartment, still owes money on a 7 year old car, has no assets, has no savings, has no health insurance, has no chance of retiring at ANY age.
At this point, I don't think there is anything within our current distance to her job (20 minutes) that A) we would be eligible for, and B) would be cheaper. I telecommute. If we both had to drive an hour to work, then we'd have to buy a second car and the increased transportation costs would certainly eclipse any savings in housing.
Mind you, an hour away in DC is 15 miles on a good day. There are people who work here for half of what we make, and they commute 2 hours to work every morning. I hope you're not suggesting that that is a livable scenario. "Well, it is for them." Maybe for them (I'd argue they are sending themselves to an early grave, but I digress), but not for society as a whole.
At that point, if we're living 2 hours away, we might as well be working for less where we lived. Thus my point: we can't live and work here for much less than we're already making.
And you have to define your terms here. What do you mean by "living"? If you mean, "able to feed themselves and live under a roof", that's not living, that's subsisting. I'm talking about being more than just a serf and actually making forward progress in life. Sure, the bartender at the insanely overpriced place a few blocks from us probably only makes $60k, but he also probably lives with a roommate in a tiny apartment, still owes money on a 7 year old car, has no assets, has no savings, has no health insurance, has no chance of retiring at ANY age.
At this point, I don't think there is anything within our current distance to her job (20 minutes) that A) we would be eligible for, and B) would be cheaper. I telecommute. If we both had to drive an hour to work, then we'd have to buy a second car and the increased transportation costs would certainly eclipse any savings in housing.
Mind you, an hour away in DC is 15 miles on a good day. There are people who work here for half of what we make, and they commute 2 hours to work every morning. I hope you're not suggesting that that is a livable scenario. "Well, it is for them." Maybe for them (I'd argue they are sending themselves to an early grave, but I digress), but not for society as a whole.
At that point, if we're living 2 hours away, we might as well be working for less where we lived. Thus my point: we can't live and work here for much less than we're already making.
I understand that. I just moved back to my home town from Nashville. I am paying the same amount for my 3 bedroom home as my studio apartment. I must say my wife and I are much happier, and it will be great to have our parents around when we have kids.
The gp isn't using the same definition of 'rich enough'. You're inferring that rich enough comment to mean "rich enough to live comfortably on and afford the things I need/want".
Instead the gp is talking about a threshold of "rich enough" where you can roll your money into these GRATs and other investment vehicles. It requires a far greater level of wealth, because you're living on the returns from investments and financial objects entirely, and in order for those returns to be enough to live on, you need a much bigger chunk of money than 150k a year.
Instead the gp is talking about a threshold of "rich enough" where you can roll your money into these GRATs and other investment vehicles. It requires a far greater level of wealth, because you're living on the returns from investments and financial objects entirely, and in order for those returns to be enough to live on, you need a much bigger chunk of money than 150k a year.
Not if the tax bracket gets lower at 20-50x the median income. Tax brackets should be monotonically increasing.
Fair tax shifts the burden of taxes to the poor who spend majority of their income. AMT hits upper middle who end paying for everything as the non earned income people have lower tax burdens. A flat tax is the most fair on all incomes(capital gain, dividends, standard income,gift/estate).
I guess I don't understand why people just LOVE, LOVE, LOVE the U.S. Government so much. They do not manage money, personnel, or any resources efficiently. The allocation of federal funds is subject to the whims of whatever lobbyist or political trend happens to be going on at the moment. If they want to use the 40% they take from your estate to fund NSA spying, deal with it.
I understand that some poor and middle class people think it's unfair for rich people to keep increasing in wealth but the government is many times more corrupt than the average multi-millionaire or billionaire. First-generation wealthy people got that way by innovation, hard work, and filling a necessary role in the marketplace.
In summary, I don't think the solution to "income inequality" is to let the government have half of our money. They have proven time and again that they do not have the right solutions.
