Author Topic: Problems with the IRS  (Read 666 times)

msquared

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Problems with the IRS
« on: December 23, 2022, 02:24:01 PM »
We now know why the GOP has been working to defund the IRS.

https://www.yahoo.com/finance/news/trump-audit-shows-depths-irs-130608652.html

What is their issue with making sure everyone pays what they owe? The GOP used to stand for fairness. Now it looks like the claims that the Party has been bought by special interest looks to be correct.

I know they use the scare tactics of "they will audit Joe Sixpack" to frighten the base, but really. If the wealthy want to concentrate all of the wealth to their top 5% they should expect the other 95% to want them to pay their fair share. If you want more people to pay more taxes, then pay them more and take less pay and bonuses for yourselves.

If Bezos gave half of his stock to employees, he would still be a multi billionaire and many of his employees would be more invested in the company (they now own stock and if it gets more valuable, they are worth more).

Fenring

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Re: Problems with the IRS
« Reply #1 on: December 23, 2022, 03:20:16 PM »
Now it looks like the claims that the Party has been bought by special interest looks to be correct.

Only now?

Tom

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Re: Problems with the IRS
« Reply #2 on: December 23, 2022, 03:44:51 PM »
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The GOP used to stand for fairness.
When? In our lifetimes?

Ouija Nightmare

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Re: Problems with the IRS
« Reply #3 on: December 23, 2022, 03:55:46 PM »
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The GOP used to stand for fairness.
When? In our lifetimes?

What? You can’t remember Eisenhower.?


TheDrake

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Re: Problems with the IRS
« Reply #4 on: December 25, 2022, 11:15:39 AM »
It is astonishing to me that with all the surveillance and other information gathering and analysis tools available, the IRS doesn't have AI scrubbing into these returns from high rollers automatically, never mind being selected for audit. Oh wait, it is not at all astonishing since the ultra-rich give the government its orders, gutting IRS, SEC, Consumer Protection, DOE, and just about anybody else that might peel away even a sliver of ill-gotten gains. My golf course is actually a farm! Wouldn't take a sophisticated AI to sort that out. Oh, wait, I forgot that was an intentional loophole designed for ultra-rich property owners to pay lower taxes. Making the rules, enforcing the rules, that only applies to the peasants. Then suddenly it is law and order, by your bootstraps, submit to the system, and work hard. If somebody gets a tax break to go to school, protect the environment, or raise their kids, that's social engineering. But giving somebody a tax break for sitting on their butts and doing nothing, that's patriotic.

Mynnion

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Re: Problems with the IRS
« Reply #5 on: December 25, 2022, 11:29:10 AM »
The American Dream of being self made has gone from hard work to what loop holes I can buy.

msquared

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Re: Problems with the IRS
« Reply #6 on: December 25, 2022, 11:48:49 AM »
Just comply.

Fenring

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Re: Problems with the IRS
« Reply #7 on: December 25, 2022, 12:00:18 PM »
Not to be too on the nose, but this is a necessary by product of capitalism. When the system is literally predicated on leveraging capital, it only becomes an artificial barrier that says in what ways it can be leveraged.

TheDrake

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Re: Problems with the IRS
« Reply #8 on: December 25, 2022, 01:59:58 PM »
I'm not sure to what you are referring, Fen. Are you saying that it is inevitable that capitalism produces rich people who will then monkey with the rules to make themselves more powerful and rich? That certainly is often the case, but is it impossible to be otherwise? Ayn Rand didn't think so, and she is the biggest cheerleader of capitalism that ever lived.

I mean it was a capitalist system that spawned a 91% tax rate on the rich in the 50s and 60s in America. We used to have an inheritance tax that worked against the present level of oligarchy, in a capitalist system. The solution is not to prevent certain uses of the capital, it is to redistribute it. Oh horror, I used the bad word! Nothing is worse than taking money away from people sitting back and collecting interest and dividends without producing anything of value!

