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Comment by coldpie | Hacker News Reader

> If you make 8 figures year then it's worth your while to spend alot of money to structure your finances so you pay as little tax as legally required.

I understand what you're saying. If you make $50,000,000 per year, then at some point it's worth spending $500,000 on an accountant who will manage to avoid you paying $10,000,000 in taxes. The math clearly works out, and that's why people do it. I get it.

But man, does it really need to be that way? Is it really so bad to "only" gain $40,000,000 per year instead of $49,500,000? Can you really not get by without that $9.5MM? We've got crumbling infrastructure, cash-strapped schools, students loaded with debt, and the fallout from a housing bubble, but Mark Zuckerberg really needs that new yacht.

Anyway, I can't say I wouldn't do the same in his situation. I understand the motivations. I'm just griping.

* Numbers all fabricated to illustrate my point.

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I don't make nearly that much (I wish!) but as a middle-class taxpayer in CT, here are my feelings on the matter.

I am most certainly not opposed to the idea of taxes since society cannot function without the government providing some essential services. That said, I am opposed to paying a dime more than entirely necessary as it stands today because I see so much of my tax contributions being wasted.

* Medicare ineligibility to negotiate rates

* Military projects that are vastly over budget

* Government budgeting practices that promote blowing your entire budget at the end of the year so that it's not cut the next

* Excessive and abusive pension amounts for public employees

* Refusal to appropriately discipline public employees (police) for wrongful conduct

I can keep listing more, however before I am asked or required to send in another penny to be spent, I personally would expect at least some of these issues to be addressed, at least where spending is concerned. Until progress is made in these areas, then I will continue to be staunchly opposed to any tax increases and will do whatever I can to lower my own tax bill. If I feel my money is being wasted, then I may as well be the one wasting it rather than the government.

While I think the amount of government waste is vastly overstated, I do understand what you're saying. But I was specifically addressing people who take so much income that they bother with these complicated tax-avoidance schemes. At that level of wealth, the difference between $40MM and $49.5MM of income is not appreciable. I was just griping that it'd be nice if they didn't try so hard to keep every cent of their massive income, so we could simplify the tax code and possibly improve our public services given the increased revenue.

(To be ultra-clear, I know this is in the realm of fantasy-land and I understand why.)

You do not need consent from the wealthiest to simplify tax code. They have very few votes.

> We've got crumbling infrastructure, cash-strapped schools, students loaded with debt, and the fallout from a housing bubble, but Mark Zuckerberg really needs that new yacht.

It's interesting that you mention education and infrastructure as the big problems, because this is an article about federal taxation, while those are largely state and municipal areas of responsibility.

We spend more on education per capita than every developed country except Switzerland. And while our infrastructure is crumbling, it's because states and cities choose to pay for it through regressive means such as user fees instead of taxes. That's probably because they're in competition with other states and cities to attract residents and businesses.

> But man, does it really need to be that way? Is it really so bad to "only" gain $40,000,000 per year instead of $49,500,000?

They didn't get that wealthy by understanding the meaning of the word "enough".

We've got crumbling infrastructure, cash-strapped schools, students loaded with debt, and the fallout from a housing bubble, but Mark Zuckerberg really needs that new yacht.

Doubling or tripling tax revenue from the super wealthy would not provide the funds to solve any of these problems, if indeed they would be solvable with "more money". There just aren't that many super wealthy people.

Is this true, though? I agree there are not that many super wealthy people. But my guess is that these people are so mind-bindingly, astoundingly wealthy, that you could adequately fund most of the government simply by focusing on the top-N (for some value N).

According to Forbes, there are ~500 billionaires in the U.S., with an average wealth of ~$4B. Let's say $2T total.

If you assume they can make 10% annually on that wealth (probably optimistic), that's $200B/year.

It is totally implausible given the history of U.S. tax policy and compliance, but let's say you could capture a 50% effective rate of that.

That's $100B/year: Not even half the increase in U.S. tax revenue between 2013 and 2014 due to economic growth[1]. Did that extra $200B enable Congress and the President to solve significant problems last year?

[1] And whether you believe in the Laffer curve or not, it's hard to imagine that levying a massive tax on billionaires' investment income would have a positive effect on economic growth & thus tax revenue from the non-super-rich.

Thanks for doing the math. We can nit-pick over assumptions but that puts it into better perspective. Perhaps the N in "Top-N" needs to be greater, but then you're no longer "focusing" on a particular income level as I initially argued for.

When you actually start doing the math it turns out that you need to tax the plain old rich as well as they super-duper-wealthy. That's what is problematic about rampant special pleading for expansive definitions of "middle class".

There was recently an op-ed in the New York Times about this very subject.+ I encourage you to read the comments. Every time the issue is raised you get the same predictable whines about how tough life is on two or three hundred thousand dollars a year. A typical complaint is about how expensive Manhattan apartments are, which is like complaining that it is hard to make ends meet after making the monthly Ferrari payment.

+ http://www.nytimes.com/2015/12/28/opinion/campaign-stops/250...

The federal budget is nearly $4 trillion. The top 400 Americans earn about $134 billion. The top 1% earns about $2 trillion. Even taxing them at 50% would only raise half of what was needed.

I think you make an implicit claim by citing these numbers that taxing those 400 specific Americans more is not the solution to solving problems related to the state not having enough money.

But isn't there an argument to be made that when these ultra-rich are stripped of their billions, they are less likely to spend money trying to do things to bend laws to their benefit?

If Koch brothers / Soros did not have the billions they do, they'd spend a lot less gaming the system, thereby the larger population of non-rich having greater power in the system, in essence ensuring better democracy, do you agree?

I don't think that spending in attempts of gaming the system really amount to much: http://freakonomics.com/2012/01/17/how-much-does-campaign-sp....

I think we have exactly the government one would expect from taking account of the demographics of voters. 2/3 of voters in midterm federal elections are 45+ and the median voter in municipal elections is pushing 60: https://www.minnpost.com/eric-black-ink/2015/07/tracking-tur....

Given the demographics, I have a hard time seeing what exactly would be different if the rich had less power. I mean, are we going to raise taxes to make health care free for younger people, when the median voter is going to be eligible for Medicare in a few years anyway? And is it really rich people lobbying for more surveillance and resisting decriminalization of drugs, or is it my mother?

> And is it really rich people lobbying for more surveillance and resisting decriminalization of drugs, or is it my mother?

While your mother may be voting for such policies, she is likely not lobbying for them (or writing them). The companies and high net worth individuals who have a financial stake in these policies are the ones doing that.

Every piece of legislation that exists benefits a rich person in some way.

If voters oppose, say, drug decriminalization,[1] who cares if rich people who might benefit from the drug war lobby to keep the existing laws?

[1] Which they do by a huge margin, with the sole exception of marijuana: http://www.huffingtonpost.com/2014/04/17/drug-legalization-p....

Thats not really the point as i see it though, its more one of fairness ... why should the richest of the rich get to basically make their own law and play by a different set of rules than the rest of us ?

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