With all of the noise going on about the budget, taxing the rich, taking from the poor, etc., I'm once again trying to wrap my brain around how a flat tax is a bad thing. Can someone please explain to me the arguments against a flat tax?
Thank you mucho in advance. :)
http://taxes.about.com/od/statetaxes/a/Flat-tax.htm
The Albertan can tell you about it.
Theoretically a flat tax is unfair in the sense that 20% of an income of £12 000 has significantly more effect on that person than the same amount on someone earning £100 000. To overcome that difficulty it becomes necessary to include substantial deductions, or credits and often to take account of whether someone's got a family and so on. All of that undermines the flat tax's central attraction which is that it's simple.
Practically they're not as low as I think people often think. Fla taxes have been effective in a number of Eastern European countries because their simplicity makes tax evasion more difficult. But in the majority of cases the rate of the flat tax, or of flat tax + social security (especially on the employer side), isn't terribly low and would, I think in the US, probably be quite high. There are, however, exceptions such as Russia.
You can see some of that here in the tax wedge column (by 2009 of this list Latvia, Lithuania, Estonia and, I believe, Romania had flat taxes):
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Tax_rate_indicators_on_low_wage_earners.png&filetimestamp=20110712142515
Personally I support what the New Zealand government are working towards. Low rates, broad base, few deductions. The challenge is making the rates low enough that you don't need to complicate the system with credits and deductions while keeping the base broad enough that you don't end up with a situation like the US or Ireland.
Most of the flat tax proposals include an exemption on the lower income, so it's kinda meh.
I think the part that I'm confused on is that if Warren Buffet is correct and he is indeed paying less of a percentage of his income than his secretary, then how do the arguments of a flat tax being hardest on the poor pan out?
What others said. And a flat tax with a tax free amount is not really a flat tax anymore.
Quote from: Martinus on September 20, 2011, 12:57:57 PM
What others said. And a flat tax with a tax free amount is not really a flat tax anymore.
I think you misunderstand the mischief a flat tax is designed to address.
A pure, flat tax would be horrible. A flat tax with basic exemptions is the height of sanity compared to the current slapdash system in the USA.
Quote from: merithyn on September 20, 2011, 12:56:52 PM
I think the part that I'm confused on is that if Warren Buffet is correct and he is indeed paying less of a percentage of his income than his secretary, then how do the arguments of a flat tax being hardest on the poor pan out?
The Buffet thing is another issue: capital is taxed less than labour or (at least over here) there are a lot of loopholes available.
The regressiveness of a flat tax lies in the amount left after taxes and the essential products and services everyone needs. If you take a big percentage of what Buffet makes he'll still be able to live like a king. If you take the same percentage from his cleaning lady she won't be able to afford rent, healthcare or a decent school for her kids.
Quote from: Iormlund on September 20, 2011, 01:13:52 PM
Quote from: merithyn on September 20, 2011, 12:56:52 PM
I think the part that I'm confused on is that if Warren Buffet is correct and he is indeed paying less of a percentage of his income than his secretary, then how do the arguments of a flat tax being hardest on the poor pan out?
The Buffet thing is another issue: capital is taxed less than labour or (at least over here) there are a lot of loopholes available.
The regressiveness of a flat tax lies in the amount left after taxes and the essential products and services everyone needs. If you take a big percentage of what Buffet makes he'll still be able to live like a king. If you take the same percentage from his cleaning lady she won't be able to afford rent, healthcare or a decent school for her kids.
That is why all realistic flat tax proposals exempt a significant base amount from low tax earners. The aim of the flat tax is not to prevent people from living like "a king". That is socialism. The goal of the flat tax is to remove needless disortions and complexity from the tax systems so that the rich end up paying less than their cleaning lady.
Quote from: merithyn on September 20, 2011, 12:56:52 PM
I think the part that I'm confused on is that if Warren Buffet is correct and he is indeed paying less of a percentage of his income than his secretary, then how do the arguments of a flat tax being hardest on the poor pan out?
Because Warren Buffet's "income" is pretty minimal. He makes his money off of capital gains, which is not "income" per se.
A flat tax would make this problem worse. A lot worse. Much, much, much, MUCH worse. Unless you build in exemptions for lower incomes, in which case it is no longer all that flat anymore, by definition.
I am all for simplofying the tax code, but a flat tax would just be a reset of the problem, not a solution. It would become complex again quickly because nobody is really willing to create such a regressive tax that a true flat, simple tax would represent, nor should they.
Quote from: merithyn on September 20, 2011, 12:56:52 PM
I think the part that I'm confused on is that if Warren Buffet is correct and he is indeed paying less of a percentage of his income than his secretary, then how do the arguments of a flat tax being hardest on the poor pan out?
Buffet is talking about the totality of taxes, which are indeed regressive, which is worse than flat. The flat tax advocates talk about just income taxes, which is the only progressive tax out of all the taxes people pay. Therefore, flat income tax, if enacted, would make the totality of taxes even more regressive than they are now.
Quote from: DGuller on September 20, 2011, 01:26:22 PM
Quote from: merithyn on September 20, 2011, 12:56:52 PM
I think the part that I'm confused on is that if Warren Buffet is correct and he is indeed paying less of a percentage of his income than his secretary, then how do the arguments of a flat tax being hardest on the poor pan out?
Buffet is talking about the totality of taxes, which are indeed regressive, which is worse than flat. The flat tax advocates talk about just income taxes, which is the only progressive tax out of all the taxes people pay. Therefore, flat income tax, if enacted, would make the totality of taxes even more regressive than they are now.
:yes:
Quote from: crazy canuck on September 20, 2011, 01:23:14 PM
Quote from: Iormlund on September 20, 2011, 01:13:52 PM
Quote from: merithyn on September 20, 2011, 12:56:52 PM
I think the part that I'm confused on is that if Warren Buffet is correct and he is indeed paying less of a percentage of his income than his secretary, then how do the arguments of a flat tax being hardest on the poor pan out?
The Buffet thing is another issue: capital is taxed less than labour or (at least over here) there are a lot of loopholes available.
The regressiveness of a flat tax lies in the amount left after taxes and the essential products and services everyone needs. If you take a big percentage of what Buffet makes he'll still be able to live like a king. If you take the same percentage from his cleaning lady she won't be able to afford rent, healthcare or a decent school for her kids.
That is why all realistic flat tax proposals exempt a significant base amount from low tax earners. The aim of the flat tax is not to prevent people from living like "a king". That is socialism. The goal of the flat tax is to remove needless disortions and complexity from the tax systems so that the rich end up paying less than their cleaning lady.
As I said, if you exempt a base amount from the flat tax, you no longer have a flat tax - you have a progressive tax scale, with two thresholds - 0% and X%. So you may just as well go whole hog and have more than one threshold.
In short, if you recognize the need to have a base amount that is exempt from tax, there is really no good argument why you can't have a progressive tax scale. (Or rather, all arguments against the progressive tax scale apply equally to the tax exempt amount).
Quote from: crazy canuck on September 20, 2011, 01:23:14 PM
That is why all realistic flat tax proposals exempt a significant base amount from low tax earners. The aim of the flat tax is not to prevent people from living like "a king". That is socialism. The goal of the flat tax is to remove needless disortions and complexity from the tax systems so that the rich end up paying less than their cleaning lady.
You don't need a single rate to get rid of the zillion of deductions available, which is where the complexity lies.
Quote from: DGuller on September 20, 2011, 01:26:22 PM
Quote from: merithyn on September 20, 2011, 12:56:52 PM
I think the part that I'm confused on is that if Warren Buffet is correct and he is indeed paying less of a percentage of his income than his secretary, then how do the arguments of a flat tax being hardest on the poor pan out?
Buffet is talking about the totality of taxes, which are indeed regressive, which is worse than flat. The flat tax advocates talk about just income taxes, which is the only progressive tax out of all the taxes people pay. Therefore, flat income tax, if enacted, would make the totality of taxes even more regressive than they are now.
