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It seems there is more to this story than the author lets on. Michelle cheated on her personal taxes: https://news.ycombinator.com/item?id=7193033

When someone is a habitual line stepper there is always another line they stepped over.

Yeah, I have a story about that: in one of my first software projects, a freelance contractor told me on my first or second day over lunch how he did semi-professional alcohol smuggling on RV trips to Norway.

Come next week, the project manager called an all-hands meeting to tell us that guy had been fired because he cheated on his reported hours.

I never like the whole sentiment about taxation. Why is the taxation so complicated with full of weird language and many complicated clauses ? Ideally it should be very simple, so any layman (even not educated) can understand it. Most people I see either scared and pay taxes without understanding anything or people always looking for cheat. People who understand whole process thorougly and proud tax-payers are rare.

Sometimes I wonder, why this nobel idea become so currupt ? May be it is failure of Govt/System. When Govt wastes tax-payers money (e.g. f35) and not held accountable, layman doesnt have choice than cheating.

It’s that way because it benefits politicians - more loopholes to hand out favors.

Sorry for being pedantic: s/nobel/noble

Lobbies. See: TurboTax.

Simple taxation is simple.

If you only have your paycheck as an income and living expenses as, well, expenses, then 1040 form can be filled under one hour.

Why is it not filled automatically is a good question, but irregardless of that no, it's not complicated.

Business expenses is when the fun starts - and rightly so, because pretty much every accounting rule was introduced to close some loophole.

Because you can't just rebuild the financial system from scratch in a single day, and most of that complexity comes from new rules or exceptions to patch a loophole or an unintended consequence

It's basically a legacy software that is kept alive with patches upon patches until it collapses.

> It's basically a legacy software that is kept alive with patches upon patches until it collapses.

Also where hackers can lobby against some bugs getting fixed.

There was a proposal to just have the California tax authority just send out prefilled tax forms for you to look over, sign and send back with a check or info on where to send your refund, but then Intuit and anti tax groups (who were afraid that making it easier to pay taxes would make people less angry at paying taxes) lobbied hard enough to kill it.

I agree with all of that, but there's also the idea that once the government decides you're guilty, they will find something. There's so many laws, and they are so complex, that's it's not hard for them to do so.

So I'd add a little more to your advice to resign if asked to do something illegal. If your company, or industry, seems to be the new whipping post for some Federal agency, consider a new place. Assuming you're in a spot that could be a scapegoat.

> I agree with all of that, but there's also the idea that once the government decides you're guilty, they will find something.

I don't think the government had any vendetta against this particular person. (ie: Martin Skherli) However, she was probably investigated for money matters (ie: her tax reports) as she probably was shadier than Ben would like to admit.

I'm pretty sure the article is talking about backdating options.

Looking at https://www.sec.gov/spotlight/optionsbackdating.htm the person being talked about likely didn't have any sense it was happening, but it did become pretty clear, later (2006/7) that the SEC was on the warpath about it.

Upthread someone linked a comment saying the she also cheated on her personal taxes.

Correct.

https://en.wikipedia.org/wiki/Joseph_Nacchio

As Beria, head of Stalin’s secret police said, “Show me the man and I will find you the crime.”

Actually I couldn't find any reliable source to attribute this quote (or something similar) to neither Beria, Andriey Wyszynski, Cardinal Richelieu, nor Quintilian.

> a 3.5 month non-suspended sentence is not something that is handed out lightly for a white collar issue

Only a single American banker saw jail time from the 2008 mortgage crisis https://ig.ft.com/jailed-bankers/

Hell, I get more than that for child-support (while funding their ivy league schools)!

> If your boss tells you to do something that might land you in jail: resign.

Let me make it better: resign, but also take precautions, in case after your resignation, your boss offloads some guilt to you.

Cousin Gregg with the receipts!

Yes, good point.

Just needed a little Italian flavor to it :)

My first thought was that "the system" is broken. It's too big and complicated. It's inhumane.

And it's not just corporate tax law. Health care is a dumpster fire. Lots of overly complicated modern bureaucracies. We're not as smart as we think we are.

>We're not as smart as we think we are.

We are, that's the problem. We find loopholes, we find edge cases, we bend rules to our benefit. Thus the bureaucracy must become ever more complicated to deal with our cleverness.

A loophole is just a more judgemental way of describing something you're allowed to do. Most discussion around the topic of tax loopholes revolves around entirely legal deductions. When you call something a loophole, all you're saying is "you're allowed to do this, but I personally thing that you should not be allowed to do this". Our tax system is a complicated, inscrutable mess because it was designed that way, not because it needs to be that way. You and I likely take advantage of many deduction "loopholes" that were created because creating a new deduction is less politically controversial than creating a tax cut.

