The IRS Tried to Take on the Ultrawealthy – It Didn’t Go Well
propublica.org
propublica.org
About 10 years back, Bono (of U2) was being interviewed on irish tv. They asked about U2's business interests (real estate and hotels), taxes, and overseas holding companies... with a "why don't you pay taxes in ireland" implication.
Bono started with a generic "U2 is a Businezss" answer but he ended with a (IMO) an honest point that people avoid making.. because it's kind of an admission of guilt:
"Look... We (ireland) manipulate our tax rules for all sorts of gain^. How can it be ok for the country but not U2?"
We're an extreme example, but not that extreme. American politicians have also been big believers in complex tax reforms/policies as a way of tweaking all sorts of economic results.
We can't have it both ways. Either we have a "the rules are the rules" approach or we have a principled approach. You can't appeal to the "spirit" of a soulless ruleset.
^We have a highly "engineered" tax system, designed to encourage foreign revenue to be silmultaneously booked and not booked in ireland. >30% of ireland's gdp is Leprechaun money, according to Paul Krugman & some oecd economists. It's here, but not real. Try to touch it, and it will vanish.
A lot of these rules relate to IP which is why the biggest companies utlizing irish tax shenanigans are apple, google and other techcos. Music is also IP.
I'll answer that Bono - because no one in Ireland asked for us to be run by leprechaun economics; that decision was taken by blatantly corrupt political parties that form a golden circle fueled by brown envelopes, protected by even more blatantly by corrupt police and state / billionaire owned media.
Normal people in Ireland :pay their fucking taxes: and he should too.
Irish one though surely? What makes them win elections?
For example, we've gone through multiple Garda Comissioners (head of police), a Taoiseach (head of state) and a justice minister over the treatment of a police whistleblower who was smeared as a child molester - twice, by police and the government agency in charge of childcare. But there was only one paper that remotely properly covered it, and this paper was then bought up. It was insane. And just one example of many.
Still, the two parties I speak of are on a long scale downward trend to the point where they're propping each other up with the help of a couple "independents" to stay in power.
In the nicest way I can say this, might you be in a bit of a bubble? For example, did you pay your Irish Water bill and assume everyone else did too?
One serves to better the country by adapting to a changing economy, while the other serves a self interest and takes money out of the economy.
However if you’re talking about tax reforms lead by corrupt politicians and lobbyists - then that’s a different matter. But I’d argue that was another tangent entirely.
This is part of the reason (albeit just a small part) why the rich and poor divide grows wider year on year. If it were as simple as you described, that wouldn’t happen.
This is a great point that I always try to inject into conversations about “tax avoidance.” People often claim that taking advantage of “loopholes” is ethically equivalent to straight up illegal tax evasion, but that claim implies that companies need to “know” the “correct ethical amount” for them to contribute.
Also, an alternative is a higher tax rate but use a UBI so poor people always have an effective negative tax rate. Constant offset, multiplicative tax rate. Ensures a floor of income such that people can always survive and that there are always consumers.
Nothing about taxation is fair because it's not intended to be fair. We agree that society as a whole benefits from every child having access to a high quality education. We agree that society as a whole benefits from free and easy travel. I read an economic report a while back (still trying to find it) that posited that a significant contributor to the US's current economic success and high rate of entrepreneurial system was the USPS. The ability for everybody to mail anything anywhere on the cheap allowed for an untold number of companies to exist and be competitive.
To pretend like taxes should be associated with the consumption of government services is a-historical, fallacious, and based on any number of lies that vilify the poor for being poor.
I agree with this 100%, and thank you for stating it so clearly.
> We agree that society as a whole benefits from [...]
Well, not all of us agree, but certainly a large majority.
> To pretend like taxes should be associated with the consumption of government services is a-historical, fallacious, and based on any number of lies that vilify the poor for being poor.
It also sets up a hell of a strawman for the abolition of taxation in general - if the goal is for the individual to pay based on their consumption, then the most effective means of achieving that with the lowest possible overhead would be to allow a competitive marketplace to develop for those things.
For the record, I do support the abolition of all taxation, but find this argument to be very poorly constructed. My justification is that taxation is instituted through the implicit threat of violence.
That said, from a practical standpoint, if we're going to have a government funded through taxation, it's in our best interest to ensure the overhead for collecting it is as low as possible. That means the ruleset should be as simple as possible, and that using taxation powers to modify behavior should be done rarely if ever in order to maintain that simplicity.
To put it another way...
Question: those dollars you have in your pocket, where'd they come from?
Answer: The government issued them and they eventually found their way to me
Question: How'd the government have them to issue them?
Answer: They taxed it from somebody else.
Question: How'd that person get those dollars?
Taxation is a method of controlling inflation and the implicit threat of violence isn't directly related or due to taxation, but rather it's connected to the government's monopoly on a fiat currency.
Our government is funded through being the monopoly issuer of a currency that it requires all transactions be priced in while enforcing that monopoly with the implicit threat of violence. Our government (and all governments that are monopoly issuers of fiat currency) additionally use taxation as methods of economic control, but not funding.
> it's in our best interest to ensure the overhead for collecting it is as low as possible
I'm not sure I agree with this. If the government is going to tax as a method of inflation control it's in our best interest that that taxation does the "least harm" and as a democratic society we have the opportunity to vigorously debate based on evidence and research how we define "least harm".
The simplest ruleset possible could easily be "everybody contributes $30k/year" (more or less what my annual tax burden is) but suddenly we're bankrupting a majority of Americans.
Perhaps "as possible" includes an implicit "without bankrupting a majority of individuals subject to the tax" but at that point "as possible" is just a doorway to say "taxing should be simple [except when it can't be]" and to me that's the same as saying "taxing is complicated" which is, finally, to say that I think it's really a whole lot of nothing interesting to say "I think tax rules should be simple".
Edit: And yes, I understand that State taxes (as opposed to federal taxes) do fund State services (Property Taxes -> Schools in CA, for ex), but the States are not monopoly issuers of a fiat currency... It's complicated and hairy but the reason I bring up the issue of funding via taxes vs. issuing dollars is because almost always in conversations about flat tax rates or "simplifying tax code" it's in reference to federal taxes and not state/local taxes.
That ends up being significantly larger than the currency issued by the government, so the government might actually get more revenue from taxes than from money printing.
No, those who consume more have benefited more. Earning more is just the opposite: it shows that you've provided more benefit to society than someone who earns less. The ones who benefit most from society are the ones who manage to consume more than they earn.