Well, unless you make flat tax equal to CIT and capital gains tax, but then it would make no sense.
Quote from: Iormlund on September 20, 2011, 01:40:07 PM
Quote from: crazy canuck on September 20, 2011, 01:23:14 PM
That is why all realistic flat tax proposals exempt a significant base amount from low tax earners. The aim of the flat tax is not to prevent people from living like "a king". That is socialism. The goal of the flat tax is to remove needless disortions and complexity from the tax systems so that the rich end up paying less than their cleaning lady.
You don't need a single rate to get rid of the zillion of deductions available, which is where the complexity lies.
Yes, that could be done. But the rates would have to be adjusted accordingly - a tax policy nightmare - or overnight you would make the US the most tax unfriendly jurisdiction in the world.
Quote from: merithyn on September 20, 2011, 10:44:44 AM
With all of the noise going on about the budget, taxing the rich, taking from the poor, etc., I'm once again trying to wrap my brain around how a flat tax is a bad thing. Can someone please explain to me the arguments against a flat tax?
Thank you mucho in advance. :)
Well you wouldn't get deductions for your children, and we would be more like Russia.
Quote from: merithyn on September 20, 2011, 12:56:52 PM
I think the part that I'm confused on is that if Warren Buffet is correct and he is indeed paying less of a percentage of his income than his secretary, then how do the arguments of a flat tax being hardest on the poor pan out?
In addition to the nature of his income, which is different to employment income a lot of that will be due to loopholes and credits and deductions. The problem - regardless of your system - with having an extremely complex tax code is that it's going to end up being of more use to someone who can afford an accountant than the single mum going to school it's trying to help. That's why I favour a simpler tax system.
Quote from: crazy canuck on September 20, 2011, 01:23:14 PM
That is why all realistic flat tax proposals exempt a significant base amount from low tax earners. The aim of the flat tax is not to prevent people from living like "a king". That is socialism. The goal of the flat tax is to remove needless disortions and complexity from the tax systems so that the rich end up paying less than their cleaning lady.
A Flat tax like this is essentially a progressive tax with only 2 levels.
You don't need a flat tax to remove the distortions, you need a tax code reform.
Capital is theoritically taxed at the same level as labour, but then, you got 50% exemption on your gains, wich in practice will lower your tax rate.
You could very well keep the same scale and remove that 50% exemption and you'd get no distortion.
My tax policy involves giving the IRS the power to beat you. In case anyone cared.
Quote from: Iormlund on September 20, 2011, 01:40:07 PM
Quote from: crazy canuck on September 20, 2011, 01:23:14 PM
That is why all realistic flat tax proposals exempt a significant base amount from low tax earners. The aim of the flat tax is not to prevent people from living like "a king". That is socialism. The goal of the flat tax is to remove needless disortions and complexity from the tax systems so that the rich end up paying less than their cleaning lady.
You don't need a single rate to get rid of the zillion of deductions available, which is where the complexity lies.
That's true, and we probably should do that--but if we did only that, we'd wind up with an awfully high tax burden.
Quote from: Berkut on September 20, 2011, 01:24:30 PM
Quote from: merithyn on September 20, 2011, 12:56:52 PM
I think the part that I'm confused on is that if Warren Buffet is correct and he is indeed paying less of a percentage of his income than his secretary, then how do the arguments of a flat tax being hardest on the poor pan out?
Because Warren Buffet's "income" is pretty minimal. He makes his money off of capital gains, which is not "income" per se.
A flat tax would make this problem worse. A lot worse. Much, much, much, MUCH worse. Unless you build in exemptions for lower incomes, in which case it is no longer all that flat anymore, by definition.
I am all for simplofying the tax code, but a flat tax would just be a reset of the problem, not a solution. It would become complex again quickly because nobody is really willing to create such a regressive tax that a true flat, simple tax would represent, nor should they.
A flat tax is an income tax. What does discussing a flat tax have to do with capital gains tax rates?
Is someone seriously proposing to introduce a flat tax and simultaneously eliminate the capital gains tax?
Alberta has a provincial flat tax. It's a straight 10%, with basic personal exemption of $16k. So, after your first $16k, you pay 10% of every dollar you earn to the province. :cool:
Quote from: Barrister on September 20, 2011, 03:02:08 PM
Is someone seriously proposing to introduce a flat tax and simultaneously eliminate the capital gains tax?
In the US, yes.
Quote from: MadImmortalMan on September 20, 2011, 02:53:39 PM
Quote from: Iormlund on September 20, 2011, 01:40:07 PM
Quote from: crazy canuck on September 20, 2011, 01:23:14 PM
That is why all realistic flat tax proposals exempt a significant base amount from low tax earners. The aim of the flat tax is not to prevent people from living like "a king". That is socialism. The goal of the flat tax is to remove needless disortions and complexity from the tax systems so that the rich end up paying less than their cleaning lady.
You don't need a single rate to get rid of the zillion of deductions available, which is where the complexity lies.
That's true, and we probably should do that--but if we did only that, we'd wind up with an awfully high tax burden.
The idea would surely be to adjust the rates so the actual overall intake is exactly the same no matter what system is adopted - all that would change is (a) overall complexity of the system, and (b) who pays what part of that overall intake.
I don't see why a progressive tax rate curve is really all that more complex than a flat tax (where, as would be necessary, the flat tax has a built-in exemption for poor folks). For the vast majority of people, we are really only talking about employment income - where troubles start, is with other types of income such as capital gains.
Quote from: Barrister on September 20, 2011, 03:02:08 PM
A flat tax is an income tax. What does discussing a flat tax have to do with capital gains tax rates?
A lot, actually, when the income tax is bypassed by creative use of capital gains tax.
Quote from: viper37 on September 20, 2011, 02:12:41 PM
Quote from: crazy canuck on September 20, 2011, 01:23:14 PM
That is why all realistic flat tax proposals exempt a significant base amount from low tax earners. The aim of the flat tax is not to prevent people from living like "a king". That is socialism. The goal of the flat tax is to remove needless disortions and complexity from the tax systems so that the rich end up paying less than their cleaning lady.
A Flat tax like this is essentially a progressive tax with only 2 levels.
You don't need a flat tax to remove the distortions, you need a tax code reform.
Capital is theoritically taxed at the same level as labour, but then, you got 50% exemption on your gains, wich in practice will lower your tax rate.
You could very well keep the same scale and remove that 50% exemption and you'd get no distortion.
It's been 14 years since I studied Tax Law, but IIRC that 50% exemption is to prevent double taxation. Whatever yoru asset is, you're already likely paying taxes on it (property tax on real estate, income tax on a business, etc.)
Quote from: MadImmortalMan on September 20, 2011, 02:53:39 PMThat's true, and we probably should do that--but if we did only that, we'd wind up with an awfully high tax burden.
Not necessarily. Again I'd say look at the Kiwi approach. Their tax rates go from 10.5% (on income up to $14k) to 33% (on income over $70k) and, I think the top rate's to fall to 30% soon. They've still got some credits for people on low incomes. But I think that sort of low, broad, simple system is probably best.
They're also trying to equalise tax on capital and on corporate income to remove economic distortions. The theory is that if Buffet's paying the same rate whether he has his income as employment, corporate or capital income he won't be worrying about the respective tax schemes but will put it where it's most likely to benefit him and be economically effective. So, basically, there's no tax encouragements by the state that distort investments.
Quote from: Sheilbh on September 20, 2011, 05:04:02 PM
Not necessarily. Again I'd say look at the Kiwi approach. Their tax rates go from 10.5% (on income up to $14k) to 33% (on income over $70k) and, I think the top rate's to fall to 30% soon. They've still got some credits for people on low incomes. But I think that sort of low, broad, simple system is probably best.
Not to agree nor disagree with the merits of the New Zealand system, but on what planet is 33% income tax "low"?
Quote from: fahdiz on September 20, 2011, 05:21:02 PM
Quote from: Sheilbh on September 20, 2011, 05:04:02 PM
Not necessarily. Again I'd say look at the Kiwi approach. Their tax rates go from 10.5% (on income up to $14k) to 33% (on income over $70k) and, I think the top rate's to fall to 30% soon. They've still got some credits for people on low incomes. But I think that sort of low, broad, simple system is probably best.