It also needs to be this way. Radical simple tax systems are usually considered unfair by the people. Like 10% of all you income needs to go to the state. Then people ask why do I have to pay 10% when the rich also only have to pay 10%, thats unfair. (Well you can say progression is ok, so this is then solved).

Here the more difficult one: if you tax income of companies, most will close down, so you need to allow tax deductions. Then what about tax deduction for IP fees? Of course nobody wants them, but IP is a big part of the US economy (worldwide) so should IP be protected, and expenses on IP be tax deductible?

After a while you probably end up with a similiar system as of today.

Most of the loopholes are there by design. The solution is not to make the bureaucracy more complicated but to make it simpler, by removing most deductions and distinctions in the tax code.

The problem may be that 330+ million people expect the politicians in Washington to do anything about these problems, while the problems just get worse and worse. And not just the tax code. They should be ashamed of health care, the complexity of the ACA, the laws allowing people to be ripped off. So many problems.

I agree with you that the tax code should be simpler. But it's about money in Washington, not what people like you and I think. The tenth amendment is there for very good reasons, part of the checks and balances. Bigger is not always better.

If we were so smart (as a society) these problem would not exists.

Personally I think these things are scaling problems. I'd argue that we are not smart enough to centrally organize these things for 330+ million people.

Perhaps the problem is that the federal government was never designed to do so much (tenth amendment). The federal government was designed to answer to the states, not 330+ million people. Look how much better smaller countries do with this stuff. We give the "bigger is better" government too much credit. Historically "bigger is better" causes all the big problems.

I'm 100% for progressive policies at the state level. I'm 100% opposed to progressive policies at the federal level. Government should be "by the people", not by some rules written by career politicians and civil servants a thousand miles away.

You can't properly centrally organize a million people either unless they're culturally homogenous and you also use shared social pressure to enforce the "spirit" of the rules. Of course anyone not in that group is discriminated against so you better have a very homogenous society (the US doesn't anywhere at a state level).

Do you mean that there's no difference between organizing at the state and federal levels, given the cultural variety at each of those levels?

Maybe that means we should go smaller? Swiss cantons average 330k people each (8.5 million population, 26 cantons), and each canton has responsibility for their own healthcare, welfare, law enforcement, public education, tax policy, its own constitution, and can enter into treaties with other cantons and even foreign countries. Their federal government is very limited. The seem to do a pretty good job. When they have a minority problem they can't fix, they split them off a new canton.

In my prior comment I had been thinking of the balance of powers between the states and the federal government. I think the tenth amendment is important, that the division of powers between the states and the federal government is just as fundamentally important as the balance of powers between the three branches within the federal government. As the federal government grows larger it grows more corrupt, dysfunctional, and disconnected from the people, as all unchecked powers tend to do.

Speaking of shared culture, and this balance of power, things have devolved to the point where we argue every four years over the entire direction of the country personified in one person, the president, tribal leader and hopeful superman to 51% of the population, and cause of all that is wrong for the other 49%. We get our facts from the news, often nothing to do with our real lives and experiences. Details are nuances are ignored, there are too many anyways. The president is the team leader. Other people are stupid and liars and evil and all that matters is that your team wins. This is not going in a good direction! This isn't a problem with the voters, it's a problem with the system.

My two cents :-)

> ask Martha Stewart (a billionaire) how her attempt to save $45K ended up to see why this is so

Wasn’t Martha Stewart charged with obstructing an investigation and not actually securities fraud?

That's why I added Al Capone: it isn't always what you did that you end up getting convicted for, some things are a lot easier to prove than others and why waste a lot of effort on something hard to prove when the perp conveniently hands you an easier way to achieve the same effect?

The details are here: https://biography.yourdictionary.com/articles/why-did-martha...

She handled it well, and came out with more offers/money.

I believe they got her on blatant insider trading.

My gripe is when the wealthy get caught doing a crime, they might do their heavily lawyered light sentence, and come home to a warm home, and a glass of Chardonnay.

A poor, or middle class guy, does his retribution, and it might destroy any semblance of the life he had before.

I’ve felt for awhile now sentences, and more important——fees/fines do to wrong doing should be tied tightly to income, and assets.

It kills me when a corporation, or a wealthy white collar individual get the same fine as the Landscaper, who rents.

Hell—-I would like to tie all societal fees/fines to income level. A rich guy gets a $600 traffic ticket, it’s dinner banter. A poor man get’s the same ticket, it could be rent.

I would would even tie vehicle registration, patent fees, etc. to income.

I can only wish though.