Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Really rich people are suddenly paying quite a bit more in taxes

washingtonpost.com

Post reply on HN
Print view View original

131–140 of 184 posts

Re: Really rich people are suddenly paying quite a bit more in taxes

#131

Post by beaner »

wtallis wrote: post #50
beaner wrote: post #42

Earlier quoted context omitted.

No idea whether or not this guy is super rich, but annual salary and net worth are two very different things.

It's an annual salary, not an isolated winning lottery ticket. Even if he doesn't currently have a super high net worth, he will soon enough unless he's spending like a lottery winner.

Maybe. I guess it depends on what you consider "super high". It'd take a few years to build up $1m from a $1m salary, and there's no guarantee the job is even kept that long.

Re: Really rich people are suddenly paying quite a bit more in taxes

#132

Post by jsankey »

thesteamboat wrote: post #123
jsankey wrote: post #38

Earlier quoted context omitted.

That's the problem, too -- it applies equally to necessities and luxuries. Sales taxes are regressive because there is a certain amount of non-discretionary spending everyone has to make, regardless of income, just to live.

It doesn't necessarily need to. We could have a `digit-sales tax', i.e. count the number of digits in the item cost and add a tax at that percent. Something less than $10 only has a 1% tax, while something costing $10,000 has a 5% tax. Clearly the numbers should be adjusted if someone wants to turn this into a serious tax proposal, but it seems possible to design a progressive sales tax.

It's not quite so simple. Many non-essential things are cheap (e.g. iOS games), and many essential things are expensive (e.g. housing, transport). The line between essential and luxury is also subjective. So you have to start categorising, and things get messy.

Re: Really rich people are suddenly paying quite a bit more in taxes

#133

Post by shalmanese »

addicted wrote: post #32
jmspring wrote: post #10

I'm not a Trump fan, and despite likely tax hits, his proposal of simplifying the tax code (as many have done before him), getting rid of the IRS (yes jobs lost, but really, I got a certified letter owing $0.51 and they were "too busy with this category to answer. click ") would be a positive thing. One short summary of his proposal -- http://www.thepoliticalinsider.com/donald-trump-unveils-his-... I think a pure fla…

The flat tax is an incredibly pointless solution. The flat tax is opposed to a progressive tax, that says that instead of having a tax rate of 15% for 100% of your income, you have a tax rate of 0% for the first $10000 of your income, 10% of the next 20000, and so on. This is something that can be calculated mentally, looked up using IRS published tables, or calculated with no effort in a 10 line script or some of th…

The biggest difference moving to a flat tax system can make is that you can shift income tax collection from the payee to the payer.

Under a progressive system, Company A paying you $10,000 and Company B paying you $10,000 results in a different tax rate so neither company knows how much tax you owe. Under flat tax, Company A can just take $1500 out of your earnings before it gets to you, regardless of any arrangements you have with other payers. Since there are far fewer companies than employees, this makes tax enforcement significantly easier and evasion much less likely. Ordinary citizens now no longer have to deal with the IRS and tax is handled transparently.

Every flat tax proposal also tends to come with a negative income tax component to make up for the regressivity. The NIT essentially becomes a basic income like social safety net to make up for the loss of progressivity. And since it involves the govt giving you money rather than you giving the govt money, compliance will naturally be much higher.

Re: Really rich people are suddenly paying quite a bit more in taxes

#134

Post by reddytowns »

fragsworth wrote: post #45
SlowComputer wrote: post #11

Earlier quoted context omitted.

I live in California. I'm not "super rich" but we earn more than $1MM/year. For every additional dollar I earn, I only get to keep 47 cents of it, just counting _income_ taxes. In reality, only high earners pay taxes. And high-salaried people are getting screwed under Obama's war against the most productive citizens.

It's somewhat infuriating. People get to sit on wealth, watch it grow, and then pay less in taxes on that income than someone who is contributing to society by working for a living.

Most people that work for a living pollute the planet while doing so.

Re: Really rich people are suddenly paying quite a bit more in taxes

#135

Post by brownbat »

harryh wrote: post #56
bhickey wrote: post #51

Earlier quoted context omitted.

Sure the mortgage deduction exemption is horrendous, but I think income source discrimination is a bigger issue. We have different rates for wages, long-term capital gains, bonus income. Don't even get me started on carried interest. I'd also like to see social security contributions get uncapped. After $118k in income, your average tax rate falls until $189k. Even then, your mean tax rate will still be lower than so…

1) Wages and bonus income aren't taxed differently. 2A) When you take into account corporate taxes, inflation, and risk the difference between tax rates on wages and cap gains aren't as big as you might think. 2B) Many economists argue that there should be no capital gains taxes at all as they create a distortion between consumption and saving behavior. https://en.wikipedia.org/wiki/Optimal_capital_income_taxatio...…

I really liked the discussion of the Chamley-Judd model, especially in parable form.

Question though: I worry that some individuals have the ability to recharacterize their earnings as either income or gains by shifting their contracts and methods of compensation.[0] If so, then you end up with odd results. Scenario 2 (a 50% tax on wages) turns into Scenario 1 (no taxes) for that subset of the population.

