This is not blackmail, this is reality. Rich people like money and they do not like to give it to governments. Therefore rich people structure their investments to pay the least amount of taxes possible. Everyone who participates in an IRA or flexible spending account is doing the same thing. They are responding to incentives just like all people do.
Hiding wealth has a cost to it, paying accountants and tax lawyers is expensive and the biggest cost of all is probably the opportunity cost. When the cost of hiding wealth is less than the cost of paying taxes people will stop hiding wealth. That is reality. You can not change this by finger wagging or comparisons to the mafia. Governments can not change human nature so they must pass laws that take human nature into account.
Bullshit. Bullshit bullshit bullshit. If we DIDN’T TAX THE MONEY at all maybe they would not hide it, but otherwise, they’ll hide it. The rich have no sense of civic duty.
Good. Then please present evidence that the level of avoidance decreased in 2001 and has stayed low since then.
OK, so what number do they want? What number will get them to never complain about taxes or hide wealth again? What is the specific number? Is it a number that will allow the United States to continue to function?
They won’t say because its too low for anyone to ever take them seriously. That’s why I’ve never ever heard a rich person say what they want their ideal tax rate to be, its always just incessant cries of LOWER LOWER LOWER LOWER … repeat ad infinitum for decade after decade.
All I’m hearing is ‘I’ll hide my money until you give me what I want’. How is that not extortion of the American people and the American economy by fellow American Citizens who are happy to utilize everything that America has to offer its citizens, but won’t follow its current tax laws in spirit, even if they do in the letter of the law. Its the action of a petulant selfish child, not an intelligent responsible adult.
Restating what I responded to is not a response, you know. In certain cases tax changes will of course affect investment in marginal opportunities, but if there is a lack of investment in non-marginal opportunities, we are not in that situation. If the economy is booming, and there is a lack of investment capital, you can get back to us on reducing tax rates to improve investment. And I might agree. Now isn’t that time. The rich have plenty of money everyone else doesn’t have enough, and I think that is bad not for moral reasons, but simply for economic ones.
Now, now. Republican rich people. There are rich people who appreciate that their taxes do good, and appreciate how little a small increase in their taxes would hurt them. Then there good Republicans like Scrooge McDuck.
Most on-short tax havens are structured like that for good reasons. Your IRA encourages saving for retirement so you won’t be a burden on the community. Municipal bonds are lower cost ways for local governments to raise money, subsidized in part by the Feds. So you can’t compare these to off-shore tax havens.
I have no idea what you are trying to say. Are you saying that the problem with the economy is that there is too much investment going on? That does not seem to be the case.
You also seem to be saying that too much money is being saved instead of going into productive investments. If that is true lowering the cost of investing would change the marginal investment into a productive one, increasing the number of productive investments.
This is silly. Taxes are already very low. What do you want, zero taxes?
Again, you didn’t address the earlier point: Investment opportunities are low because of low demand. Don’t you think this is the real reason why the rich aren’t investing as much as they could be? As a business owner myself, why on earth would I avoid an otherwise good opportunity to make money just because a slightly larger chunk of it would get eaten up as tax? I wouldn’t. No rational person would. If there’s a chance to make money, you make that money. Would you rather get 1% expected return on your money or 15% minus a bit of tax? What you’re saying is nonsense.
If you’re the kind of person who shies away from viable opportunities, you probably shouldn’t be in business in the first place.
Nobody “likes taxes.” But we pay them anyway because they prop up a country we all benefit from. The rich are not excluded from this, either.
We all respond to incentives, but the problem here is that the mega-wealthy aren’t just following the rules: They’re creating the rules. Then they can hold up their hands and say, “Don’t blame us, we’re just following the rules!” even though the system has been modified to give them the relative advantage to begin with. How would you like it if we played Poker with the modified rule that I can see your cards but you can’t see mine? It’s completely fair, I’m just following the rules, same as you. There are wealth-generating methods and investment vehicles and financial mechanisms that the rich can use to shield wealth that the average American does not have, so your comment that “they respond to incentives just like all people do” is extraordinarily disingenuous.
If there are few investment opportunities then there is not much opportunity cost to hiding wealth, by definition. It’s just wealth that is subject to tax. That’s why the rich hide it. They’d rather pay a little to their accountants to hide the wealth because they don’t want a bigger chunk going to the government.
