Hacker News Reader

Comment by speedplane | Hacker News Reader

> It's a funny one because [Tax Evasion is] potentially one of the most serious crimes. You're stealing from everybody, undermining the basis of trust in the entire system in which we live and probably in the long term eroding the basis of democracy. You're creating a non-level playing field.

This is true, and in addition, it's a very unequal crime. To properly evade taxes and get away with it, you need professional help. Most standard W-2 employees can't afford it, i.e., for most, the cost to hire professional help evading taxes is larger than the taxes they could save.

However, if you're very wealthy, then the calculus changes: saving 20% taxes on $50M/yr income is a lot more attractive than saving 20% on $200k/yr income. Effectively, the wealthier you are, the easier it is to evade taxes, further exacerbating at least the perception (and quite likely the reality) of inequality.

View on HN

>Most standard W-2 employees can't afford it, i.e., for most, the cost to hire professional help evading taxes is larger than the taxes they could save.

>than saving 20% on $200k/yr income

Erm, that's not a standard W2 employee's income. Not even close. The median U.S. household income was $63,179 in 2017.

In lieu of the accuracy, you missed the essence.

Many on HN think everyone in the United States makes a 6-figure salary because they do. It's a common theme, I pointed out another potential instance.

40k of 200k doesn't make a big difference, 3016 of 15,080 (federal minimum wage @ 40 hours a week for a year) makes a HUGE difference as does 12,635.90 of 63,179.

Why do you think waitstaff and the like prefer cash tips? because they feel that no one will know if they don't report some or all of that income. Go ask any waiter, waitress, bartender, etc if they want you to give them that tip on credit card where they get taxed or cash where they don't. The same goes for electricians, plumbers, handymen, etc as they'll happily take cash first because they can fudge their numbers some.

In the US, incomes between $9,701 to $39,475 are taxed at 12%, so the tax on 15,080 is actually $1,810 or 40% less than your estimate... at 63,179 the tax rate is 22% which is $13,899 - only a little higher than your estimate.

At $200K, the tax rate is 32%, so the tax is really $64K, 160% of your estimate. (all for single filers or married filing separately; married filing jointly has wider bands, and the rates are less overall at the given combined income levels)

Tax evasion is not even a real crime. Tax is stealing from someone. Tax evasion and avoidance are great for society and we would be poorer if people didn't do it. Virtually all tax money usually goes to wars, warmongers, and the pockets of politicians and bureaucrats. Virtually nothing returns to society as services.

When people find a way to pay fewer taxes, it means money is not only not going to wars, but also being able to be used for better things for everyone.

http://bastiat.org/en/twisatwins.html

In theory, sure, but reality is a bit of a prisoner's dilemma.

Consider:

Person A is evading Taxes.

Person B is not evading taxes.

Government says 'Well, we aren't getting enough money', So they raise taxes on those who can't realistically evade. By a second order effect, Person A is causing Person B to get 'stolen from' twice instead of once.

I'd say it doesn't work like this. Instead, the state will try to charge as much as possible taxes from both of them while providing the least amount of service possible so someone not paying tax has a really low impact overall on the services the state is able to provide.

They charge tax way higher than any of the services they provide truly cost (even if we put any efficiency concerns aside).

I'd even argue this impact is positive given that now money is freely circulating in society for other stuff. For me, society will eventually have other ways to finance infrastructure and social benefits that are not based on taxes, as it happens today – but this doesn't even mean something entirely new. Let's remember most fire companies, schools, hospitals, and other stuff we rely upon are either privately maintained (for-profit or not), the concept started like so, or both.

Reply on news.ycombinator.com