Usually you can consume more if you have earned more i.e. have more buying power. But I know that's not what you mean.
> Earning more is just the opposite: it shows that you've provided more benefit to society than someone who earns less.
They're not very strongly correlated. It's possible to provide value without seeing much in reward (janitors, nurses, schoolteachers), earn plenty without providing much or even negative value (telemarketers, those opioid manufacturers we're hearing about), or both provide value and earn $$$ (Google, StackOverflow).
In any case the taxman doesn't care about "value" provided to society because it's such a nebulous concept. The IRS doesn't let you take deductions for adding value or add extra taxes because you're a telemarketer. Even if you provided a ton of value to society while getting rich, you still got rich. And your society's enforcement of laws and property rights, educated citizenry, and infrastructure were likely crucial to this.
> The ones who benefit most from society are the ones who manage to consume more than they earn.
This is true in the case of those who inherit large fortunes/trust funds and don't work. Tax laws favor them greatly at present (lower estate and capital gains taxes).
It's not true at the other end of the scale though. If not having a job and being on food stamps/medicaid/unemployment was really all that great, you'd have far more people looking to get in on it. It's actually a miserable situation that most people work their hardest to never fall into.
Sure, but you've produced more as well. The key is whether you're a net producer (earner) or a net consumer. As a general rule, high-earners tend to fall into the first group. Past a certain point earnings tend to outstrip spending; the more capital you have the easier it is to produce things other people want, whereas there's only so much one person can consume.
> They're not very strongly correlated. It's possible to provide value without seeing much in reward (janitors, nurses, schoolteachers), earn plenty without providing much or even negative value (telemarketers, those opioid manufacturers we're hearing about), or both provide value and earn $$$ (Google, StackOverflow).
We obviously aren't using the same definition of "value" here. If something is valuable, people will pay for it voluntarily. Providing things that are already in abundant supply does not contribute much value, even if they're things people claim to approve of. Of course, the reverse is also true: anything people willingly pay for has value to them.
> And your society's enforcement of laws and property rights, educated citizenry, and infrastructure were likely crucial to this.
As others have already pointed out, this doesn't hold water. The more wealth you have the more capable you are of providing these things for yourself. The rich already own most of the infrastructure, provide quite a bit of the financing for education, and are perfectly capable of hiring their own security. No, the ones who benefit most from having these things provided to them "for free" are those who would otherwise have a difficult time paying them on their own.
>> The ones who benefit most from society are the ones who manage to consume more than they earn.
> This is true in the case of those who inherit large fortunes/trust funds and don't work.
If someone is rich because of an inheritance, that inheritance was a gift. By taxing the estate you're punishing the one(s) earned that wealth. If they want to spend their earnings on their kids rather than themselves, who are you to judge?
The recipient of the inheritance is benefiting specifically from the work and prudent saving and investment of the ones who left them that inheritance, not from "society".
> If not having a job and being on food stamps/medicaid/unemployment was really all that great, you'd have far more people looking to get in on it.
I never said that being reliant on government handouts was pleasant, but there's really no question that these are the people the system is designed to benefit—at everyone else's expense. If it were purely a question of optimizing the material factors, achieving an acceptable standard of living with minimal effort, I think you'd see a lot more people relying on welfare. The only reason the system doesn't collapse under it own weight is that the more nebulous cost in self-respect of deliberately choosing to live as a parasitic freeloader is simply too high for most people to ignore.
I think you're right, we are not. It appears we hold very different views about everything being discussed here, and I don't think we'll find much common ground. In the interest of saving your time, and mine, I'll say no more. Have a good weekend :-)
It would be more accurate to say that the opportunity for profit indicates that society is not obtaining the maximum benefit from the available resources.
Under theoretical models of market economics you refer to there is no such thing as long-term economic profit. That's because profit is only realized by moving the economy closer to the ideal state, and in those theoretical perfect-information perfect-competition models you're already in the ideal state. In the non-theoretical world, however, things are never that ideal, and opportunities exist to earn a profit by addressing those deficiencies.
> It means you are benefitting from things that are bad for society, like imperfect information and barriers to entry.
I agree with you 100%. If society didn't have problems then there would be no opportunity to profit by offering solutions. That doesn't mean that you're responsible for those problems, however. Imperfect information is a fact of life, and providing better information is one perfectly legitimate way to earn a profit. Where barriers to entry exist, finding ways to break down those barriers is another way to profit.
Now, if you're creating new problems for society, such as spreading misinformation and erecting barriers to entry where none would naturally exist, that's obviously a problem. Negative externalities such as these require restitution to the victims. At this point we've left the economic realm, however, and crossed into the domain of politics.
10% of what is what the question reduces to.
What if I have an investment that increases in value? Does the gain count as income? What if I don't sell it?
What if I receive non-monetary compensation? Is that income? How valued?
What if I have a loan forgiven (as in the article)? Do I pay tax on the forgiven amount?
What if I lose money or spend money? Does that affect income, or am I being taxed on my gross income?
What if my company pays for my rent and other living expenses? Is that income?
If you don't close these "loopholes" then the 10% just becomes a penalty for the people who don't have the time or the knowledge to circumvent the rule, but for those that do, they just don't have any "income" so there's no problem. The closure of the loopholes creates more loopholes, that push the problem upstream until only the very wealthiest individuals can afford to not pay taxes.
Companies already engage in all sorts of shenanigans to show lower profits when it suits them. [1]
Taxing revenue goes against decades, maybe centuries, of established tax law and tradition, which roughly operates on the principle "The state makes money when you make money."
If you start taxing assets, you're going to need very invasive government bureaucracy that knows everything you own, down to the last paperclip.
Anyone who claims they can make taxes simpler is either lying or doesn't understand the subject.
As are business assets, which includes everything from the desk I'm sitting at; the chair I'm sitting on; to the computer I'm using.
Disposable supplies, such as paperclips, are not taxed but once a year I have to fill out paperwork--roughly a 10 page document--to pass onto my local government declaring said assets.
If you have never filed your own tax return before, go skim the instructions for form 1040[0] (117 pages). It includes a 10 page table for the graduated tax rate so most people don't need to do any arithmetic if they make <100,000. Besides a couple tables like that and some administrative pages, the rest is text and worksheets for figuring the amount to apply the rate to. And this is just the basic form that everyone files! There are additional forms someone might file for complex circumstances, let alone filings for all the kinds of trusts and corporations.
Comparisons are stupid but still:
Compare loopholes with game glitches. They are not intended, they break the system and every player is hated for using them.