Not to agree nor disagree with the merits of the New Zealand system, but on what planet is 33% income tax "low"?
Everywhere but in the US.
Quote from: fahdiz on September 20, 2011, 05:21:02 PM
Not to agree nor disagree with the merits of the New Zealand system, but on what planet is 33% income tax "low"?
As a top rate. Isn't US Federal tax 35% at top rate?
Edit: Also with the exception of oil oligarchies and offshore tax havens I can't think of a country with a lower top tax rate worth living in. Possibly Hong Kong and Singapore.
Quote from: Sheilbh on September 20, 2011, 05:22:50 PM
Quote from: fahdiz on September 20, 2011, 05:21:02 PM
Not to agree nor disagree with the merits of the New Zealand system, but on what planet is 33% income tax "low"?
As a top rate. Isn't US Federal tax 35% at top rate?
Yep. 349K and above, if I am remembering the brackets correctly.
Quote from: Sheilbh on September 20, 2011, 05:22:50 PM
As a top rate. Isn't US Federal tax 35% at top rate?
Edit: Also with the exception of oil oligarchies and offshore tax havens I can't think of a country with a lower top tax rate worth living in. Possibly Hong Kong and Singapore.
33% last year.
Quote from: Sheilbh on September 20, 2011, 05:22:50 PM
Quote from: fahdiz on September 20, 2011, 05:21:02 PM
Not to agree nor disagree with the merits of the New Zealand system, but on what planet is 33% income tax "low"?
As a top rate. Isn't US Federal tax 35% at top rate?
Edit: Also with the exception of oil oligarchies and offshore tax havens I can't think of a country with a lower top tax rate worth living in. Possibly Hong Kong and Singapore.
Ireland.
Quote from: Razgovory on September 20, 2011, 05:29:30 PMIreland.
It's in the 40s now. You throw in PRSI and the Universal Social Charge and you're over 50%. That's austerity :(
Ick.
Quote from: Sheilbh on September 20, 2011, 05:31:29 PM
Quote from: Razgovory on September 20, 2011, 05:29:30 PMIreland.
It's in the 40s now. You throw in PRSI and the Universal Social Charge and you're over 50%. That's austerity :(
Was it lower earlier in the decade? I know they had a fairly low corporate tax, I assumed they had lower taxes for the higher brackets as well. Incidentally conservatives in this country pointed to the Celtic Tiger as an example of how to do taxation. I don't think they do so now.
Quote from: Ed Anger on September 20, 2011, 05:32:40 PM
Ick.
Yep. And the top rate comes into effect around about €45-50k from what I remember, top rate of USC is effective at even lower, it was something ridiculous like €15k :bleeding:
Quote from: Razgovory on September 20, 2011, 05:37:26 PM
Was it lower earlier in the decade? I know they had a fairly low corporate tax, I assumed they had lower taxes for the higher brackets as well. Incidentally conservatives in this country pointed to the Celtic Tiger as an example of how to do taxation. I don't think they do so now.
Their corporate rate's still 12% and that seemed to become totemic of independence during the bailout row. I couldn't tell you if they were lower earlier on, I've only really had to investigate post-crash.
Quote from: Sheilbh on September 20, 2011, 12:14:47 PM
Personally I support what the New Zealand government are working towards. Low rates, broad base, few deductions. The challenge is making the rates low enough that you don't need to complicate the system with credits and deductions while keeping the base broad enough that you don't end up with a situation like the US or Ireland.
There's been talk of doing something fairly similar in the US, by politicians Dem and Repub, for a little while now. I think it has some good merit to it. I think also Pres Obama's debt commission had some similar ideas, but their views pretty much went nowhere.
A flat tax also implies that the tax is not tiered of course. When we say that the top bracket in 33%, that doesn't mean that you are taxed 33% on all your income if you are over a certain income, that means you are taxed 33% only on the income that is over the bracket. Which does make it kind of complex, since it means you are taxed at a variety of different rates for a given income. Although I suppose that if the tax system was simple enough, for a given highest bracket, the amount you would be taxed at the lower rates would effectively be fixed, right?
IE, if the brackets look like this:
0-50k: 10%
50-75k: 15%
75k+: 20%
then everyone in the 75k+ braket will always pay the same amount and rate on the first 75k - 8750.
I don't feel like reading all of this but in case nobody has pointed it out already, in the case of Warren Buffett his income tax would be utterly marginal compared to what he pays on capital gains... IIRC as Berkshire CEO he only draws a salary of like $100K. All the rest of his enormous income is derived from capital gains and dividends which are taxed at a much lower rate than conventional income.
I thought dividends were taxed as income.
Quote from: Admiral Yi on September 20, 2011, 06:36:00 PM
I thought dividends were taxed as income.
I think it's at a lower rate. Capital gains is definitely a lower rate.
Quote from: Admiral Yi on September 20, 2011, 06:36:00 PM
I thought dividends were taxed as income.
Depends on whether they are qualified or unqualified. Unqualified dividends get taxed at your normal income tax rate. Qualified dividends get taxed at the capital gains rate.
What is the capital gains rate? I mean, what is the percentage, not what is it?
Quote from: merithyn on September 20, 2011, 10:19:28 PM
What is the capital gains rate? I mean, what is the percentage, not what is it?
in canada it's taxed as 50% income. ie if you make 100,000 you only get taxed on the 50,000 (and if it's you're only income then at whatever bracket the 50,000 falls into). There are some other things like 500,000 tax free.
dividends are weird here. there are two rates. one for eligibile and one fr non-eligible. both lower then the normal bracket. But you have to mark up the value of your dividend income to to get the taxable value, and then you get a credit for it.
Quote from: merithyn on September 20, 2011, 10:44:44 AM
With all of the noise going on about the budget, taxing the rich, taking from the poor, etc., I'm once again trying to wrap my brain around how a flat tax is a bad thing. Can someone please explain to me the arguments against a flat tax?
Thank you mucho in advance. :)
Flat taxers are bad people, and you should feel bad for not knowing why.
I'm sure someone explained the finer points.
Meri's gone full Mexican! :o
Quote from: Ideologue on September 20, 2011, 11:04:40 PM
Quote from: merithyn on September 20, 2011, 10:44:44 AM
With all of the noise going on about the budget, taxing the rich, taking from the poor, etc., I'm once again trying to wrap my brain around how a flat tax is a bad thing. Can someone please explain to me the arguments against a flat tax?
Thank you mucho in advance. :)
Flat taxers are bad people, and you should feel bad for not knowing why.
I'm sure someone explained the finer points.
Flat tax is what they do in Eastern Europe. You support the flat tax, you support Putin.
Quote from: Berkut on September 20, 2011, 06:19:06 PM
A flat tax also implies that the tax is not tiered of course. When we say that the top bracket in 33%, that doesn't mean that you are taxed 33% on all your income if you are over a certain income, that means you are taxed 33% only on the income that is over the bracket. Which does make it kind of complex, since it means you are taxed at a variety of different rates for a given income. Although I suppose that if the tax system was simple enough, for a given highest bracket, the amount you would be taxed at the lower rates would effectively be fixed, right?
IE, if the brackets look like this:
0-50k: 10%
50-75k: 15%
75k+: 20%
then everyone in the 75k+ braket will always pay the same amount and rate on the first 75k - 8750.
That's exactly right.
QuoteI thought dividends were taxed as income.
Could be, but income's split into different categories. Income from emloyment will be different from income from director's fees (in some countries) or from, say, rental properties. Dividends are normally treated differently from employment income.
You have to also remember that "simplifying the tax code" is not as easy if you want to keep competitive for foreign (or local) investors. It makes sense to keep corporate income tax low (or eliminate it in certain transactions/set-ups) as otherwise a number of corporate entities you have in your group structure would affect the amount of tax you pay - which would make no sense.
