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Evidence from leaked account data on how elites use offshore banking [pdf]

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Re: Evidence from leaked account data on how elites use offshore banking [pdf]

#311

Post by gzer0 »

lend000 wrote: post #256
aceazzameen wrote: post #247

Earlier quoted context omitted.

I see multiple people in this thread talking about high taxes without knowing how tax brackets actually work in reality. I wish people understood them. It's very easy to senationalize high taxes. I'll make up some numbers to make it simple. Let's say there's 2 brackets. Everyone who makes under $399,999.99 pays 0% tax. And everyone who makes over $400k pays 90% tax. You make $400k. How much do you owe the taxman? Did…

I don't think anyone on either side of this thread is confused by this simple concept. But perhaps in writing your own comment you realize how unprogressive these tax brackets are. You start paying pretty close to the top rate on income over 44,000. And then it stops increasing at a tiny fraction of the incomes of the truly wealthy (the wealthiest of whom don't need help from offshore tax gymnastics -- they just pay…

Sure, the tax bracket in 1913 might have been 1 million USD (not adjusted for inflation). The highest tax bracket was also paying 67 percent in 1917 and 77 percent in 1918 [1]. During WW2, the tax rate for the highest bracket jumped to a whopping 94% [1]. Most people don't realize how low the rates have gotten compared to previous times. Subsequently, as rates have gotten lower, the income inequality gap is near all-time highs [2].

[1] https://bradfordtaxinstitute.com/Free_Resources/Federal-Inco...

[2] https://www.pewresearch.org/social-trends/2020/01/09/trends-...

Note: I'm not saying correlation = causation; just an interesting phenomenon to notice.

Re: Evidence from leaked account data on how elites use offshore banking [pdf]

#312

Post by DSingularity »

Trias11 wrote: post #14
DSingularity wrote: post #12

Earlier quoted context omitted.

Come on. The ultra-rich don’t pay their fair share. You know this and everyone knows this. Wealth inequality is obscene. Full stop.

Could you define "fair share" please in a way that everyone is agree with?

IMO a percentage which ensures that they don’t monopolize wealth. Their levels of money and resources are so large that it is game changing. Take startups, who do you think funds them? Is it a pension for teachers that’s goes out and gets those precious preferred shares in 5 startups per year or is it the venture arm of gates/below/zuckerberg/dell/..? The wealthy have monopolized wealth. That’s why we end up where one man owns most the farm land in the US.

Re: Evidence from leaked account data on how elites use offshore banking [pdf]

#313

Post by _djo_ »

ErikVandeWater wrote: post #195
_djo_ wrote: post #65

Earlier quoted context omitted.

Not really. The Biden administration’s proposals include more funding and organisational reform for the IRS. Democrats have been talking for some time about how the steady defunding of the IRS has resulted in less tax collection from the rich and powerful.

What leads you to believe increased funding would be directed toward regulating the richest and most powerful people/companies (i.e. the biggest financiers of political campaigns on both sides of the aisle)?

The OPs statement was that more focus needs to be on improving enforcement. I simply pointed out that improving enforcement, by reversing the budget cuts and consequent drop in audit capability within the IRS, was part of the current administration’s policy.

Whether their proposed changes will actually work is another question, but it’s wrong to say there’s no attention there and that the debate is only about raising taxes.

I can’t say I understand the downvotes I received for saying that.

Re: Evidence from leaked account data on how elites use offshore banking [pdf]

#314

Post by airstrike »

jonas21 wrote: post #63
airstrike wrote: post #22

Earlier quoted context omitted.

I'll throw a range out there for the sake of argument, and I'm really low-balling it: 25-30%

So a little bit less than they pay right now in the US? The latest CBO data has the average Federal tax rate at around 31% for both the top 1% and top 0.01% cohorts [1]. [1] https://www.cbo.gov/system/files/2020-10/56575-Household-Inc...

Only if you assume "income" correctly captures the money made by the richest.