I understand that some poor and middle class people think it's unfair for rich people to keep increasing in wealth but the government is many times more corrupt than the average multi-millionaire or billionaire. First-generation wealthy people got that way by innovation, hard work, and filling a necessary role in the marketplace.
In summary, I don't think the solution to "income inequality" is to let the government have half of our money. They have proven time and again that they do not have the right solutions.
The people that "love the government", are the lobbysist and political donors. They are the ones that receive the benefit of from this tax dodge, from the cash left over.
Make sense now?
Make sense now?
There shouldn't be an estate tax. You're taxed on your income when you earn it. Why should there be a special tax just because you died? If anything those who inherit it should just have to file it as income and pay income / cap gains tax on it.
It is exempt up to 5.25 million for individuals and 10.5 million for couples. Is between 5 and 10 million not enough? For hitting the sperm lottery? Large amounts of generational wealth is a net negative in a democratic society as it further exacerbates the income gap.
I can assure you that meager transfer payments in the form of SS, Medicare, etc will do absolutely nothing to reduce the income gap. Do you really think that giving money to the government is going to magically make people wealthier?
While generational wealth of the magnitude we have today certainly isn't productive, it doesn't actually do anything to impede peoples' ability to earn more for themselves, and forcing the wealthy to fork over money when they die is basically purely symbolic, because even when taken cumulatively it has zero effect.
While generational wealth of the magnitude we have today certainly isn't productive, it doesn't actually do anything to impede peoples' ability to earn more for themselves, and forcing the wealthy to fork over money when they die is basically purely symbolic, because even when taken cumulatively it has zero effect.
I disagree that it doesn't actually do anything to impede peoples' ability to earn more for themselves. If someone handed you $50 million of tax-free money, you wouldn't go volunteer somewhere or travel or whatever instead of going into the office? Maybe ever again?
Something is getting lost in translation here. How does some kid inheriting a bunch of money adversely effect my or anyone else's ability to earn a better living? As distasteful as it may be that someone can win the genetic lottery, the reality is it doesn't preclude others from creating more wealth for themselves. This is one of the biggest economic misconceptions in the world...it's not a zero-sum game.
Oh, I thought you meant that inheriting the money did not impede their ability to create more wealth. I understand now.
However, I still disagree with you. On a micro level, that is absolutely true, there is absolutely enough wealth to be created from different places that it is not a zero-sum game. That said, on a macro level, it is a zero-sum game. Your wealth had to come from someone somewhere else. Sheldon Adelson's came from people staying and gambling at his hotel. Mine comes from clients, and theirs comes from their customers. Your wealth is determined by the amount of money you can collect from other people. As far as I know, nobody is collecting wealth from a source that is not another human being. Well, except for the Federal Reserve, but that is a totally different topic.
However, I still disagree with you. On a micro level, that is absolutely true, there is absolutely enough wealth to be created from different places that it is not a zero-sum game. That said, on a macro level, it is a zero-sum game. Your wealth had to come from someone somewhere else. Sheldon Adelson's came from people staying and gambling at his hotel. Mine comes from clients, and theirs comes from their customers. Your wealth is determined by the amount of money you can collect from other people. As far as I know, nobody is collecting wealth from a source that is not another human being. Well, except for the Federal Reserve, but that is a totally different topic.
The rules cannot (and in fact do not) work differently on a macro and micro level. Your argument means that no one ever becomes wealthy over time because we are collectively stuck. The wealth is fixed, it just sloshes around from one party to the next. I hope it's self-evident that this is not reality.
Wealth can be created, destroyed, or transferred. You seem to be confusing "collecting" and "creating". Wealth is created by people doing things that manage to satisfy demand...it's the right combination of labor and capital. This can take many forms, whether it's a guy building a casino or a starting a social network or a law firm. These are forms of creation, not transfer (or what you seem to be referring to as "collecting"). Transfer is entirely a governmental endeavor, a social mechanism for redistribution of the wealth that's actually been created. There is no labor, capital, ideas, or hard work behind it.
