Terthna
Professional Lurker
Simplifying the tax code means closing loopholes; you can't do one without also doing the other, which is of course why the rich don't want a simplified tax code, and instead always want to make it more complex.
Has anybody glanced at the debt clock recently? (U.S. National Debt Talk.)
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No, simplifying it means making the wording more plain in regards to tax law, and making plain the avenues the rich use to avoid unnecessary tax burdens are open to anyone if they wish to utilize them.
If every joe on the street realized they could avoid a lot of taxes legally by using these methods, they might be able to save more money themselves, and force the US Gov to actually start using our tax money more efficiently.
Giving the US Federal Gov more money isn't going to make anything better anymore, now that SCOTUS has shown it will openly allow the rigging of elections and not take election cases that might show there are legit issues of election fraud.
So why shouldn't people use every means they can to legally avoid paying more in taxes?
LordsFire
Internet Wizard
Before Reagan, the top marginal tax rate was over 70%. After his cuts went through, it was 28%. And gross tax revenues increased.
The way that you make the tax system more fair, is by cutting taxes drastically, and using that as a justification for closing the loopholes along the way.
There's no good reason for our tax code to be more than 3-5 pages. I honestly think it should be one.
The loopholes are people taking advantage of the complicated nature of our tax codes.
Simplifing it is arguably synonymous to closing off loopholes. It's not a matter of making the loopholes easier to use. The loopholes exist as a byproduct of the tax code being very complex. That's why they need lawyers and such to do it.
What you seem to be thinking of is more like tax credits than loopholes. To be in line with what you're thinking, I suppose You could simplify the tax code, and put credits in place where loopholes once existed. But loopholes are just that. People are exploiting them.
Additionally, a lot of these loopholes wouldn't apply to the regular person. These are businesses taking advantage of things that don't apply to regular finance.
For example, a medical company I worked for wouldn't build new locations unless they really needed to, because they were grandfathered in to pay taxes on an older system. New facilities would need to pay the new taxes. but if they built on to existing locations, that didn't count, and they could stay on the older tax system. So instead of building new sites, they expanded a bunch of existing sites.
I can barely even explain this because it's complex, but that's just an example.
See, by calling them 'loopholes', you are buying into the idea that legally paying less on taxes while following the current tax code is a 'bad thing' or somehow 'nefarious'. It's not, and the people who utilize those methods are not breaking any laws or committing any crimes.
What I want is for every joe and jane sixpack to know they are able to make a Cayman account, to incorporate, and use trusts to protect assets. I want them to see that infographic Terthna posted as a guide to legally avoiding a lot of tax burden.
Simplifying the tax code so that it is obvious to even layman how to legally avoid paying additional taxes is my desire.
I don't think it's wrong to utilize the laws as written to save money on taxes.
But I don't think a lot of those loopholes apply to personal finances.
They're a result of a complex system not thinking of this or that (sometimes intentionally I'd assume,) and taking advantage of something the law writers neglected to include.
A lot of these loopholes are corporate things, things pertaining to business ownership and stuff that just wouldn't apply to an average Joe.
You wouldn't have a warehouse worker deciding if they should build a new site or expand, for example
That's the trick, to make it so 'personal' finances become 'corporate', or so they are put in a non-taxable location like a trust.
It only takes $25 or so bucks to incorporate in Wyoming, and if rich people can play shell games with their money, why shouldn't we help the common man and woman figure out how to reduce their legal tax burden as well.
However, you are right that the tax code is complicated because it was something that has continuously evolved and changed as time has gone by.
We probably won't get a simplified tax code without also getting a complete reorganization of the Federal Gov.
Terthna
Professional Lurker
I could get behind all that. Closing loopholes and simplifying the tax code, while also lowering taxes across the board; even for the rich? Let's do it.
The Cayman Islands doesn't let just anybody open an account; you have to be rich enough for it to be worth their while, and financially invest in the local economy. And that carries over to a lot of the methods the rich use to avoid paying taxes; they only work if you have enough money to start with.
