> You can just have your official address be wherever and so long as the tax benefits make sense financially you'll make more money with a fake address in a state with no income tax while mostly living somewhere else.
Do you not expect governments to use their powers to issue subpoenas to banks or get location history from mobile networks or license plate readers to figure out this fraud if their tax revenues suffer?
A few years ago, Connecticut had Newegg send them a list of all purchases shipped to the state, and then mailed everyone a tax bill with penalties for failing to pay use tax. The onus was on the recipients to prove they already paid the use tax.
> Do you not expect governments to use their powers to issue subpoenas to banks or get location history from mobile networks or license plate readers to figure out this fraud if their tax revenues suffer?
Well let's not be so hasty to call this fraud. I don't know the legal details but lots of individuals and corporations do things for financial/tax reasons that undermine the spirit of law and we don't call it fraud. Also things can change. I think there is a more broad discussion to have here on taxes and such. Like why am I paying more in taxes than Buffet (contrived example)? Isn't that fraud?
But I think the underlying thing to noodle on is what if a lot of people do it and just ignore the government? Or how will the government know if you're paid in BTC from an overseas company? That's where I think property taxes (and probably sales taxes) come into play because the police or tax authority can show up at the door and seize the property.
And in the case of San Francisco PO box let's say I buy a 2 bedroom house and then it costs whatever and I say ok I rent it out to 15 people with 15 bunk beds and rent it out for whatever + something so I profit (hell maybe it's even a co-op) and then you just tell your company that's your address and where you reside but you drive around in a van full-time or just 1 month in SF, spend 8 months in Oklahoma and 3 months in New York or whatever.
From SF/CA perspective you are living and paying taxes there, but the point is that your company pays you the higher wage while not living there (and taxes are deducted and soforth) but you're saving by getting the higher wage without the cost of living (again this would be a financial calculation to see if it's worth it and all that so I don't want to argue details at the moment b/c idk). In a sense you're tricking your company because they have this policy of "if this is where you live and pay taxes then here's your paycheck" but the actual living part doesn't need to be done where you "live".
Another example is living in Texas or Florida where there's no income tax. Set up a PO box, say that's your address, and there ya go. (Over-simplifying it a bit).
No doubt in my mind that schemes like this are occuring. Question is what happens when everybody does it? And what does the world look like when every person has access to the equivalent of a tax haven and is instead choosing where to live based on other factors?
A couple things:
> why can't we just regulate #of people in a house.
Well, tell that to the families of service workers who can't afford rent. What's the right number of people per address? Etc.
> The onus was on the recipients to prove they already paid the use tax."
Sure but if you live somewhere else you can just decline. What will Connecticut do when 50,000 people living all over the world just don't pay the tax? What will the U.S. do if there are millions? It seems like it's hard enough to go after corporations and they have big legal entities and property in the U.S. to seize and litigate over. Hell, maybe you get enough people doing it and law firms start representing people with medium net worths and so now every time you go after someone it costs so much money you go bankrupt over the tax. The problem for the governments is ability to enforce, which is why I think long-term everything rests on enforcement of property taxes. And you'll pay property tax because you want roads, police, etc. and if you don't pay the tax then they can block you from your property. Probably in-person sales taxes as well because you can also enforce those decently enough.
The scenario is like a lion trying to crush ants. It's probably not effective.
Also please don't take this as an anti-anything statement. I'm just trying to think through and predict future outcomes and just have some fun with scenarios :) I pay all of my taxes, and probably pay too much even...
I am going to refer to it as fraud, because that is the usual way the word is used in the context of the legal consequences one opens themselves up to making intentionally false claims about your residence in order to evade taxes. The law does not require anyone to pay taxes on unrealized gains of stocks, so no, it is not fraud if Buffett does not pay tax on unrealized gains of stocks.
>A couple things: > why can't we just regulate #of people in a house.
I never wrote this, so I am not sure who you are responding to.
>It seems like it's hard enough to go after corporations
It is not hard if they are evading taxes by committing clear fraud with no plausible deniability, such as claiming they were physically in one place when in reality they were in another place. The news articles you see are for cases where there is a lot of gray area in the law.
>The problem for the governments is ability to enforce
It is called freezing bank accounts. It is where much of the power of the US comes from, and many times why opposing entities who do not trust each other choose to do business in the US.
> I am going to refer to it as fraud, because that is the usual way the word is used in the context of the legal consequences one opens themselves up to making intentionally false claims about your residence in order to evade taxes.
> The law does not require anyone to pay taxes on unrealized gains of stocks, so no, it is not fraud if Buffett does not pay tax on unrealized gains of stocks.
You're not violating the technical aspect of the law anymore than Buffet would be. Can you tell me the proper amount of time someone must live somewhere in order for them to truly live there? Pass a law? Those won't work. Already people are doing this - what do you think people who are living in vans do? They claim residence somewhere, maybe their parent's house and then they just live in the van or maybe they have some other place they stay. People do this with Florida to evade New York City taxes, etc.
> I never wrote this, so I am not sure who you are responding to.
Just pre-empting a response. Long story short the first answer many have is legislation but it is too burdensome to address any actual issues.
> It is not hard if they are evading taxes by committing clear fraud with no plausible deniability, such as claiming they were physically in one place when in reality they were in another place. The news articles you see are for cases where there is a lot of gray area in the law.
I think you're operating in the current model but not thinking about what can and is likely to happen in the future. The U.S. already can't go after many people who are outright breaking the law. Once this reaches a critical mass it's basically like trying to stop people from pirating songs. It's just not going to work. The lion and ant thing is really great here to help visualize.
Also, who is to say where you really live? Ok maybe you do live with 14 other people in bunkbeds in San Francisco. Is (insert company) going to fly/drive/walk someone out there and show up and check on you? It's impossible to enforce. So you can definitely draw a Bay Area salary and effectively live somewhere else. You can even do it in other countries. Plenty of digital nomads. Have you ever heard of one being prosecuted?
> It is called freezing bank accounts. It is where much of the power of the US comes from, and many times why opposing entities who do not trust each other choose to do business in the US.
The dysfunction and instability of the stability of the U.S. democracy is eroding power like this, for better or worse. You can't freeze a Bitcoin address, etc.
Do you not expect governments to use their powers to issue subpoenas to banks or get location history from mobile networks or license plate readers to figure out this fraud if their tax revenues suffer?
A few years ago, Connecticut had Newegg send them a list of all purchases shipped to the state, and then mailed everyone a tax bill with penalties for failing to pay use tax. The onus was on the recipients to prove they already paid the use tax.