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Comment by pc86 | Hacker News Reader

I think if anything it can be traced to a fundamental misunderstanding about how fractions work (and less glibly, basic personal finance). Choosing to spend $150,000 on things you objectively do not need in order to not have to write a $30,000 check to the IRS and put $120,000 in the bank for next year is not a rational decision for all but the most extreme anti-government/anti-tax ideologies. It's the very definition of cutting off your nose to spite your face.

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I agree with you that such a strategy is not optimal but it is not quite how you describe it to be.

In the mind of the farmer:

* $150,000 tractor: something that has value (not easy to calculate, but a $150k tractor has a value above zero, even if not brand new) and utility.

* $30,000 to the IRS: money that I will never see again. Literally thrown away money.

Option number 1 is very tempting.

The problem with that is that its only a $150,000 tractor until you drive it off the lot. I would be if the day after you bought it you are lucky if it is a $120,000 tractor.

Averseness to government is taxation is so engrained in some country it is almost genetic...and it leads to utterly bad thinking by individuals.

I suspect this isn't only averseness to taxation. Loss aversion is a well known human behavior, and when you have to write out a huge check to the government at the end of the year instead of having it taken out of your paycheck automatically, I could def see this kicking in pretty strongly.

Maybe we are not doing a good enough job of promoting civic duty, including payment of taxes? After all those taxes are used mostly for Medicare, Medicaid and the Military, all of which seem like worthy causes to pay for right? Not including State and Local taxes used for more immediate local functions, of course.

Personally I'm fine with Medicare and Medicaid but what I'm not so convinced is worthy is an endless series of overseas wars, 4000 U.S. bases, 800 more bases in 80 countries, $1.4 trillion for F-35s of controversial effectiveness, another trillion for nuclear weapon modernization, and several more trillion that's unaccounted for because the Pentagon has never been audited.

http://www.theamericanconservative.com/articles/why-is-defen...

https://www.thenation.com/article/the-united-states-probably...

https://www.theguardian.com/commentisfree/2017/mar/20/pentag...

I lean liberal but a significant portion of my family is conservative.

Their thinking with regards to taxes is that it's spent on one of the following:

- Welfare, which is supposedly rampant with fraud to the point that most people who are on welfare don't "need" it

- Unspecified government waste

Not that these don't exist- it's just that it's the majority of government spending, according to them.

If taxes are cut, they claim welfare will get cut, forcing people to find work, and that government will somehow cut their other wasteful spending while still managing to fund the necessities.

I live in suburban NJ, so it's a bit easier for me to see where my taxes go- police, fire, public transit, a handful of schools. But in rural America, where 911 response times can be around 30 minutes, there's no train to get to a nearby city, and there's only two schools in your town? It looks like that money vanished.

Welfare is welfare but then we're calling welfare welfare. The F35, on the other hand, is another form of welfare except that it's patriotic welfare.

Do they know that 20 billion goes to farm subsidies? I would guess that they don't mind that type of welfare.

> Maybe we are not doing a good enough job of promoting civic duty, including payment of taxes?

If you're a strict old-school limited govt jeffersonian type, as many farmers are, fighting income taxes and avoiding paying into federally mandated systems is your civic duty..

not saying I agree with either side - but pointing out that notions of 'civic duty' are not so cut-and-dried

>all of which seem like worthy causes to pay for right

Just because something is worth doing does not mean you can throw money at it with no regard to efficiency.

Tractors are not cars. While they do loose value by not being "new", the ratio is MUCH smaller than for cars.

They have an hour meter for a reason. This is really what people use to tell if it is new.

Of course, but then you've now got $30,000 in depreciation toward next year's taxes!

Farmers often take 100% depreciation on a new purchase. So for tax purposes they lost 150k and do not have an asset worth 150k sitting around.

Now if they sell the tractor they have to pay taxes on the full sale price as profit since it was previously worth zero.

Which, because of their mindset about taxes, hurts the resale market for tractors and allows manufacturers to overprice new sales.

I wonder how they see taxes as thrown away? Yes, government is inefficient. And corrupt. But you do need roads. And bridges. And law enforcement. And even military protection, even if it seems far away and remote from your farm.