But this means that the same system can be used by the rich to avoid paying the same level of taxes as everybody else.
Quote from: Berkut on September 20, 2011, 06:19:06 PM
A flat tax also implies that the tax is not tiered of course. When we say that the top bracket in 33%, that doesn't mean that you are taxed 33% on all your income if you are over a certain income, that means you are taxed 33% only on the income that is over the bracket. Which does make it kind of complex, since it means you are taxed at a variety of different rates for a given income. Although I suppose that if the tax system was simple enough, for a given highest bracket, the amount you would be taxed at the lower rates would effectively be fixed, right?
IE, if the brackets look like this:
0-50k: 10%
50-75k: 15%
75k+: 20%
then everyone in the 75k+ braket will always pay the same amount and rate on the first 75k - 8750.
Yup. Makes it pretty simple.
Of course most (sensible) flat tax plans work sort of like this, only with a single bracket - there is a deduction for X amount earned.
So (say) 0-20K = no tax;
20K + = taxed at 10% (or whatever).
Quote from: Malthus on September 21, 2011, 03:16:49 PM
Quote from: Berkut on September 20, 2011, 06:19:06 PM
A flat tax also implies that the tax is not tiered of course. When we say that the top bracket in 33%, that doesn't mean that you are taxed 33% on all your income if you are over a certain income, that means you are taxed 33% only on the income that is over the bracket. Which does make it kind of complex, since it means you are taxed at a variety of different rates for a given income. Although I suppose that if the tax system was simple enough, for a given highest bracket, the amount you would be taxed at the lower rates would effectively be fixed, right?
IE, if the brackets look like this:
0-50k: 10%
50-75k: 15%
75k+: 20%
then everyone in the 75k+ braket will always pay the same amount and rate on the first 75k - 8750.
Yup. Makes it pretty simple.
Of course most (sensible) flat tax plans work sort of like this, only with a single bracket - there is a deduction for X amount earned.
So (say) 0-20K = no tax;
20K + = taxed at 10% (or whatever).
I'm glad to see you approve of Alberta's flat tax. :)
Taxes will always become burdensome and complicated. There will always be loop holes. Tax codes start off much simpler (and smaller. Canadian one is like a phone book printed on rice paper). But people find work around and so either things become illegal or compromises occur (which adds complexity to calculate). Even where things are illegal there are ways around that so more laws are passed. There are reasons the tax accountants and lawyers are handsomely paid.
And that's ignoring other stuff like business incentives that muck the system up.
So changing laws for simplicities sake is, I think, flawed. That's not to say changes shouldn't be made for fairness. I believe capital gains and dividends taxes should be higher, for example. Especially in the current climate.
Quote from: Barrister on September 21, 2011, 03:22:06 PM
I'm glad to see you approve of Alberta's flat tax. :)
damn oil barons!
Quote from: Barrister on September 21, 2011, 03:22:06 PM
I'm glad to see you approve of Alberta's flat tax. :)
I don't see any particular social advantage to it. Progressive strikes me as better.
Quote from: Martinus on September 21, 2011, 03:06:08 PM
You have to also remember that "simplifying the tax code" is not as easy if you want to keep competitive for foreign (or local) investors. It makes sense to keep corporate income tax low (or eliminate it in certain transactions/set-ups) as otherwise a number of corporate entities you have in your group structure would affect the amount of tax you pay - which would make no sense.
But this means that the same system can be used by the rich to avoid paying the same level of taxes as everybody else.
I think most people think about personal income taxes when talking about simplifying the tax code.
Designing corporate taxes in a way that money that is taken out of the company as personal income is considered just that and taxed accordingly should be feasible, no?
Quote from: Zanza on September 21, 2011, 03:36:08 PM
Quote from: Martinus on September 21, 2011, 03:06:08 PM
You have to also remember that "simplifying the tax code" is not as easy if you want to keep competitive for foreign (or local) investors. It makes sense to keep corporate income tax low (or eliminate it in certain transactions/set-ups) as otherwise a number of corporate entities you have in your group structure would affect the amount of tax you pay - which would make no sense.
But this means that the same system can be used by the rich to avoid paying the same level of taxes as everybody else.
I think most people think about personal income taxes when talking about simplifying the tax code.
Designing corporate taxes in a way that money that is taken out of the company as personal income is considered just that and taxed accordingly should be feasible, no?
Not really. There is a host of reasons/things at work here.
You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.
Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!
Capital gains tax is the same for everyone and can be used to circumvent personal income tax.
You could source your income through a Cypriot or a Jersey structure and pay hardly any taxes.
Etc.
Etc.
Quote from: Sheilbh on September 20, 2011, 05:04:02 PM
They're also trying to equalise tax on capital and on corporate income to remove economic distortions. The theory is that if Buffet's paying the same rate whether he has his income as employment, corporate or capital income he won't be worrying about the respective tax schemes but will put it where it's most likely to benefit him and be economically effective. So, basically, there's no tax encouragements by the state that distort investments.
Well no. A corporation is owned by people, so if you tax corporate earnings and then tax personal earnings again, you have created a disincentive to create a corporate business structure, and an incentive to remove wealth from the corporate form. Western countries typically have structures that large businesses with multiple investors can operate as so that they avoid corporate taxation.
Buffet's company is a corporation that pays corporate tax, but many investment companies are privately held and in forms that do not. So if you tax Buffet's corporation at 35%, and then add a personal tax rate on Buffett of an additional 35% (or so), what a great incentive for parts of his business to be sold or transferred to partnerships where the owners only pay personal taxes.
Quote from: Martinus on September 21, 2011, 03:53:22 PM
Quote from: Zanza on September 21, 2011, 03:36:08 PM
Quote from: Martinus on September 21, 2011, 03:06:08 PM
You have to also remember that "simplifying the tax code" is not as easy if you want to keep competitive for foreign (or local) investors. It makes sense to keep corporate income tax low (or eliminate it in certain transactions/set-ups) as otherwise a number of corporate entities you have in your group structure would affect the amount of tax you pay - which would make no sense.
But this means that the same system can be used by the rich to avoid paying the same level of taxes as everybody else.
I think most people think about personal income taxes when talking about simplifying the tax code.
Designing corporate taxes in a way that money that is taken out of the company as personal income is considered just that and taxed accordingly should be feasible, no?
Not really. There is a host of reasons/things at work here.
You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.
Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!
Capital gains tax is the same for everyone and can be used to circumvent personal income tax.
You could source your income through a Cypriot or a Jersey structure and pay hardly any taxes.
Etc.
Etc.
I hope you don't moonlight as a US tax advisor, or you and your clients are likely to end up in the big house.
Quote from: Martinus on September 21, 2011, 03:53:22 PM
Not really. There is a host of reasons/things at work here.
You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.
Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!
Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct. AFAIK, you can't use corporate assets for personal use, in any guise.
Quote from: DGuller on September 21, 2011, 05:36:24 PM
Quote from: Martinus on September 21, 2011, 03:53:22 PM
Not really. There is a host of reasons/things at work here.
You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.
Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!
Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct. AFAIK, you can't use corporate assets for personal use, in any guise.
in any case (at least in canada) when an employee uses company property like cars or condo's they're taxed on the value of the use.
Quote from: DGuller on September 21, 2011, 05:36:24 PM
Quote from: Martinus on September 21, 2011, 03:53:22 PM
Not really. There is a host of reasons/things at work here.
You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.
Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!
Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct. AFAIK, you can't use corporate assets for personal use, in any guise.
Yet again Marti gives us pause to take his claim to be a lawyer seriously.
I wish my personal law corporation could just buy everything I need in my personal life. But who knows maybe that is the way things work in Poland.
Quote from: crazy canuck on September 21, 2011, 07:07:46 PM
Quote from: DGuller on September 21, 2011, 05:36:24 PM
Quote from: Martinus on September 21, 2011, 03:53:22 PM
Not really. There is a host of reasons/things at work here.
You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.
Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!
Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct. AFAIK, you can't use corporate assets for personal use, in any guise.