Often "pro-loopholers" claim that everyone tries to optimize their tax, so why not big companies. But tax breaks which are used by the regular guy have clear implications: Support families, incentivize businesses, steer society in a certain direction. Loopholes are just edge cases that have not been thought of, thus have to be closed as soon as possible. They are the glitch in a perfect tax law. Don't exploit them!
That's not my experience, having played numerous competitive games. Bhopping in CS, wavedashing in melee, all of the various glitches necessary when speedrunning almost any game, are pretty universally loved and players that can perform them well are looked up to.
1) How do you know it's a loophole. Sure, there's probably some instances where it's pretty obvious what you're doing is a loophole. But others require you to be up-to-date on economic and political debates as well as being extremely well read in the tax law. Similarly, half of the people who signed the loophole into law may consider it not a loophole and the other half might consider it to be a loophole. In general there's no way to know.
2) What if part of the tax law was signed into law specifically as a favor to a corporate entity who funded a political candidate, but disguised with complicated language so it's not obvious who is getting the favor. In this instance realizing that you qualify for the tax reduction would be considered a loophole by the shady politician that created the law ... or a bonus because it will obfuscate who the kickback is going to.
In case 1), I feel a little bit uncomfortable with calling someone's action unethical when it depends on their ability to understand a complicated law AND the economic scenario and theory behind the law AND the minds of ALL politicians involved with making the law.
In case 2), I actively want everyone to abuse loopholes created for this purpose as much as possible. It's like watching someone burn themselves on a stove. If a politician is doing this sort of thing, I want it to blow up in their face so they learn not to try to do such things in the future.
I don't know if it's that simple. If we define a loophole as a tax exemption that was not intended to be used in a certain way by the lawmakers, then I don't think it's fair to call something a loophole if it has been widely known about and used for many years. It's on the lawmakers to clarify their intentions with new laws. That's literally their only job.
Devil is in the details.
Imagine it is you or your business, looking at a situation where a loophole will give you a truly consequential big tax savings, maybe 30% of the annual top line income (for you, your company, etc.). It is perfectly legal. What do you do?
OK, now your company is involved in something that promotes general good, social welfare, clean energy, etc. You are at the edge of survival, and using this legal loophole will make the difference keeping you alive for the next year, and actually help poor people or endangered species?
Or, you are merely in the finance division of an ordinary company, with a responsibility to deliver maximum shareholder value and maximum profits to go to employee bonuses, and your job depends on properly and legally maximizing income and avoiding taxes?
While it's easy to proclaim from on high "do what was intended", the actual situation is quite different.
The only solution is better laws, without the bugs, or laws written for situations (such as transaction taxes) that aren't so bug-prone.
But what counts as a loophole? There's a law that says you can deduct your interest income, so is doing that "using a loophole?" If that doesn't count as a loophole, then why does the double Irish arrangement count as a loophole? They are both just taking advantage of a law.
The obvious response to this dilemma is to bring up what lawmakers intended. That makes sense. But why not just have the lawmakers themselves clarify their intentions by closing things they consider to be loopholes? It seems unreasonable to expect each company to guess the intentions of each tax law.
Instead of a half-inch fuel line, Yunick created a two-inch fuel line that was 11 feet long, and held five gallons of gas.
(A car with more gas has to stop less often)
You could say he took a loophole. You could try, I'm sure, to argue "how could he have known he wasn't supposed to make a fuel line that way? What was the correct ethical size of a fuel line?". But it's pretty obvious to most people that took it too far, and specifications for fuel lines were created immediately after the gambit was discovered.
The two rulesets are following different ethical norms.
So a 2in x 11ft fuel line was "too far".
But what about a 1in x 6ft fuel line?
0.75in x 3ft?
Which of these is not too far?
> specifications for fuel lines were created immediately
It sounds like everyone recognized there was underspecification and it was remedied.
Are you suggesting that was wrong?
The difference with taxes is that there isn't some well-agreed upon precise amount or percentage of money that companies are supposed to pay. The rules are very complicated, even for companies that most people wouldn't consider to be "searching for loopholes."
In other words, it may be easy to get a lot of people to agree that Apple should be paying more taxes to the US, but how will they agree on an exact amount?
That has nothing to do with the US tax system.
>"Look... We (ireland) manipulate our tax rules for all sorts of gain^. How can it be ok for the country but not U2?"
Be that as it may (an admission of guilt, indeed), I find the argument to be absolutely reasonable. To my mind, the most efficient way to enforce any tax-related measure coming from the government is to have the more powerful citizens and entities abide by it systematically; then, they become the social moderators of the measure, increasing the value in respecting it.
I think people do sometimes overstate the amount of legal and ethical complexity in all this.
We can’t have it both ways. If loopholes are being intentionally put in we can’t blame people for taking advantage of loopholes.
I’d love a fair tax code but until we have one I won’t begrudge anyone for being smart about how they pay.
What I'm arguing is that the rules themselves don't have a spirit. Not all rules, but most tax rulesets. The complexity of transactions is largely a factor because of the complexity of the rules. They're complex because tax rules are constantly being fiddled with to benefit someone, encourage something or shield something. It's the kind of ruleset you end up with specifically because you're not being principled. The spirit of the tax rules that U2 is taking advantage of is exactly the type of whats-good-for-me-is-good-for-me spirit that he was being accused of. If there's a loophole in the rules to protect some industry or district that happened to have been politically important or connected at some point and some other groups manage to take advantage of it...
For principled rules (don't rape, murder or steal) it makes sense to appeal to the spirit. It's not necessarily inarguable but it exists. We can debate whether something constitutes theft sensibly, and appeal to the spirit of the rule. But, if there were weird rules specifically defining stealing commercial vehicles "not theft" because in the early 90s some economists theorized this would help balance insurance company finances somehow... the "spirit" of the "no stealing" rule becomes meaningless. All you have at that point is the rules in ink.
I'm not even talking about ethical complexity, mostly. This bleeds into empirical reality pretty directly. Where we have complicated and unprincipled tax rules we tend to have complicated and unprincipled avoidance, tax structuring, planning or pick your euphemism.
No, they would have called it a violation if it was found to be illegal in court, or in a settlement. Since that didn't happen, it would be wrong to call it a violation (for essentially technical reasons). I think you're at the very least missing that there is a category of things that are "illegal but not prosecutable". I also don't think your U2 example helps, because I still don't see what it has to do with the issue in the article.
Here's a simple razor: if the people who wrote the rules, upon learning of what you are doing, would likely have written the rules differently to make illegal what you are doing, it's against the "spirit" of the rules.
