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."
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).
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."
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.
See http://www.investopedia.com/articles/personal-finance/101515...
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...
[1] Not to be confused with 'sheltered' where the tax was not paid but through a legal loophole.
[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.
This neglects to account for all the wealth owned by the government.
Hmmm... so it sounds like the rich are paying their fair share then?
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."
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.
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.
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.