Wealth can be created, destroyed, or transferred. You seem to be confusing "collecting" and "creating". Wealth is created by people doing things that manage to satisfy demand...it's the right combination of labor and capital. This can take many forms, whether it's a guy building a casino or a starting a social network or a law firm. These are forms of creation, not transfer (or what you seem to be referring to as "collecting"). Transfer is entirely a governmental endeavor, a social mechanism for redistribution of the wealth that's actually been created. There is no labor, capital, ideas, or hard work behind it.
You are right about the macro/micro point. That occurred to me during the writing of that post, but I decided to leave it in there because I was wrong and I did not want to confuse anyone else interested in the discussion.
You are correct, obviously, that wealth is created by people doing things that satisfy demand. For the purposes of our discussion, wealth is measured in dollars. Let's say there are two people on earth. One has 100 dollars, the other has 0 dollars. The person with zero dollars creates some widget that the dude with 100 dollars wants and charges the other guy 80 dollars for it. Guy 1 now has 20 dollars and guy 2 now has 80 dollars. Guy 2 created his wealth (his 80 dollars) by doing/building/whatever something that guy 1 wanted. Am I thinking about this too simply? How is it possible that wealth (measured in dollars) is introduced into an economy without it coming from another participant in the market?
You are correct, obviously, that wealth is created by people doing things that satisfy demand. For the purposes of our discussion, wealth is measured in dollars. Let's say there are two people on earth. One has 100 dollars, the other has 0 dollars. The person with zero dollars creates some widget that the dude with 100 dollars wants and charges the other guy 80 dollars for it. Guy 1 now has 20 dollars and guy 2 now has 80 dollars. Guy 2 created his wealth (his 80 dollars) by doing/building/whatever something that guy 1 wanted. Am I thinking about this too simply? How is it possible that wealth (measured in dollars) is introduced into an economy without it coming from another participant in the market?
I admit it's a bit abstract but here goes.
Guy 2 (inventor) had to employ himself, other people, and capital in order to create the widget. He has to pay those people and the owners of the capital, and in turn they now have income which they do "stuff" with. Some of it's consumed (spent) and some is saved (invested), in each case having yet more downstream effects. Maybe Guy 2 realizes he can sell more widgets to more people but needs to employ more labor and capital in order to do so. Multiply this sort of ripple effect by a kajillion, every second of the day, and that's sort of how it works. It's never stagnant, and the more activity there is, generally speaking, the more wealth creation is taking place.
But in a capitalist world, nothing is stopping anyone from being Guy 2, which is kind of my original point.
Guy 2 (inventor) had to employ himself, other people, and capital in order to create the widget. He has to pay those people and the owners of the capital, and in turn they now have income which they do "stuff" with. Some of it's consumed (spent) and some is saved (invested), in each case having yet more downstream effects. Maybe Guy 2 realizes he can sell more widgets to more people but needs to employ more labor and capital in order to do so. Multiply this sort of ripple effect by a kajillion, every second of the day, and that's sort of how it works. It's never stagnant, and the more activity there is, generally speaking, the more wealth creation is taking place.
But in a capitalist world, nothing is stopping anyone from being Guy 2, which is kind of my original point.
I see what you are saying, and after some additional reading on the subject can now see your point.
I guess it breaks down for me when you actually bring dollars into the model. You are absolutely right, widgets made of resources come from the combination of those resources and ingenuity. However, in modern society, refined resources are quantified in terms of dollars and once dollars are part of the equation, it must be zero-sum because people cannot just create dollars for themselves to buy stuff. They must create stuff to convert into dollars so they can buy other stuff. You can absolutely create stuff from nothing, but that does not mean that anyone is going to buy it, which would convert it into dollar wealth.