Not to mention $20 billion a year in farm subsidies.

only if you accept them.

many farmers dont.

also: these are not distributed evenly (see also agribusiness)

Many rural areas in the US are heavily neglected; There are roads that haven't seen any upkeep in a decade and have police response times that are over an hour long. A lot of farmers feel that they pay into the system but get only a minuscule fraction back.

Rural areas in the US are heavily subsidized by urban areas (which is not inherently bad, but the perception that money flows the other way is a big political problem), especially when it comes to social services such as healthcare, disability payments, welfare, etc., but also if you just look at basic infrastructure like roads, sometimes disguised as regulatory requirements that private infrastructure providers maintain some baseline service everywhere. The issue is that providing high levels of service to sparsely populated places is very expensive. Of course many states are also doing a poor job of basic infrastructure maintenance statewide, but that's a different problem.

Which is why you get the Lega Nord in Italy and the Catalan nationalists who object to subsidising the poorer southern parts of there counties.

Yes, a lot of this can be mismanagement at a state level. If you don't like what you're getting on a state or federal level, vote, campaign, cause a ruckus, etc.

This has everything to do with the fundamental physical fact that it's hard to provide services at very low population densities. I live in a city that has low single digit emergency response times. In order to get that out in rural farmland you would need to collocate a police and fire station with every single dwelling. Not gonna happen.

Correct, but that doesn't change the fact that when most people think about taxes they think of them paying for roads, schools, and emergency services. All lacking in rural areas. This creates the cognitive dissonance against taxes among those folk.

Those farmers are deluded. Their roads cost far more in upkeep then they return in economic benefit and if the farmers had to pay for their own roads they would be nothing more than dirt paths and remain blanketed by several feet of snow all winter long.

And if the people who have to use those roads are ok with roads like that why should they pay taxes so the state can turn around and use those taxes to pay for pavement they don't need?

This is a disgusting perspective. The civilization they live in is bankrolled by taxes. The TV they watch, electricity they use, everything they purchase, the customers that purchase their crops... All of this is possible because people pay taxes for the greater good of society.

There isn't anything wrong with tax avoidance.

Additionally some debatably large portion of tax money is wasted or spent on things you completely disagree with, no matter what your political perspective.

I don't doubt that they may think that, but it's a fundamentally flawed line of reasoning. The upkeep of your immediate area is not the only benefit of those taxes. Consider the road system that takes whatever goods they are growing and distributes it to the end consumer. They are only able to make a living growing what they do within this system because the system as a whole functions.

Those road cost $100k per mile to repave. They get beaten to hell with heavy equipment rolling over them all the time so their life is reduced. I doubt farmers even pay enough taxes to cover just the roads.

unlike the 'real products' us software developer types produce far exceeding the value of the houses, cars, food, etc. that we consume..

Aside from military protection, that is a list of things largely irrelevant to people who live in rural areas. It's money to be confiscated from them and used to prop up societies to which they have little to no connection.

It's the cost of being an American. And in reality, people in rural communities are the ones that are being propped up by money confiscated from others.

Roads alone are very expensive, over a million bucks per mile in rural areas. Wyoming has 33,000 miles of road serving a population of 550k. That works out to at least $60k per person in just to build the roads, never mind maintaining them. And not having these roads means higher transportation costs, which translate to more money spent on goods and more profit being lost to transporting sales.

There are plenty of countries in the world without individual taxes, they just also happen to be places most people don't want to live.

> over a million bucks per mile in rural areas

This is a commonly repeated myth, but is not usually true. Road costs are far lower than often claimed. A 2-lane asphalt road construction costs about $800k on average and lasts approximately 30 years with proper maintenance. (Using MDOT numbers, since that's what I happen to have on hand).

In Wyoming, this works out to $1,600 per person per year ($133/month/person). But that assumes every single road in Wyoming is paved -- they aren't. I don't know the accuracy of this, but the University of Wyoming claims only 20% of a county's roads are paved in the state, on average, so real costs are probably much lower.

In states with any significant city whatsoever, the costs drop dramatically. Michigan, for example, has 120,256 miles of road serving 9.9 million people, 75% of which are rural. That's a total road cost of about $360 per person per year ($30/person/month).

