Study shows the top 0.01% of Scandinavian households underpaid taxes by 30%
economist.com
economist.com
"... maybe the data should cause even more surprise: despite the best efforts of a lucrative global tax-evasion industry, Scandinavia’s ultra-rich are paying 70% of their taxes."
Wonder what a similar study in of people in the US would say (not that one could really know what people are evading, or the IRS would prosecute more people)
Funny you might say that!
https://theintercept.com/2017/10/27/david-kautter-trumps-irs...
Not even that. It's just a guess at who has money in offshore accounts. That's not proof of anything.
https://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-fed...
The vast majority of the US debt is owed to SS recipients.
And given that the total trust fund appears to be $2.8T, I'm not sure how it could hold the majority of the debt: https://ycharts.com/indicators/us_oldage_and_survivors_insur...
[1] https://www.thebalance.com/who-owns-the-u-s-national-debt-33...
I think to correctly frame what proportion any income group (or wealth group) pays, you have to look not just as federal income taxes, but at all taxes.
More to the point, and I think we agree here, the deception is by framing the discussion only about the "us federal income tax" when that is only 60% of the total federal income/payroll taxes collected. If you tell people that the top 1% makes 22% of the money and pays 40% of federal income taxes it makes them sound oppressed. If you tell people that the top 1% makes 22% of the money, has 35% of wealth and pays 25% of federal income and payroll taxes, the oppression disappears.
(the left hand of the government says it has $2.8 trillion and the right hand of the government thinks that is a cool story https://www.ssa.gov/oact/TRSUM/index.html )
Especially since it’s very much not a forced savings program. If it were, we’d pass on the remainder to our heirs if we died early, and we’d run out of money if we lived too long. It’s more like a forced annuity.
(It's ~$10,000-$15,000 for valley salaries... https://www.ssa.gov/oact/cola/cbb.html )
If an average person starts doing everything they technically are allowed to do, they will be shunned socially. When that happens, beyond feeling bad, you lose your support network and can get into serious trouble in life. The rich don't have that problem. They don't need to rely on the good will of others to watch their kids, or to give them time off to go handle bank issues or medical problems.
I think it is more like a few hundred thousand dollars not really being a relevant amount of money to someone with hundreds of millions of dollars of stock on the line and the symbolism being useful.
It's more than a bit deceiving. It's part of a systematic disinformation campaign. It goes hand-in-hand with the outrageous lie that the estate tax harms family farmers.
But cutting taxes on the rich is indefensible on the merits, so deception is the only option if you're rich and you don't want to pay taxes.
Income percentile - % individual income tax paid - % all taxes paid
Top 10% - 83.4% - 65%
Top 5% - 69.4% - 53%
Top 0.01% - 26.4% - 19.2%
Note that anyone in the bottom 50% actually has a negative income tax contribution since they get tax credits.
For the top 0.01% of income earners, the average total tax rate is 46.3%. Much higher than I originally thought.
[1]https://www.treasury.gov/resource-center/tax-policy/tax-anal...
Oh, no, I'm sorry but it's the other way around.
The 'mass lie' is on the employer payroll tax side of the equation.
An employer payroll tax is for all purposes the same thing as an employee tax, but it's 'hidden' (i.e. you don't see it as a deduction) - but it's equally as oppressive.
Politicians love it because they can increase it without any visibility and no uproar.
It's about 30% in Sweden.
Also - up to ~50% income tax.
And then 25% VAT.
Can you imagine if Google had to take 30% of your salary off the top before they paid you?
And then you're effective rate wast 10% higher (like 40%?).
And then everything you bought was 25% taxed?
And the other form of 'hidden tax' - in many places, prices have to be quoted with VAT to hide the 'hit' they take.
Admittedly you get healthcare for that.
It's very reasonable to call this confiscation of wealth.
If you're a professional, you're giving by far and away most of your earnings to the government to have them manage it on your behalf.