Looks like a well studied topic, so I'm sure someone tackles this?

[0] Say I build machines that make widgets, and your new widget factory wants such a machine. You could hire me as an machine-building employee, I could own my own business and you could buy the machine from me, or you could give me shares of ownership in your factory. Each of these could result in the same actions and changes in wealth for all parties, but would be taxed under completely different systems. CEO compensation packages are the most transparent real world example of compensation structuring I can think of. On the other hand, Jon Ronson interviewed a woman making 1.5-3 million per year who claimed she paid 35%, that she wasn't rich enough to restructure to avoid income taxes. This was in a piece on income inequality, maybe for GQ. So maybe this is non-trivial until you start getting near the top...

Re: Really rich people are suddenly paying quite a bit more in taxes

#136

Post by dang »

Zhenya wrote: post #110
gnaritas wrote: post #107

Earlier quoted context omitted.

> If he/she earned it legally, they deserve it. Utter nonsense. Legal doesn't equal moral nor does it mean fair. Slavery was legal, that doesn't mean the slave owners deserved the profits from their labor (you apparently think it does). Legals means nothing more than we can't put you in jail yet.

Eyeroll. And who decides morality? You? No thanks.

This comment breaks the HN guidelines. Please comment civilly and substantively, or not at all.

https://news.ycombinator.com/newsguidelines.html

https://news.ycombinator.com/newswelcome.html

Re: Really rich people are suddenly paying quite a bit more in taxes

#137

Post by harryh »

brownbat wrote: post #135
harryh wrote: post #56

Earlier quoted context omitted.

1) Wages and bonus income aren't taxed differently. 2A) When you take into account corporate taxes, inflation, and risk the difference between tax rates on wages and cap gains aren't as big as you might think. 2B) Many economists argue that there should be no capital gains taxes at all as they create a distortion between consumption and saving behavior. https://en.wikipedia.org/wiki/Optimal_capital_income_taxatio...…

I really liked the discussion of the Chamley-Judd model, especially in parable form. Question though: I worry that some individuals have the ability to recharacterize their earnings as either income or gains by shifting their contracts and methods of compensation.[0] If so, then you end up with odd results. Scenario 2 (a 50% tax on wages) turns into Scenario 1 (no taxes) for that subset of the population. Looks like…

Indeed if you look at the Wikipedia link I posted you'll find a section on "Avoidance of tax arbitrage between capital and labor incomes" which is exactly the problem you describe.

Incidentally, when people talk about "tax shelters" and "complicated schemes the rich use to avoid paying taxes"(1) they're mostly talking about this. Though often they don't make that as clear as they should.

1. http://www.nytimes.com/2015/12/30/business/economy/for-the-w...

Re: Really rich people are suddenly paying quite a bit more in taxes

#138

Post by muzz »

pmorici wrote: post #98
curiousgeorgio wrote: post #26

Earlier quoted context omitted.

While you are entitled to that opinion, I think it's really hard to say with any confidence what your attitude would be at a vastly different income level. It may be useful to frame the idea in a different way: You sound as if you'd approve of a ~53% tax rate at an income level higher than your own, but not necessarily at your own level. For the sake of argument, if you were to work just as hard for every dollar at t…

"Similarly, if you were earning 7 figures and wanted to help society / people in need, would the government really be your best choice in terms of bang for your buck?" Under the current tax code, people already have the ability to donate up to 50% of their income to charity tax free. How many people do you know who donate 50% of their income to charity every year?

What is the 50% limitation? In theory, aren't all charitable contributions a deduction? I.e., even up to 100%?

Re: Really rich people are suddenly paying quite a bit more in taxes

#139

Post by muzz »

Mikeb85 wrote: post #79
gnaritas wrote: post #66

Earlier quoted context omitted.

> It's not a terrible solution. It's precisely a terrible solution. Yes, taxes are hard, but a solution that punishes the poor (or the not rich) by not recognizing the marginal utility of money is terrible in any form.

There's pretty much always a minimum amount you need to make to pay taxes, most flat tax schemes are still progressive on the low end. Very few 'flat tax' proponents want to tax the poor (not much money in it anyway). The idea with a flat tax isn't to punish the poor, but to reduce tax evasion on the higher end, and to reduce to burden on the middle class.

In theory, the AMT exists to prevent the affluent from using too many deductions

Re: Really rich people are suddenly paying quite a bit more in taxes

#140

Post by muzz »

Mikeb85 wrote: post #84
fweespeech wrote: post #73

Earlier quoted context omitted.

Regressive taxes are inherently economically destructive. I'm sorry but its just a terrible idea. You can get a 0 deductions system with a progressive tax system too, it isn't some magical property of a flat tax.

> Regressive taxes are inherently economically destructive. The current system, in practice, is progressive up to the upper middle class, and regressive after that. Flat tax rates aren't about taxing the poor (you can still build in income exemptions and most flat tax schemes do), but reducing tax evasion by the rich...

In theory, the AMT exists to prevent that
Post reply on HN