Every possible means should be brought to bear in punishing these enablers of tax evasion. Steal from the rest of us at such a scale? Prepare to feel pain.
Wow, more classically liberal than the man himself Adam Smith, who basically invented the concept of graduated taxation because he laid out how such systems would work and what would end up happening without it.
How will you pay for a functional society then? All these people that are rich, it is rich because they live in very complex, healthy, educated societies. That does not come from the air.
How will you make sure that one person does not accumulate all world wealth? Without progressive taxation, wealth accumulates naturally as having more money makes it even easier to make even more money. How could such a system work?
I would like to understand your position. Why paying for the sustain the society where you live in is unethical?
Income tax is theft since it is the state usurping the will of the individual, and literally saps the agency one might have over ones progress - Expenditure tax is a better solution, since it allows the individual to maintain agency over their wealth, while also allowing the state to gain income on equal ground.
Really, its time for societies to evolve beyond state-supported theft through threat of force, and grant individuals more agency over how they use their wealth. The current system is criminal.
To be able to run a stable state that actually allows anyone to have opportunities, taxation would have to be pretty high. After all, you need well funded public schools, child services, police/emergency service and a health system at the very least - otherwise you just end up with a bisected society of rich and poor.
But then you need to have a high taxation rate on expenditure (most countries have a VAT, for example, and it would not be enough by itself). So again, this smothers the poors, and they could not, for example, gain wealth themselves.
Why does this imply that taxation is not theft?
I think the most important argument is, that people have accumulated their wealth in either of two ways. First, they did not earn it themselves. Then, one could reasonably argue that some taxation is fair. Second, they accumulated it themselves, such as by starting a business. Then you argue that taxation is theft. However, they earned their money in the existing society. Since they were not rich, they, at that time, used all public services, education, markets and stability provided by the system, while also paying relatively little. They are rich, in part because of a consumer surplus society affords by non-regressive taxation. It is therefore fair, and and not theft, that they are to pay more of their wealth, which they gained within a beneficial system of taxation, to keep that same system stable for the next generation.
Well, overlooking the obvious straw man argument, and ignoring that this has been successfully implemented already, in some of the most diverse poverty vs. wealth distribution countries in the world (India and Sri Lanka) .. this would only be the case if expenditure taxes weren't scaled to target the higher-end luxury items, but instead applied flat across society. Clearly, this is not the case with income tax - and it wouldn't be the case, necessarily, with an expenditure tax. Luxury items would be taxed at higher rates than basic life-survival items. Such a tax would be progressively or proportionally applied across society, such that the wealthy simply pay more for their luxuries, while the poor pay less for their essentials.
In a properly designed expenditure-tax system, people still get wealthy by hard work or inheritance/exploitation - but when they try to spend that wealth, they are equalised by the expenditure tax compared to the less wealthy.
And in this case its not theft, like income tax, because people still will have the choice on whether to spend their money, however it is earned, on luxury items (high tax rate) or survival items (low tax rate). The point is, they have the choice, and ~50% of their life is not spent just working for the state, as is the case with income tax repression.
The only issue, is that it is 'difficult to administer' - but I see no reason to make tax bureaucrats lives easier. We already have sales tax in many states - eradicating income tax would mean freeing resources up to expand the scope of those sales taxes into a broader taxation on expenditure.
Income tax results in people making the conscious decision to not make more money - because, after all, most of it will go to the government. Expenditure tax encourages people to save, and invest wisely in their local economy, and thus gives state managers the ability to direct those investments according to reduced tax rates around the commodities/services for which the state wants to promote growth.
The current mess is repressive. People consciously don't work to improve their conditions in life, when half of that life is given over, immediately, to the government. This causes a lot of resentment over society, and promotes criminal tax avoidance all over the scale.
Curious how you fund police in this dreamworld...
> and if people can escape it I'm happy for them.
Yep, nothing like running off with a pile of cash and doing nothing to support the system from which you extracted it, leaving everyone else to fend for themselves.
Sure, donations are perfectly legal and an above-board way to evade paying taxes to the USA, but it's still tax avoidance and I could choose not to itemize, especially if my donations were 100% pure of heart.
Similarly, emigrating to Malta, or Bermuda, etc. is perfectly legal and if I do so for the weather, or to avoid paying taxes, is not one just as legal as the other? Even moving from New York to Texas so my combined state and city income taxes drop from 10% to 0% has a whiff of tax avoidance.