I guess it breaks down for me when you actually bring dollars into the model. You are absolutely right, widgets made of resources come from the combination of those resources and ingenuity. However, in modern society, refined resources are quantified in terms of dollars and once dollars are part of the equation, it must be zero-sum because people cannot just create dollars for themselves to buy stuff. They must create stuff to convert into dollars so they can buy other stuff. You can absolutely create stuff from nothing, but that does not mean that anyone is going to buy it, which would convert it into dollar wealth.
The introduction of dollars is irrelevant...you're overthinking it. There is a banking system that deals with the money supply, but that's another (possibly confusing) matter. Wealth is not not fixed, that is the only idea you need to get for this. Me being wealthy, even extraordinarily wealthy, does not therefore mean that you cannot be. If you get this concept you're already ahead of 95% of the world in terms of economic literacy.
What if I built my wealth exploiting child labor in Malaysia? What if it wasn't half a world away, but there was a source of similarly cheap labor in my neighborhood? I suppose that you are saying that the people working 12 hours/day for maybe 1 USD are getting more wealthy themselves than before, so a rising tide is lifting all boats?
What do "income gaps" produce? If my neighbor makes $10 million a year and I make $100,000, how does that affect my life?
Many of the "poor" in our country are obese. That should tell you something. They aren't that poor. They have houses, cars, food, and clothing. Poor people can go to college for free (Pell Grant), eat for free (EBT), have housing for free (HUD), and get a check to pay for other living expenses (welfare). We have proven that providing all of these things to people with no strings attached does not lift them to a higher plane.
How will it help to take another billion dollars from a family who knows how to manage money and give it to a bunch of families who don't?
Many of the "poor" in our country are obese. That should tell you something. They aren't that poor. They have houses, cars, food, and clothing. Poor people can go to college for free (Pell Grant), eat for free (EBT), have housing for free (HUD), and get a check to pay for other living expenses (welfare). We have proven that providing all of these things to people with no strings attached does not lift them to a higher plane.
How will it help to take another billion dollars from a family who knows how to manage money and give it to a bunch of families who don't?
> What do "income gaps" produce? If my neighbor makes $10 million a year and I make $100,000, how does that affect my life?
Well, for one thing, you are probably not neighbors if the income disparity is that wide. Secondly, you are really not comparing apples to apples. Someone making $100K/year is by no means poor. They make relatively less than someone making $10M, and they might be just as over-extended, but they can easily meet their basic needs, whereas somebody making $15K/year may have enormous difficulties doing so and as a result, might break into your car and steal your briefcase. That is how income disparities can affect your life.
The rest of your post is patently absurd. Food stamps in AZ amount to $160/month, and the maximum federal Pell Grant for this year is $5,645 [0]. For comparison, tuition for an in-state student at ASU at the college of engineering is $10k/year [1].
Not to mention that you cannot get sick or hurt, otherwise you are basically fucked. Are you suggesting that it is somehow easy to be poor?
0: http://blog.collegeup.org/maximum-federal-pell-grant-increas...
1: https://students.asu.edu/tuition/results?acad_year=2014&resi...
Well, for one thing, you are probably not neighbors if the income disparity is that wide. Secondly, you are really not comparing apples to apples. Someone making $100K/year is by no means poor. They make relatively less than someone making $10M, and they might be just as over-extended, but they can easily meet their basic needs, whereas somebody making $15K/year may have enormous difficulties doing so and as a result, might break into your car and steal your briefcase. That is how income disparities can affect your life.
The rest of your post is patently absurd. Food stamps in AZ amount to $160/month, and the maximum federal Pell Grant for this year is $5,645 [0]. For comparison, tuition for an in-state student at ASU at the college of engineering is $10k/year [1].
Not to mention that you cannot get sick or hurt, otherwise you are basically fucked. Are you suggesting that it is somehow easy to be poor?
0: http://blog.collegeup.org/maximum-federal-pell-grant-increas...
1: https://students.asu.edu/tuition/results?acad_year=2014&resi...
