The Swiss leaks and Panama papers open a window on the tax-dodger’s world
economist.com
economist.com
But if so much wealth is hidden and not tied to each nation's fate, those with the most power and influence lose the connection to their compatriots.
This has led to the brittleness of the current international order. Since the fall of the USSR, national treaties no longer bottom out at the self-interest of each countries' residents. We are trusting a legal framework that has had its foundation severely degraded over the past 30 years.
I think this is a questionable causal relationship. Globalization of wealth happened due to improved banking/monetary infrastructure; yes, governments giving permission for this to happen was a practical prerequisite, but I wouldn't say it's a "result" of international politics.
In fact, as we can tell from another article currently on the front page (about Chinese bitcoin miners), globalization of wealth eventually happens whether governments want it or not.
In the age of sail, I'm sure one could have stashed gold in some backwater city, which would have hidden it very effectively from any government. But then you couldn't use it.
The international banking & legal systems now enable those with means to both keep wealth away from governments while still maintaining access to it for practical purposes.
The usual story is that the incorporated municipality dissolves its police department and then contracts with the county sheriff for less money. Then reported crime goes down. This is in large part because there was not a crime problem in the first place, and the local police were simply issuing citations all day, to collect the fines that paid for the police to issue citations. A more minor component is that smaller crimes may go unreported because it is less convenient to report them.
It only makes sense to cut the budget of the tax enforcement agency if it costs more than one unit to collect an additional one unit of taxes, which is currently not the case for the IRS.
You are assuming that the only function of enforcing taxes is to get money (1).
We can presume that honest taxpayers would feel like fools if taxes were not enforced in a assertive way. That would be a thread to social cohesion.
(1)- In fact, I dispute that the function of taxes is to get money, but I will leave that polemic discussion for other day.
My tinfoil-hat self adamantly asserts that the purpose of the income tax is not to collect revenue, but to control the side-effects to the inflationary monetary policy that is the real source of revenue for the federal government. That self somehow sees a significant difference between spending money after it was collected via taxation and spending debt that is later discharged via taxation. Whenever that self starts ranting about the great Keynesian confidence game, my other selves generally cram it back into the penalty box for a while.
The idea that the government's primary means of paying for things is printing currency is perhaps true if you just stepped out of a time machine from the early 19th Century, but it has little to do with how the government works today. If that were actually how the government ran inflation would be well into the double digits (if not higher), as you could see by referring to any historical examples of governments trying to do this.
For instance, poll taxes were routinely used as a substitute for laws banning black Americans from voting.
Attempts to punish tax evasion that are more costly to pursue than the revenues generated from the tax being evaded are tyrannical. The cost-benefit analysis makes it clear that the tax in question is a lever to control people rather than a means of raising revenue for some particular purpose.
Please don't try to argue with my foil-hatted self. I have tried it on occasion, and it just never works. Better for me to just cram it into a locked compartment of my brain, and only let it out for entertainment purposes. But even my more rational personality components can detect the odor of trimethylamine in the Federal Reserve-Treasury relationship.
Perhaps it is because I can still hear foil-hat tapping on the pipes when it is locked up, but the manner in which the government measures inflation and publishes inflation statistics is not entirely honest. Look into price indices [0], and in particular, the price indices that US policymakers use [1] [2]. It is clear that they choose to use measures that understate real inflation. Furthermore, they occasionally change the method of calculation, without putting hard breaks in all the time series graphs. That can cause the index to further understate inflation. That isn't to say that you should believe the favorite sites of fearmongers and gold-hawkers (i.e. ShadowStats) either. Be skeptical of anyone trying to tell you what your money is worth.
Trying to track money through the government is more than a full-time job, and would be a boring and infuriating hobby for an amateur. As such, few people can perceive how their taxes become... well, anything. In that environment, tax evasion frequently becomes rationalized as a victimless crime, and political corruption grows in the spaces where no one ever looks.
Transparency and open records would go further to prevent tax evasion than any number of law enforcers hunting down those people that attempt it, as would simply dropping those taxes that cost more to collect than they bring in.
[0] https://en.wikipedia.org/wiki/Price_index
[1] https://en.wikipedia.org/wiki/United_States_Consumer_Price_I...
[2] https://en.wikipedia.org/wiki/Personal_consumption_expenditu...
