Comment by rayiner | Hacker News Reader

Comment by rayiner | Hacker News Reader

Parent Full thread

> And as I've said before here, the current tax system exist in the interest and benefit of large companies, not small companies or individuals

That is contradicted by the huge number of middle-class tax loopholes out there for, e.g. mortgage interest, small business credits, etc. Several middle-class tax expenditures cost $100 billion or more: http://taxfoundation.org/blog/12-largest-individual-tax-expe.... Health insurance deduction: $212 billion; retirement savings deduction $176 billion; mortgage interest deduction: $101 billion.

Tax evasion using overseas havens is estimated to cost $100 billion per year: http://freebeacon.com/issues/report-tax-evasion-avoidance-co.... Legal corporate tax avoidance costs about the same: http://www.theatlantic.com/business/archive/2016/04/corporat....

> If we instituted an overnight 9%, 9%, 9% "Simcity Tax" system

Sophisticated tax evasion has little to do with claiming various deductions and credits. It is a mechanical and straightforward process to run through those. The real complexity is intrinsic: what's an appropriate depreciation schedule for this asset? Does appreciation of this options contract result in ordinary income or capital gains? Is this payment between related companies legitimate, or a way to shift profits? You can't get rid of these basic distinctions, but at the same time those are the bread-and-butter of sophisticated tax planning.

There is a way to limit tax evasion from companies: stop taxing corporations.

There is an argument to be made for not having corporate tax. Corporations are just collections of people, owners and employees. As long as the income goes from the corporation to those people, it will be taxed as individual income. Now I grant you that individuals will use techniques to try and avoid having that income attributed to themselves, so you'd need to tighten that up. But a corporation paying tax, then paying employees and owners, who then pay tax, is double taxation. Indeed some countries have taxation credits that flow through to owners when they are paid dividends, eliminating that double taxation.

Flat taxes sure woud put a lot of tax planners out in the street. Hat wouldn't necessarily be a bad thing overall.

>> There is an argument to be made for not having corporate tax. Corporations are just collections of people, owners and employees.

Forming a corporation allows me to gain benefits that would be difficult or impossible to obtain as an ordinary person. (e.g. limited liability, special tax treatment) It's not unreasonable that a corporation's owners pay additional taxes.

Both limited liability and special tax treatment (an ironic benefit in this case) are available to corporate forms that are not subject to the corporate tax at all, so this is a hollow justification.

There is also an argument against shifting tax burden from corporations onto shareholders. In a way, it's easier to hold corporations accountable than individuals. Corporations may go to great lengths to legally avoid taxes, but few corporate officers will put their asses on the line and commit illegal tax evasion just to save their shareholders money.

Also, corporate taxation isn't "double taxation" any more than it's double taxation for me to pay my nanny with post-tax income, which is then taxed again.

I have also heard that this is a reason why childcare is so expensive relative to a primary caregiver staying at home. I'm trying to remember the details - it was something like:

- When you purchase child care, you pay sales tax

- The childcare company pays payroll tax on salary paid to its employees.

- The childcare employees pay income tax on their salary

- The corporation also pays corporate tax

- Company owner pays income tax on any income they take, and/or capital gains tax

Every dollar you spend purchasing childcare from others is taxed multiple times before it reaches actual stakeholders who deliver the service. Since each of the actors involved seeks a certain after-tax benefit (e.g. company owner needs profit for the venture to be worthwhile; childcare worker needs sufficient salary), this means that all of the taxes must be part of the price for childcare that's charged to customers. Thus childcare is expensive relative to staying home and providing it yourself, in large part due to the multiple layers of taxation.

Someone who is familiar with the details better than I could estimate what percentage of each dollar spent on childcare goes to the government as tax - when I was reading about this, I think the number I saw was around 60-75%. When you think of it in these terms, feels extreme how much of the economic value of these transactions is taxed and captured by the government, and therefore driving up the costs for everyone.

This applies to many things, including deciding to mow your own lawn instead of outsourcing it. Most people think that their time is worth x, and the yard-guy costs y, and if x>y, they should outsource the mowing. It's not as simple as that, as most people cannot earn X on demand - their total hours are capped by law or arrangement. Additionally, people mistakenly use their gross over net pay to calculate it, and then discount the time needed to arrange, inspect and pay.

The ideal childcare arrangement is bartered, such as an agreement between two families to cover childcare with each other. This takes into consideration attachment of the child to the caregivers.

However, it is more efficient economically to have as many children under a single caregiver, as that frees other adults to create value for society (work with me and imagine every job adds value).

Taxation on that arrangement is just the government capturing some of the value created by it becoming more efficient. I don't necessarily have a problem with that, but the childcare company paying tax, paying payroll tax and then the individual employees paying income tax and the owners paying income tax is taxing the activity too many times.

and start taxing land: land value tax.

Let's see them hide that!

Note that you need zoning for this to be fair, as otherwise farmers of large amounts of marginal land will get horribly screwed.

I've never seen anyone propose a flat land value tax, from it's inception through 150 years later. Land value tax is about taxing the value of the land, and land value varies with location. That is the entire point of it.

Yeah, go further, stop all taxation and be rid of the problem of evasion altogether.

How do you simultaneously stop all taxation and prevent someone from breaking the flourist's kneecaps if she doesn't pay protection money?

In the theoretical anarchist paradise, the person threatening the florist (I think is what you meant) breaks all the non-violence contracts with the rest of society by doing so, and if the florist (or witnesses) can prove the aggression in contract courts agreed upon in all participants contracts, then the aggressor is either fined to rejoin or outright removed from participating in the economy.

Of course, its theoretical, and only works so long as the economy of good actors and voluntary participants is sufficiently larger than the economy of violent aggressors to prevent them from rising to power. If the violent aggressors can accumulate enough capital and power, they influence the rest of the economy and can rapidly usurp it because they aren't working by the same ethics as everyone else.

Honestly, i've heard the anarchist argument plenty of times now, and the society being described never fails to seem like a state with the serial numbers filed off to me.

It seems you've essentially described "laws" being interpreted by "courts" and enforced by "police." You're just calling the laws contracts, the courts contract courts and the police... hired mercenaries? Who is it forcing people to pay fines, or to exile themselves from society?

At scale it seems as if a marketplace of violence and a monopoly on violence look like the same thing to most particpants.

Going further, this is what society currently looks like in the US. There are a variety of organizations offering security and they have all entered agreements to cooperate, effectively forming a monopoly. Occasionally a new one arises (Dead Rabbits, Cosa Nostra, Latin Kings, etc), but it can only operate on the fringes and is ultimately muscled-out by the Federal Conglomerate.

Thats kind of the point, isn't it? All the pros of states without the cons. It should look familiar.

My point is that, to me, you would still wind up the cons, the only difference being they would be governed by different incentives. A man with a gun is still a man with a gun, and a jail is still a jail.

It was sarcasm,

Reply on news.ycombinator.com