Re: Evidence from leaked account data on how elites use offshore banking [pdf]

#315

Post by closeparen »

R0b0t1 wrote: post #302
closeparen wrote: post #129

Earlier quoted context omitted.

Owns a reasonable home in a decent school district with a commute around 30 minutes. Eats out a few times a month. Takes 1-2 vacations a year. If upper middle class, savings adequate to gradually upgrade housing, send kids to University of State, etc. If regular middle class, home will be maintained against entropy and kids will take out student loans. Either way, will retire at the usual time. In some places $400k c…

As noted this is not really true in most locations, but I still would not feel bad about the person earning $400k. They live in a desirable location. They can move if they wish.

They live in a productive location. When they leave it their productivity collapses.

I understand it’s emotionally satisfying to see them deprived, but the government also ends up with less revenue when they apply their skills to lower impact projects.

Re: Evidence from leaked account data on how elites use offshore banking [pdf]

#316

Post by lend000 »

gzer0 wrote: post #311
lend000 wrote: post #256

Earlier quoted context omitted.

I don't think anyone on either side of this thread is confused by this simple concept. But perhaps in writing your own comment you realize how unprogressive these tax brackets are. You start paying pretty close to the top rate on income over 44,000. And then it stops increasing at a tiny fraction of the incomes of the truly wealthy (the wealthiest of whom don't need help from offshore tax gymnastics -- they just pay…

Sure, the tax bracket in 1913 might have been 1 million USD (not adjusted for inflation). The highest tax bracket was also paying 67 percent in 1917 and 77 percent in 1918 [1]. During WW2, the tax rate for the highest bracket jumped to a whopping 94% [1]. Most people don't realize how low the rates have gotten compared to previous times. Subsequently, as rates have gotten lower, the income inequality gap is near all-…

I'm in agreement. But to tax people 67% starting at 400K is ludicrous to me, barring emergency wartime measures (although nowadays the Fed would just print the money and dissolve the value of USD). That 67% rate was for income over TWO MILLION (not inflation adjusted). Using the extremely conservative CPI figure, that's over $25M USD today. Using the median price of a home in the US for inflation, that's nearly $100M. A much more sensible maximum bracket than what we have today.

The point is that the distribution of tax rates is broken, with no statement made about the rates themselves.

Re: Evidence from leaked account data on how elites use offshore banking [pdf]

#317

Post by TeMPOraL »

offsthroway wrote: post #213
pydry wrote: post #208

Earlier quoted context omitted.

>Since the world is lacking in the department of opinion of wealthy men You're serious aren't you?

I was joking, the formatting ruined it :(

For future reference, though I see you figured it out: asterisks mark italics, two spaces in front of an empty paragraph mark a code block, URLs in comments gets turned into links automatically. That's about all HN offers in terms of formatting. So, for bullet lists and footnotes, you have to use characters other than asterisks.

The format you picked in your edit is one of the typical people arrive at. Myself I do like you[0], but some use daggers instead†, or rarely, superscripts².

--

[0] - Though I start my footnotes at 0, because https://en.wikipedia.org/wiki/Zero-based_numbering.

† - Once you get to ‡ and ⸸ it's getting tricky to pick a new one.

² - More often seen in mathematical formulas.

Re: Evidence from leaked account data on how elites use offshore banking [pdf]

#318

Post by TeMPOraL »

offsthroway wrote: post #139
offsthroway wrote: post #128

Throwaway for obvious reasons Since the world is lacking in the department of opinion of wealthy men , let me add something to this discussion: I'm currently in the situation of becoming rich (from a global standpoint, unicorn early employees would laugh at my near future net worth) due to selling my company. I'm having conversations with both tax lawyers and private bankers who are interested in helping me manage my…

For some reason edit is not working here's with the format fixed: Throwaway for obvious reasons Since the world is lacking in the department of opinion of wealthy men[1], let me add something to this discussion: I'm currently in the situation of becoming rich (from a global standpoint, unicorn early employees would laugh at my near future net worth) due to selling my company. I'm having conversations with both tax la…

That's a very important perspective, thanks for sharing. Your comment is actually the most interesting one I've read in this entire thread - it challenges my currently held beliefs. My current assumption was that, "all that offshoring and tax optimization stuff costs a lot of money and requires specialized skills, surely the rich would only do that to pay less taxes and keep more for themselves". But I see some very important additional factors in your comment, which I'll itemize:

> all the professionals I talked to were very straightforward with saying that trying to avoid taxes would bring more headaches than it was worth it

Good to know that the difficulty curve of tax avoidance is steep in the millionaire region, and that it's not obvious there's even a point in trying hard.