It's not zero-sum at all. The amount of money is zero-sum (obviously), but net social utility isn't zero-sum. That's the point.
It's mentioned in "The Panama Papers" book:
https://www.amazon.com/Panama-Papers-Breaking-Story-Powerful...
It also mentioned that some governments (I think it was Iceland) paid to get hacked data covering offshore company ownership.
So there might actually be a business model where you investigate tax evasion and sell the relevant data to tax authorities.
I suspect that might be a rather high risk activity though!
Whenever a prominent wealthy person is talking, be aware of the PR necessity to not appear as if they are hoarding their wealth, or as if they are uninterested in sharing. Buffet and Gates are no doubt keenly aware of this necessity.
From the perspective of a Buffet or Gates, it is wise to publicly advocate for a tax increase that has little or no effect on your personal wealth, potentially targets up-and-comers who are currently making good money through their small-to-medium business ventures and may some day pose a threat to your interests (weakening them by confiscating more money from them), and keeps the public on your good side because they can point at you and say "There is $FAMOUS_RICH_GUY, and he knows that being greedy is bad."
It isn't safe to take someone at face value once they can buy a PR firm without blinking.
Well I agree with that. But it seems like you're saying that there's literally no evidence in the world that can convince you that your cynical view of them is wrong, which is a pretty hard position to hold IMO.
I don't necessarily impute any of these motives upon Gates or Buffet per se. I just think it's important to be aware of how such actions align with their interests. The subjective judgment of each man's true motives is left to the reader.
I will say that if Gates and Buffet truly believed that 40% of the wealth they accrue each year could be put to better use by the USG than themselves, they could put their money where their mouth is and donate that portion of their assets to the U.S. Treasury. [0] Instead, they seem to keep that wealth within vehicles that they can control.
[0] https://www.fiscal.treasury.gov/fsfaq/faq_gifts_to_govt.htm
One example: http://money.cnn.com/2013/03/04/news/economy/buffett-secreta...
I don't have any quotes in memory from Gates, but your position of "Buffett is just trying to get good PR by advocating tax changes that wouldn't effect him" doesn't mesh with his quotes to the effect of "It's unfair I pay less effective tax than my secretary."
What exactly do you seem him advocating that has an ulterior motive?
The fact of the matter is that any type of change to the tax status of a significant asset is going to have far-reaching implications and plenty of people sticking their hands in the pot to try to make the outcome favorable to themselves.
A puff piece that features one of the most-conspicuous richest men in the world suggesting a tax hike against himself is just throwing a bone to the dogs; it's fodder that keeps Berkshire Hathaway and Buffett in the news and it makes the Buffett/BH brand more recognizable, likable, and personable, which are very important qualities.
It also gives him an anchor to point to if he ever needs to negate bad press. He can say "Look, I have a track record of advocating for selfless causes. What kind of greedy billionaire would get on TV and ask for a tax hike? You wouldn't see Donald Trump do that! The things that are causing my bad publicity are not actually bad, they're just misunderstood."
When people hear "tax hike" they think about it in relation to themselves, i.e., a hike on wage taxes. Beyond PR interest, the ulterior motives would be a) increasing the tax rate on people who are having good years in their small businesses, so that the growth of their nascent empire is stymied, lest it someday pose a challenge to BH's interests; and b) many of BH's major holdings are closely linked to government activity, things like railroads and utility companies. More money to the government = more money to BH, and this good PR makes government employees more favorable to Buffett/BH since he is not demonizing the thing that pays their salaries (taxes).
It's convenient to assume that people are honest and straightforward as long as one remains naive enough to believe that. But with something as complex and interconnected as BH and Buffett, nothing occurs in a vacuum. Buffett's private thoughts remain private. He knows when he is on the public stage and he certainly knows to calculate the consequences of his actions there. To deny that this is significant is to deny the purpose and value of Public Relations completely.
> most-conspicuous richest men in the world
You mean the guy who still lives in a $600k house in Omaha [1] and briefly owned a $5.5M vacation house in California?
The guy who donates ~$2.8B [2] in Berkshire stock to charity annually? Who has said he does not plan to pass down an inordinate amount of wealth to his children?
These are facts. And they don't jive with a narrative of "He's doing all these things just to make more money."
A valid point becomes lesser when you have to perform gymnastics to make it fit to the person you've chosen. There's plenty of people who are better fits for your narrative: Larry Ellison, the Koch brothers, the Waltons, the Mars's, Soros, etc.