Simply put, people vote with their feet, and the rich have the best shoes money can buy.
No. You're mixing up terms. That's avoiding taxes. There's a critical distinction in the tax world between avoiding taxes and evading taxes. One is legal and common, one can send you to prison and get you a lifetime of close IRS scrutiny.
Simplified, evading means to not pay what you actually owe (what you should be paying). Avoiding means to use entirely legal means - such as deductions - to not owe the taxes in the first place. To evade taxes you always have to do something illegal. In avoiding taxes you should never break the law.
So tax deductible donations show what is important for a society at large. And society profits.
Leaving a country to evade taxes doesn't help society at large. People do this after they profit of the infrastructure and all other stuff society provided and paid for with taxes.
I really don't see how tax deductions for donations aren't glorified tax evasion strategies.
[0] https://www.snopes.com/fact-check/nra-tax-exempt-non-profit/
You could argue it's tax avoidance, but it's not even that, it's just making a donation, and that's how they are taxed. It's part of your normal activity: taxes are higher on some things than others.
Creating a non-profit as a special purpose vehicle would be 'tax avoidance' but if it's legal, it's legal.
The OP's comments are perfectly just i.e. punishing tax havens because there's deep incentive for them to facilitate actual tax evasion, moreover, they enable the stockpiling of surpluses generated elsewhere. Especially for those part of a 'common market' - you can't have taxes at 1% in Malta and 50% and France, it's not going to work.
Dubai does not have any tax deals with the US, it's built on utterly shady tax dealings. Much of the money poured into Afghanistan by the US for reconstruction ends up there, for example. It's super duper dirty.
People are not fleeing China because of 'taxation' in the classical sense, they're fleeing for a pile of other, obvious reasons.
People are however fleeing France, partly due to 'taxation' and this is an issue ... they have some issues with competitively and their solution of 'just tax the rich' will not work out if that's it.
Worth considering: normalize the migration data against 'regular people' and what you'll find is that still a lot of Chinese are moving to Australia/Canada, and in general people are moving there, the US anyhow!
I'll bet the one that sticks out a little is France. I don't suggest a ton of people are leaving, net.
Right, but if it's perfectly legal to emigrate to a lower-tax jurisdiction, is that not "part of normal activity"?
I think there's an argument to remove the tax deduction for donations. If you are doing it altruistically, then you still owe your fair share to the government, no?
I have been on vacations on Malta. It is a nice place for a vacation, but it is not the most interesting place in the world to live in.
Rich people are rich because they have access to luxury items, health care, transportations systems, etc. For all that to exist a complex society is needed where citizens have education, transport, health care, food safety, clean water, rule of law... and all that costs money, a lot of it.
If rich people leave that society, how rich are they? How easy is to just tax the business that produces wealth?
Malta, as a nice place as it is, cannot produce super-rich people. Is Malta decides to isolate itself it just becomes an inhabitable rock in the middle of the Mediterranean. The same goes for more tax havens.
Rich people will vote with their feet, but the economy will not care. Taxes are needed to generate any wealth independently of the tantrum of a few rich people.
So you want to prevent rich people from moving to low-tax jurisdictions for their own good? How kind of you!
Given your comment, I assume you think 0% taxation is also infeasible.
So we agree that somewhere above 0% and below 100% taxation there is some optimal amount. However, given the circumstances of the country and our personal philosophies, we may disagree on that optimal level.
The fact that free people can move to lower (or higher!) tax jurisdictions, and judge the quality of those services based on how much they pay and what they get in return, is a good thing in my opinion. The competition keeps politicians from elevating taxation to that unworkable 100%.
I think few would disagree that if you move to a new jurisdiction to benefit from a different tax scheme, that's fine. But therein lies two problems: First, so few people are able to move; the wealthy are disproportionally able to have their pick of tax jurisdictions so they can extract benefits from one society and then jump ship when it suits them without returning benefits to that society.
Second is when people move on "paper" to benefit from another jurisdiction but don't physically move in reality. Thus they continue to benefit from the society they nominally "left" but don't pay into it. That's the kind of tax avoidance / evasion that most people have a problem with.
What jurisdiction allows this?
The US is particularly draconian by taxing worldwide income; every other country that I know of will tax your income if you live there.
Although really most of the tax avoidance schemes rely on moving one's income and assets to a company and then playing games with the "residency" of the company.