More precisely, 6.2% on a wage base limit of $127,200 for calendar year 2017, which amounts to $7,886.40 per person; 1.45% for Medicare without a cap, and an additional 0.9% withholding in excess of $200,000.
For the unindoctrinated, the IRS publishes these (and other related) details under Notice 1036[1] every year circa December.
However, that hasn't worked for decades in the US and a great many other countries.
Why should the government, or the masses, or society be allowed to take people’s money at all in the first place?
If it helps you could think of taxes as society user-fees. Your Society as a Service bill.
Adam smith mentions that war should be a direct tax on people's incomes, as opposed to long term bonds. It would thus make people very much against any kind of war, realizing how expensive they are.
But you've already ceded the point that taxes make sense - we're just arguing about how much and how to spend them.
Consider the utility derived from a roadway for two different people. For the average American, they're a way to get conveniently across from point a to point b. For the wealthy their factories are able to ship goods and services to markets all over the country. Their employees are able to drive to the factory. The factory itself was built because there was road access for construction vehicles to reach the site and transport raw materials there.
The SEC is a great example. We all benefit from having a market for securities that is stabilized by regulation and oversight. For someone with no securities their utility derived ends there. For the wealthy, they derive the maximal utility from that same situation since they have wealth to protect from unscrupulous actors.
Is there any case you can make that the wealthy don't derive more utility from society and so should face a greater burden in maintaining it via taxes?
You'd be grunting and chortling without a society. Even in remote places, they have a language and a bit of knowledge to pass along if you're halfway decent to the group.
That's pretty counter to how America operates. The gov't operates at the behest of the citizens of the US. Any income you make is yours, thus the gov't has an obligations to spend it in a responsible manner. I think that's why so many Americans complain about taxes. If it was spent wisely and people felt they got good value for their tax dollars I'm sure the complaining wouldn't be as loud.
Then why are lobbyist surrounding the capital with wads of cash? If wealthy interests didn't get a return on investment, they wouldn't keep investing. And since they are coming back and they do get a return on investment, then the government isn't serving the citizens but rather the patrons.
For this reason, the citizens won't get a great return on their tax dollars. The problem seems to be getting worse rather than better.
That's how America operates. We can still turn it around though, I hope.
Very little to do with US tax policy. It helps to click before commenting.
"The often used counter argument is that top 1% pays almost 50% of total federal income tax."
But ^ is a discussion of "how a thing in another country relates to themselves?" I must be missing all the well-written nuance of how tax evasion is justified due to income inequality.
Added: Something along the lines of 0.16 * income - 0.16 * 12000 or (income - 12000) * 0.16.
http://equitablegrowth.org/research-analysis/u-s-income-ineq...
The data is somewhat surprising but I'll sum up: the top 20% of households are net tax producers, the next quintile pay their own way, and the bottom 60% are net tax consumers. In other words, the top 20% are subsidizing the bottom 60%, and 80% of the population effectively doesn't contribute to funding the government. Most of the middle class that thinks it pays Federal taxes doesn't, from a balance sheet perspective.
[1] https://taxfoundation.org/60-percent-households-now-receive-...
Edit: the numbers come from a supplemental table, not part of the main link. They did make this clear, I just missed it. Looking at that table, I’m highly suspicious of the conclusion that 80% of the country isn’t paying their own way. That particular table organizes households into quartiles by “before-tax income” which includes transfers and capital gains. That means a retired household receiving $50,000/year from a combination of social security, Medicaid, and capital gains gets lumped in with a working household receiving $50,000/year in wages. The retired household pays little tax and has massive transfers, while the working household pays more and gets much less.
Governments actually compete to get rich people to invest money into their country, because they would rather get 10% of a big pie than 0 - wealthy people usually have many options on where to invest. Right now, there are cities across the US COMPETING to have Amazon build an office there. Economic incentives will be a big part of whats on the negotiating table of course. When you have that level of money/power, you are effectively negotiating with the government so of course they negotiate better deals for themselves.