So you say, “Well, if taxes were lower, they wouldn’t need to pay their accountants to hide that wealth from taxes.” The problem is that even if you lowered taxes, that isn’t going to solve the problem. The rich aren’t investing in the first place because demand is low because of the financial burdens placed upon the middle class. Giving the rich more tax breaks just means they add more money to the pile of tax-shielded money that they can’t invest anyway because people are too poor to spend money on their goods and services. Giving the rich tax breaks, in other words, means placing more relative tax burden on those who can afford it the least.
Even if you put the rate down to zero for the wealthiest, it wouldn’t help the situation. They’d find something else to complain about.
No. It isn’t. And it hasn’t been for every single person in the history of history save for kings and dictators.
Every person in every society in every time in history has been expected to contribute SOMETHING to maintaining the general welfare of society. Nobody gets to say “what’s mine is mine is mine is mine and keep your mitts off.”
No it doesn’t. What it shows is that high income returns increased continually, except during recessions. You’re just cherry-picking.
That seems a pretty extreme position. Are you saying that you receive no benefit from the operations of government, and so should have no obligation to support them?
I realize you jest, but not quite. Hardly a tin-foil hat conspiracy…
At least as far as the US government is concerned, it is the hiding of income which is a concern. Not wealth. If I have a home safe full of cash, the federal government gets no part of that. If I invest that money then the fed gets its cut if I profit.
So what would encourage the wealthy to open the proverbial safe and do something with it that might create jobs, or otherwise do whatever is socially acceptable with the money?
Simply it is the after tax ROI measured against the perceived risk. As tax rates go up, the effective after tax ROI goes down. The incentive to invest decreases.
And in this low interest rate and low inflationary period the opportunity cost of not investing may not be high enough to spur investment, particulary if the perceived risk in today’s economy outweighs the potential reward.
And with the wealthy not investing, the government has no profits to tax, regardless of how much wealth the person has.
Sure. He’s a lawyer, but his courthouse is a rock under a tree.
Are you somehow blind to the word “demand”? The Fed has cut interest rates to near zero. Companies are sitting on hordes of cash. Do you think investing in more capacity where you already have too much is going to make sense no matter what the interest rates are? Companies don’t either.
I think CEOs and CFOs are smart. The reason that too much money is being saved is not because they are evil, it is because of the lack of what they see as productive investments. Buying the Brooklyn Bridge is not a productive investment no matter how low the rate is, or how low your tax rate is. Giving someone more money does not increase the number of productive investments. Reducing the discount rate does, but the Fed has done that already. Where is the investment?
Now, maybe it is fear of the next recession, but throwing more money at them doesn’t solve that problem either.
If you were in charge, what would you try to do to fix the situation? Curiousity
Personally, I feel it has less to do with the actual tax rate and more to do with how the tax money gets spent.
I mean I am sure the tax rate effects people but if you are talking about a percentage point or two, what is that amongst friends, right?
Where I feel people get bent is when the government keeps spending money on things the tax payer doesn’t want or need. For every tax bracket, that changes.
I don’t read it that way at all. I read it like he states. He understands that there is a responsibility to the government but that the responsibility needs to be minimalized. You need a baseline position and that position is: This money that I earn is mine
After that baseline then you can discuss how much to tax and what to spend those taxes on but you can’t start with the baseline being: Hey , all that money you make it belongs to us and we will let you keep some of it.
Perspective. I am Bricker will be along at some point to shoot us both down (I mean, he will extrapolate on what he meant :))
He taught himself law from first principles, without the use of schools, teachers or books. He just sat by his rock and thought until he knew the law.
Frankly, the idea that rich people are hiding huge amounts of capital is absurd. For one thing, they don’t keep vaults full of cash-they keep it in investment accounts-otherwise, they lose due to inflation.
One thing that has always interested me-the concealment of vast real estate assets in trusts. I think it is very possible to conceal assets in such a way that only a dedicated investigator can learn who owns what. For example, here in Boston, the grandaughter to a man who died in 1990 is fighting with other heirs, over the guy’s fortune. This man lived like a pauper-yet he was found to own over $11 million in real estate, at the time of his death.