Fenring

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Re: Problems with the IRS
« Reply #9 on: December 25, 2022, 02:10:47 PM »
I am not talking about long-forecast predictions (although I could make some), but rather about what people will try to do with their capital. Yes, they will try to use any leverage they have to lever the system in their favor. The system itself is predicated on larger capital and leverage moving larger mountains, so to speak. However the outcome may go, the process will involve constant attempts to undermine what we might call fair play.

Tom

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Re: Problems with the IRS
« Reply #10 on: December 25, 2022, 06:02:03 PM »
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I mean it was a capitalist system that spawned a 91% tax rate on the rich in the 50s and 60s in America.
No, it wasn't. It was anti-capitalist sentiment filtered through the working class. And the capitalists have been so afraid of that ever happening again that almost all the right-wing political movements in America since the '60s can be directly traced to their desire to prevent that.

TheDrake

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Re: Problems with the IRS
« Reply #11 on: December 26, 2022, 01:41:54 PM »
Yes, Tom, it was a curbing of unfettered capitalism. There are many forms. The requirement of a capitalist system is only this.
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an economic and political system in which a country's trade and industry are controlled by private owners for profit.

So yes, in the 50s and 60s everything remained a for-profit system.

I do not believe that people will always act to grow their personal fortune, I do not think that greed is an indelible part of the human condition. Psychological studies show that incremental happiness above a certain level of wealth diminishes. While doing things for others generally provides psychological rewards.

I do not know how long that might take to become a norm in America, or most of the rest of the world. Most assuredly not in my lifetime, but not inevitable. Maybe when we exhaust our resources. Maybe that will make it worse. Maybe it will be transhumanism or something else. But I do not think we are trapped in a world that takes as a central notion the idea of screwing everybody else over by rigging the system.

Fenring

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Re: Problems with the IRS
« Reply #12 on: December 26, 2022, 02:09:17 PM »
The requirement of a capitalist system is only this.
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an economic and political system in which a country's trade and industry are controlled by private owners for profit.

This type of definition is taught in high school, but it is very incorrect. I could name all sorts of economic systems that fit this definition that are most definitely not capitalist. Plenty of feudal and monarchical systems had private markets and private ownership, which were not in the least capitalist. In fact, you would have a difficult time naming too many historic societies in which trade and industry were not privately owned and controlled. Maybe the USSR? China circa 1950? And of course you don't really have private enterprise in any warzone in which civilization has completely disintegrated, but then again you don't have any system of any kind in places like that. There is a general gross misunderstanding of what "capitalist" means.

TheDrake

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Re: Problems with the IRS
« Reply #13 on: December 26, 2022, 02:26:46 PM »
Your condescending response is great. Feel free to ignore what the words mean as defined by the dictionary. What does Merriam Webster know anyway?

It's astonishing that you think a monarchy has private control. Control, man, like the English King handing control to what you call private owners by letters patent.

Since you are so learned, I wonder what your definition of capitalism is? There's probably a PhD in it for you.

Fenring

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Re: Problems with the IRS
« Reply #14 on: December 26, 2022, 02:46:38 PM »
Capitalism within a system increases as the structures and resources become financialized. So for example historically there was no real estate market, which is a much more recent phenomenon. But once real estate becomes a capital market you can have anyone with capital buy into land, income stream, capital growth, and so forth. Theoretically not every sector and area has been financialized yet. For example there was talk some years ago about perhaps water becoming privatized (which in some countries the people have had to deal with). The fewer the areas of life that are open to capital investment, the less you have capitalism. But you still have private ownership and private markets. For example the farmer's market in Elizabethan England - you think Queen Elizabeth owned the farming business each farmer ran? No, it was a private enterprise, making their own living off of their own land. The lawyer's guilds, etc etc were not run by the state, nor by some baron, but by the private individuals conducting regular business, just as it was going back to ancient Rome and further. What demarks modern capitalism from, say, feudalism is that feudalism had a stratified society where (a) only certain individuals had access to certain lands and rights, and (b) social mobility and opportunity were not governed only by cash (although they probably were to a greater extent than anyone wanted to admit). But both systems would have private markets, profit motive, and trade being done on the basis of personal connections and the will to do business. A society is more capitalist when money is increasingly what talks, and where everything can be bought and leveraged. More capital markets and more access to buyers means more capitalism.

