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What lies beneath: Evidence from leaked account data on offshore banking use

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Re: What lies beneath: Evidence from leaked account data on offshore banking use

#101

Post by jandrese »

reedjosh wrote: post #75
admissionsguy wrote: post #62

Earlier quoted context omitted.

Not sure about the first sentence, but how is "most of us are just working to prop them up and keep them rich" a conspiracy theory? Isn't that the whole basis of capitalism? I am asking honestly. The social order being a mostly immutable pyramid has always been the natural model of how things work in my mind.

> Isn't that the whole basis of capitalism? I think it's only exacerbated by government intervention (corruption) and regulatory capture. I do agree that human nature tends to winners and losers, but right now the losers are being bashed over the head by a tool they think is helping them.

At the same time, the natural flow of capital is upward. Without government intervention you end up back at feudalism as a very small percentage of the population controls effectively all of the wealth. The way to combat this is progressive taxation and government spending on social programs and infrastructure.

Re: What lies beneath: Evidence from leaked account data on offshore banking use

#102

Post by NovemberWhiskey »

AnimalMuppet wrote: post #93
NovemberWhiskey wrote: post #44

Earlier quoted context omitted.

You proceed from a fallacy. The IRS doesn't know how much tax you owe because Congress has created a massively complex system that includes using deductions to incentivize certain types of behavior, as well as using the tax system as a mechanism to deliver means-tested benefits.

Yeah. For example, one year I bought double-pane windows for my house, which were eligible for a tax deduction (on the grounds of promoting energy conservation). Either I have to tell the IRS that I bought those windows, or the IRS has to know that I bought windows . The second option is too close to dystopian nightmares for my taste.

Precisely. For those playing along at home, that would be the Residential Energy Efficient Property Credit, Form 5695.

Re: What lies beneath: Evidence from leaked account data on offshore banking use

#103

Post by medvezhenok »

eloff wrote: post #83
the_optimist wrote: post #39

Earlier quoted context omitted.

You’ll never see rich people argue for a wealth tax, but they sure as hell will parade demanding that we raise taxes on income of the service class.

That's factually incorrect. It's easy to make a list of rich people specifically saying tax the rich more. Leaving that aside, the 1% pay 38.5% of taxes, which seems quite fair as is. We already tax the rich quite heavily. I'd rather the focus be on compliance. Close the loopholes and catch the tax evaders. Wealth taxes, if you look at examples elsewhere both present and historically, are hard to do well. I worry the…

I think we're missing the forest for the trees by focusing on exactly what the tax rates are and how much is "fair".

Money at the top levels is not at all like money for the rest of us. For a middle class citizen, money is about consumption and freedom to do what you want (with enough of it).

At the top end of the distribution, money is no longer about consumption or freedom (since you can never realistically consume as much as they have, and you don't have to work after you've saved like $10M). Money at that level is a proxy for power - a group of oligarchs can basically have the power of a shadow government, but unelected. And the real question to ask is "how much power/leverage do we want an individual (or a group of rich oligarchs) to have in a democracy."

So taxing the rich is not even about spreading the wealth, necessarily - if you redistributed it directly you might get inflation by redirecting investment money into consumption. It's more about limiting the amount of power that a person can accumulate over others.

Re: What lies beneath: Evidence from leaked account data on offshore banking use

#104

Post by germinalphrase »

wpietri wrote: post #11
samstave wrote: post #3

I find it odd that the IRS does a lot of heavy lifting to go after Joe-Blue-Collar but completely seems blind to the thousands of money launderers both individuals and corps. Personally, I think the entire financial system is broken and should be squashed.

You might consider that your "it's all broken" feelings are exactly what is desired by the people who have worked to hamstring the IRS and generally tilt things in their favor. The more cynical individual voters are about the system, the easier it is for people with money and power to shift outcomes to the ones that benefit them. It's the political equivalent of a FUD strategy.

Next, you’re going to tell me that social security isn’t going to collapse any day now…

Re: What lies beneath: Evidence from leaked account data on offshore banking use

#105

Post by medvezhenok »

javert wrote: post #65
the_optimist wrote: post #39

Earlier quoted context omitted.

You’ll never see rich people argue for a wealth tax, but they sure as hell will parade demanding that we raise taxes on income of the service class.