"Globalisation has disproportionately benefited the rich in part by rewarding capital more handsomely than labour. But globalisation has also made it easier for the well-heeled to hide their wealth. In that sense, maybe the data should cause even more surprise: despite the best efforts of a lucrative global tax-evasion industry, Scandinavia’s ultra-rich are paying 70% of their taxes."
Most wealthy people don't have an issue paying taxes, say 15-20% of their income (income / dividends / capital gains) -- even if that income runs in the millions. Most have an issue paying excessive taxes, e.g. 30%+, for what they get back from society.
Simple math: the higher the tax rate, the more sense it makes to avoid. And once you've set up the structures to avoid and are taking the risk, you might as well try and bring it as close to zero as possible.
For example, I recently had a friend tell me: I could buy this expensive car every three months, with the amount of tax I pay on my (passive) dividends. Why wouldn't I just move to Monaco (or some other country that doesn't tax their income excessively) and keep that money?
It might be an unpopular opinion, but in my view, he's right. As selfish as it sounds, the fact of just being allowed to live in a certain jurisdiction might not be sufficient for any wealthy person to stick around.
They're welcome to. But they don't (or they haven't yet) because they see some benefit to staying versus the cost of leaving.
What an unsourced and biased viewpoint :) a lot of wealthy people are routinely found evading taxes even in low-tax countries. Even the likes of Luxembourg and Monaco have to go after illegal tax avoidance. Nobody likes paying tax, even at 1% people would try to skim. Egoism is a natural element of human psychology.
> Why wouldn't I just move to Monaco
Indeed, why? It might have something to do with Monaco being a minuscule country and their citizens being subject to more restrictions when working or investing in larger markets. This is a friction that globalization has eroded (e.g. there are no such restrictions now for Luxembourg citizens accessing the EU market, or Delaware citizens accessing the US market), which is part of the problem. If you make money from a large and well-run market, you should pay your fair share towards maintaining that market, no matter where you haul from.
Monaco and Luxembourg are not 'low tax' countries.
They are 'tax shelters' for foreigners, not for locals.
And other things.
But you still pay high Euro taxes, VAT and all sort of things like hidden taxes.
Source: myself, ex-Monaco resident + worked and stayed in Lux.
That is genuinely new, at least at scale. Private actors making states compete against each other to lower their taxes and sue nations for enforcing health codes a la investor rights trade agreements.
While trade is good, extractive trade is damaging. The American industrial midwest is a good example. Capitalists first moved jobs overseas, and then automated what was left. We still have strong manufacturing, but few people doing it.
This level of inequality, lack of agency, and lack of hope is incredibly corrosive to democratic values. You can see it for yourself in the election of our leader, the grievance of the pepés, and the general ascension of the right. The fact that this kind of thing is taking place globally across the trilateral powers means there's something systemic at work, it's not a quirk of American circumstance.
Of course I am, this is the comments to an article submitted to HackerNews.
> Factually, capitalism/globalization has benefited lower classes materially
So we're in agreement.
> but has stripped them of agency
Social mobility has gone up since 1700s and continued to go up, with little more than a few hiccups along the way. Regardless, whether or not globalization is good or bad is an opinion and one that does not belong in an article about a single specific study on tax avoidance / possible tax evasion.
I'm not going to reply to the rest of what you said because of that same basic point. It's a complicated issue that tackles a lot of different areas of economics, history, and politics that doesn't have any real agreement with the experts that study those things. I certainly have no hope of doing the subject justice as a comment to an article.
And that's precisely why that shouldn't be shoehorned into an article about taxes to begin with. You have no hope of defending general condemnation of globalization and piling on nonspecific blame on the "ultra rich." If a journalist has an opinion and they want to argue why they're right backed up by objective facts and research, I'd love to read that sort of thing. But precisely because I don't want to live in an echo chamber, I don't want to hear your opinion stated as fact without anything to back up.