Fenring

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Re: Problems with the IRS
« Reply #15 on: December 26, 2022, 02:48:17 PM »
I'll take that PhD in the form of an IOU for now - we'll call it the doctoral bond market.

TheDrake

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Re: Problems with the IRS
« Reply #16 on: December 26, 2022, 06:07:01 PM »
I'm fine with the idea of a spectrum of capitalism rather than a binary, but there exist points on that continuum that are not corrupt or amoral. Down the end of the purest form of capitalism, you have slavery, snake oil, and dumping radioactive waste into poor neighborhoods. Some of Heinlein and other science fiction contemplate much more down the capitalist spectrum, like Snowcrash. That's not a good way to go, but it certainly seems more likely right now than a Star Trek anti material federation. AI unleashed could probably both define and enforce fairness. Of course fairness of rules are in the eye of the beholder. A carbon tax is either a fair burden based on externalities, or unfair punishment of an industry in favor of others. But this tax is not incompatible with capitalism.

Tom

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Re: Problems with the IRS
« Reply #17 on: December 26, 2022, 09:12:24 PM »
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I do not think that greed is an indelible part of the human condition.
Why not? While individual humans may not be greedy, what would lead you to believe that avarice as a trait can be eliminated?

Fenring

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Re: Problems with the IRS
« Reply #18 on: December 26, 2022, 09:22:50 PM »
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I do not think that greed is an indelible part of the human condition.
Why not? While individual humans may not be greedy, what would lead you to believe that avarice as a trait can be eliminated?

I think a good case could be made that greed is an emergent property rather than innate. For instance, if you suppose that people try to win at games, and imagine an economy as being a sort of game, it doesn't require assigning a negative virtue of greed to imagine that some people will try to win the game at all costs, or try to break the system to win even harder. That could alternatively be called 'being competitive'. That's just an example, anyhow. But thinking along those lines, you would have to go to some lengths to create systems people could win at where accumulation of things wasn't really an achievable goal, and see if they had some need that wasn't being met. We could also speak of things like intellectual greed, that is, wanting to know everything just for its own sake rather than for some noble end. In religious terms such a compulsion could be construed as sinful, or perhaps harmful at any rate. But even then could we perhaps reconceptualize that into being pride rather than greed - wanting to be the one who knows the things, rather than it being the things themselves one wants? Mainly I'm just suggesting that it's not clear to me that we can assert strongly that greed is a necessary (or even real) human trait.

Tom

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Re: Problems with the IRS
« Reply #19 on: December 26, 2022, 09:40:45 PM »
I would argue that the desire to accumulate more than you need even if it might deprive someone else of sufficient resources is indeed a human trait, insofar as we as a people have a very limited Monkeysphere and "someone else" can very easily be abstracted or obscured from one's direct experience. Whether this is driven by competitive instinct or survival concerns or whatever, I don't see a problem with just broadly calling it "greed." And certainly capitalism -- the pursuit and development of capital -- is all about the acceleration of accumulation.