Yet again Marti gives us pause to take his claim to be a lawyer seriously.
I wish my personal law corporation could just buy everything I need in my personal life. But who knows maybe that is the way things work in Poland.
Cocaine
is a business expense. :angry:
Quote from: crazy canuck on September 21, 2011, 07:07:46 PM
Yet again Marti gives us pause to take his claim to be a lawyer seriously.
I wish my personal law corporation could just buy everything I need in my personal life. But who knows maybe that is the way things work in Poland.
I seem to recall Marty mentioning he did something with Maritime law, so everything he says about law may be true, but only at sea. Then again, he might simply be a Sea Lawyer, which isn't really a type of lawyer. http://www.merriam-webster.com/dictionary/sea%20lawyer and thus our confusion.
Quote from: DGuller on September 21, 2011, 05:36:24 PM
Quote from: Martinus on September 21, 2011, 03:53:22 PM
Not really. There is a host of reasons/things at work here.
You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.
Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!
Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct. AFAIK, you can't use corporate assets for personal use, in any guise.
I'm not a lawyer in any country, but know that in the US if you comingle personal and corporate assets you are just asking for the liability protections of the corporations to be disregarded, and that if you try to deduct personal expenses through a corporation you will end up in big trouble with the IRS if you get caught. So when Marty says "noone can do shit", noone is excluding the judicial system, the IRS, and law enforcement. But beyond those groups, I think Marty is basically correct. For example, a baker can't do anything about tax evasion or fraud without them.
Also, in the US (and I'm guessing this might be different in Poland), if you are a contractor to a company you will pay at a personal tax rate in almost every circumstance.
Cal wants a flat chest tax.
Quote from: Ed Anger on September 21, 2011, 07:34:16 PM
Cal wants a flat chest tax.
I'd use the revenues raised to pay for mandated implants. That way I would eventually remove the need for the tax. Government works after all! :w00t:
Quote from: Caliga on September 21, 2011, 07:40:12 PM
Quote from: Ed Anger on September 21, 2011, 07:34:16 PM
Cal wants a flat chest tax.
I'd use the revenues raised to pay for mandated implants. That way I would eventually remove the need for the tax. Government works after all! :w00t:
Never eliminate your revenue streams. :mad:
I used to think that grumbler pretending that Marty isn't a lawyer was a tired schtick. Now I think that Marty pretending to be a lawyer is the truly tired schtick.
Quote from: DGuller on September 21, 2011, 07:47:39 PM
I used to think that grumbler pretending that Marty isn't a lawyer was a tired schtick. Now I think that Marty pretending to be a lawyer is the truly tired schtick.
People question Marty's claim of being a lawyer not because it's a schtick, but because he consistently demonstrates both an abysmal knowledge of laws and the principles they are based on. It's kind of disturbing actually. If he's telling the truth, then he is what passes for the "educated class" in Poland. I shudder to think what the rest of the country may be like. I imagine a country where people hear thunder, look up at the sky, and drown when rain trickles down their noses or slack jawed mouths.
Quote from: alfred russel on September 21, 2011, 05:28:48 PM
Quote from: Martinus on September 21, 2011, 03:53:22 PM
Quote from: Zanza on September 21, 2011, 03:36:08 PM
Quote from: Martinus on September 21, 2011, 03:06:08 PM
You have to also remember that "simplifying the tax code" is not as easy if you want to keep competitive for foreign (or local) investors. It makes sense to keep corporate income tax low (or eliminate it in certain transactions/set-ups) as otherwise a number of corporate entities you have in your group structure would affect the amount of tax you pay - which would make no sense.
But this means that the same system can be used by the rich to avoid paying the same level of taxes as everybody else.
I think most people think about personal income taxes when talking about simplifying the tax code.
Designing corporate taxes in a way that money that is taken out of the company as personal income is considered just that and taxed accordingly should be feasible, no?
Not really. There is a host of reasons/things at work here.
You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.
Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!
Capital gains tax is the same for everyone and can be used to circumvent personal income tax.
You could source your income through a Cypriot or a Jersey structure and pay hardly any taxes.
Etc.
Etc.
I hope you don't moonlight as a US tax advisor, or you and your clients are likely to end up in the big house.
I am a Pole responding to a German. Why the fuck would you think my post has anything to do with US tax laws???
Quote from: HVC on September 21, 2011, 06:53:04 PM
Quote from: DGuller on September 21, 2011, 05:36:24 PM
Quote from: Martinus on September 21, 2011, 03:53:22 PM
Not really. There is a host of reasons/things at work here.
You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.
Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!
Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct. AFAIK, you can't use corporate assets for personal use, in any guise.
in any case (at least in canada) when an employee uses company property like cars or condo's they're taxed on the value of the use.
On the value of the use - which is lower than the value of the asset (at least if you take into account money-over-time).
Quote from: Razgovory on September 21, 2011, 07:19:37 PM
Quote from: crazy canuck on September 21, 2011, 07:07:46 PM
Yet again Marti gives us pause to take his claim to be a lawyer seriously.
I wish my personal law corporation could just buy everything I need in my personal life. But who knows maybe that is the way things work in Poland.
I seem to recall Marty mentioning he did something with Maritime law, so everything he says about law may be true, but only at sea. Then again, he might simply be a Sea Lawyer, which isn't really a type of lawyer. http://www.merriam-webster.com/dictionary/sea%20lawyer and thus our confusion.
I try to be nice to you but you are a retarded idiot. I never claimed any connection to maritime law.
Quote from: alfred russel on September 21, 2011, 07:33:29 PM
Quote from: DGuller on September 21, 2011, 05:36:24 PM
Quote from: Martinus on September 21, 2011, 03:53:22 PM
Not really. There is a host of reasons/things at work here.
You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.
Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!
Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct. AFAIK, you can't use corporate assets for personal use, in any guise.
I'm not a lawyer in any country, but know that in the US if you comingle personal and corporate assets you are just asking for the liability protections of the corporations to be disregarded, and that if you try to deduct personal expenses through a corporation you will end up in big trouble with the IRS if you get caught. So when Marty says "noone can do shit", noone is excluding the judicial system, the IRS, and law enforcement. But beyond those groups, I think Marty is basically correct. For example, a baker can't do anything about tax evasion or fraud without them.
Also, in the US (and I'm guessing this might be different in Poland), if you are a contractor to a company you will pay at a personal tax rate in almost every circumstance.
I am a Pole responding to a German. Why the fuck would you think my post has anything to do with US tax laws???
Quote from: DGuller on September 21, 2011, 05:36:24 PM
Quote from: Martinus on September 21, 2011, 03:53:22 PM
Not really. There is a host of reasons/things at work here.
You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.
Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!
Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct. AFAIK, you can't use corporate assets for personal use, in any guise.
I am a Pole responding to a German. Why the fuck would you think my post has anything to do with US tax laws???
I am far from an expert on tax law here (only had a single class at uni on it and beyond that only know what's necessary for a small employee with little assets) so I don't know exactly how it works, but here is how I think it works:
We basically have two types of businesses: a) a "personal" type where you are liable with your entire assets and can use business assets for whatever you like and b) a "corporation" where you have limited liability but the money isn't yours, but belongs to the company.
Tax-wise this difference also matters. While "personal" companies are taxed with personal income tax (progressive, up to about 45%), corporations are taxed with the corporate tax rate (flat, about 17-20%). However, when you take money out of a corporation for private use, you have to pay taxes on that (flat, 25%).
The idea is that it shouldn't matter tax-wise whether you organise your business as a corporation or a personal company as both are taxed similarly.
You can't directly use a corporation to pay your house or other private consumption. That's always considered taking money out and thus you have to pay taxes on it. If you don't, that's tax evasion of course.
So I think our system is somewhat similar to the American one.
Any country with developed corporate laws should be the same in that regard. Transfer of money between limited liability corporations and individuals is a pretty fundamental issue to the whole concept of having a corporation.