Example: if some tax code says, people who make below $100k must pay $10k in taxes, and people who make above $100k must pay $20k, paying someone $99,999 to avoid extra taxes is a foreseeable consequence and therefore not an unethical loophole. However, paying someone exactly $100k so they fall in neither bracket and thus need not pay any taxes is probably not what the policymakers intended; they would surely have amended the rules had they had this pointed out to them before enacting this tax code.
Of course, this requires being a judge of intent, but what ethical framework doesn't have grey areas?
the result is that you can shift earnings and inflate costs to reduce gains dodging taxes.
people should be able to claim expenses even for luxuries, but then nobody would have savings because those are capital inefficient.
so there are two different drives that make the tax code asymmetrical, even in principle, before those schemes for dodging fair taxation.
Should corporations be able take allowances for their dependents?
Each entity is treated differently because they are different.
If your tax avoidance can be successfully defended in court it seems completely ethical to me. Change the law if there is a problem with it.
Then perhaps the people writing the rules could tell us what they actually want? By writing it down?
Tax codes (or other laws) don't need to be executed by a computer. They need to be executed by an accountant/auditor/judge. So you can rely on well-defined but still human concepts like "security", "place of residence", "child care", "employment", "property improvement", "dependent", "exchange of goods", etc.
Just because it can't be fully specified in x86 doesn't having a clearly defined tax code is an absurd idea.
(Perhaps the razor would be better worded as "would rewrite" rather than "would have written differently".)
I know you're just making an example for demonstration, but you happened to choose a scenario that many believe is actually how tax brackets work.
Thus, it's worth reiterating: in the American tax system (and I imagine almost everywhere), we use marginal rates for income tax. The first 100k you earn would get taxed at the lower rate, and every incremental dollar above that would get taxed at the higher rate.
For example, play with this calculator: https://smartasset.com/investing/capital-gains-tax-calculato...
I can also confirm this with my own taxes. I only had $10k in long term capital gains last year, but the entire amount was taxed at 23.8% by the federal government.
What part am I not understanding? Is the idea that capital gains tax itself is marginal, but if your other income has already put you in that higher bracket, then you pay that rate?
Edit: playing with the knobs on the calculator seems to indicate that's what it is.
I understand that there is a limit to how much loss you can claim against your gains in the coming year, and that you can claim the loss as a deduction in following years up to a limited number of dollars each year, and limited number of years, but what I don't know is what the losses can be claimed against.
If I have capital losses this year, and I'm getting a refund this year for my income withholdings overpayment... then next year say I owe income taxes from underpayment, but I have that deduction from the previous year, can I cancel them out?
Or do I need to report a capital gain in the next year in order to be able to "use up" the previous year's loss as a deduction? My understanding is I can't use capital losses to pay income taxes, but I am not a CPA.
Perhaps this is a question for my accountant, and this should be a billable conversation, but this is just a question I've had since I started thinking about capital gains, and I've never been able to answer it for myself.
I think capital losses can completely cancel any capital gains - kind of obvious if you think about it - if you lose $10 on sales of stock A and gain $10 on sales of stock B you had not income from your activities.
In addition, you can apply $3,000 in losses to reduce ordinary income (not taxes directly) and carry the remainder to following years. So on sale of stock A you lost $5,000, on sale of stock B you gained $1,000. You can eliminate the gain, have $4,000 left, reduce your taxable income of $100,000 to $97,000 using $3,000 more of the loss, then have $1,000 left over for following years. In the next years I think you can use that loss to reduce gains then income in the same way.
Hope I’m right and that is clear.
https://taxmap.irs.gov/taxmap/instr/i1040gi-015.htm#w24811v1...
You'll see that there are breaks at 0% (Line 8/11), 15% (Line 15/20), and 20% (Line 23). Looking at the lead-up to line 23 is the clearest part.
Line 21 adds the part taxed at 0% (Line 11) and 15% (Line 19). Line 22 then subtracts that from the total gains (Line 12). That final amount is then taxed at 20%.
If those people would find it a problem, then just change the rules AGAIN to close said loophole, and go on with your day. I get tired of people talking about the spirit of the law.
Fact of the matter is, most politicians are incompetents and cannot make proper laws (everything is rushed through and hardly read twice).
Make. proper. laws. and stop complaining. Nearly all tax avoidance is the price of having incompetent politicians.
The remainder is the result of smart people who went ahead and understood the tax code well. They're to be applauded -- the pot of gold is waiting at the end of the rainbow for them, just like in any other profession.
If they can vote several times to get rid of Obamacare, and then when the vote actually matters and they don’t pass their vote, what is the “spirit”?
Honestly, I used to feel your way, but when you see both sides pull as much shifty crap over the years, I’m following the letter. Screw the spirit - I prefer to donate to charity than give those guys one more dime.
Sure you can. A judge could rule that you're breaking the spirit of the law issue appropriate fines. If this became common practice, people and companies would stop utilizing so many "loopholes".
I would be much in favor of flat rates with negative tax rates on first $X to help bridge the gap from minimum wage to living wage. And a better safety net for those who cannot work. My 2c.
But, let's stop worrying about "the wealthy"...just make a systems that's easy for everyone and funds the government. Soaking the rich shouldn't be the goal...a balanced government budget providing the basic services we together agree on should be the goal.
Is that your intention?
No it's an item that produces work, unlike a painting which I'm totally OK with making it impractical to invest in.
So yes, I consider “soaking the rich” a valid policy goal, despite your pejorative spin.
Real estate is wealth but inflation doesn't decrease its value. Stocks are wealth but inflation doesn't decrease their value.
We tax cancelled debt as income. Simple enough at first glance.
But when is debt cancelled vs restructured?
From the article:
> They often have trusts, foundations, limited liability companies, complex partnerships and overseas operations, all woven together to lower their tax bills.
Which is to say that...even if you set out a flat tax rate of X% it is possible to arrange situations where multiple trusts, companies, partnerships, etc, are arranged in such a way that even though they are operated for the benefit of an individual that individual has little to no real obligation via their engagement, and the interactions of those independent entities behave in such a way as to - on paper - present a reduced income then it becomes exceptionally hard to determine who owes what without devoting massive amounts of effort collecting all of these loosely related entities and analyzing flows of money.
LLCs maybe less so. Overseas operations much less so.
And look, the complexity of the tax code isn't (solely) a result of raw dysfunction. We decided that we didn't want to treat all income the same as all other income, and all organizations the same as all other organizations, in ways that are pretty defensible.