[1] http://www.today.com/slideshow/homes-warren-buffett-48385413
[2] https://www.forbes.com/sites/chasewithorn/2016/07/14/warren-...
Call it "mental gymnastics" if you want; I just call it analysis. Every approach has pros and cons and I make no assertion about the true status of Buffett's motives. I just believe it is important to understand how these moves can work.
In competitive endeavors like business, it is wise to visualize the exercise as a game of chess. If I move to A5, that opens B4-C4 for my opponent, and opens to me D6-F6. My experience is that often, those who try to discourage such perspectives are merely trying to maintain the edge they get by having opponents that aren't aware a game is being played at all.
Enshrining placidity and complacency as social values only allows the sharks to operate more freely.
That's the "I'm not saying he's a rapist, I'm just asking the question" defense, and it's bullshit. Every single one of your posts in this thread is along the lines of "If Gates and Buffett were profiteering assholes, they would do {thing they do} for {evil reason you ascribe to it}."
So by duck typing, you're absolutely saying they're profiteering assholes.
And then you throw out strawmen like this to support your point:
> I will say that if Gates and Buffet truly believed that 40% of the wealth they accrue each year could be put to better use by the USG than themselves, they could put their money where their mouth is and donate that portion of their assets to the U.S. Treasury. [0] Instead, they seem to keep that wealth within vehicles that they can control.
IMO people are too quick to accept something at face value if it's politically or rhetorically convenient to do so, and I wanted to get more people thinking about the potential subtexts of statements made by the world's most conspicuously wealthy men, especially when these statements are oriented toward political matters.
[1] Not to be confused with 'sheltered' where the tax was not paid but through a legal loophole.
The problem with this line of thought in it's current implemenation is that the top marginal income tax rates are very, very, very low in comparison to the "truly wealthy" people that you are referring to.
You only have to make (roughly) $400k[1] in the US to hit the very top federal bracket of 39%. That's hardly scrooge mcduck swimming in his bank vault. It's more like middle sized contractors, and (lower echelon) doctors and dentists.
So if you are a proponent of substituting income taxes with wealth taxes I would hope you are also a proponent of drastically raising the income brackets for very, very high tax rates to avoid hitting people that aren't "actually wealthy" (your definition).
If the dentist owns a particularly successful office of dentists, they're not just a dentist, but a small business owner, so they could be making more money (paid by dividends rather than salary).
http://www.dentaleconomics.com/articles/print/volume-102/iss...
https://forums.studentdoctor.net/threads/how-much-can-a-priv...
See http://www.investopedia.com/articles/personal-finance/101515...
That's my point.
The top income tax brackets are designed for, and sold to voters as, appropriate rates for the "super rich".
So to whatever degree you feel this is a bad tool for that job, I would hope you'd recognize that, therefore, the income ranges for those very high rates are not appropriate.
As I pointed out, those top rates aren't for millions or tens of millions of dollars of income - they are for (roughly) $400k.
No, it's the right way.
> They make most of their income from capital gains, which is taxed at a different, low rate.
Capital gains taxes are income taxes, they just are at a lower rate to deliberately favor holders of capital. But there's a simple and obvious way to correct that; apply regular income tax rates to capital gains [0].
[0] there is actually a good reason for special treatment of income earned over a period of greater than one year in a progressive annual income tax system, as doing otherwise penalizes punctuated, non-repeatable income; but you can address that by either (or both) of allowing income to be recognized in advance for tax purposes and allowing income to be deferred for tax purposes for a period after it is earned (neither of which, managed properly, provides any avoidance opportunity for regularly-recurring income.)
I ought to have said, "labor income tax is the wrong way to tax the extremely wealthy."
[1]https://taxfoundation.org/summary-latest-federal-income-tax-...
Their wealth also tends to stay with them. Bill Gates isn't planning on taking out a reverse mortgage for his house anytime soon.
In our debt-based society, wealth flows up. The average person spends most of their life paying interest to someone, in exchange for the ability to work, a place to live, and a vehicle for getting them from where they live to where they work.
People who don't need to go into debt for those three expenses get to grow their wealth, and pass it on to their children. People who do have to go into debt to do so tend to die, and pass on little to nothing.
Hmmm... so it sounds like the rich are paying their fair share then?