Let me tell you a little story. In 2013, Croatia had some 350,000 unemployed. In a country of about 4 million people, that is a lot. Today, we have the lowest unemployment rate in the EU. What happened?
Many of those people (and even some that were employed) left for Germany and Ireland. It's gotten to the point that the government has increased non-EU worker quotas in order to plug the hole - despite being part of the EU and having access to its huge labor market!
So, as you can see, at least in the EU, people can and do move.
What does this have to do with taxes? Germany does not have a problem with tens or even hundreds of thousands of skilled migrants emigrating to fuel its economy. But God forbid that some billionaire decides to leave Germany for Malta - that's an atrocity and a EU-wide problem that MUST be solved. Despite the fact that the EU is based on the free movement of labor, goods AND capital.
I think that in the future, more and more people are going to be voting with their feet - and not just the rich. Between gerrymandering, vote buying, corporate lobbying, vocal minorities, apathetic voters and defective electoral systems (first past the post/two party systems) many have lost faith in democracy.
You are making a very big assumption here - that paying taxes guarantees you these things. I assure you, it does not.
In fact, I believe that public services and the amount of tax you pay have been out of sync for a very long time - that is, that it is quite possible to pay a lot of tax and get none (or only a few) of those services.
It is definitely possible to pay a lot of tax and get nothing and that is something to be opposed. America’s existence is testament to the resentment that unjust taxation evokes.
All throughout history, any society of sufficient complexity develops strong hierarchies, with a small ruling elite. Throughout history those ruling elites almost never had a problem exerting sufficient oppression on the majority of the population so as to remain rich and powerful. Indeed it has been argues that the ruling elites of yesteryear were substantially more wealthy in comparison with the rest of the population than today's rich. Ruling families tend to last centuries (e.g. the almost 2000 year rule of Europe by a few families like the House of Habsburg which ruled Austria for > 600 years, or ongoing 2.5K years ruling family in Japan, the Shang dynasty ruled in China for 554 years. House of Saud is ruling for nearly 3 centuries. Etc etc.) We remember the French revolution, because it's so rare.
Contrary to what you claim ("expensive institutions"), oppressing a large number of people into submission is cheap, provided the oppressors cooperate tightly and efficiently. (See also the prevalence of slavery in almost all known societies before industrialisation).
It has been argued that by letting the rich get off with some tax evasion, the population buys them off, buys their acceptance of democracy and low-levels of oppression.
Hard to believe that Bezos or Gates would find it difficult to hire enough mercenaries to defend their position at the top of the social hierarchy.
History certainly seems to suggest that the ruling class virtually always manage to do this. The main way in which the ruling class looses power has been being displaced by other members of the ruling class, which is why dictators are always especially suspicious of their own army and secret service leaders. For example, after the collapse of the Soviet Union, Russia became a fiefdom of 4 oligarchs pretty quickly, and they were displaced by a high-ranking ex-KGB operative (Putin) and his people, i.e. by a gang from another power center.
What historical evidence to the contrary would you put forward?
My point is that the kind of elite we get in a context of peace and security is very different from the kind we get outside of it. Russia is run by a former member of the security forces, and that is often what happens in a time of disorder. How many other former leaders of Russia were drawn from the security forces, and when?
Yeltsin, a civil engineer, followed Gorbachev in 1991 as the first President of Russia. Putin followed Yeltsin in 1999.
> The Organisation for Economic Co-operation & Development is scrutinizing the potential misuse of these schemes. In October 2018, it released a blacklist of 21 jurisdictions, including Malta and Cyprus, that it believes are undermining international efforts to combat tax evasion.
What we're talking about here is hiding assets that are subject to taxation. Like Swiss banks did for many years.
What I'm advocating is retaliation against other countries that are facilitating criminal behavior.
The majority of human societies live in peace. Uncontacted tribes never before exposed to us generally mostly live in peace together. They don't have the word "law" but they have an agreed upon set of social norms that people don't violate. Even most primates live in mostly peaceful social groups with established social norms.
Hobbes erred in his assessment of the natural state of humans.
How is it their own money if it is the state money? That is all the point. It is not their money.
If I buy an apple an I do not want to give the money to the cashier because "it is my money", I am stealing.
Also you could make the argument that the people rich enough take advantage of these schemes have already paid more tax than most people through other taxes.