But that's generally true of the insanely high-complexity legal systems of modern countries: most individual decisions make sense, but the aggregate result of them is bewildering, easily-parasitized complexity.
You will always have problems when taking from the rich. 800 years ago It was barron rebellion (Magna Carta). Now its army of lawyers and gutted IRS. IMO War between taxman and rich is not entirely off table in future.
Except I fear being labeled "rich" as someone in the top 1% globally but making 85k a year in the US. If you want a Russian Revolution, where the farmers were the "rich", that's how you get a Russian Revolution.
Until people (citizens) know the dollar value of the loop holes, subsidies, lack of enforcement, penalties, etc., it's hard to have a rational conversation.
--
One of my state legislators changed our law to make that information public.
Previously, only the chair of the finance committee could see those numbers, any public disclosure was a felony (yes, resulting in jail time).
His reform is now model legislation being pushed in other jurisdictions.
The issue is that the complexity of the tax laws are a feature, not a bug. Each of those subsidies, exceptions, tweaks, hiccups, and exemptions is a payout to the members of the winning coalition in our electoral system. “Simple” tax laws would indicate an unresponsiveness by the government to the interests of the governed, by virtue of the fact that the governed have complex interests. Analyses that start and stop at “simple or complex” are thus doomed to be fruitless.
The anti-tax rich are totally fine with continuing to shovel government money into their pockets, via contracts, grants, etc. Which suggests that a greater share of the cost burden of enriching these people will fall to regular Americans.
After all, it was tax evasion of all things that brought down Al Capone.
All this brain power could be used to help with this sort of injustice, in what seems to be essentially a battle of brains (IRS lawyers vs rich people's top lawyers).
But then the gov needs to find a way to competitively pay for this stuff.
However, you are right that it is probably regressive, since the rich normally place more of their wealth percentage-wise in non-cash assets than poor people do.
Second, can you show your basis for thinking that? I would think it's the opposite: the wealthy aren't using the public schools, free health care, etc.
The upper class has their own private version of pretty much everything.
It is the difference between not being able to afford childcare and not being able to afford a second vacation home.
It's fine to think that, but normally when people are talking about tax progressiveness, they are thinking about the fractional tax on dollars, not "utils". Otherwise, you'd also call our existing, progressive taxation scheme "regressive," since it still probably taxes poor people's utils at a higher rate than rich people. And there would probably not anywhere in the world be a tax scheme that can properly be called progressive.
One good rule of thumb, IMO, is that when you want to change the meaning of a classifier such that all extant instances of the classified type fall into a single bucket, that's probably not a useful change. YMMV.
The cash-poor with few or no financial holdings or savings, are largely unaffected, as are those holding non-cash assets (real property, capital, commodities, stocks).
It seems like rapid inflation would really only hurt the poor and middle class.
Also I feel that it is immoral to steal from the future generations (my children) via inflation. Cash investments should be allowed to gain value via productivity gains, instead of constantly cashing in our productivity gains for Govt largess. We'd probably have that "4-hour work week" by now if it weren't for inflationary policies stealing gains.
I know benefits are popular, and the gov't recklessness (defense budgets for example) today makes uninformed people feel like it's a gravy train out there...but really it's a house of cards, arguably steered by IYIs (IMHO).
(inb4: "Do you want Hitler and Nazis? Because that's literally how we got Hitler and Nazis!" /s)
Inflation as a tax is inherently regressive, as the rich are usually the first to hold the newer money, and the poor the last to hold it, long after all the information about the new size of the money supply has already leaked out to the market.
And it is a tax on holding the circulating currency. The rich often trade their currency for ownership in ventures that produce passive income, or, at worst, low-risk government bonds. In order for those investments to sell, they will have to offer a rate of return exceeding the expected rate of inflation. If inflation is used in place of all taxes, then just reading the government's budget is sufficient to predict the rate of inflation.
The poor see annual wage increases near the expected rate of inflation, if they have sufficient labor-market power, or below it if they don't.
Monetary inflation is a tax on holding dollars. The rich don't hold much of their wealth in dollars, percentage-wise. They hold ownership of productive assets and inherently valuable properties. A tax on money doesn't touch those who get all the money they need from ownership of their wealth.
Whoever is angrily downvoting this is welcome to explain why they think allocating brainpower to the IRS is the best way to maximize welfare.
This is, quite literally, a won battle at this point. The only way to fix it is for the ancient republican party to either collapse or iterate into something that serves America's interests instead of ultra-wealthy interests.
I'll counter and say the only way to fix it is to either go to pre-1917 no income tax, and have a smaller government (do we really need $700BN/yr on defense around the world?), or move to a flat % wealth or income tax (if you are pro-progressive, set an offset that neutralizes to $0 at say $50k/year, but I am against).
We can do this without all the loopholes and misaligned incentives that causes finger pointing in all directions. And we won't need the CompSci majors from CalTech!
On either side of those "elitist liberals" are where I see the biggest concentration of conservative political views. There's the stoic >$50k crowd who preach personal responsibility between drags off a Pall Mall while Rosanne reruns play softly in the background but carry balances on all their debts and haven't had a raise or a job interview in 10 years. They think the world should be like them, content to stay near the bottom because they think they're still in the middle. Probably lower-mid level education with a proclivity to disdain any social spending at all with an emphasis on "WWJD?" These people are conservative because their own brand of low-effort thought aligns with typical knee-jerk conservative policies like "shut down the entire border" or "trickle down economics creates jobs (that aren't worth having)." They only know about the social conservative policies that (they believe) affect them. Like women's rights (or lack of), LBTQ rights, anti-discrimination, gun laws. Economically they have no idea what's going on and they just trust whoever tells them they get to keep their guns.
On the other side of the "elitist liberals" are the ultra-wealthy conservatives. They are the engines of the party and use their resources and influence to concoct the low-effort policies that rope in the lower-class conservatives. Then they focus their hoarde on how "amoral" the left is while these ultra-wealthy conservatives empty all of the social services the non-stoic poor people rely on to save themselves money and taxes. They use their lower-education counterparts as pawns and fodder to keep the liberals busy talking about non-issues while they dismantle safety nets and redirect government resources into the private sector. They don't believe half of the things their own party tells poor people, but they all rub each other off and that's what keeps the party going.
the simple idea of rich republicans vs. average to poor democrats has some truth, but there's also the pesky fact of a large number of liberal Democratic billionaires which complicates the picture.
i think it's because these ultra-wealthy folks can extract their needs from (aka corrupt) any politician. D vs R doesn't really matter much.