This neglects to account for all the wealth owned by the government.
E.g. "You probably screwed over a lot of people to get where you are, or at least leveraged their work while reaping most of the gains. As well as being able to afford to pay more (given that basic necessity costs don't scale with income). So you should pay a larger share."
No, the fact is we differentiate between salaried "earned" income and tax it much, much higher, than investment "unearned" income. It's a very explicitly designed system that encourages stuffing the left overs into real estate, stocks, bonds rather than take the risk of starting or growing a business.
This is not a John Rawl's country, where we believe in "the veil of ignorance" thought game. If it were, there would be no such thing as tax free gifts, and low or non-existence inheritance tax.
Corporate bonds do help grow businesses, but these are dwarfed by government bonds, which are just another way of transferring money from the vast majority of living and future generations, to a tiny number of current living people.
Corporate bonds also trade on the secondary market and that has similar consequences.
http://www.alternet.org/visions/true-history-libertarianism-...
http://www.worldcat.org/title/road-from-mont-plerin-the-maki...
Gates is quieter on his political views, but a general outline of his philosophy, in his own words, is in this piece:
https://www.wired.com/2013/11/bill-gates-wired-essay/
My assessment is also very strongly based on the actions and financial support both elements have provided. The Kochs, and most other major Libertarian supporters, ultimately back projects which favour a return to feudalism, though they rarely state it this baldly. Gates has tended to support instutions aligned with general liberal democratic principles.
Despite being more democratic today than its founding, there's still present a substantial minority who appear to believe in the proper existence of aristocracy. Family name, bloodline, class, are real things, they define who is better and who is inferior. Better people have more money, and they can buy things inferior people can't, or they can buy better versions: privacy, education, health care, justice, political representation, police protection, tax avoidance. Those things are products.
What most people are trying to do is find a civil way of playing reasonably fair. But aristocrats think money buys everything, so when catastrophe comes along to equalize things, they never see it coming. https://www.theatlantic.com/business/archive/2017/02/scheide...
Anyway, when people impact through the national state they have power, when wealth is shifted from nation to private hands is when the public should start to move. I'm still surprised the reality that could be had by the big short (2015) where moody's et al with rubberstamping actively helps in making that shift happen. It seems like hidden plutocrats have greenlit to jump ship more or less...
What people need to do is to organise, activate and put real pressure on those working for as few as possible instead of as many as possible. Once real democratic rule has been established through law and oversight (transparency - means disabling some shadow groups in the gov and right outside it) a more egalitarian and utilitarian (efficient) society will spring forth.
It's people who have no trust in those things, and just want to go back to a simple life of one deity, one leader, a small bunch of benevolent aristocrats, and everyone else gets a basic job and they just suck it up and like it.
A significant minority is convinced crony capitalism is real capitalism, and the only reason why it doesn't work perfectly is because of government, gays, and libtards. That's the political reality of ~80% of Republicans who still approve of everything this U.S. administration is doing. That may only be 25% of the eligible voting population, but then a bit over 50% of those eligible voters could not be bothered to participate at all. So you have a sizable minority of anti-democratic people who want a weak autocrat to just fix things and de-Obamafy the country. And a bunch of disinterested people. Ergo 3/4 of the voting eligible population.
It's a problem.
Oh boy, is this idiotic red herring from Indian politics going to get ported almost verbatim to US politics? Yes, I'm sure a max ~4% revenue boost will make the government start behaving properly.
[1]: Page 32, https://www.cbo.gov/sites/default/files/114th-congress-2015-...
You are incorrect as a large number of would-be tax avoiders can attest.
e.g. Mr. Snipes
(Also: the sixteenth amendment?)
The 16th amendment was adopted on February 3, 1913. Good to read its history: https://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_Uni... and how controversy still stands despite a century of litigation.
Yes. 4 years after congress passed the amendment, it was ratified by the 36th state and adopted. In no way was this "magically mandated without any sort of discussion".
No they don't.
You're just unwilling to admit that your views aren't broadly popular.
The nation literally passed a constitutional amendment specifically to allow direct, unapportioned income tax.
If I cannot choose to not pay taxes, then I have been denied the right to choose, then it is a forced subjugation of my free will. Correct would be to give my taxes voluntarily, according to my disposition and agreement with the government.
