Wait a minute, there is a distinction between Tax Avoidance and Tax Evasion.
Tax Avoidance is perfectly legal and encouraged by the IRS. There are many exemptions and credits for anyone who is eligible to take advantage of. If you’ve ever seen “whichever is lower” on a tax preparation form, that’s an example of avoidance. Why pay more when the law says you don’t have to?
Tax Evasion is the illegal activity of not paying taxes you were supposed to pay. This is where fraud comes into play. People should absolutely be prosecuted for evasion, but they should not shamed for avoidance.
> Why pay more when the law says you don’t have to?
Yeah, it makes no sense. I would not do that, not sure why I should expect others to do that. I think this whole thing is BS.
I can very well agree that some people can afford to pay more tax, but tax is not some trust based charity system. I would say simplify tax laws so people can avoid tax easier without having to hire an army of tax professionals, and then increase the effective tax rate on the people who can afford to hire an army of tax professional.
If you are not for this approach but you whine about tax avoidance I think you are just looking for a way to score political and ideological points.
They should not be prosecuted for avoidance. I think at a certain point it's fair to shame people for seeking out loopholes, even if they're technically legal. Not that they probably care.
> > I think at a certain point it's fair to shame people for seeking out loopholes, even if they're technically legal. Not that they probably care.
> Governments should just close the loopholes.
Calling attention to the existing wrong — its existence, it's wrongness, and it's connection to the present state of the law — is a key part of changing the law, so such public shaming is directly part of that process in a democratic republic, though perhaps not in a regime where “the government” is an aloof dictator unconcerned with public opinion.
> public shaming is directly part of that process in a democratic republic
When the wealthy can collectively lobby their way out of paying taxes, this process is pretty much useless. The middle/lower class don’t care so much to do public demonstrations.
Do they do this though? I don't see anyone making specific policy proposals, just blaming "loopholes". What is the moral wrong here? Can anyone state it in a way that doesn't also apply to everyone else.
I suspect that people are less concerned about loopholes and more just jealous that some people make massively more than them.
Many of the loopholes were 100% known by everyone passing the law. They were often an agreement to keep certain stakeholders happy.
For example, this year in the UK there is a special question on the tax form for if you are a deep water diver. Why? Because divers have a different taxation system put in place as a sweetheart deal for BP (who employ a lot of divers for their offshore oil rigs)
I don't care in the least if someone makes more money than me. Good for them. But if they make significantly more than me and yet pay a significantly lower effective tax rate than I do, well then I get a bit annoyed.
An accountant once told me a loophole is just someone else's deduction. I don't think you can even just go with the intent of the law, 401ks famously weren't intended at all, they were a loophole that are now viewed as a pillar of most American's retirement plans.
Ya, but there are a lot more ways to avoid taxes than just deductions. Sometimes going way out of your way and doing things like renouncing your citizenship or creating shell corporations or never paying dividends and just using corporate profits to buy back your own stock forever.
Not for the ones they fall victim to, but what is hacking but the exploitation of bugs for personal gain? I assume you or your company would blame a user who exploits a security bug and uses it to compromise your product/business/other customers
Loophole is a loaded term because it itself implies morality or lack thereof. If it's legal, it's legal. Period. Calling it a loophole implies otherwise.
I know it won’t work because some businesses work on high volume, really slim margins (such as grocery stores) but I really believe the solution is still to have a tax based on gross receipts with no credits, deductions, or anything like that. Call it like alternate minimum taxes for businesses maybe?
As for personal income tax, I strongly believe all credits, deductions, exemptions should be abolished/phased out completely. These are nothing but an extra tax on the lazy, the stupid, and the poorly educated like me. Whether you have zero dependents or a hundred, your tax obligation does not change. Whether you donated nothing or all your income, your tax obligation does not change. Why can’t we have that?
Except it's not that simple. There are a lot of legal grey area techniques that people use to avoid taxes. Tricks that the average person cannot take advantage of because it would not be cost effective to have to defend them in tax court.
That really depends on what is a loophole. Should people be publicly shamed for making pension contributions or buying an electric car? I sympathise with where you are coming from. Someone employing themselves via a company in Ireland that owns one in Barbados and calling the money a loan is likely shameful. But there is no hard line between these two...
There's no hard line, but there's a soft line at the letter vs intent of the law. More concretely, when the wealthy as a category are contributing less than their fair share to society, the intent of the law is not being fulfilled. Even if it's a tough thing to solve.
I don't think people should be shamed for trying to minimize how much they pay for something they didn't consent to, that ends up mostly enriching government sector insiders in powerful unions.
I personally detest the phrase Tax Avoidance. If an exemption exists and allows me to pay a tax lower than I would have otherwise, what tax was avoided? Why are exceptions viewed differently than the tax tables? They all collectively constitute the “tax code”.
Tax avoidance means “following the tax code and being an honest citizen”. Why would you apply such an Orwellian term to something so banal?”
Well, tax avoidance implies that you are taking actions or modifying your behavior for the express purpose of avoiding taxes. If you increase your ira contribution amount at the end of year to more than you normally would have in order to decrease your taxable income, then that is an example of tax avoidance. If you schedule a corporate team building retreat in the Bahamas instead of taking a personal vacation there, that is tax avoidance. Moving from California to Texas right before you sign a $100m contract is another example of tax avoidance. Denouncing your US citizenship before cashing in billions in stock is another example of tax avoidance.
Tax Avoidance is perfectly legal and encouraged by the IRS. There are many exemptions and credits for anyone who is eligible to take advantage of. If you’ve ever seen “whichever is lower” on a tax preparation form, that’s an example of avoidance. Why pay more when the law says you don’t have to?
Tax Evasion is the illegal activity of not paying taxes you were supposed to pay. This is where fraud comes into play. People should absolutely be prosecuted for evasion, but they should not shamed for avoidance.