Who are you to decide what is enough?
That is the beauty of our democratic system! I believe that 5-10 million is enough, so I can vote for a candidate that believes that 5-10 million is enough. Hopefully, I can get enough people who believe that 5-10 million is enough and we can get that candidate elected.
That is also the ugly of our democratic system. Democracy is two wolves and a lamb voting on what to have for lunch. The "99%" will always out number (and usually outvote) the "1%". How kind of us to keep voting for them to pay more taxes.
Let me take a stab at this, and I hope you dont take this offensively. I am guessing you are somewhere between 18-24 years old, right?
These are the kind of lazy ideas that get people in trouble. I emphasize lazy because to genuinely believe this is like playing a game of chess and only thinking one move ahead. Stop for a moment and seriously consider what kind of effects a theoretical wealth cap at $5-10 million would have. What are those ripple effects, the unintended consequences of this? Tell you what, and I mean this seriously and without derision, why dont you tell me what you think the big picture effects would be. Would it be all sunshine and roses? It's a worthwhile thought exercise.
These are the kind of lazy ideas that get people in trouble. I emphasize lazy because to genuinely believe this is like playing a game of chess and only thinking one move ahead. Stop for a moment and seriously consider what kind of effects a theoretical wealth cap at $5-10 million would have. What are those ripple effects, the unintended consequences of this? Tell you what, and I mean this seriously and without derision, why dont you tell me what you think the big picture effects would be. Would it be all sunshine and roses? It's a worthwhile thought exercise.
I never advocated for a wealth cap. I merely stated that I thought the $5.25 million to $10.5 million exemption from estate tax was enough.
Also, you are correct that I am in that demographic. I am not exactly sure why that is relevant, however.
Also, you are correct that I am in that demographic. I am not exactly sure why that is relevant, however.
> If anything those who inherit it should just have to file it as income and pay income / cap gains tax on it.
That's pretty much what the estate tax is.
That's pretty much what the estate tax is.
> You're taxed on your income when you earn it. Why should there be a special tax just because you died?
Because your children didn't earn it. They just won the lucky sperm lotto.
As a society, our policies should be structured to discourage the formation of a hereditary elite.
Because your children didn't earn it. They just won the lucky sperm lotto.
As a society, our policies should be structured to discourage the formation of a hereditary elite.
I do not see why these who inherit it should pay anything on it - income tax on this money was already paid.
And the government remains powerless to close this loophole? They really do seem to be owned by the wealthy and corporate interests. That's sad. The wealthy are little more deserving of their wealth than the poor are deserving of their situation. In fact, if we really do have no free will as science seems to suggest, then the only thing separating the rich from the poor is luck. Then the current inequality is particularly sick.
Relevant (Thomas Jefferson's explanation of the nature of inherited wealth): http://www.economist.com/blogs/lexington/2010/10/estate_tax_....
Better source for how these actually work instead of the handwaving in the article: http://taxprof.typepad.com/taxprof_blog/2013/09/wal-marts-wa....
Thank you. This article also points out that the recipients still pay income tax. The original Bloomberg link isn't very informative or accurate.
For perspective - let's make them pay it all back, retroactively, from the year 2000 as the article suggest. Now we will have (roughly due to compounding) tackled 0.0058% of the current US deficit leaving us with $17,133,947,996,837 or 99.994%.
For those who prefer a visual perspective - http://demonocracy.info/infographics/usa/us_debt/us_debt.htm...
I'm not convinced focusing on these tiny (relatively) loopholes on the "world's richest", should be the focus of trying to fix the problem.
For those who prefer a visual perspective - http://demonocracy.info/infographics/usa/us_debt/us_debt.htm...
I'm not convinced focusing on these tiny (relatively) loopholes on the "world's richest", should be the focus of trying to fix the problem.