You'll note that judging whether globalisation has helped capital more vs labour more is not an assertion of goodness or badness of globalisation, either way. Just like someone can say that cars make road accidents more likely (fact), without it being a judgement on whether cars are good or bad (opinion).
I think you've been triggered and are reacting to something that wasn't written; you've over-read into the piece.
The old system is crashing. We need to acknowledge reality now and work as fast as possible to fix it after we figure out how.
Sure, globalization has lifted millions out of poverty, but it is also pretty uncontroversial to state that it also has disproportionately increased the wealth of the billionaire and millionaire class.
> Globalization has primarily benefited the poor
But you aren't. It is simultaneously possible for globalization to have strongly benefited the poor and for "Globalisation [to have] disproportionately benefited the rich in part by rewarding capital more handsomely than labour."
They quite regularly make the point that trade has broad benefits, and on net they're fans of globalization. But unlike you, they are willing to hold that opinion while simultaneously noting that not everything about it is perfect.
The Economist's official editorials (which they call leaders) are separate. There they are quite free with their opinions. Elsewhere, though, they mainly mainly stick to having a viewpoint. Since their founding 1843 they've been firmly in favor of what we'd now call economic liberalism: their perspective is pro-human, pro-freedom, and numerically oriented.
What they don't do much of, though, is conforming to journalistic orthodoxies that came into fashion after they got going. In particular, you seem to want them to ape what journalism professor calls "the view from nowhere": http://pressthink.org/2010/11/the-view-from-nowhere-question...
Having read them for decades, I'm glad they don't. I often disagree with them, but I appreciate their transparency. That's in sharp contrast to "view from nowhere" media where you either have to puzzle out their actual viewpoint or the articles are so watered down that they are nearly useless for understanding anything.
In a normal journalism article this same opinion would probably be offered in the form of a quote by some competing economist, instead of directly, but the effect is the same.
Do you think globalisation has not rewarded capital more than labour?
Do you think globalisation has not made it easier for wealthy people to hide their assets from governments?
Because I think both statements are factually accurate, not opinion. The only bit that was "opinion" was the suggestion that the reader should perhaps be surprised. It doesn't seem a stretch.
My references:
https://www.weforum.org/agenda/2016/01/3-charts-that-explain...
https://understandingsociety.blogspot.co.uk/2014/07/tyler-co...
I'm using growing income inequality as a proxy for rewarding capital vs rewarding labour. It's well-known to everyone that middle-classes in Western countries have had the rawest deal from globalisation, and that large populations in poorer countries have seen large relative increases. But that isn't the same thing as saying that globalisation benefits labour more than capital; it doesn't. It also isn't a judgement as to whether globalisation is good or bad; overall, I think it's a good thing, we're better off with fewer poor people globally.
In the "view from nowhere" style, a journalist would get quotes from experts to make those points. But The Economist writes as an expert. They work from a clearly established and frankly declared viewpoint. That's why people read them
If you believe their facts are wrong, you should demonstrate that. Indeed, they regularly print letters from people claiming that. But as far as I can tell, you just don't like their viewpoint.
I think what you're talking about would be more "pro-humankind".
The Economist explicitly brands and declares itself a journal of both reporting and opinion. As for "unsourced", it choses to adopt an anonymous style and tone of writing (such that any statements of opinion, which in any case are hardly disguised and pretty obvious to spot as such, take be taken to be the opinions of the entire editorial board, more or less).
As such, it's one of the few organs (though I frequently find myself in disagreement with it) I almost always enjoy reading.
Also don't be mislead by rates. In absolute terms, the super rich pay a lot of taxes, it is only unimpressive in relative terms.
Now there is some ambiguity about the term "tax evasion". Does it only include illegal, punishable practices or are dubious but technically legal "optimization" techniques included? The conclusion could be very different.