TheDrake

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Re: Problems with the IRS
« Reply #20 on: December 27, 2022, 10:25:32 AM »
Human beings are a social animal. We crave each other's approval. The problem is that there are enclaves of society where greed is met with approval rather than disapproval. And that's not just a shadowy cabal, that's everyone oohing and aahing over the "Lifestyles of the Rich and Famous", while not watching "Lifestyles of the Modest and Altruistic". Then there's actual diminishment of people not squeezing the letter of every law to extract the last few drops of "stuff for me". I told somebody once that I paid taxes on my consulting fees, which were minor for this job. They acted like they were letting me in on a great secret that there was a threshold and if it wasn't over $600, you didn't need to report it. That's number one, not accurate. The IRS won't know about small amounts because the payor doesn't report it via 1099. But they still exist, and they are still taxable. And it is the right thing to do. I am blessed to be in the top 10% of wage earners. It is only fair that I pay my apportionment. Then people tell me that I should start claiming my car as a business expenses because I've used to to drive, or during the pandemic claiming my home office as a business expense. They are actually disappointed and even angry that I won't follow their advice? Why? Because it registers to them as disapproval of such tactics, and that doesn't feel good, because we crave each other's approval.

Is it any wonder that we need a massive IRS force when people are actively trying to figure out how to screw their fellow citizens by not paying a fair share? Actively trying to increase the wealth gap? Actively trying to get a third estate while raising the rent of people physically unable to pay any more and still afford their high prescription drug prices, also driven up by the same people? People setting up sham charities as a way to launder money to give to their other rich associates? People setting up sneaky trusts to ensure their holdings are not taxed even when they aren't breathing anymore?

Competition is good. I wouldn't argue that the bakery in my neighborhood should have government set prices. I wouldn't argue that the people investing in that business do well when the business makes a good profit. But I will take exception when Hostess and their army of lawyers figures out or even engineers pieces of tax code that you only get to exploit if you have 3000 employees, or an interstate business, or a fleet of trucks. I don't know why more people aren't more disgusted by this, but there are a lot of us. You can measure it politically with Bernie Sanders and the other progressive lefties.

Can we eliminate avarice? No, people will continue to commit all kinds of frauds and swindles. Relatively few people admire Elizabeth Holmes for her $1B theft. But she made the grave error of swindling rich people, while payday loan companies are going strong. Put more people under the microscope. Restrict obvious and egregious greed. Petty greed, like taking a bigger slice of cake, we can live with.

I'm not righteous either. I am part of the problem. I support the greed of Amazon by continuing to use their service because I'm not willing to cobble together an alternative. I am two-faced by feeding them with my cash and wagging my finger at them for avoiding $5,000,000,000 in federal taxes. I justify it to myself by supporting the minimum corporate tax provision in BBB, or critiquing local governments for courting them to put their new headquarters in their area.

So I can't put a timetable on when I and the rest of society are really going to put our collective foot down. Funding an army of IRS agents to make life miserable for the cheaters seems like a good first step.

Fenring

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Re: Problems with the IRS
« Reply #21 on: December 28, 2022, 12:24:43 AM »
I don't have any problem with re-jiggering the system to eliminate certain avenues of financial advancement. I was a fan of Bernie's and a sort of cheerleader of Occupy Wall Street. But what I would and do contest is the idea that "capitalism" is an unfettered good that only gets ruined by no-good regulators, government, and (in Rand's view) jealous weaklings. I know, TheDrake, that your views, despite being Randian, are not precisely those of modern Republicans, notwithstanding the fact that many of them appear to revere her. However I just think it's sloppy to afford any praise to "capitalism" for the advances that are frankly simply a result of progress, both technological and in the human sphere. Capital markets did not invent metallurgy, chemistry, or physics, even though publicly owned corporations have obviously participated in the development of processes and even theory. But they haven't participated in them by virtue of being publicly traded corps, but rather by virtue of the fact that humans worked there. These things have developed despite the profit motive, not because of it. But obviously it's more complex than that, because trying to monetize development has most certainly hampered creative development in some quarters while legitimately assisting it in others. What I push back against is the bizarre idea pushed a lot in the U.S. that we have capitalism to thank for wealth and technology, both of which preceded it and will exist beyond it. And honestly while industrial enterprise did harness tech to usher in the so-called industrial revolution, the fact that tech advances occur happens as an inevitable consequence of human curiosity and drive, not as a consequence of capital markets attracting investors. Just as an example, I am rather fond of a lot of Charlie Munger's advice about life, but one area where I find him quite blind to reality is in his insistence that the poor should be thankful for their quality of life, as compared to even the rich going back in history, and not complain about wealth disparity. But naturally he's implicitly attributing this to capitalism when in fact it's simply attributable to technologies which could just as soon have been invented in totalitarian regimes or aristocracies. Maybe at a slower pace (this is arguable), but eventually.