If you are profoundly 'contra' what the government is doing, then how can you be forced to help with activities that you believe to be deeply detrimental to the well-being of yourself, others, and all life on earth and beyond?
Tolstoy argues this point very well in his book "The Kingdom of God is Within You." He essentially says that if we pay taxes to a government that kills innocents or tortures Arabs their blood is on our (the taxpayers') hands.
If the government is doing something that I find to be deplorable then I have the moral obligation to find a way to avoid contributing to such array of horrors.
Because you participate in society and its infrastructure and services, paid for by taxes.
I'm sure there are uninhabited tundras where no one will bother you.
>CBO projected a drop in the ROI after 2018 as taxpayers found new ways to evade taxes.
I mean, damn.
But let me float this: Guess which parties/party wanted the tax code that complicated to begin with? The first step to fixing it would be to not align yourself with the ones who caused the issue.
Simpler tax code would make it less worrysome for regular plebs (us) to fill out our taxes, meaning the lower/middle class that pays their taxes would ensure they weren't in danger, and IRS would have an easier time chasing down tax avoiders.
The people who complicated the tax codes and also wants to uninsure tens of millions of people to save a few bucks for rich people won't help you.
I'm sure a lot of the language and ideas they're parroting are coming from conservative talk radio, hence the blind spots. But it really soured me on the US tax simplification debate.
Whole heartedly agree. Simplification and flatter tax code should be separate discussions, with separate conclusions.
1. IRS determines the median for personal income (total household income divided by household size), and publishes it no later than January 1.
2. Your taxable income is your household income minus the published median from #1 times the number of people in your household. If this is less than or equal to zero, pay no tax.
3. Those with positive taxable income pay x% of that amount as tax, with x set according to the requirements of the previous year's budget, but not to exceed a statutory limit of y%.
If you take the median income as a proxy for spending, this tax thus approximates a flat tax on the annual increase in household wealth.
Cut out the various deductions and credits and additions to income etc. to make things simple. Then calculating tax due becomes a simple table lookup or addition of amounts from multiple tables. 3rd grade math. We don't need to set a single universal x% tax rate to make things easy.
I'm all in favor of a vastly simpler tax code, but I'm also in favor of a vastly more progressive tax code. These two things aren't in opposition to one another.
If you take 20% of 20,000 bucks your tax on me is 4k which only leaves me 16k to live on (You would be extremely poor in US). 20% of 200k is 40k, which leaves me 160k to live on.
[1] Where "one" is a bit of a fuzzy concept when you're dealing with multi-millionaires hiding their wealth through various shenanigans.
Sure, until recently you could hide your income in Switzerland, but it was a clear crime -- there wasn't legal grey area.
And yes yes, there are other ways to try to avoid taxation (deductions etc) but this is a really big one that the US doesn't have to worry about.
This is not how you fix it. You fix it by a flat tax rate and by not abusing the taxpayer: max 10% tax. Anything over that figure is outright theft.
Tax the rich cheering is just an incentive to tax starve the regular taxpayer (everyone else). The rich, meaning their capital will just move elsewhere.
As an Australian who lives in Australia, I have to pay Australian income tax on any income I make from overseas assets as long as I am an Australian resident for tax purposes. This kind of taxation policy is pretty standard as far as I know.
The problems with offshore income are that you can often bury the income in a twisted maze of companies and trusts that are under your control - not that the personal income tax laws of your country don't tax foreign source income.
What's different about the US model is that worldwide income is taxed while not living in the US. So if you are an American who permanently lives and works in Germany, for example, the American government entitles itself to tax the money you earn in Germany (*in principle, at least; due to exemptions you've really got to be earning $$$$ to pay taxes twice).
Most countries as far as I'm aware would tax their residents based on income earned abroad, provided they are actually residing in said country. The difference is taxation by citizenship vs. taxation by residence.
P.S. US isn't the only country that taxes you on your worldwide income.
If an accountant helps a billionaire dodge taxes he can earn millions of dollars in fees. If a tax inspector exposes the scam he might get a salary bonus worth a few thousand dollars.
I would like to see tax inspectors get paid by commission. If the tax inspector exposes a scam and the government collects $50 million, the inspector gets $2 million. (And to avoid overzealous inspectors, if a tax audit finds no impropriety the inspector forfeits $20,000)
It's a perverse incentive that encourages the law enforcement to act corrupt.
