Ethics of tax planning

[dps]

Whether trump acted ethical sort of misses the point here.  Trump proposes an enormous tax cut for the rich in order to create new jobs.  Since "smart" businessmen like Trump don't pay taxes, to begin with, what's the point of a tax cut?

To allow dumb businessmen to create jobs, too.  D'oh. 

[grumbler]

Ultimately, I think the reason people think the way you do is because they want, desperately, to feel morally superior to other people, and have no objective basis for doing so.*

I often wonder if this is Grumbler's true self and he hides it (I hope) in the classroom or if he has just been trolling us all these years - as I assume Marti has been doing.

  Wow, now there's a reading comprehension fail!  No wonder you fall for thse Onion stories all the time:  you can't tell a spoof even when it is explicitly labelled as one!

[alfred russel]

Whether trump acted ethical sort of misses the point here.  Trump proposes an enormous tax cut for the rich in order to create new jobs.  Since "smart" businessmen like Trump don't pay taxes, to begin with, what's the point of a tax cut?

To allow dumb businessmen to create jobs, too.  D'oh. 

To answer it seriously, it is not the case that smart businessmen don't pay taxes: at least if you look at the proportion of taxes high earners pay, it is quite high.

However, even in a system where that was the case, it could make sense to reduce taxes. In a business of any size, any significant decisions involving the supply chain, acquisitions, divestitures, major investments, etc. will have tax people sitting at the table and providing significant input. That isn't the most economically efficient state of affairs. Even if a company is avoiding most taxes, by reducing the tax rate you reduce their incentive to structure operations in a tax driven manner.

[Valmy]

To answer it seriously, it is not the case that smart businessmen don't pay taxes: at least if you look at the proportion of taxes high earners pay, it is quite high.

High compared to what? I mean it would be weird if the proportion of taxes that come from penniless people living in the streets was high. 'Most of this country's taxes are collected from single parents with five or more children and who lack a high school education'

However, even in a system where that was the case, it could make sense to reduce taxes. In a business of any size, any significant decisions involving the supply chain, acquisitions, divestitures, major investments, etc. will have tax people sitting at the table and providing significant input. That isn't the most economically efficient state of affairs. Even if a company is avoiding most taxes, by reducing the tax rate you reduce their incentive to structure operations in a tax driven manner.

How far exactly do we need to cut things before all these great benefits kick in?

I guess I am worried about the deficit. So how many amazing high paying jobs were added last time we seriously cut taxes? Was it worth the huge growth in federal debt?

[Berkut]

He isn't saying we should cut taxes on the wealthy, he is saying that it is possible that doing so might have some positive side effects that you might not realize.

The particulars of whether you should or not in some specific circumstance is not the same.

At least, I think that is what he is saying.

[Valmy]

He isn't saying we should cut taxes on the wealthy, he is saying that it is possible that doing so might have some positive side effects that you might not realize.

The particulars of whether you should or not in some specific circumstance is not the same.

At least, I think that is what he is saying.

I am challenging the assumption that the reason that companies plan around taxes is because they are too high. If the company is making millions it seems hard to conceive of a rate where it would just not make sense to do so. Even if it was 1% surely that is worth hiring a few tax attorneys.

Now some tax rates are so burdensome that companies will just get out of dodge but I have yet to see that federal taxes are high enough to have that sort of impact. Sometimes the states drive them away though.

[Berkut]

He isn't saying we should cut taxes on the wealthy, he is saying that it is possible that doing so might have some positive side effects that you might not realize.

The particulars of whether you should or not in some specific circumstance is not the same.

At least, I think that is what he is saying.

I am challenging the assumption that the reason that companies plan around taxes is because they are too high. If the company is making millions it seems hard to conceive of a rate where it would just not make sense to do so. Even if it was 1% surely that is worth hiring a few tax attorneys.

Now some tax rates are so burdensome that companies will just get out of dodge but I have yet to see that federal taxes are high enough to have that sort of impact. Sometimes the states drive them away though.

Companies plan around all of their expenses, of course. And the extent that they plan around them is of course directly related to how much those expenses are, and how elastic they are to being planned around.

That is the only part I think Dorsey is leaving out - that the reason they spend considerable resources planning around them is not just because of the amount, but because that amount is vulnerable to being adjusted radically by creative accounting. That is the real problem with our system - that people like Trump can lose a billion dollars of someone elses money, then use that to offset paying taxes himself for a couple decades.

The never ending battle between people who write tax law, and people who are paid to exploit tax law, will always be won by the lawyers and business people. They are, simply, smarter and better equipped to win that fight. Not to mention the corruption involved in those same people being responsible for the law writers having their jobs to begin with...

[alfred russel]

To answer it seriously, it is not the case that smart businessmen don't pay taxes: at least if you look at the proportion of taxes high earners pay, it is quite high.

High compared to what? I mean it would be weird if the proportion of taxes that come from penniless people living in the streets was high. 'Most of this country's taxes are collected from single parents with five or more children and who lack a high school education'

I meant something like the top 5% pay like 40% of income taxes or something. Not saying that is unfair, just saying it is evidence of rich people being smart enough not to pay taxes.

[alfred russel]

He isn't saying we should cut taxes on the wealthy, he is saying that it is possible that doing so might have some positive side effects that you might not realize.

The particulars of whether you should or not in some specific circumstance is not the same.

At least, I think that is what he is saying.

Yeah, just making a theoretical point.

FWIW, I think that all else being equal, corporate taxes should be cut and offset with higher tax rates on high earners. Corporate taxes are generally much easier to plan around than personal, and the effects of planning are generally negative.

[Berkut]

I think we need to re-evaluate our entire tax structure. It is just a mess.

I don't think we should go to some flat tax bullshit, but I do think a radical simplifying is in order, and a much simpler understanding of how we want to collect revenue, and from whom.

This won't happen, of course. Probably can't happen, even.

[alfred russel]

I am challenging the assumption that the reason that companies plan around taxes is because they are too high. If the company is making millions it seems hard to conceive of a rate where it would just not make sense to do so. Even if it was 1% surely that is worth hiring a few tax attorneys.

Now some tax rates are so burdensome that companies will just get out of dodge but I have yet to see that federal taxes are high enough to have that sort of impact. Sometimes the states drive them away though.

Generally speaking, a tax strategy isn't just an arrangement of words and numbers in a tax filing--it needs real world actions to implement. That might mean moving production to another country, opening an office somewhere obscure, or having your supply chain organized in a way it wouldn't otherwise. There are costs to those things, and the benefit is tied to the tax rate. Lower the rate, you lower the benefit, and reduce tax driven decisions.

[alfred russel]

I think we need to re-evaluate our entire tax structure. It is just a mess.

I don't think we should go to some flat tax bullshit, but I do think a radical simplifying is in order, and a much simpler understanding of how we want to collect revenue, and from whom.

This won't happen, of course. Probably can't happen, even.

The flat tax as a simplification method makes no sense to me. I don't think marginal taxes make the top 100 list of why the tax code is complex.

[The Brain]

Is it ethical to use a loophole, that you know shouldn't have been there, to avoid military draft during a major war?

Lots of laws shouldn't be, but are. You can't just ignore nonsensical laws.

[Valmy]

Lots of laws shouldn't be, but are. You can't just ignore nonsensical laws.

I do. I rip the tags off mattresses regularly.

[Berkut]

Lots of laws shouldn't be, but are. You can't just ignore nonsensical laws.

I do. I rip the tags off mattresses regularly.

Barbarian.

I cut them off neatly.