These kind of articles look like cheap communist propaganda, throwing dirt to the high producers of a community because they don't contribute "enough" to the welfare of the non-producers. These low-earners are painted as being somehow entitled to what others who are working harder, or smarter, or are willing to take risks are producing.
[1] Hire a team of accountants, lawyers, and bankers to do your taxes. If you're really brave let the government sue you if there is a disagreement. The way budgets and incentives are set up at the IRS and Justice, the government lawyers will get a status bump for settling your case for ten cents on the dollar so they won't risk losing at trial. You might have $10m to spend on a protracted legal fight but Congress purposely underfunds the prosecution. Note that this only applies to billionaires. Garden variety millionaires can also make the system look regressive due to things like the income caps on Social Security taxes, the huge discounts in state tax equity secondary markets, a cornucopia of deductions, shifting income from W-2 to long term capital gains, and playing "will I get audited (by someone competent)" roulette.
[2] Name used for illustrative purposes only. Based on the way his holdings are reportedly structured, Buffett probably doesn't engage in tax fraud. The guy just has too much money to care, it's mostly tied up in one well-structured investment, and he's donating it all to charity so why bother?
https://www.amazon.com/dp/125008444X/
Edit: several commentors have asked why I posted this link. The entire framing of the article and source paper is based on the idea that tax evasion is bad because of its relation to inequality. This book shows that the concept of inequality is misguided and shows a better framework for human flourishing.
If someone is following the letter of the law, how can they be cheating?
Well, they can be cheating if they are violating the ‘spirit’ of the law or some unwritten but generally accepted notion about the law. In this case, that assumption is that taxes should always always be progressive and redistributive, right?
That’s how it’s an alternate view point.
(Personally, I’m in favor of negative income tax, but I think Yaron Brook is a talented thinker and speaker. I did not know this book of his existed, and am glad it was brought up.)
I’m searching but if you find anything on what constitutes ‘hiding’ in Norwegian tax law as it relates to offshore accounts it would be much appreciated.
I have a feeling ‘hiding’ is another one of those spirit of the law / unwritten societal rules sort of thing in this context.
The US is also very unique in which it’s the only country that expects you to pay taxes on money earned overseas as well.
That's as far as I got.
1. More money makes it easier to earn more money.
2. More money buys more ways to avoid taxes, both legally and illegally.
3. More money buys more political power (i.e. corruption of democracy).
4. More political power ensures 1, 2 and even 3.
If the mandate is narrow, none of the above steps have much negative effect on the functioning of society. If the mandate of government is broad, or capable of becoming broader, all of them have a negative effect, and the third ensures that the mandate broadens, which grows the negative effect proportionally.
https://www.forbes.com/sites/robertwood/2015/11/02/how-ikea-...
This article got promoted while this other link, which was posted almost at the same time (and not by me) was simply deleted:
"World's Poorest People Are Getting Richer Faster than Anyone Else" https://fee.org/articles/the-worlds-poorest-people-are-getti...
I don't think it's healthy for this site to become an echo chamber where the only articles that anyone is allowed to see are all from the same viewpoint.
I don’t see it in hn.algolia.com.
As for the rest, do you have an HN link for the other post you're referring to? When you say "deleted", do you mean flagged? Dead? or completely gone? I suspect this last as you haven't provided a link and likely would have if you had one. If it's gone, one possibility is that the submitter deleted it.
I suggest you contact the mods. They do sometimes come across comments like this and answer, but they don't see everything on the site. In my experience they've been very responsive.
Also in my experience the mods are very hands-off when it comes to completely removing content. Before assuming bad faith on their part, I'd ask them first.
We never delete posts outright except when an author asks us to. Moderated posts always remain visible to anyone with 'showdead' set to 'yes' in their profile.
Leaping to the conclusion that we're sinister suppressers is fun in a fuck-the-man way, but if you care about this community, consider the systemic effects it has. They're not good.
"Let them eat cake"
Is that adjusted for COL/purchasing power differences?