I have to pay 40% of my income as income tax.
I have HAD ENOUGH. This is infuriating.
What can we do?
I have HAD ENOUGH. This is infuriating.
What can we do?
It's a tough question. The tendency is to react superficially: Moralizing reactions, emotional reaction, first principles takes. The way tax actually works is via accounting "standards," tax law and corporation law... across multiple jurisdictions. A thousand-detail complex , where morals, emotions and first principles are literally meaningless. Actual meaning can only be derived with scenario plans and spreadsheets. Words like "profit," "company," "revenue" and such don't have inherent meanings, in that world. They're just objects with associated rules.
The pro-corporate side of this debate (debate is the wrong word) deals entirely in the latter terms. Terms that the majority of journalists and politicians can't work with. They tend to win.
When the other side does consider the reality of mess, they tend to conclude radical/unrealistic conclusions like "throw everything out and start from scratch."
At this point, complexity is hardened by international agreements and trade rules.
IMO the actual place to start is corporation law, not tax law. If entities can own other entities, or part thereof in an endless cascade...words like "tax rate" have no meaning.
Another, more radical approach is rethinking the idea of public wealth. The currently ongoing collapse of monetarism is, perhaps, an opportunity. Tax public companies x% of their shares per year. Hold, to avoid price deflation. Offload shares as part of macroeconomic/monetary policy (ie, when we run deficits), to avoid inflationary scenarios such as the current one.
I would take the same approach for wealth taxes. Capital gains, property, etc. Tax x% of current market value annually, not income or realized gains. It won't be perfect, but everything gets marked to market eventually.
1. this disproportionately affects companies with higher capital requirements than lower ones. Think spacex compared to a SaaS.
2. this doesn't solve the underlying issue of moving to a jurisdiction with lower taxes. let's say US taxes 1% of shares every year, but the company offshores to bermuda. then what?
How/Why?
>> underlying issue of moving to a jurisdiction with lower taxes
Well... nothing simple solves this in full. However, "loophole" in this article works by attributing income from IP licensing (an internal transaction between Apple owned entities) to Ireland, which does not consider this a taxable transaction.
A "share tax" would apply to the same entity that shareholders own a stake in, it doesn't try to disentangle subsidiary structures. Companies might try to list on Bermuda's stock exchange. I wouldn't discount that possibility, but it won't happen overnight.
Because a company's value (and therefore its stock price) is determined partly by how much assets it has on hand. A company that's capital intensive by definition bring in less money for the same amount of capital invested. Think how much money you need to invest to get spacex off the ground (r&d, rockets, manufacturing facilities, etc.) and how much profit it brings in, compared to how much investment a SaaS needs (a laptop) and how much profit it can bring in (hundreds of thousands? millions?). Under a tax scheme that taxes based on company's shares, a 1% tax would get you 1% of spacex's IP, rockets, and manufacturing facilities, but a 1% tax on a SaaS would only get you 1% of their laptops.
>A "share tax" would apply to the same entity that shareholders own a stake in, it doesn't try to disentangle subsidiary structures.
So the US would end up getting 1% ownership of Microsoft USA, which makes zero profit and sends all its profit to Microsoft Bermuda. Once they're about to lose control because they bled too many shares, they'll cut off doing business with Microsoft USA and start doing business with Microsoft America (a newly formed company) instead.
>Companies might try to list on Bermuda's stock exchange. I wouldn't discount that possibility, but it won't happen overnight.
It might not happen overnight but I guarantee it would happen within the year.
Well you can look at it in the round and realise that your income is similarly higher than it otherwise would be because government spent money into the economy that it is now extracting as tax.
Moving the tax around doesn't avoid you paying it. It just gets rolled into the price of what you buy instead. That's because in aggregate corporate costs including taxation are a component of final consumption expenditure.
While there are fewer jobs than people that want them the incidence of charges on corporations will always end up being paid by workers one way or another. That's the whole point of the 'unemployment buffer' put in place during the neoliberal era - to make sure that price changes can't be easily passed through to wage rises and thereby resolve the distributional conflict in favour of capital.
Paying tax is good for society, what's not great is companies avoiding it. The latter doesn't negate the former.
I cringe every time I hear this from people.
Rich people pay WAY more than what they get back from the gov.
Only if you ignore the role of the government in defining and enforcing (violently, where necessary) property rights, which is what allows “rich people” —particularly rich through various forms of intangible, indirect, and directly-physical-but-beyond-immediate-personal-supervision property — to, as such, even exist.
Where as someone who worked 40 hours a week for the whole year and made $200K gets taxed... exact same 20% effective (federal), and another ~15% (employer+employee) in FICA.
Part of the value of paying taxes is to ensure that the people who's labor you're extracting value from don't rebel and rise up against you.
Should we tax the automobile for displacing the horse stableman.
Microsoft did not even make £220B (apx $310B) revenue globally in the 2020 fiscal year, much less in one subsidiary. Their total global revenues were $143B and total global net income (aka profit) was $44.
If The Guardian can't fact check the basics, how can you trust anything else they write?
https://www.bankrate.com/finance/taxes/tax-brackets.aspx
This is really just the first thing I looked at, but it seems to provide the desired information.
The highest bracket, for income above roughly 550k, is 37%. So considering only federal income tax it is impossible to pay 40% of your income in taxes, but also the first 550k or so of your income would be taxed at lower rates.
But they don't dare to take a firm stance, because the politicians that make the decisions benefit from the system. Just look at how many politicians had accounts revealed via the Panama Papers.
If the cost of getting to net Y cash inflow is X gross income where X = Y + (.66Y) then solve for X and move on, or perform the cost benefit analysis for moving to another tax jurisdiction. The solution is yours to execute.
If it's the first one I can't disagree more, I'm paying kinda the same percentage and I'm happy to do so personally.
If it's the second one, I can't agree more that this is infuriating indeed.
So do all the engineers, PMs, etc working at Microsoft.
Is a starting salary for an engineer at Microsoft really around $320,000/yr.? If they're really pulling in that, one would hope they'd have some long-term capital gains, which would further pull down their effective income tax rate.
I wasn't aware of the Washington state tax rate though.