Interestingly, Wyoming is actually the worst pick of any state that they could choose. As of 2013[0], it was second in the nation (New Jersey) in balance of payments with the federal government (give more than take). It was one of only two red states, along with North Dakota. Per capita, it paid the most of any state in corporate taxes, 3rd most in estate taxes (behind CT and FL), and 2nd in excise taxes (ND).

[0] https://osc.state.ny.us/reports/budget/2015/fed_budget_fy201...

I can't find a more recent pre-compiled source, and too lazy to run the numbers myself. I doubt it has changed significantly enough to make the

Given the fact that most farmers (or at least the ones we are talking about here) are living off the welfare gravy train known as agricultural subsidies it is hard to have any pity for those who think that their taxes are confiscation. They would have been forced off their inefficient enterprise generations ago if it were not for those "societies to which they have little to no connection" propping them up.

You'd get no resistance from me to eliminate agriculture subsidies. It would be mighty nice to see an organized movement to produce crops free of subsidies. I think people would be shocked to see just how cheap their food really is.

> inefficient enterprise

only when competing against imports from defacto slaves in other countries..

Yeah, that's kind of bullshit. They send their kids to public schools and maybe public universities later, drive on public roads, use water, electricity, etc. They also have a place where they buy seed, animals, neighbors they attend church with, etc. Not to mention the markets they need to sell to.

There is some level of self-sustainment but it's a myth how 'independent' people really are.

They might be detached from the federal side of things but they still also have to interact at a state level.

There are levels of rural, BTW. Of which more of these services aren't provided.

Those societies are their customers. It's where they're making all their money.

Only off-the-grid homesteaders can make any credible claim to having no connection to society at large, but if they get sick, they better be honest with themselves and just die at home instead of going to get healthcare from a system they elected not to contribute to.

Why should they be taxed for the benefit of their customers? Aren't their customers paying them?

Modern society works by having everyone contribute for the greater good. One of the principal mechanisms by which this occurs is taxation and spending on government services.

You go really far down the civilizational chain if you remove these mechanisms. Almost all the way down to primitivism.

> Modern society works by having everyone contribute for the greater good.

Whose definition of "good" are we using? Clearly not mine, as my definition of "good" demands consent.

Stop using the Internet for starters, then. Billions of dollars of tax money went into developing it.

That's just foolish. I'm not going to forsake the benefit of something I'm forced to pay for. I can, however, still advocate for changes to that system. That isn't hypocrisy.

The system is what allowed the existence of the medium you're using to argue against it. It is hypocritical to argue against the downsides of civilization while taking advantages of all of its benefits.

So if a thief steals your car and leaves you his bicycle, it's hypocritical to criticize him while using the bike to get around? Or if you're forced to pay protection money by some gang, it's hypocritical to criticize them even if they do protect your business from other gangs?

And is it hypocritical to live in the West and take advantage of all the benefits it gained from centuries of imperialism and exploitation, while criticizing that behavior?

I'm not against taxation, but that's some BS logic.

Just some notes: Using an bicycle that isn't yours is illegal even if it supposedly was left there by a thief, at least here. In a similar way it is legal to buy protection from someone if you feel you have a need to, that right is questionable. Private security is much more mob like than taxes IMHO.

I think the ideas of anti-taxation is often hypocritical, too often you see people critize tax cuts that do not serve their other beliefs. Mind you, this is not an argument against tax cuts, I just think anti taxation is an pipedream.

Your attempt to make an analogy here doesn't hold up. The anti-tax position would be to want to keep your car but also get use of the bicycle whenever you want it, since the true taxation analogy would be both you and the other person granting use of your property to others.

Unless you want to argue about people paying more in taxes than they (feel they) get in benefits. In which case, well, the most rabid anti-tax people generally are getting far more benefits than they pay for (and are busily re-rigging the tax system to tilt even more in their favor).

I'm not arguing for "the most rabid anti-tax people" and whatever their position may be. I'm arguing against a specific claim made by CydeWeys - that it's "hypocritical to argue against the downsides of civilization while taking advantages of all of its benefits" - and my analogies are specifically written to fit that claim.

