
Higher Taxes Don’t Cause Millionaires to Flee Their Homes - terryauerbach
http://www.bloomberg.com/news/articles/2016-05-26/higher-taxes-don-t-scare-millionaires-into-fleeing-their-homes-after-all
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apercu
Why do people have problems with taxes? I don't. Never have. When taxes build
schools and infrastructure and provide policing and social support it's a good
thing. When taxes are misused (military industrial complex perhaps) that's an
issue with the system of government, not taxes.

I do have an issue with the wealthiest people sheltering their money from
taxation. This is the 1%. These people (at least the 0.01%) might just move
for tax reasons.

The 2-5% top earners actually do seem to pay a lot of taxes (at least in the
US and Canada).

I don't know exactly what the top 5% earn, but some cursory research suggests
around $250k annually in North America. As someone who has been near there,
yes, I paid a lot in taxes. But I also had spare money to defer some of those
taxes.

My experience in Canada has been different than my experience in the US. In
Canada, over about 120k in salary you start paying a bit more than you would
in the US. About 43% or so on everything over 90k. (Please don't rip my
numbers, I'm not a tax accountant and just want to make a point).

So we have a lot of people who appear to be doing pretty well, and join the
rest of the middle in basically supporting the government programs for
everyone else in the country to enjoy.

But these people are getting more than a 3rd of their income taken in taxes.
At 200k per year for a family (look, I'm not asking you to feel sorry for
them) that's a big hit.

But if you have $10m in assets in the bank, no mortgage, and are bring in 600k
per year you might actually be getting taxed close to the person in the first
example. But you are left with A LOT MORE money after taxes. And this is the
issue for me.

~~~
tn13
Taxation is indistinguishable from theft.

Government forcibly takes money from hardworking people to spend on things
that politicians think are good for us.

I am pretty sure if you donate your money to education, infra and other things
it will be more efficient use of that money than you giving it to politicians.

The biggest reason why I will not pay taxes is because it increases the size
of government. War on Drugs, Wars in foreign countries, Civil Forfeiture and
other horrible things that government is doing is simply because our
government has far more money than it needs.

Reducing government revenue is the best way to kill/starve this beast.

~~~
bobwaycott
Perhaps when looking through your ideological lens, you fail to distinguish
between taxes and theft. But that's a problem of your inability to
distinguish, not anything inherent in taxes that obscures them from being
clearly identified as a different thing from theft.

~~~
jjn2009
I don't see what is so ideological about this idea. If someone threatens you
with violence or locking you away in a cell without your consent for not
paying them that is by definition theft.

If I asked you if its okay for a citizen to do this you would obviously say
no, now replace "citizen" with IRS swat team (yes these exist) and some how
the answer should be that this is some how 100% okay?

~~~
intopieces
>some how the answer should be that this is some how 100% okay?

Yep. Because governments are instituted among men and derive their just powers
from the consent of the governed. There are clear mechanisms for relinquishing
certain freedoms (i.e., the freedom to keep all your money) through
representative government.

If you don't like taxes, get 'em repealed through the way we repeal taxes. If
you don't like the way the government collects taxes, we have a way to change
that too.

~~~
jjn2009
In theory that would all be fine but this magical contract that I signed at
birth some how which gives the IRS the right to commit violence against me
some how doesn't sound as appealing as you make it.

When the three wolves vote to eat the sheep, the sheep is also 100%
responsible because didn't you know? You signed this thing at birth that
agreed to such a possible outcome!

~~~
intopieces
Infants can't sign contracts, and we don't tax infants anyway because they
don't meet the income requirements.

Your comparison to wolves and sheep is not apt -- the "violence" of taxation
is only as punishment for reaping the benefits of previous payers and not
abiding by the rules the common voters agreed on. You are under no obligation
to reap those benefits -- in fact, society is perfectly happy to give them to
you for free (albeit minimally) in the form of welfare, and charities are
satisfied with giving you free food and shelter should you find the system of
commerce and taxation too burdensome.

That you are not afforded the extended benefits gained by common taxation at
your pleasure and rate without yourself contributing is not theft in the most
basic sense; it's more like an obtuse mischaracterization. It makes an
interesting civics thought experiment, but nothing more.

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jeremyrwelch
Just because they don't move doesn't mean they aren't unhappy with higher
taxes. Also doesn't mean they don't want to move.

A more interesting angle would be to track productivity and financial returns
of the elites under multiple tax schemes.

~~~
EliRivers
In my (granted fairly limited) experience, very few of those hauling in the
really huge paypackets (or the huge, huge bonuses or clever backhanders or
whatever) are doing it for the actual money. They don't spend the money they
have now. It doesn't seem to be about having the money. It's some kind of
social status game involving bringing in the money. Coming up with ways to
dodge tax doesn't seem to be about having more money to spend; it's another
part of the game, and they're all playing against themselves and each other.