Actions speak louder than words. Endorsing a democratic candidate while paying your warehouse employees barely enough to survive without food stamps doesn't exactly quality you for "liberal of the year."
> i think it's because these ultra-wealthy folks can extract their needs from (aka corrupt) any politician. D vs R doesn't really matter much.
This is 100% true, and also why I did not/do not support Hilary Clinton for any elected office.
of course, even that idealism may evaporate if it means an intelligent, meritorious poor or disadvantaged student might take the place of a favored son at an elite university.
are the wealthy really "D" or "R" at all? it seems to me they're "W" first and foremost. also narcissistic. really narcissistic. presidentially narcissistic.
https://www.latimes.com/projects/la-pol-ca-california-neighb...
The problem is a democratic party one -- they need to figure out a way to grow beyond their urban core to appeal to some subset of rural and other voters. You need a better message to control the Senate.
Trump said he could shoot someone on fifth avenue and not lose a single voter. And he's right.
If we can change our voting system, then maybe I can give you better advice. Until then, game theory suggests voting Democrat.
> proud white Americans
Better be careful here. Proud to be an American is okay. Proud to be white... why should anyone be proud of the color of their skin? Even if it should be okay (but honestly white people have an awful history, as do most skin colors if you look back far enough), it's so arbitrary. There's nothing to be proud of, you just have specific pigmentation.
I cannot argue with any of this, and highlights some of my flawed thinking. I guess I thought of "white americans" as an abstraction of Americans of European decent. So I guess, I don't know the proper way to convey "Someone who is proud of their European heritage, and proud of being an American."
You apparently do care about groups over individuals, using that classification.
The GOP is the party of grievance. The democrats are a big tent, but smaller groups get lost in the crowd.
Those views of mine were developed over years of observation and represent my true opinion of the Republican party. If you feel I'm misrepresenting anything feel free to get specific about your beliefs.
Also, the IRS is big, the commissioner does not decide cases, however it issues policy memos, which have a large influence on enforcement. And these are usually public and or can be FOIA-ed.
So all in all, their pick is very much a political ally, and that he/she happens to be a tax specialist is just a convenient factor. (So that the man is fit to deal with IRS stuff.)
Trump only got 46% of the popular vote.
The Republican Senate majority represents 18% of the population.
Can you name a Democrat who proudly proclaimed that not paying taxes made them "smart?" Or a Democratic equivalent to Grover Norquist saying he wanted to reduce the size of government enough to be able to "drown it in a bathtub?"
What ever else the Republican party might stand for, they obviously also stand for plutocracy, albeit with a veneer of libertarian and populist rhetoric that leads the rank and file to believe they're doing it for the sake of the common people.
So I agree Whataboutism isn't attractive.
[1]: https://en.wikipedia.org/wiki/Grover_Norquist#Taxpayer_Prote...
Legitimate question, would it be viewed as "not extremist" if it came from another group such Libertarians, or SJWs?
The way I see it, if you default to working for or starting yet another ad-tech/surveillance company, it's a sign that you aren't creative and probably don't have anything original or useful to contribute to society. If they weren't on the ad-tech bandwagon, they'd just be going for the next path of least resistance.
I used to work in a call center. Scripts and giving an ID is brutal.
It generally has a negative connotation for the folks taking the calls as well. They know the process is there for someone to come down on them if someone complains. Any positive reinforcement is at best a virtual high five as people are FAR more likely to complain than complement, even if you do a great job.
I worked at a call center once where I got a negative report when a report came back from someone doing follow up customer satisfaction surveys. The quote from the person they called: "Please stop calling this number, I am not Joe and i don't own a X computer."
Nobody could do anything about it, the report stood... it was not possible to remove such an obviously bogus report because management was worried someone might abuse that system. Call centers are metrics hell.
In Europe, you can do something about it. The magic words are something like "In terms of General Data Protection Regulation (GDPR) I invoke my right to be forgotten. Please erase this data, and you will be in violation if you keep calling me".
Then it's the other way around - management would be right to be worried if they're not complying with that.
I'm not sure GDPR applies to employer's holding information about employees.
Otherwise I would expect you'd have the absurdity of:
"Delete all my data!"
"See I didn't do anything wrong, you've got nothing on me!"
if I buy a fridge from you, I can't then insist on right to be forgotten and then ask for repairs under warranty later. The seller has a right to keep a record of purchase for that legitimate interest. https://ico.org.uk/for-organisations/guide-to-data-protectio...
That would apply to employee, yes.
Above:
> "Please stop calling this number, I am not Joe and i don't own a X computer."
Right, I don't understand how that describes an employee. To me that seems to describe a person who could assert their rights under the GDPR to not be called any more.
But overall problem I described was not really a customer's problem, it is the employee's problem having feedback like that reflect their work.
I understand what you're saying as an aside about that one line.
Oh I see. Yes, that's an internal process problem. Customers screaming about GDPR would probably make that employee's life worse, to be honest, if the process was not improved.
I'm guessing they'd happily sell you a fake or worthless warranty for a non-existent Accord.
I'd love it if each call I had to make to a company started with a call ID number and then I got emailed a transcript and recording afterward.
I think some call centres give staff pseudonyms so they're unique.
They don't need it, but I do.
> you can automatically keep track of which customers were connected to which call centre person
But I want to keep track. I don't care how they keep track.
I want to be able to say 'on call XYZ we agreed this' rather than saying 'I spoke to someone called John Smith on Tuesday please look it up in your log'.
“<Caller ID says your perferred name, and you were talking with Mr ExampleName about your contract> Hello Mr Seaton, how can I help you today with your contract?”
I've always assumed this isn't the norm because incompetence, purposeful obfuscation, or both.
The logging system should already track the call that way, exposing some unique ID (or some hash of it) to the customer for record keeping purposes is unlikely to require major engineering effort.
[NB I seem to remember that David Brin's novel Earth has something like this where WW3 is everyone-vs-Switzerland - or something like that].
That's a feature, not a bug, of the LVT. The entire point is to tax something which is inelastic and won't cause deadweight losses by people not creating it (capital like physical or equity, or human capital, or labor for that matter). We want there to be lots of that kind of capital.
(I've looked for wealth distribution by asset class. It's remarkably hard to find.)
LVT is assessed on unimproved value.
The former discourages development & density, the latter encourages it.