Which raises a subsequent question: Why does the middle class clamor to raise taxes on the rich, which won't appreciably benefit themselves, when they could instead push to lower taxes on themselves, which will benefit themselves? Maybe different in Europe, but in the USA tax increases do not find their way back to benefits for the public. I mean unless by "public" you mean the next country we want to "liberate" and…

I'll copy my answer from above since I think it's an important point and relates to your question:

"Money at the top levels is not at all like money for the rest of us. For a middle class citizen, money is about consumption and freedom to do what you want (with enough of it).

At the top end of the distribution, money is no longer about consumption or freedom (since you can never realistically consume as much as they have, and you don't have to work after you've saved like $10M). Money at that level is a proxy for power - a group of oligarchs can basically have the power of a shadow government, but unelected. And the real question to ask is "how much power/leverage do we want an individual (or a group of rich oligarchs) to have in a democracy."

So taxing the rich is not even about spreading the wealth, necessarily - if you redistributed it directly you might get inflation by redirecting investment money into consumption. It's more about limiting the amount of power that a person can accumulate over others."

Re: What lies beneath: Evidence from leaked account data on offshore banking use

#106

Post by jandrese »

maxerickson wrote: post #38
cle wrote: post #35

Earlier quoted context omitted.

It's because they don't actually know how much taxes you owe. They aren't omniscient (thankfully) so they don't know e.g. how much in deductions you should have. (I agree that #2 is a big problem, but I don't think it's actually the reason we file taxes.)

People mostly take the standard deduction. (85-90% of households in recent years)

Yes, but only because I got capped out on deductions before I exceeded what the standard deduction would give me. Increased my tax burden about 1.5% overall that year. Not as much the next year because I had much less charitable giving. Sure am glad I'm getting to pay for all of the stuff those rich people aren't anymore thanks to their massive tax break.

Oh, and my taxes are supposed to increase even more once the Trump tax holiday for the middle class expires in 2025. Luckily for corporations it is permanent for them. That tax plan was the most blatant government handout to the 1% and for some reason 40% of Americans think it's the best tax plan ever.

Re: What lies beneath: Evidence from leaked account data on offshore banking use

#107

Post by jandrese »

AnimalMuppet wrote: post #93
NovemberWhiskey wrote: post #44

Earlier quoted context omitted.

You proceed from a fallacy. The IRS doesn't know how much tax you owe because Congress has created a massively complex system that includes using deductions to incentivize certain types of behavior, as well as using the tax system as a mechanism to deliver means-tested benefits.

Yeah. For example, one year I bought double-pane windows for my house, which were eligible for a tax deduction (on the grounds of promoting energy conservation). Either I have to tell the IRS that I bought those windows, or the IRS has to know that I bought windows . The second option is too close to dystopian nightmares for my taste.

Nobody is calling for a completely omniscient IRS.

What should happen is you log in to irs.gov and see everything they know (number of kids, income, interest, reported charitable giving, etc...), you fill out the missing pieces (energy credits, when you bought and sold stocks, charitable giving not reported to them, etc...), and they run the calculation. It should take almost no time at all for people with simple returns and only a few minutes of inputting some basic figures for most everyone else, with of course a handful of people who have terminally complex returns and need an accountant.

Instead you have to manually enter all of the information the IRS already knows because otherwise nobody would pay for TurboTax or H&R Block. Only real accountants would be necessary for those special cases where people have complex holdings.

Re: What lies beneath: Evidence from leaked account data on offshore banking use

#108

Post by eli »

supernova87a wrote: post #79

Can someone ELI5, what entities or convoluted mechanisms or businesses do very rich people create / have access to that they can minimize taxes, which the rest of us simply cannot take advantage of here in regular life?

This paper is mostly about tax fraud. It's "tax minimization" in the same sense that you can get as job that pays cash and you don't declare the income.

Re: What lies beneath: Evidence from leaked account data on offshore banking use

#109

Post by charlesdm »

supernova87a wrote: post #79

Can someone ELI5, what entities or convoluted mechanisms or businesses do very rich people create / have access to that they can minimize taxes, which the rest of us simply cannot take advantage of here in regular life?

Depends on your citizenship. If you hold non US citizenship, it is generally easy to avoid most taxes by physically relocating to a tax haven (low or no tax). But that is perfectly legal, not fraud.

Re: What lies beneath: Evidence from leaked account data on offshore banking use

#110

Post by eli »

TOSSAWAY_1 wrote: post #24

If the IRS knows how much money I owe why dont they just send me a bill?

Because Intuit/TurboTax have successfully lobbied for decades to prevent the federal government from pre-filling tax forms.

https://www.propublica.org/article/filing-taxes-could-be-fre...

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