If the claim was that anti-tax people demand both not paying tax and that others do, then I wouldn't have posted. Although I'd say that just selfish, not hypocritical.

If the claim was that anti-tax people demand both not paying tax and that others do

But that is exactly it. They want all the benefits of living in a modern civilized society, but they don't want to pay their share of keeping that society going.

What you may be missing is that not everyone shares your assumption that taxation is a sine qua non of the benefits they want from modern society. They might be wrong, but that doesn't make them hypocrites.

Also, the claim that it's all hypocrisy reminds me of this bit from the TAL episode "What Kind of Country":

Jan Martin: And a gentleman came up to me and actually thanked me for the adopt a street light program. He had just written a check to the city for $300 to turn all the street lights back on in his neighborhood. And I did remind him that for $200 if he had supported the tax initiative, we could have had not only streetlights, but parks and firemen and swimming pools and community centers. That by combining our resources, we as a community can actually accomplish more than we as individuals.

Robert Smith: And he said?

Jan Martin: He said he would never support a tax increase.

By that logic you couldn't argue against anything in our current system, since it all played a part in creating the life you live.

You'd be just like the current generation of Americans in power. Get fat off of all the rich government programs, then cut them as you no longer need them - forget the people who are currently in the position you once were. To me, it's disgusting and selfish, but America seems fine with it. America is doing fine, right? Oh wait . . .

A certain base is required for customers to exist. It's most beneficial to pay a tiny amount towards this vs. having no customers.

Especially when you consider that the cost of "military protection" would be is a tiny, tiny fraction of what we spend annually to maintain our global military empire that offers no protection at all (and actually serves to create many new enemies and threats).

>And even military protection, even if it seems far away and remote from your farm.

Not in the US, which is mostly the offender, and no country will ever attempt to attack it (domestically), even if US kept just 1/10 the military resources it has, unless provoked purposefully for months on end into doing so (e.g. Pearl Harbor).

If nothing else, it's probably that the benefit you get from the government does not depend on your tax burden. So the money they pay to the government has "zero" utility to them. Spending that money somewhere else, even if the utility is very low, would seem better.

One common feeling (i am from a farming community in Canada) is that tax revenue tends to get siphoned to urban areas.

Politicians focus on bigger voting blocks, while rural communities (in their mind) pay for those promises.

I'm sure that is a common feeling. And it probably varies from jurisdiction to jurisdiction.

But in the USA, just as coastal areas subsidize inland areas, typically urban areas within a state subsidize the rural areas. Definitely true of California counties, and I'd be very surprised if this wasn't true of any particular state.

This gets brought up a lot on Hacker News as if it's a bad thing. One, I doubt it's as universally true as people think (I'd wager that in Utah, say, an equal chunk of taxes comes from suburban as urban areas), and two, people who can't afford the cities need places to live and those who can need places to vacation and buy food.

I don't see them presenting it in a negative, just a fact, and one not understood in rural areas.

If you believe in wealth distribution, then richer coastal or urban areas should help out their brethren in the rural areas and spread the money around. It's when those rural brethren then attack the better off coastal / urban folks as stealing their money that things become problematic.

Don't forget that red (more rural) states also receive political welfare in the form of the electoral college, so their misguided views carry more weight.

Good point.

And then complain about being the neglected or down-trodden ones.

Its not a bad thing. But it is quite annoying that the places who benefit the most from taxes keep trying to abolish them out of a lack of understanding, and also get an oversized influence in terms of voting value to do so.

I don't think subsidizing rural living a bad thing, but I do think rural people thinking "I don't get anything from the government, why should I pay taxes" is a bad thing.

I was responding to a comment that stated that rural folks believe that they subsidize the cities by pointing out that belief was contrary to the reality (at least in the States; I don't know much about Canada's rural vs urban divisions, but I'd guess the dynamics there are similar).

As far as what I prefer: I have no issue subsidizing rural areas, within reason. I support everyone having access to basic infrastructure, healthcare, and education, regardless of where they live. Beyond that, there's no particular reason for government to provide incentives to live in one or the other; let the market sort that out.