Think of income taxes as regulatory capture by those who already have money. The higher the taxes, the greater wealth inequality becomes. Once you have a lot of wealth, you can afford to stop and start new efforts at getting income, while everyone else is stuck taking a salary (and if they're lucky, stock / 401ks). That flexibility lets them stay ahead of the tax laws that keep everyone else down.
I've known wealthy people, but not plutocrats, who the IRS has gone after. Auditing (harassing) them year after year. Referring them to be investigated by DEA, BATF, etc. It's totally insane how unaccountable the IRS is.
Of course someone in the gun sites of the IRS is going to avail themselves of the best legal and accounting talent they can get. If you have lots of money, you are in their sites.
Food purchases get taxed at 1%
Car purchases get taxed at 2%
First home purchases get taxed at 3%
Second home purchases get taxed at 6%
Private airplane purchases get taxed at 99%
that sort of thing
Make it flat at 20% for any time money is traded for something. This would be for toilet paper to a house to a political donation and include capital gains profits. Everything is taxed at 20%.
Then eliminate income and corporate taxes. States can define other taxes like local income tax, property tax etc.
Then every adult gets a check for 20% of the agreed upon poverty level in January.
Now taxes are not tied to income, to only those that work or capitalize, etc.
You'd need to exclude resale of used items, unless it's your intent to kill the market for used goods and ensure that they end up straight in the trash. With a 20% sales tax on used items you might as well buy new instead, especially for durable goods which wouldn't trade at much of a discount.
Apart from that change, what you're describing is essentially the "Fair Tax", except that they calculated that the rate would need to be more like 30% to remain revenue-neutral with the current income tax scheme.
I don't see why this follows. For example, most states currently charge sales tax on the sales of used cars and there seems to be a thriving market for used cars. Do you believe that raising this rate from 5-10% to 20% would significantly impact the sales of used vehicles?
especially for durable goods which wouldn't trade at much of a discount
While I don't think it's a likely outcome, suppose that for some reason all buyers balked at paying a 20% tax. I think it's likely that this would cause sellers to reduce their asking price to clear the market. Why do you think sellers would throw the item in the trash rather than reducing the price?
First, it would be raised by 20%, to 25-30%. Adding a federal sales taxes wouldn't negate the existing state taxes.
Second, vehicles are a special case in the tax code. When you trade in a used vehicle you typically only pay the tax once, on the value of the new vehicle. (Technically, one tax on the trade-in value and another on whatever extra you paid for the new vehicle to make up the difference.) Under your scheme there would be a 20% federal tax on the value of the old vehicle plus another 20% federal tax on the value of the replacement. (Unless you don't intend to apply the sales tax to barter... with the predictable consequence that all significant transactions thereafter will avoid any actual exchange of currency.)
More importantly, used cars tend to be much cheaper than new ones. There's some basis to that joke about losing half the value just driving the car off the lot. Even a 25-30% tax wouldn't make up for that much of a difference in price, though it would make used vehicle trades more expensive and probably put a damper on the market. Do you believe that imposing an extra cost of anywhere from hundreds to thousands of dollars in taxes on any used vehicle sale wouldn't significantly impact the sales of used vehicles? I think people would be more likely to buy their vehicles new, when they can afford it, and hold on to them longer. The ones that would be available used would consequently tend to be older and in worse condition, on average.
> Why do you think sellers would throw the item in the trash rather than reducing the price?
How much do you think they can reduce the price before it isn't worth the trouble? Finding a buyer is not necessarily an effortless process, and given that buyers aren't likely to want to pay more (incl. tax) than they do now the seller will have to lower their pre-tax price by at least 16% to make the sale. I already see perfectly good items sitting out on the curb with a "free" sign in less-than-ideal weather because they'd be too much trouble to sell; reducing the incentive to advertise and locate someone who values the item will only make that more prevalent.
Besides, do you really want individuals collecting and remitting sales tax on behalf of the federal government? Sales of used items are much more likely to be person-to-person. Taxes on the sales of new items tend to be collected by registered businesses, which makes it a more manageable problem.
And instead of buying that private airplane, lease it for 20 years from Boeing?
That's kind of the point of the article: There are ways to structure purchases to avoid this kind of thing.
He specifically differentiated first from second homes, so it does matter who buys it.
> Regarding leasing, I'm sure that provisions could be made for that sort of thing.
It can get complicated fast, what if you share the plane? Presumably you only pay your portion. What if the plane is idle most of the time? Presumably Boeing won't pay the tax just for making a plane.
What if I build a home instead of buy it? What if I buy a $20,000 home and upgrade it?
This stuff gets really complicated very fast, what seems "oh it's simple, do abc", suddenly isn't.
Alternatively, an employer of last resort effecting a living minimum wage.
(Your consumption tax proposal would also have to mark political donations and ad spending as "consumption", or you're making the existent problems in that area far worse)
Or exim taxes on international money transfers.
Or taxes on bank balances, particularly offshore.
https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_V/...
https://www.yang2020.com/policies/value-added-tax/
He also wants to increase the IRS's funding which would help go after those super rich people and their lawyers.
Or exim taxes on international money transfers.
Or taxes on bank balances, particularly offshore.
https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_V/...
Someone from an "aggressive accountant" will somehow find you. They will tell you what kind of people they represent, and why you are one of them.
Then they will draw an immensely complicated block diagram, like the UML diagram of a large enterprise application, except none of the blocks means anything to you.
There's always some special rule they are using. One time it hinged on me, a guy who can't play or sing a note, spending an hour or two each week critiquing the lyrics of a well known rap artist. Another time it hinged on me writing and publishing poetry. Yet another one was related to films. I've got zero skill in anything artistic, so obviously this was not going to be legit.
It is what the guy presents it as, a tax dodge. The guy also says your winning are dependent on running a legal gauntlet; Some schemes work, others don't and you end up paying the tax bill, the accountants, and a penalty.
Luckily I wasn't tempted to participate in any of these schemes. You know why you are participating in these schemes, and it's not a sincere desire to improve rap music. And I did hear about a friend of a friend recently who tried and lost, and is now in deep trouble.
That's just the tip of the iceberg as well. All sorts of other tax games are played by people way wealthier than me, as well as corporate entities.
2. Reading through all of this, I hold no sympathy to the IRS given this situation. The government policies described, from the requests of disclosure to the taxation levied in this specific case appear downright abusive.
Collecting a billion dollars on a loan that really hasn’t been forgiven and driving the company into bankruptcy seems insane. The IRS would have more of a case if they looked at the situation at the term of the loan and found it hadn’t been repaid.