> Tax officers have no downside to suing even completely transparent transactions.

Minimizing risk of tax officers making mistakes or acting in bad faith.

> Said bureaucratic procedure would be a single docusign in a business-friendly jurisdiction (aka tax heaven)

Streamlining of legal/tax procedures.

> American private bankers find it a hassle to deal with developing country clients directly

Outsourcing the hassle to someone better suited to handling it.

> it is not beyond the realm of possibility that my government, or at least a few unsavory parties that could be in charge one day, decides that it wants to set a high wealth tax or outright confiscate investments and I don't plan on making that easy

Mitigating risk of unfriendly governance, similar to point 1.

I find points 2 and 3 particularly convincing - I can see "outsourcing hassle" to be a reason enough to create "an offshore structure". After all, quite a lot of things in a business is just finding way to outsource some hassle (and associated liability) onto someone better equipped for handling it. Taking all your points together, I can imagine a millionaire wanting to do this even if it would be a net loss of money for them. Time, peace of mind, lowered personal risk and less bureaucratic inertia in business activities are all worth a lot too (even if it's hard to estimate their dollar value).

You gave me something to think about.

Re: Evidence from leaked account data on how elites use offshore banking [pdf]

#319

Post by seangrogg »

CPLX wrote: post #272
seangrogg wrote: post #236

Earlier quoted context omitted.

I'd imagine in this case it's more a matter of liquidity. It's one thing to say you have a million dollars to your name. The difference is that one person has to sell everything they own to command that value while someone else just calls their broker to have it liquidated from their rainy day fund.

Indeed, and in 2021 I think it’s pretty clear that owning a residence means you have a reasonably liquid asset. But more to the actual point. To the extent a concept of “paper wealth” exists it should be confined to things that are genuinely unable to be converted into real money at all. For example stock options in a seed stage company are genuinely illiquid and may never be worth anything ever to anyone. People liv…

The whole concept of paper wealth is literally around what you could hypothetically have, though. That's the whole point.

https://en.wikipedia.org/wiki/Paper_wealth

If you're sitting in a house and it has appreciated in value because it's 2005 and you are in Sunnyvale then you've acquired paper wealth. You didn't upgrade your home, you didn't make it nicer. It's the same home you bought for $300k. It's just now magically worth $1.2m because the world continued spinning.

Sure, that probably sounds great if the person wanted to sell the home and move into a place where home values have remained largely unchanged. But if that person either likes where they live or wants to stay reasonably close, the increased value of their home basically doesn't affect their life - they purchased something that was of modest wealth and now people think it's worth more.

If you bought a gumball for $0.25 and now people think it's worth $1m should you get taxed as a millionaire even if you never intend to sell it? Would it seem reasonable that the rest of the world thinks that you're out of touch because they don't get to have million dollar gumballs?

Re: Evidence from leaked account data on how elites use offshore banking [pdf]

#320

Post by smashah »

vmception wrote: post #288
smashah wrote: post #19

Earlier quoted context omitted.

Is there some sort of issue with ICIJ reporting?

Yes. Over time they've balanced out their reporting by at least acknowledging legitimate uses of tax havens, and even going as far to point out that it is probably the predominate use of tax havens - compliant to all countries involved. But their headlines still lead their readers towards assuming impropriety. And now that they bother to acknowledge the existence of legitimate uses, given the ongoing criticism from a…

Well, just because it's not breaking laws doesn't mean the use of tax havens has positive benefits for society which ,I guess, is the point of these ICIJ investigations - to eventually change laws.
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