The city slickers don't want to cut checks to a bunch of hicks and the rednecks don't want to give their money to the city slickers and neither wants the other telling them what to do but our tax system ensures that they can't stay out of each other's business.

Except the “city slickers” have been cutting checks to the “hicks and rednecks” for decades, and furthermore, the “hicks and rednecks” vote against this and rail on the “city slickers”for doing so, while simultaneously falsely believing they cut chekcks to the “city slickers” and also complaining about any time their checks from the “city slickers”are reduced (try campaigning in Iowa on a platform of reducing farm subsidies).

And the counterpoint to that is that the city slickers do whatever they want when it comes to running the state.

NY-SAFE is a good recent example of the city doing one thing despite the objection (as opposed to apathy) of everywhere else.

Depends on the locale, but sometimes just talking to the city works. If you're in a rural area of a smaller town, the mayor or council may not have reason to go to the rural areas. That can seem like they're getting purposefully neglected.

The reality is that they may not know of the giant pothole on County Road 18 or the rampant littering in certain areas. It may not always work, but informing the local government of issues might get you what you want. After all, you are the constituent that gets those people into office. Let them help you.

Rural areas usually get more per capita. It's just that density makes services of all sorts easier and more efficient to provide.

What's the feeling about the other side of that, which is industry-specific subsidies?

While not on the same level as the US, Canada still provides significant farm subsidies, which comes from.. tax revenue!

Did you see the thread here literally yesterday about taxes becoming higher for upper-middle class earners in blue states? Why didn't they get asked why they don't want roads?

I feel like this comes up any time someone does something to avoid paying taxes, as if that necessarily means they want no government at all. They (the farmers) will see no appreciable difference whether they pay the tax or buy the tractor, so they choose the tractor. That doesn't mean they don't want roads.

Because upper middle class earners in blue states, and blue states in general, already pay out more in taxes than they get back. Rural areas don’t.

Parent point: Why do farmers see taxes paid as providing no value to them? Don't they want roads?

My point: Nobody wants to pay taxes they don't have to, and farmers are no different from upper-middle class blue state residents in that regard. It doesn't mean they literally don't want roads.

That blue state residents already pay more in taxes than they get back is irrelevant. Nobody wants to pay more in taxes, and that doesn't mean nobody wants roads.

>Nobody wants to pay more in taxes

Bullshit. I'm happy to pay more in taxes if it means that the society I'm a part of improves as a consequence.

Whether money from a tax increase is well spent is another question, however.

In the same way that people buys online (or in the neighbouring state) and “forgets” to pay sales tax. It’s better to keep the money.

I think they just simply think "how can I minimize what I pay in taxes". They might think of police, roads, etc but that's after they finish thinking about themselves and their own accounting. So it means pretty much they never think of it.

But those things were all there back when this hypothetical farmer wasn't making any money. Tragedy of the commons, perhaps.

I know people who do the same thing with charitable donations. They donate to an organization because they "need the tax deduction". Despite that they'd have more money in their pocket if they just didn't make the donation in the first place.

When most people bring up tax deductions in casual settings it's pretty obvious pretty quickly that they don't really know what a tax deduction is. And the odds quickly approach 1 if they use the phrase "write-off."

It seems to be the common understanding among many that a "write off" of a business expense like a laptop or something means you get that thing for free.

I wonder if this is the result of most people taking the standard deduction instead of itemizing at tax time.

I think it's the result of them probably getting paid a salary out of their business, and the laptop being purchased in December or January makes no difference to their actual take home pay (assuming they're not distributing 100% of profit).

But that being said, a 15-30% discount because you used a different credit card to buy it is a pretty good incentive.

Yes. I know lots of folks living in cheap Midwestern housing who think they're getting a great deal on the mortgage interest rate deduction, but who almost certainly have deductions at or below the standard amount.

I'd venture that a lot of people are typing all this info into their tax software, which summarily throws it all away without them really understanding that that's what's happening.

Regular folks just do not get this stuff and it's silly that we have such a complicated system.

Yeah but the upside of that particularly ignorance is that a charity gets a donation.. Win-win in my book.

They might benefit indirectly from the donation in a way they couldn't by spending the money themselves, while also getting an income tax deduction.

