The people that benefit from complicated taxes are always gonna be the ones that can pay for high prices accountants and plan all year to minimize their tax liability.
Everyone else would be way better off with a flat progressive rate system.
Eg:
0-20k: no taxes
20k-60k: 5%
60k-120k: 10%
Maybe a deduction for dependents.
Do the same for property tax, unrealized capital gains, and suddenly we’ve got a tax system that you really can’t cheat. Because there’s virtually no loopholes.
As a bonus, it’s ridiculously easily to understand, and no one needs an accountant to figure it out.
Because once they have enough wealth that they can’t pay a better accountant, they start lobbying to change the tax law and add something they already know how to exploit.
Shit doesn’t have to be complicated. It’s just harder for the wealthy to cheat if it’s simple.
Once, Blattmachr devised a way that Bill Gates, the richest man in America, could reap $200 million in profits on Microsoft stock without paying the $56 million of capital gains taxes that federal law required at the time. The plan was so lucrative that Gates would not have to pay a single dollar in tax and would even be entitled to an income tax deduction of $6 million or so. And that was just the initial plan. The concept could be applied endlessly, allowing Gates to convert billions of dollars in Microsoft stock gains into cash over the years. So long as the Internal Revenue Service did not challenge the deals, then Gates could realize unlimited capital gains without the pain of taxes.
The trick was in manipulating charitable trusts, a common enough device used by generous people who own an asset, such as stock or a building that has appreciated in value. Instead of selling the asset and investing the after-tax proceeds, an individual or a married couple can donate the asset to a charitable trust that they control. The trust sells the asset tax-free and invests the proceeds, giving the donating individual or couple a lifetime income, typically 6 percent per year. When the donors die, what remains in the trust, typically half its value, goes to charity.
Blattmachr’s plan was to take back not 6 percent annually for life, but 80 percent per year for two years. Gates could have pocketed at least $192 million without paying any tax. Then the trust would fold and a charity would get the remaining sum, less than $8 million. Under the plan Gates could have converted into cash more than 96 percent of gains on the Microsoft shares he donated, not the 72 percent he was entitled to after federal capital gains taxes. The charity would get less than four cents on each donated dollar. The government would collect nothing.
The scheme even created a tax deduction that was enough to reduce Gates’s income taxes by about $2 million.
Whether Gates took advantage of such a plan is not known for sure because the law makes individual income tax records confidential. What is known is that when Blattmachr made this route available to others, it sold like a treasure map where X marks the tax-free spot. Billions of dollars of assets poured into these short-term charitable
Businesses are still going to negotiate no taxes with the local government. A millionaire getting a charitable deductible is nothing compared to the billions Amazon saves by getting lower taxes in exchange for locating hubs in a particular city.
I agree, it should be simplified to the point of being unavoidable.
However, a very large part of the working force are employed only because companies need to make a financial statement to document their earnings.
If we simplify taxes, you can kiss goodbye to 30-40% of all jobs. Many people work these bullshit jobs.
Yep.
The people that benefit from complicated taxes are always gonna be the ones that can pay for high prices accountants and plan all year to minimize their tax liability.
Everyone else would be way better off with a flat progressive rate system.
Eg:
0-20k: no taxes
20k-60k: 5%
60k-120k: 10%
Maybe a deduction for dependents.
Do the same for property tax, unrealized capital gains, and suddenly we’ve got a tax system that you really can’t cheat. Because there’s virtually no loopholes.
As a bonus, it’s ridiculously easily to understand, and no one needs an accountant to figure it out.
Because once they have enough wealth that they can’t pay a better accountant, they start lobbying to change the tax law and add something they already know how to exploit.
Shit doesn’t have to be complicated. It’s just harder for the wealthy to cheat if it’s simple.
Oh, for the super wealthy it couldn’t be easier… hang on a second…
Here’s just one page from Perfectly Legal. People do not grasp at just how different a level the truly wealthy are operating at:
Transcript for readability:
Once, Blattmachr devised a way that Bill Gates, the richest man in America, could reap $200 million in profits on Microsoft stock without paying the $56 million of capital gains taxes that federal law required at the time. The plan was so lucrative that Gates would not have to pay a single dollar in tax and would even be entitled to an income tax deduction of $6 million or so. And that was just the initial plan. The concept could be applied endlessly, allowing Gates to convert billions of dollars in Microsoft stock gains into cash over the years. So long as the Internal Revenue Service did not challenge the deals, then Gates could realize unlimited capital gains without the pain of taxes.
The trick was in manipulating charitable trusts, a common enough device used by generous people who own an asset, such as stock or a building that has appreciated in value. Instead of selling the asset and investing the after-tax proceeds, an individual or a married couple can donate the asset to a charitable trust that they control. The trust sells the asset tax-free and invests the proceeds, giving the donating individual or couple a lifetime income, typically 6 percent per year. When the donors die, what remains in the trust, typically half its value, goes to charity.
Blattmachr’s plan was to take back not 6 percent annually for life, but 80 percent per year for two years. Gates could have pocketed at least $192 million without paying any tax. Then the trust would fold and a charity would get the remaining sum, less than $8 million. Under the plan Gates could have converted into cash more than 96 percent of gains on the Microsoft shares he donated, not the 72 percent he was entitled to after federal capital gains taxes. The charity would get less than four cents on each donated dollar. The government would collect nothing.
The scheme even created a tax deduction that was enough to reduce Gates’s income taxes by about $2 million.
Whether Gates took advantage of such a plan is not known for sure because the law makes individual income tax records confidential. What is known is that when Blattmachr made this route available to others, it sold like a treasure map where X marks the tax-free spot. Billions of dollars of assets poured into these short-term charitable
Well, any tax shenanigans is “easy” because they ain’t doing their own taxes.
And the more they have to gain, the more they’ll pay an accountant.
The book summarizes it as a “deal” but doesn’t say how many hours it takes a six figure account to fanagale into “legal”.
But even if Gates had to pay a team of ten for a whole year to pull it off, it’s a lot better than 56% in taxes on $200 million.
Not all of them will do it, but most people with that level of wealth got there by always making the choice that prioritizes profits over anything.
Businesses are still going to negotiate no taxes with the local government. A millionaire getting a charitable deductible is nothing compared to the billions Amazon saves by getting lower taxes in exchange for locating hubs in a particular city.
Lots of politicians know and admit those are bullshit…
Like most issues, it would be solved if at least one of the only two parties was progressive.
Neoliberals and republicans uniting to fuck over the average American, doesn’t mean the average American will always lose.
Just means we have a bunch of politicians to replace.
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Legit question:
What’s the difference?
They’re both the same people, like, in your eyes can you name one from each group that don’t belong to the other?
I feel like that’s the entire point of them changing their label every 5-10 years. It’s all the same policy, just a new name.
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…
I’ve never in all my life thought anyone would seriously say Bernie Sanders is a neoliberal…
Who told you that?
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A progressive…
Because that’s what he calls himself, and that’s what he is.
https://berniesanders.com/
Rather than summarize, here’s a very good article on how neoliberalism has been fucking shit up for decades in America
https://www.vox.com/polyarchy/2019/6/11/18660240/democrats-neoliberalism
I agree, it should be simplified to the point of being unavoidable.
However, a very large part of the working force are employed only because companies need to make a financial statement to document their earnings. If we simplify taxes, you can kiss goodbye to 30-40% of all jobs. Many people work these bullshit jobs.
30% of all jobs aren’t related to paying taxes.