Astrid Lindgren, who you might now as the author of Karlsson-on-the-Roof and Pippi Longstocking children books, once was unlucky enough that she had to pay 102% of her income in taxes (yes, paying more than she had earned this year). Things got better since then, but I would totally understand the desire to evade arbitrarily-imposed taxes.
Isn't a progressive tax system basically the opposite of an arbitrarily defined system? Perhaps you can quibble over where each progressive quantile is delineated, but a system defined by raising taxes on those who make the most is not an arbitrary one. In fact it's a system based on determined reason. Just because you disagree doesn't make it arbitrary.
Such would establish an income level above which it becomes more desirable to reduce one's taxable income rather than pursue additional income. Every additional euro would go to the state, plus a 2% fee for having the audacity to earn more money when you already earn too much.
Assuming there is a deduction for charitable contributions, that's when you direct your accountant to dump any unexpected windfalls into your favorite charity, so that you save that 2%. Or, more cynically, you might direct your company to reduce its dividend and spend some extra money on an executive retreat.
I can see how a 102% marginal rate might seem reasonable to an insane person. But I think the highest marginal rate you can charge without causing unexpected bizarre avoidance behaviors [that may spill over onto other people] is probably 50%.
So to correct my statement: make a million, pay 35% (averaged out over different tax rates) on the first €XX.000, and then lose half of the remaining €XXX,000.
Is that supposed to make it better?
e.g. Higher rate income tax in the UK is 40% for income over £45K (to £150K). However with capital gains tax with things like taper relief you can end up paying 10%.
Just pointing out that having income taxes that are too high is often counterproductive for society, just because they can easily be avoided by the wealthy. I guess the differentiation (and justification) is mostly a way to make sure the masses who actually use the infrastructure pay more than the one wealthy person who uses it, but don't need it as much.
I am not proposing that any nation institute a 50% marginal tax rate. I am just saying that I believe that any nation that tries to go higher than that is guaranteed to have tax avoidance schemes that ensure no one ever actually pays that much, whether those schemes are visible to the taxing authority or not. Some people will jump through a maze of hoops just to avoid a 0.1% tax.
What I'm saying is that nobody would rationally submit to a scheme wherein they do all the work and someone else reaps the majority of the benefits from it. It goes beyond the limits of the human sense of fairness. A 102% marginal tax rate is so far beyond that, I cannot even imagine circumstances that might lead to anyone actually paying it.
https://en.m.wikipedia.org/wiki/Income_tax_in_the_United_Sta...
http://ablog.typepad.com/.a/6a00e554717cc988330147e220e3f997...
It is an exceptional situation, but its also a possibility. Greater-than-income taxes aren't simply unreasonable.
Punishing capitalists for creating wealth is just stupid. Let's say you live in country X, and country X does this. Generally there are sufficient ways for wealthy people to avoid being taxed at 102%.
However, in the case where they would in fact have to pay such ridiculous tax rates, they would either: 1) stop working and investing and just live off of their capital, to be exempt from the tax (not great for the local economy + because what's the point / why would I risk my money?); or 2) leave (even worse).
Personally I'm not a believer in that wealthy people will easily relocate when taxes are raised, but in this case, I do believe they would. There's a certain cutoff point where it just gets unacceptable and it becomes a no brainer.
People also don't evade taxes because they feel personally slighted. People evade taxes because the ROI on doing so is positive. Because they can, and because they won't go to jail for it.
Did you say that backwards? The value of a dollar to someone in poverty is much higher than the value of a dollar to Bill Gates.
You rob banks because that's where the money is, not because you feel like the bank can more easily handle the loss.
Raising the bottom marginal rates produces far more additional tax revenue that raising the top ones.
1. The difference between marginal tax rate and effective tax rate. 2. The key motivating reason for a progressive tax policy vs. a flat tax.
[0] https://en.wikipedia.org/wiki/Pomperipossa_in_Monismania
It's still an incredibly high marginal rate, but is nowhere near as crazy as the implied 102% effective tax rate.
For example, I've had to pay taxes for funds that were formed in 2016, but the tax starts in 2013, which means that if you completely paid all your taxes for 2015, in 2016 you suddenly owe three years of a tax that was voted in just that year.
No it does not mean that. It's a marginal tax rate, not an effective tax rate.