Quote from: Zanza on September 22, 2011, 06:13:39 AMYou can't directly use a corporation to pay your house or other private consumption. That's always considered taking money out and thus you have to pay taxes on it. If you don't, that's tax evasion of course.
So I think our system is somewhat similar to the American one.
As is the UK's. I bet Poland's is as well.
It's true that people try to game the sytsem, claiming tax fares, food and petrol on expenses etc but Marti is exagerrating hugely or is talking out of his arse.
Quote from: Martinus on September 21, 2011, 03:53:22 PMSo you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!
That's not possible under our laws. If you are "pseudo self-employed" (there are several criteria to check that, e.g. >5/6 of revenue from one source), you and your de facto employer have to pay the same payroll taxes and social security contributions as for a regular employee.
And self-employed people here generally have to pay the same personal income taxes as everybody else. Why wouldn't they? It wouldn't be fair to tax employees different from self-employed people. The only type of income that is taxed differently is that from capital gains because it was taxed before (e.g. with corporate taxes or with your personal income tax when you earned the principal).
Well, in Poland you cannot be "pseudo-self employed" either but this is decided not by your income structure, but rather the nature of your work. If you have to work from 9 to 5 and are supervised, this technically makes you ineligible for self-employment, but if you have a more independent position, you can.
An example in Poland is lawyers - most of my colleagues (including myself) are self employed and only have consultancy agreements with bigger lawfirms. We conduct our own accounting, formally hire secretaries, sub-lease our office space and whatnot. We also lack protections of an employment contract (for example, women who plan to have children, often stay on employment, as this gives them maternity leave rights). In return, we pay a flat 19% income tax rate (as opposed to the progressive tax rate employed people pay) and can deduct VAT, as well as consider tax-deductible costs any purchases which can be shown to relate to our work (e.g. a laptop, or a mobile phone, or a car).
So yeah, I guess all your comments about me being a shitty lawyer can be understood as whines that you cannot pay a 19% flat tax on your income in your silly jurisdictions. :nelson:
Quote from: Gups on September 22, 2011, 08:29:36 AM
Quote from: Zanza on September 22, 2011, 06:13:39 AMYou can't directly use a corporation to pay your house or other private consumption. That's always considered taking money out and thus you have to pay taxes on it. If you don't, that's tax evasion of course.
So I think our system is somewhat similar to the American one.
As is the UK's. I bet Poland's is as well.
It's true that people try to game the sytsem, claiming tax fares, food and petrol on expenses etc but Marti is exagerrating hugely or is talking out of his arse.
Well, I exaggerated a bit, but you can for example buy a company car for the CEO - he has to then pay an income tax on its use, but this is obviously much smaller than if you just "gave" the car to him (or paid him the money to buy it). And the company can deduct the car as a cost. Likewise many companies buy real property to be used e.g. as flats for their CEOs - again he would pay tax on the "rent" value he gets that way, but it is smaller than if he just had to buy the flat out of his pocket.
It is not that hard to game the system.
Quote from: Martinus on September 23, 2011, 05:02:53 AM
Well, in Poland you cannot be "pseudo-self employed" either but this is decided not by your income structure, but rather the nature of your work. If you have to work from 9 to 5 and are supervised, this technically makes you ineligible for self-employment, but if you have a more independent position, you can.
An example in Poland is lawyers - most of my colleagues (including myself) are self employed and only have consultancy agreements with bigger lawfirms. We conduct our own accounting, formally hire secretaries, sub-lease our office space and whatnot. We also lack protections of an employment contract (for example, women who plan to have children, often stay on employment, as this gives them maternity leave rights). In return, we pay a flat 19% income tax rate (as opposed to the progressive tax rate employed people pay) and can deduct VAT, as well as consider tax-deductible costs any purchases which can be shown to relate to our work (e.g. a laptop, or a mobile phone, or a car).
So yeah, I guess all your comments about me being a shitty lawyer can be understood as whines that you cannot pay a 19% flat tax on your income in your silly jurisdictions. :nelson:
Warren Buffet hates you & thinks you are the problem.
I think uncle Warren would like to sell Marty some insurance. He needs the business now that all his banks are getting downgraded.
Quote from: alfred russel on September 21, 2011, 05:26:53 PMWell no. A corporation is owned by people, so if you tax corporate earnings and then tax personal earnings again, you have created a disincentive to create a corporate business structure, and an incentive to remove wealth from the corporate form. Western countries typically have structures that large businesses with multiple investors can operate as so that they avoid corporate taxation.
Yeah, sorry I phrased that really badly. It was some particular method Australians tax personal income from a business. The way they assess tax isn't really done anywhere else in the world and theoretically leads to distortions (something to do with property I think). The Kiwis want to get rid of it because of that, but practically speaking can't because they're so interlinked with Australia. So they're aligning top rates to try and minimise the distortions.
Quote from: Martinus on September 22, 2011, 05:48:31 AM
I try to be nice to you but you are a retarded idiot. I never claimed any connection to maritime law.
Okay, fine. I'll go with "not a lawyer at all".
Quote from: Grey Fox on September 23, 2011, 06:01:27 AM
Quote from: Martinus on September 23, 2011, 05:02:53 AM
Well, in Poland you cannot be "pseudo-self employed" either but this is decided not by your income structure, but rather the nature of your work. If you have to work from 9 to 5 and are supervised, this technically makes you ineligible for self-employment, but if you have a more independent position, you can.
An example in Poland is lawyers - most of my colleagues (including myself) are self employed and only have consultancy agreements with bigger lawfirms. We conduct our own accounting, formally hire secretaries, sub-lease our office space and whatnot. We also lack protections of an employment contract (for example, women who plan to have children, often stay on employment, as this gives them maternity leave rights). In return, we pay a flat 19% income tax rate (as opposed to the progressive tax rate employed people pay) and can deduct VAT, as well as consider tax-deductible costs any purchases which can be shown to relate to our work (e.g. a laptop, or a mobile phone, or a car).
So yeah, I guess all your comments about me being a shitty lawyer can be understood as whines that you cannot pay a 19% flat tax on your income in your silly jurisdictions. :nelson:
Warren Buffet hates you & thinks you are the problem.
No shit? 19% tax rate on an income over $100k, with deductions for his fucking computer? Poland: hellhole.
Quote from: Ideologue on September 23, 2011, 07:25:27 PM
Quote from: Grey Fox on September 23, 2011, 06:01:27 AM
Quote from: Martinus on September 23, 2011, 05:02:53 AM
Well, in Poland you cannot be "pseudo-self employed" either but this is decided not by your income structure, but rather the nature of your work. If you have to work from 9 to 5 and are supervised, this technically makes you ineligible for self-employment, but if you have a more independent position, you can.
An example in Poland is lawyers - most of my colleagues (including myself) are self employed and only have consultancy agreements with bigger lawfirms. We conduct our own accounting, formally hire secretaries, sub-lease our office space and whatnot. We also lack protections of an employment contract (for example, women who plan to have children, often stay on employment, as this gives them maternity leave rights). In return, we pay a flat 19% income tax rate (as opposed to the progressive tax rate employed people pay) and can deduct VAT, as well as consider tax-deductible costs any purchases which can be shown to relate to our work (e.g. a laptop, or a mobile phone, or a car).
So yeah, I guess all your comments about me being a shitty lawyer can be understood as whines that you cannot pay a 19% flat tax on your income in your silly jurisdictions. :nelson:
Warren Buffet hates you & thinks you are the problem.
No shit? 19% tax rate on an income over $100k, with deductions for his fucking computer? Poland: hellhole.
Better to rule in hell than pay high taxes in heaven. :nelson:
Quote from: Razgovory on September 23, 2011, 07:24:30 PM
Quote from: Martinus on September 22, 2011, 05:48:31 AM
I try to be nice to you but you are a retarded idiot. I never claimed any connection to maritime law.
Okay, fine. I'll go with "not a lawyer at all".
I'm a M&A lawyer. Gups is a maritime lawyer.
I didn't know Texas A&M gave out law degrees.