If they got their billions of taxes they'd have bankrupted this guy and put Continental Tire and a bunch of other companies out of business.
There would be a ton of lost jobs and a lot of value in society destroyed.
All because they couldn't back out of a deal because of the law in the first place.
Definitely a weird international thing going on here too with the IRS potentially bankrupting a German company and the Germans being stuck with the fallout.
But now at a certain level of wealth you can turn yourself into an international corporation. Who isn’t really a citizen of any one country.
No one is going to ban international business. So the ultra rich will probably continue to get away with this. And the upper class (100k - 500k a year) will bear the tax burden.
Our society has run into a fundamental problem - there are always a certain number of people who will cheat on their taxes. According to research, these people are disproportionately the ultrawealthy. The real problem comes up when the government does not do proper audits and doesn't enforce penalties because then good and honest people see the cheaters get away with it. This leads to a quick erosion of morals and integrity in the whole system.
Making all tax returns public makes it very easy for anyone to spot the cheaters. Even pathological liars and cheaters will have a strong disincentive against cheating and will be quickly punished if they do.
But I whole heartedly agree, if you want to solve any form of corruption or “some are more equal than others”, public accountability and immutable/verifiable record keeping is the best counter.
Crowd fund some under employed accountants and geeks and sleuths to dig into some of the big boys.
--
Is there some kind of bounty program exposing tax cheats? Like that small law group that's made millions whistleblowing big pharma.
Problem solved.
I mean, that's pretty dead.
[...]
Being told that there are no social classes in the place where the interviewee lives is an old experience for sociologists. "'We don't have classes in our town' almost invariably is the first remark recorded by the investigator," reports Leonard Reissman, author of Class in American Life (1959). "Once that has been uttered and is out of the way, the class divisions in the town can be recorded with what seems to be an amazing degree of agreement among the good citizens of the community."
[...]
The special hazards attending the class situation in America, where movement appears so fluid and where the prizes seem available to anyone who's lucky, are disappointment, and, following close on that, envy. Because the myth conveys the impression that you can readily earn your way upward, disillusion and bitterness are particularly strong when you find yourself trapped in a class system you've been half persuaded isn't important. When in middle life some people discover that certain limits have been placed on their capacity to ascend socially by such apparent irrelevancies as heredity, early environment, and the social class of their immediate forebears, they go into something like despair, which, if generally secret, is no less destructive.
-- from Paul Fussell's Class: A Guide Through the American Status System, Chapter 1, "A Touchy Subject" (typed in from the book, any errors probably mine)
It doesn't so much matter that their attitudes and behaviors are strictly better, but that conforming to them and knowing about the things they know and being able to relate to them that way lets you network on a level those "under" them cannot, reinforcing the class hierarchy. You may be able to get a country club sponsorship on the power of your income, but someone else might swing it by being able to talk sailing or swapping prep school stories with their boss—and oh hey you play squash my brother needs a partner, you're not a member there well we'll have to fix that, you know there's a position open with one of our funds upstairs that I think you'd suit just fine, let me make a call or two...
Secondly, casting aspersions based on class-membership is "all the way out" as a basis for understanding modern economy IMO, either way .. it is prejuidice in another form
Misdirection. Not money, ot more properly, wealth, but power.
Much the topic of Smith's Wealth of Nations, actually. Though modern economics likes to pretend otherwise.
* 1040 (including Schedule 4, to report Form 8959 bits on)
* 6251 (they probably don't owe AMT now, but need to fill out the form to prove it)
* 8959 (because wage income over $250k).
If they have any savings that's not cash under a mattress, probably add form 8960 and 1040 Schedule B or D or both (but now we have non-W2 income, of course). If they own a house, likely add Schedule A. If they have kids, probably add Schedule 3 for the child care credit and form 2441.
Plus the various worksheets involved (child credit, not to be confused with the child care credit, the actual tax computation worksheet, etc), which I guess don't have to be filed with the IRS, at least.
Now I agree that this is not really complicated in the grand scheme of things. I also agree that for people at lower income levels the 1040 is the only thing involved if no kids, add form 2441 if they have kids and are not stay-at-home parenting.
8 pages of EIC credit table. 10 pages of tax table. Longish, but pretty simple.
Now there are in fact things in there that are not simple. Filing status is usually simple, unless you try to figure out "head of household", in which case it's not. But in general, the 1040 is quite simple as tax forms go, and the instructions are mostly long because they are written out with a lot of detail and to be easy to follow, and have to cover various edge cases.
Then the corporations and the state would together dictate what you had to do to be eligible for the welfare.
Now, 25% of what?
Oh wait that’s the problem ain’t it. As the article notes in extreme detail there’s a lot of ways to argue about what is and isn’t income.
Defining what 'income' really is or what an allowable 'expense' is, not so easy. Should two farmers helping each other out 1099 each other? Can a wealthy but chronically ill executive write off his RN wife's presence on a business trip?
...and then all the corner cases go to tax court.
Thing is, life is more complicated than law.
But most of the time, in the course of getting passed, proposed simplifications become additions instead of replacements. It's depressing.
To me, it's like the handwaving you hear about simply using a consumption tax. No doubt, people would find an infinite number of ways to game the system toot sweet.
Of course, implementing socially desirable behavior via tax law just throws even more complexity in the mix. Generally, I'd say that the larger the government share of GDP, the more opportunity for craziness. If your underlying culture doesn't reign anything in, mayhem results.
step 1. Hire a team of accountants and legal advisors
Nearly 100% of my income is W2 labor, and I always do my own taxes. A long time ago I thought I'd hire a CPA to do my taxes, to double check that I was doing mine optimally. Total waste of money. He cost about $400 (I understand that's a pretty good bargain these days), and found no additional deductions, and was kind of a pain to deal with. For working class and middle class people, there really aren't that many ways to get creative with your income to reduce your tax bill.
I'm sure your accountant could have set up a charity, put most of your assets there, the charity would hire yourself as an independent contractor... But it will cost more than it's worth.
Gains from financial transactions (capital gains, debt, etc.) are much more complexly handled and more ambiguous.
* Accounting creativity can be employed with capital gains taxes because it is only paid on asset sale by the asset seller. So you can "move" the taxes around by donating and gifting. Move states to avoid high state income taxes. Better yet, if you die, your heirs never pay taxes -- this leads to all sorts of trust structuring that allows basis step up and estate tax bypass.
* Debt (this article) is another example. If you read the article, cancelled debt is taxable, but you can make it a bit ambiguous whether the debt was cancelled or just merely restructured.