~~~
charlesdm
As a wealthy person once explained it to me: half the fun is making a ton of
money, and half is finding a way not to pay (or just a tiny amount of) taxes.

If you have $20m in the bank and are living off of investment income, in a way
it makes sense. You want the highest return, for the least effort and risk
required. Taxes eat into that.

~~~
EliRivers
_As a wealthy person once explained it to me: half the fun is making a ton of
money, and half is finding a way not to pay (or just a tiny amount of) taxes._

Exactly; that leaves none of the fun being in actually spending it.

Going WAY off-topic now, I split the very wealthy into two groups. Rich
people, and poor people who happen to have money.

Rich people think differently. They've got a whole lot of money, and now they
can stop worrying about that and get on with doing things. Bill Gates deciding
to team up with Rotary International et al and see if we can't finally kill
Polio stone cold dead with the extra help of all this money that seems to be
cluttering up his bank account. This is the action of a rich man.

Poor people with money have the same concerns and same aims as they did when
they didn't have money. They just buy a more expensive watch, a more expensive
car, move their social status group to be around other similarly wealthy
people and signal at each other, keep thinking about making more money.

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gizi
Imagine person _A_ invoices person _B_ for services delivered. In such case,
it is always possible to get _A_ invoice _C_ and then _C_ invoice _B_. _C_
would just be a middleman. There is nothing wrong with that.

Then, you could easily "chainify" the concept: _A_ -> _C1_ -> _C2_ -> _C3_ ->
_B_

Now you turn _C1_ into a reservoir. It does not pay out to _A_ , because _A_
prefers to save his revenue inside _C1_. Therefore, _A_ never gets taxed on
income that remains in _C1_.

Also, whenever reasonable, _C2_ and _C3_ pay for _A_ 's spending. That money
does not hit _A_ either, and not even _C1_. Therefore, _A_ actually needs
little actual money to be paid out to him. His expenses are taken care of by
_C2_ , _C3_ , ..., while his savings are held up in the _C1_ reservoir.

Even though _B_ could pay millions for _A_ 's services, in terms of taxation,
_A_ makes almost no money at all. The money remains legally stuck in the _C_
chain. Even though _A_ is a real person, the _C_ chain is not. It is a chain
of virtual persons: "incorporations". They used to exist only on paper. These
days they only exist on a computer screen.

Moving nodes in the chain to another state or to countries, pretty much
amounts to just updating a field in a database. Depending on what you fill out
in that database field, you pay more or less tax. Hence, the reason why they
consistently fill out the cheapest choices on the screen.

In other words, there is never a valid reason to pay income tax for a
"chainified" income stream. Therefore, income tax is in reality not a tax on
income but on the inability to "chainify" income.

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DamnYuppie
Why move? If you are wealthy enough it isn't too hard to shield most of your
wealth from taxes. It is not too hard, if you own your own business, to shield
a great deal of your income from taxes. Setup a Trust that has a Holding
Company which contains multiple LLC's. This is a very effective way to move
money around while simultaneously reducing ones liability exposure.

Even if you aren't wealthy it is a great idea to have such a setup for ones
home and other assets that you would wish to leave for others when you die. As
it is in a trust you can buy pass a lot of taxes.

~~~
mywittyname
Or domicile your business in Delaware most other companies do.

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tn13
I would look at the growth of millionaire by city:

1\. Huston 9% 2\. LA 8% 3\. NY 7% 4\. D.C. 5\. Boston 6\. Chicago 7\. Sf 6%

The real impact of taxation of Millionaires would be between "what is" v/s
"what could have been". Should the financial capital of the world NY be third
on that list ?

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spoinkaroo
The amount of people who moved for tax reasons is far lower than I would've
expected. Only 2.2%

~~~
DrScump
But if it's the _highest-earning_ 2.2%, that's a huge hit for states with high
income tax.

~~~
spoinkaroo
True, but it is still far lower than I would have expected.

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plowman
The author of this article has clearly not played much SimCity.

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mariusz79
I remember when in school I was being told how bad was the life of people in
feudal Europe because of all the taxes that kings, church and local lords took
from people.. I wonder what would these people think about our, much higher,
taxes.

~~~
sammydavis
The average feudal person from the middle ages would love to live in our
world! Yes, they would have to pay a lot of taxes. But they'd have enough
food, be free from the king's men raping them, have very low infant mortality.
Did I miss your point somehow? I'd rather pay taxes than live in that world.