I'm not familiar with the author's situation but standard marginal rate assurances stop applying when the tax rate exceeds 100%.
If you're a billionaire in Russia or China, you only get punished if A) you piss-off/embarrass the leadership or B) the leadership wants to steal all your wealth.
TL;DR they can get you good for taking money from your parents to buy your first house, which most people in the US do.
I think the author's argument wasn't that this practice is not or should not be a crime, but that the potential criminal penalty - 30 years! - is far too high.
A change in taxation and improvements in coverage by the IRS will always be challenged by the Rich and their political agents.
Its is, always has been, and always will be - a power play.
This is the level at which sufficient money accumulates in individuals that it converts to power.
So Earlier - the monied class converted wealth to power to act on the political class.
Now the constituents and political class want to use their diversified/unfocused power to counteract the monied class.
This is the simple transfer of force model.
See Leona Helmsley about whether tax evasion is a crime.
Edit: Clarification. Understating income or overstating deductible expenses, are crimes.
Put a few billionaires in prison and there won't be any billionaires left in the country.
Why do I get paid and automatically get taxed during this process, but a footballer doesn't?
It is bullshit
You can do the exact same thing extremely easily - just set up a company in your name(10 minutes of work here in UK) and work as a contractor - then it's your responsibility to pay income tax, it is not(and I would argue it cannot be) taken from your payments, because as a contractor you can always subtract your expenses from your income so the actual tax to pay would be difficult to calculate without knowing all details.
E.g. Cristiano Ronaldo pays taxes in Spain for his salary. His income from advertisers using his mug all over the world is another story - the Spanish state wants dibs on it, his accountants say that is not "work" performed there.
We still do not have a handle on the Mickey Mouse and superstar system.
When you're Neymar and you get paid for a toothpaste add in Japan, you get 3 countries possibly arguing about that revenue. Hence Panama, at least until you figure it out.
How would one define "Capital" in this case? What does this mean?
Progressive tax rates on non-capital income, with additional flat taxes on specifically labor income, and lower (but still progressive) rates on capital income hit both low-income workers (because of payroll tax, which bites them hardest due to declining marginal utility) and high-income workers (the part of the middle class that isn't "small business owners") hardest even before considering tax avoidance.
A progressive tax on all income without special tax favor for capital and special tax penalty for labor would go a long way toward making things better, even with the possibility of the rich spending some of their money on less rich accountants to avoid some of their tax burden.
Avoidance is a much smaller problem than the system being designed to favor the way the ultra-rich earn income from square one.
It seems insane to me to punish people getting better jobs. But by owning expensive land you are in effect depriving others of using it. If you want to argue a moral basis for taxation, that is surely one.
Taxing career advancement instead of property investment and absentee land owners sitting on property seems completely backward. But I never considered that tax laws were probably designed from day 1 to benefit the rich, since the wealthy are so much more influential in any government (including democracies).
The first was a universal transaction tax. Every transaction that passes through the banking system has an associated transaction tax rated at 1 cent per 100 dollars collected by the banks, remitted directly to the government and taken out of the transaction. All monies transferred out of a country would have the originating country collect and retain the tax.
The interesting aspect of this is that all funds that end up in the banking system, irrespective of legality of source would participate in the transaction tax. And based on the figures of over 20 years ago of only 1 in every 1000 dollars passing through the banking system was from legal enterprises, that's a lot of additional taxed wealth.
The other aspect of that discussion was that all other taxes, government charges (duties etc) would be dispensed with. It was unpalatable because it treated all as equal and various interest groups don't like that.
The second one was charging a flat tax (income) on every entity with the only allowable deduction being salaries and wages. This is based on gross income not net income. One aspect would be to force companies to run much more efficiently than they would otherwise do so. Again treating every entity equally would not be politically palatable.
Of course, there will those who would still try to game the system, them you cannot get rid of.
Largely varying margins in different industries makes this seem unfair to me, unless I'm misunderstanding it. Basing it on net income avoids this, but then you get funny bookkeeping to game the system.
Trade tariffs can be applied in a similar manner. In the usual case, tariffs are based on the worst performing internal supplier, not on the best performing (most efficient) internal supplier. As efficiencies are gained by all, the tariffs themselves can come down. If the most efficient internal supplier gets less efficient, the tariffs do not increase to offset this decrease in efficiency. hence, they are forced to maintain or increase efficiency.