Here's one case study: https://www.gocurrycracker.com/never-pay-taxes-again/
"Once income and spending exceed this level, taxes must be paid. Unless… Unless that income comes from qualified dividends or long-term capital gains. In this case, a married couple can have $24,400 a year in income AND $78,750 in investment income, TAX-FREE" If you can get 78k$ yearly investment income from index funds, you already have a net worth of several million $, and you're thus already among the people that…
Don't hate the player, hate the game. Capital owners pay far less in taxes than worker bees.
Why no one ever mentions how much companies effectively contribute to various salary and employees income taxes? Corporate tax is practically nothing.
Companies that pay billions in taxes also contribute. Why let a handful get away with it?
Wrong incentives.
When basing on salary/personal income taxes, government is interested to raise everyone's income less inflation if it wants more taxes (let's skip 20th century aberrations like > 90% income taxes for now).
Corporate tax is an opaque mechanism with unknown corrupt incentives, effectively turns into blackmailing of business and IMO should be dropped whatsoever.
Many countries are adopting zero corporate tax (having dividend and salary taxes instead).
I read about tax avoidance schemes like corporate inversions or sending all your patents to a company in some tax free haven and licensing your patents from your company for all your profits, and so on, and it makes me really mad. Companies making many billions of dollars paying no taxes. My intuition is that if I personally came up with a cute "gotcha" like this where I wound up paying zero in taxes because of some…
Tax loopholes (and tax lawyers) exist only because there is sufficient complexity in the tax system/tax code. This is because the tax system actually has 2 conflicting uses: (i) collect revenue for the gov't and (ii) create incentives/disincentives that are meant to push taxpayers in ways that are deemed beneficial, be it to the economy or to certain policy like environment, housing, etc. If you drop (ii) you can end…
> Tax loopholes (and tax lawyers) exist only because there is sufficient complexity in the tax system/tax code.
I don't think this is entirely correct. Even if there were no deductions and no other complexities, and the corporate income tax was simply based on "all revenue minus all costs", a company could still reduce or even eliminate its tax burden entirely by simply paying IP licensing costs to a different company located in a tax haven.
>It would be foolish not to. Hard disagree. At typical self-employed scale, fiddling around with avoiding taxes is a waste of time (and money) which is a net loser against putting that energy into finding income. Are self-employed people really busy setting up as a business in Estonia or lobbying their national representatives? If you're taxed on your profits, it's always better to double your profits than to avoid t…
>> It would be foolish not to. > Hard disagree. At typical self-employed scale, fiddling around with avoiding taxes is a waste of time (and money) To the nearest percentage approximation, 100% of self-employed and small businesses do exactly this at a basic level, and it's low effort. There's an entire support industry to keep it simple. Tax efficiency, which is the polite name for avoiding taxes, which is perfectly…
Not only self employed and small businesses! If you work as an employee and have a 401(k), you are participating in a form of tax avoidance: deferral. Your money goes into it, but it's not taxed until much later when you retire and take it out. If you have an HSA, a Roth IRA or a 529 plan for your kid's education, you're also deferring and/or avoiding taxes. If you buy municipal bonds you're avoiding some taxes. There are a few "it would be foolish not to" ways for middle class people to keep their finances tax efficient. Obviously there are many more ways available to rich people and businesses, and they can shelter orders of magnitude more money than us, but let's not pretend that tax avoidance is something only they do.
Legitimately expensing office supplies is scarcely considered "corporate tax avoidance" and not reasonable to call "stealing". Since the OP was making this direct comparison, and you seem to like fallacies, you can take it that I am calling their argument a slippery slope fallacy.
I am the OP and I was not making this direct comparison. I was pointing out that it's common for the small business to perform tax efficiency, which is extremely widespread and taught in small business courses. Most people running a small business or self-employed relate to it, and it's indeed a "set and forget" thing, mainly because you just do what the accountant tells you. In that world, tax efficiency is largely…
> It's saying that one thing follows from another
That's why I called it a slippery slope fallacy.
Following the common tax rules to run a competitive and productive business does not inevitably lead to calculating and exploiting (and lobbying to create) loopholes in international tax law.
I'm talking about the fact that this doesn't address the base problem.
Sure, I simply addressed this point >It is more efficient to let people keep money than it is to take it from them and give it back Direct subsidies in the form of tax credit don't incur any costs of moving money because no money are moved, but functionally it is almost the same.
The base problem being that tax law is gameable. That's what the article and comments are about.
VAT is literally tax on revenue and it works fine. You tax the added value, so each company pays tax only on (sell_price - purchase_price).
Yes, VAT is tax on revenue of the entire supply chain as a whole (not individual companies), so long as it is within a group of countries using VAT. But it didn't look to me like that's what the GP comment meant. I assumed they meant tax on revenue taken by each company. No need to account for expenses... I'd hoped that would be obvious from my comment, but if not I hope I've clarified that now. ps. It looks like oth…
My comment actually wasn't in relation to the GP comment, I meant that revenue taxing in the form of VAT works fine for certain situations.
My current biggest gripe with taxation is that it's mostly paid in the countries where the corporation lives, not where the revenue is made. Facebook sells 10 mil worth of ads in France? Facebook should pay (some) taxes for the 10 mil in France.
VAT is not tax on revenue. Only the end customer pays VAT.
Although true, that seems moot because all tax on business (whether VAT or not) is, one way or another, passed along to the end customer (or not passed on according to business pricing decisions). No matter which company in the supply chain pays it! With VAT, it's raised prices and shown on the receipt. With other business taxes, it's raised prices and not shown on the receipt. Customer pays either way. Of course, co…