The Republican party has become the party of the rich. They really want to get rid of the estate tax so they can build wealth across generations. $5 million is excluded from the estate tax, but they don't think that is enough to pass on when they die.
What claim does the government have on the wealth those people created? Why is the discussion always about how much the rich deserve to keep based on their own creation of wealth?
The government has the same claim on their wealth as any other level of income, as part of the social contract of living in the US. I am a little confused on what your point is. Should people making $50k/year be exempt from the government's claim on the wealth they created, too? What about people making $25k/year?
The estate tax extends the standard tax rate on that degree of income to the money left behind when they die, it is not currently a higher rate. Do you suggest there should be no estate tax?
"Accidental"? Classic!
<rant>
How much fucking money does someone need? Seriously. What is the difference between 7.9 billion (what he wants to leave) and 5.1 billion (less the existing estate tax of 2.8 billion)? Clearly, his ego is huge given that he watches the ranks of richest people closely. Honestly, what the fuck? Congratulations man, you got really fucking loaded. Good work. Now, please play fair.
</rant>
How much fucking money does someone need? Seriously. What is the difference between 7.9 billion (what he wants to leave) and 5.1 billion (less the existing estate tax of 2.8 billion)? Clearly, his ego is huge given that he watches the ranks of richest people closely. Honestly, what the fuck? Congratulations man, you got really fucking loaded. Good work. Now, please play fair.
</rant>
I see your point. The thing is, nobody trusts the government to spend their money well, or at least not as that person thinks it should be spent. Therefore everyone avoids taxes to the extent they can. I take every deduction I can, I bet you do too.
Even the rich folks that aren't trying to pass on a huge inheritance, such as Bill Gates and Warren Buffet, still aren't giving it to the government. They're giving it all to charity, which is undoubtedly generous of them but also lets them direct their wealth themselves rather than giving it to the tax man.
Even the rich folks that aren't trying to pass on a huge inheritance, such as Bill Gates and Warren Buffet, still aren't giving it to the government. They're giving it all to charity, which is undoubtedly generous of them but also lets them direct their wealth themselves rather than giving it to the tax man.
Warren Buffet has frequently said that he is perfectly willing to pay more taxes, and that his secretary pays a higher percentage of her income than he does. There are numerous reasons for government inefficiency, but how could you run efficiently if there is always a target on your budget's back?
EDIT: You are absolutely right that the government spends money on stuff that I don't want, like bombs and wars, and I think it is extraordinarily generous that men like this give so very much to charity. However, I also believe that if we as a society have decided that there should be an estate tax, then there should be an estate tax and that the loophole should be closed.
EDIT: You are absolutely right that the government spends money on stuff that I don't want, like bombs and wars, and I think it is extraordinarily generous that men like this give so very much to charity. However, I also believe that if we as a society have decided that there should be an estate tax, then there should be an estate tax and that the loophole should be closed.
The IRS does accept voluntary donations, but despite the rhetoric Mr Buffett has not actually given more to the government than he has to. So I'm a little skeptical of his claims. Also, part of the reason his secretary pays more is because he has gone out of his way to avoid paying taxes (euphemistically, to structure his businesses in a tax-efficient manner).
I'm not arguing that there shouldn't be an estate tax, or that people shouldn't pay it. Just that I fully understand why they try to avoid it. I would probably do the same thing in their situation, and I suspect many others would as well.
I'm not arguing that there shouldn't be an estate tax, or that people shouldn't pay it. Just that I fully understand why they try to avoid it. I would probably do the same thing in their situation, and I suspect many others would as well.
You are right. They are acting economically rationally, but that does not mean that they are playing fair. That is why I am so viscerally opposed to the Byzantine nature of the US tax code and the inability of our lawmakers to level the playing field.
>Covey, 84, a Missouri native and former U.S. Marine Corps basketball player who earned a law degree from Columbia Law School in 1955, uses the words “romantic” and “beautiful” to describe the most elegant tax maneuvers.
This guy is a hacker.