Pretty much the way I understand it: this shit isn't cheap, but it's cheaper than the taxes, Assuming you make over a certain amount.
All Gas, No Brakes!
Let's show Greece how it's done Team Biden!
US Debt-to-GDP Ratio Is Worse Than Greece’s Before the 2008 Crash (And It’s About to Get Worse)
There's no question debt is a serious matter. (Just ask the ancient Romans and modern Grecians.) But the US debt explosion may be a symptom of a bigger problem.
fee.org
Let's show Greece how it's done Team Biden!
strunkenwhite
Well-known member
Tax increases have happened before; it's not beyond imagination that they could happen again given the right public mood. And I think that raising taxes is the only way we can produce a public willingness to cut spending: raise taxes until they are actually willing to have government spend less instead of just say they want it. Or until the budget is balanced, whichever comes first.
I mean, of course cutting down to our current level of revenue, or lower, is hypothetically an option. But frankly I think "starve the beast" has had more than enough time to prove its thesis only to fail miserably and completely. And if taxes rise, the budget is balanced, and people are happy with the level of government spending that then exists, then fuck it, that's fiscally conservative enough for me. At the very least it's a waypoint preferable to the current and projected state of affairs.
It's easy to be for cutting government spending in the abstract, but once people start asking for specific cut victims it doesn't take long before NIMBY homeowners are put to shame.
LordsFire
Internet Wizard
Apparently it needs to be said again:
Raising taxes will not meaningfully raise revenue.
You cannot raise taxes to fulfill the needs of the budget. It does not work.
strunkenwhite
Well-known member
Sure it does.
edit: And to respond to the video linked earlier, the portion you linked to was pretty bad; his 17% average doesn't really reflect the substantial changes such as steady rise in % of GDP through the 1990s only to crash in the early 2000s
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History Learner
Well-known member
In the specific economic situation of the United States (i.e. World Reserve Currency), debt doesn't really matter, at least as long as it's not unduly high on a per annum basis. $1 Trillion or more deficits per year aren't sustainable long term, but in times of crisis, like right now, it's completely fine. If you are a debt hawk concerned about recent events, just repeal the old Tax Cuts of 2017, slash military spending and eliminate SALT deductions entirely.
strunkenwhite
Well-known member
I'm not that concerned about balancing the budget per se, but I'm concerned about having overall debt north of annual GDP, let alone 150% or 200%. In theory even that wouldn't be a problem as long as interest rates remain sufficiently low, but committing to minimizing interest rates as a policy would definitely limit our options when dealing with financial trouble. And spending our way out of a crisis gets more and more sketchy the higher the existing debt and "normal deficit" are.
Like, if revenue-to-spending targeted a national debt of 60 to 75% of GDP, and then crisis spending was paid back in good times, that would be fine by me.
Like, if revenue-to-spending targeted a national debt of 60 to 75% of GDP, and then crisis spending was paid back in good times, that would be fine by me.
LordsFire
Internet Wizard
...Okay, I'm sorry, but what kind of economic theory have you been taught where tax cuts cause economic crashes?
Rather than things like, you know, the dot com bubble or the Freddie Mac/Fanny May catastrophe?
strunkenwhite
Well-known member
Remind me, what Freddie Mac/Fannie Mae catastrophe happened in the early 2000s?
LordsFire
Internet Wizard
It didn't. The dot-com bubble bursting did. That's why I mentioned both, because the sub-prime crisis is generally a lot more well-remembered, even if people rarely understand why it happened.
strunkenwhite
Well-known member
Okay. When I said "crash" in my post above, I was not referring to the economy but to tax revenues. The CBO estimated, retrospectively, that the cuts cost $1.5 trillion over the decade following the cuts. However, I was wrong to say "at least", since that implied doubt about the existence of other factors, and you rightly point out that other factors existed.
LordsFire
Internet Wizard
And did the CBO factor how much less economic growth there would have been without the tax cuts into their calculations?
I kind of doubt it.2