Quote from: jimmy olsen on September 21, 2011, 12:36:15 AM
Meri's gone full Mexican! :o
You never go full mexican. :homestar:
Bloomberg claims that the Buffett tax is theatrics, and says that if his income wasn't from capital gains, he would be paying a much higher rate than his secretary. Um, Mike, that's precisely the point.
If there is a valid attack on the Buffett tax, is that it's a band-aid on the broken tax code, much like AMT. Much like AMT, it can potentially lead to all kinds of weird shit that wasn't foreseen at the time of enactment, or maybe could have even been foreseen. The correct thing to do is to cut the crap, and not favor capital income over wage income, or at least not letting what is essentially a salary be passed off as some kind of investment gain.
Quote from: DGuller on September 25, 2011, 07:03:23 PM
Um, Mike, that's precisely the point.
That's not the point Obama has been trying to make.
Quote from: Martinus on September 22, 2011, 05:49:46 AM
Quote from: alfred russel on September 21, 2011, 07:33:29 PM
Quote from: DGuller on September 21, 2011, 05:36:24 PM
Quote from: Martinus on September 21, 2011, 03:53:22 PM
Not really. There is a host of reasons/things at work here.
You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.
Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!
Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct. AFAIK, you can't use corporate assets for personal use, in any guise.
I'm not a lawyer in any country, but know that in the US if you comingle personal and corporate assets you are just asking for the liability protections of the corporations to be disregarded, and that if you try to deduct personal expenses through a corporation you will end up in big trouble with the IRS if you get caught. So when Marty says "noone can do shit", noone is excluding the judicial system, the IRS, and law enforcement. But beyond those groups, I think Marty is basically correct. For example, a baker can't do anything about tax evasion or fraud without them.
Also, in the US (and I'm guessing this might be different in Poland), if you are a contractor to a company you will pay at a personal tax rate in almost every circumstance.
I am a Pole responding to a German. Why the fuck would you think my post has anything to do with US tax laws???
Because your posts are very general, and contradict the basic structure of the US tax code, which is almost certainly replicated elsewhere. And subsequent posts show that. Developed first world countries are going to be about the same. Poland is still developing, so its code may lack some sophistication.
Quote from: Martinus on September 23, 2011, 05:02:53 AM
Well, in Poland you cannot be "pseudo-self employed" either but this is decided not by your income structure, but rather the nature of your work. If you have to work from 9 to 5 and are supervised, this technically makes you ineligible for self-employment, but if you have a more independent position, you can.
An example in Poland is lawyers - most of my colleagues (including myself) are self employed and only have consultancy agreements with bigger lawfirms. We conduct our own accounting, formally hire secretaries, sub-lease our office space and whatnot. We also lack protections of an employment contract (for example, women who plan to have children, often stay on employment, as this gives them maternity leave rights). In return, we pay a flat 19% income tax rate (as opposed to the progressive tax rate employed people pay) and can deduct VAT, as well as consider tax-deductible costs any purchases which can be shown to relate to our work (e.g. a laptop, or a mobile phone, or a car).
So yeah, I guess all your comments about me being a shitty lawyer can be understood as whines that you cannot pay a 19% flat tax on your income in your silly jurisdictions. :nelson:
While it is great that you can take advantage of that situation, your jurisdiction's policy as you describe it is terrible tax policy.
Yeah, that shit is insane. A car? Really? Can you deduct your fucking house because "Lol how am I gonna do my job if I don't haves nowheres to live?"
Quote from: Ideologue on September 26, 2011, 04:26:23 AM
Yeah, that shit is insane. A car? Really? Can you deduct your fucking house because "Lol how am I gonna do my job if I don't haves nowheres to live?"
My friend has deducted the furnishing of the entire room in his house since it is where he intends to receive clients, if he has to meet with them at his house. :P But that's probably pushing it a bit.
Like Malthus said a couple of times, a flat tax doesn't have very significant simplicty advantages. A graduated rate requires an ability to read a simple table or multiply by percentages, that's it.
The bigger issue, alluded to here in multiple posts, is the idea of neutrality -- that the tax system should treat all gains equally regardless of type of source. Perhaps an unobtainable ideal but in the US we don't even try; tax policy incorporates an explicit preferential treatment for gains on capital.
Quote from: The Minsky Moment on September 27, 2011, 04:39:21 PM
Like Malthus said a couple of times, a flat tax doesn't have very significant simplicty advantages. A graduated rate requires an ability to read a simple table or multiply by percentages, that's it.
[engineer voice] "There's your problem!" [/engineer voice]
QuoteThe bigger issue, alluded to here in multiple posts, is the idea of neutrality -- that the tax system should treat all gains equally regardless of type of source. Perhaps an unobtainable ideal but in the US we don't even try; tax policy incorporates an explicit preferential treatment for gains on capital.
Do you have ideas toward potentially bipartisan solutions for this particular issue?
Quote from: The Minsky Moment on September 27, 2011, 04:39:21 PM
Like Malthus said a couple of times, a flat tax doesn't have very significant simplicty advantages. A graduated rate requires an ability to read a simple table or multiply by percentages, that's it.
I think this depends on the context though. The US and Canada are countries with a tradition of obeying the law and voluntarily paying taxes. I think the relative simplicity and ease of the flat tax in post-Soviet countries without that tradition (esecially as most do PAYE only on employment income) could make the rate of overall tax evasion lower. That's not an issue in the US or Canada.
Fahdiz, Bowles-Simpson and Rivlin-Domenici plans both address them I think. They won't pass.
Quote from: fahdiz on September 27, 2011, 05:41:05 PM
Do you have ideas toward potentially bipartisan solutions for this particular issue?
Right now, I don't think there are any bipartisan solutions for counting to 3 or filling a glass with water.
Anything with the word "tax" in it is out as far a likely bipartisan resolution.
Quote from: The Minsky Moment on September 27, 2011, 04:39:21 PM
Like Malthus said a couple of times, a flat tax doesn't have very significant simplicty advantages. A graduated rate requires an ability to read a simple table or multiply by percentages, that's it.
The bigger issue, alluded to here in multiple posts, is the idea of neutrality -- that the tax system should treat all gains equally regardless of type of source. Perhaps an unobtainable ideal but in the US we don't even try; tax policy incorporates an explicit preferential treatment for gains on capital.
I don't disagree, but to play devils advocate, while it isn't much harder to compute a graduated rate vs. a flat one, it brings into play a lot of complex tax planning strategies (ie, shifting income into lower rate entities/people). Tax planning probably results in more dead weight loss for the economy than the process of computing taxes.
The US tax policy incorporates an explicit preferential treatment for gains on capital to offset an adverse treatment for income within C Corps. I recall being taught in school that corporate income is subject to double taxation as a payment for the liability protections they provide their owners. But now that most corporations are S Corps that pay 0% tax, I struggle to see the theoretical difference.
Quote from: The Minsky Moment on September 27, 2011, 06:04:46 PM
Right now, I don't think there are any bipartisan solutions for counting to 3 or filling a glass with water.
The concepts are too complicated for the one time assistant wrestling coach?
Quote from: Sheilbh on September 27, 2011, 05:42:15 PM
The US [ ] are countries with a tradition of [ ] voluntarily paying taxes.
I kinda know what you are trying to say, but taken literally, that's a rather tall statement for a country which saw several rebellions (including the one that brought it to life) over the people's refusal to pay taxes, not to mention now has a very strong anti-tax political camp. :D
Also, I wouldn't exactly call the country of Billy the Kid and Al Capone as one with a strong tradition of obeying the law. ;)
Quote from: Martinus on September 28, 2011, 09:40:32 AM
Quote from: Sheilbh on September 27, 2011, 05:42:15 PM
The US [ ] are countries with a tradition of [ ] voluntarily paying taxes.
I kinda know what you are trying to say, but taken literally, that's a rather tall statement for a country which saw several rebellions (including the one that brought it to life) over the people's refusal to pay taxes, not to mention now has a very strong anti-tax political camp. :D
Also, I wouldn't exactly call the country of Billy the Kid and Al Capone as one with a strong tradition of obeying the law. ;)
Really?