I'm separating the people I'm talking about from people that actually just want to make donations because of the social good. This other group seems to have no interest in making contributions other than their own misunderstanding of what a tax deduction is.

Other than "feeling good" you can't derive personal benefit from a deductible donation.

That's not true. If the donation helps enable a societal outcome that you benefit from (i.e. a donation to a local environmental cleanup nonprofit organization results in a cleaner park for you to enjoy), then you can benefit. You can't derive an exclusive personal benefit from it, of course. If you did, it would be tax fraud.

Depending on how underwithheld you are, you can avoid tax underpayment penalties.

money that I will never see again

See also: depreciation on a $150K tractor I didn’t need.

Depreciation on a $150K tractor you don't need amounts to -$150K, for what it's worth ;) It's just some amount of that every year (with the biggest hit being in the same year, same for buying a new car).

Dude, you’re deconstructing a clever rejoinder on the topic of paying taxes. Ease up, I know how depreciation works. :-)

I literally put a smiley in my reply to indicate tone, and yet you still somehow miscontrued it. Take your own advice :D

You can still sell it.

I think one of the issues is the farmers are conflating their incorporated farm's assets with their own.

I think it's a failure at root to understand how marginal tax rates work. There is an honest-to-god, widespread folk mythology about how you can actually earn less by earning more, because you'll pay a higher tax rate. You can hear this opinion expressed by people of all intelligence levels and in all professions, from fry cooks to engineers.

This, in my experience, drives a lot of insane opinions about taxes.

US tax code is a strange animal. While in general you take home more if you earn more, the curve is not always smooth. There are several spot you suddenly lose the ability to claim certain benefit as income increase. In a situation like that you could take home slightly less as your income increase. If your income is high enough, those doesn't apply to you. All you need to worry about it the different tax bracket.

Very very few things being claimed by the average person fall off immediately, almost all of them scale such that you are still netting an increase, even if that increase is less pronounced.

In fact, I can't think of a thing where this isn't the case. Can you provide an example?

All of the people who would get jobs if it wouldn't cut them off of their free/cheap housing and food stamps? You either qualify for subsidized housing or you don't (at least in my state).

> the curve is not always smooth

THIS

If the tax code was easily understood, these steep/jagged areas of the tax curve wouldn't exist. Even my accountant seems to struggle with the amount of variables when I ask similar questions.

Yes. This is absolutely a big problem. The incentives are all wrong here. But that's not really what we're talking about. We're talking about working people who aren't receiving any additional government assistance not understanding marginal tax rates.

I still remember a HS teacher insisting that because she got a raise she took less money home. A friend of mine was the son of a CPA and all but called her a liar in the middle of class.

I was one of those people who didn't understand it enough to think that an increase once you got to a new bracket applied to all your income. In that situation, it's logical to be careful not to move to the next tax bracket accidentally. It wasn't until later that I understood that the bracket applies only to the amount of your income that is above the bracket amount. I think it's a common assumption to make if you don't research it more carefully.

This myth is probably fed by employers who don't want to give raises as well.

"Well if I give you a raise, you won't get more money! Get back to work!"

Sadly, this is a conversation I've had several times.

In my case it was true, because I became ineligible for overtime.

But it is true that the marginal earnings decrease. If I suddenly am making less on the margin for working more, that might be enough to tip the decision to "not worth it."

But from experience in the UK where there are some points in the tax scale that have odd high marginal rates (about £110k I think) but if you in that rage your employer normally pays you enough to jump over that band and you can do salary sacrifice or extra payments into a pension for some juicy tax benefits also EIS's and VCT's come into play at that level.

Most white collar professionals don't have obvious things they could invest money in that would quickly improve their bottom line. Farmers have that option constantly, so their situation is qualitatively different in a way that the white collar professionals in this thread clearly have trouble understanding.

Except that in the situation described, this wasn't "I am reinvesting in my business to turn a higher profit in the future" but rather a case of "I am buying something that will not improve my bottom line in order to avoid paying taxes."

They aren't buying things they don't need. They are buying newer equipment to replace older equipment. Could they wait another 2-5 years on some of those purchases, maybe, but they aren't being irrational given the current system and incentives.

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