Quote from: Martinus on September 28, 2011, 09:40:32 AM
Quote from: Sheilbh on September 27, 2011, 05:42:15 PM
The US [ ] are countries with a tradition of [ ] voluntarily paying taxes.
I kinda know what you are trying to say, but taken literally, that's a rather tall statement for a country which saw several rebellions (including the one that brought it to life) over the people's refusal to pay taxes, not to mention now has a very strong anti-tax political camp. :D
Also, I wouldn't exactly call the country of Billy the Kid and Al Capone as one with a strong tradition of obeying the law. ;)
I dont know if you are just playing dumb or whether you honestly didnt understand his point.
Quote from: Valmy on September 28, 2011, 09:44:39 AM
Quote from: Martinus on September 28, 2011, 09:40:32 AM
Quote from: Sheilbh on September 27, 2011, 05:42:15 PM
The US [ ] are countries with a tradition of [ ] voluntarily paying taxes.
I kinda know what you are trying to say, but taken literally, that's a rather tall statement for a country which saw several rebellions (including the one that brought it to life) over the people's refusal to pay taxes, not to mention now has a very strong anti-tax political camp. :D
Also, I wouldn't exactly call the country of Billy the Kid and Al Capone as one with a strong tradition of obeying the law. ;)
Really?
Really.
I remember when they nabbed Billy the Kid for tax evasion.
Quote from: Ideologue on September 28, 2011, 10:06:44 AM
I remember when they nabbed Billy the Kid for tax evasion.
Nice try but no cigar - never said Billy the Kid is an example of tax evasion. With such reading skills, no wonder you cannot find a job as a lawyer.
Quote from: Martinus on September 28, 2011, 09:57:40 AM
Really.
Sometimes you make me sad. That was possibly the lamest and most retarded troll ever.
By the logic of those weak ties then i can assume that Poland is a nation of hypochondriac toe suckers :lol:
Quote from: Martinus on September 28, 2011, 10:07:56 AM
Quote from: Ideologue on September 28, 2011, 10:06:44 AM
I remember when they nabbed Billy the Kid for tax evasion.
Nice try but no cigar - never said Billy the Kid is an example of tax evasion. With such reading skills, no wonder you cannot find a job as a lawyer.
I dunno. You're the one trying to build a thesis, "Americans lack respect for law," upon the historical example of Billy the Kid, which demonstrates the critical thinking kills of the average third grader, assuming, of course, that the average third grader has not yet come to understanding of the phrase "over a century ago." I assume you also believe that Franklin Roosevelt is evidence that a polio epidemic is sweeping through America and that Henry Ford shows that America is possessed by a deep-seated anti-semitism.
Quote from: The Minsky Moment on September 27, 2011, 06:04:46 PM
Quote from: fahdiz on September 27, 2011, 05:41:05 PM
Do you have ideas toward potentially bipartisan solutions for this particular issue?
Right now, I don't think there are any bipartisan solutions for counting to 3 or filling a glass with water.
Anything with the word "tax" in it is out as far a likely bipartisan resolution.
Part of the problem--and this is sad--is that a lot of people don't even understand what "capital gains" means. It's hard to have an intelligent discussion about whether or not capital gains should be taxed as ordinary income or not when people don't know what the term means.
Quote from: Ideologue on September 28, 2011, 10:29:23 AM
Quote from: Martinus on September 28, 2011, 10:07:56 AM
Quote from: Ideologue on September 28, 2011, 10:06:44 AM
I remember when they nabbed Billy the Kid for tax evasion.
Nice try but no cigar - never said Billy the Kid is an example of tax evasion. With such reading skills, no wonder you cannot find a job as a lawyer.
I dunno. You're the one trying to build a thesis, "Americans lack respect for law," upon the historical example of Billy the Kid, which demonstrates the critical thinking kills of the average third grader, assuming, of course, that the average third grader has not yet come to understanding of the phrase "over a century ago." I assume you also believe that Franklin Roosevelt is evidence that a polio epidemic is sweeping through America and that Henry Ford shows that America is possessed by a deep-seated anti-semitism.
I never said that "Amercians lack respect for law". I said that calling America a nation with a strong tradition of obeying law and paying taxes voluntarily is a bit of a stretch. You seem to act as if these traits were binary, whereas they are a continuum (and America is probably somewhere in the moderate middle ground).
I'm pretty sure Marti was just kidding around. I mean - there are a bunchof smilies...
Quote from: Barrister on September 28, 2011, 01:14:13 PM
I'm pretty sure Marti was just kidding around. I mean - there are a bunchof smilies...
The reason I prefaced my post with "I know what you are trying to say". Since I understood what he meant, I just thought it's funny way of saying that, since Americans aren't famously fond of taxes. ;)
Quote from: Martinus on September 28, 2011, 01:26:32 PM
Quote from: Barrister on September 28, 2011, 01:14:13 PM
I'm pretty sure Marti was just kidding around. I mean - there are a bunchof smilies...
The reason I prefaced my post with "I know what you are trying to say". Since I understood what he meant, I just thought it's funny way of saying that, since Americans aren't famously fond of taxes. ;)
And yet Americans are famously fond of having a tax system which depends on voluntary reporting of taxes owed. Yes there are exceptions to the rule that the IRS must track down but only a moron would try to deny that the system is built on voluntarily reporting and it would take an even greater moron to try to use such a stupid idea as the basis for a joke.
Quote from: Martinus on September 28, 2011, 09:40:32 AM
that's a rather tall statement for a country which saw several rebellions (including the one that brought it to life) over the people's refusal to pay taxes
a) The Revolutionary War wasn't about a refusal to pay taxes so much as it was about a refusal to be taxed without receiving real representation in the British government.
b) What rebellions in US history have been caused by the people's refusal to pay taxes?
Quote from: fahdiz on September 28, 2011, 04:42:57 PM
Quote from: Martinus on September 28, 2011, 09:40:32 AM
that's a rather tall statement for a country which saw several rebellions (including the one that brought it to life) over the people's refusal to pay taxes
a) The Revolutionary War wasn't about a refusal to pay taxes so much as it was about a refusal to be taxed without receiving real representation in the British government.
b) What rebellions in US history have been caused by the people's refusal to pay taxes?
Well, the Whiskey Rebellion - though it hardly merits the name. ;)
http://en.wikipedia.org/wiki/Whiskey_Rebellion
Quote from: fahdiz on September 28, 2011, 04:42:57 PM
b) What rebellions in US history have been caused by the people's refusal to pay taxes?
Whiskey.
Fuck. One second late.
Quote from: Malthus on September 28, 2011, 04:52:52 PM
Well, the Whiskey Rebellion - though it hardly merits the name. ;)
http://en.wikipedia.org/wiki/Whiskey_Rebellion
Excellent, thanks; I'd forgotten about that one.
I was slower because I cropped. :mad:
Quote from: Admiral Yi on September 28, 2011, 04:55:01 PM
I was slower because I cropped. :mad:
Points for cropping.
Quote from: Admiral Yi on September 28, 2011, 04:55:01 PM
I was slower because I cropped. :mad:
But no helpful link. :D
Quote from: Malthus on September 28, 2011, 05:01:04 PM
But no helpful link. :D
Points for helpful link, and for being first. Malthus wins, by a nose.
Jew lover. You'll get yours.
Quote from: fahdiz on September 28, 2011, 04:42:57 PM
Quote from: Martinus on September 28, 2011, 09:40:32 AM
that's a rather tall statement for a country which saw several rebellions (including the one that brought it to life) over the people's refusal to pay taxes
a) The Revolutionary War wasn't about a refusal to pay taxes so much as it was about a refusal to be taxed without receiving real representation in the British government.
b) What rebellions in US history have been caused by the people's refusal to pay taxes?
I would argue it was more about the revocation of a colony charter. Various taxes might be unpopular with the colonists but most payed them with out to much trouble. The heavy handed crack down on Massachusetts really mobilized the rest of the colonies.