All this to say, Capitalists (I use the capital C to indicate those with the power to marshal forces that can maneuver the entire system) will always no doubt try to maintain and further the system to favor capitalists, i.e. those with large amounts of capital. That's not some conspiracy theory, but actually pretty much the very nature of what the system is supposed to be. It's not like using wealth to leverage power and wealth is an unfortunate by-product of the system - it's actually called the system of capital in its name! So can the IRS do something about those trying to outdo others within the system? Maybe. I don't know, really, since the system is pretty much defined as "can you use your intelligence and leverage to win the game". So can you fault someone for doing that?

Or put another way, TheDrake, why shouldn't you try to minimize your tax burden under the law, without resorting to actual cheating? It's actually what you are supposed to do, the stated rules of the game. Now you are free to reject the game, however at that point you are simply making a voluntary donation to the government. Maybe that's something people should do, but it's usually not thought of as an option. Most people give to charities instead, I suppose. I think there is this idea that government has been co-opted by various powers they feel are antagonistic to life anyhow, so why further support them? An easy example is - why should I want to pay more taxes when it's just going to contribute to bombs and killing? I actually think governments would get a lot more cooperation with taxes if people could use their tax obligations in an opt-in fashion, designating which government programs they want to support. Naturally that wouldn't work, since what if no one wanted to support a "necessary" program. But at least hypothetically they could know they were not actively working to further ends they find immoral.

TheDrake

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Re: Problems with the IRS
« Reply #22 on: December 28, 2022, 03:33:30 PM »
Sometimes I wonder why I keep coming back here, then I get a thoughtful post like Fenring's and remember why. I think everything you say makes sense if you equate capitalism with "maximize profit to the exclusion of all other values, restricting only by what is illegal". Is Costco profit-driven? Of course they are. But they are not pathological about it. They let their employees take reasonable breaks and don't fire them for falling behind an inhuman required pace. They pay them more than market value. I attended earnings calls where they were chastised by institutional investors for high labor cost. Senior management stuck to principle, and they are still a very good retail place to work. I don't know if Costco lobbies the government to get sweet tax deals. They might. But I would bet they don't push the envelope like other companies. Now, I can't say if that is altruism. It could be profit-driven. Knowing that customer service is much better when you've got the cream of the employment pool for that type of position, when workers are happy and motivated. In many cases, I believe that is true. But either way, it is "good" capitalism.

Why shouldn't you try to minimize your tax burden? It depends on how you mean. Are you in the white, the black, or the grey? If you have a delivery truck that you bought and use for your LLC, it should reduce the tax on they money you made providing services. If you had the truck all along, and you do some side jobs here and there and claim it, you're entering a gray area. If you legitimately take clients out to lunch, there's no reason for you to avoid the tax break. If you go out with a friend and then say "huh huh, huh huh, I mentioned my business that you're not involved in, now I'm deducting this lunch, you are entering a gray area.

I'm just asking for people to stay out of the gray. But we know people will slide right up to the edge of getting caught and punished - many of them anyway. I'd like to see a year where every single person pulling deductions gets an audit. We don't have the resources, but you'd have millions paying penalties I would guess. Do you have any documentation to support that lunch deduction? Mileage logs for your truck?

Then there's trying to leverage a law clearly not intended for you. Like a tax break directed to help farmers who raise livestock, that you exploit by planting just enough sheep on your golf course to try to claim it. If it doesn't hold up, oh well, that's just a calculation of doing business. If they reject your claims, you just pay some penalties that are offset by other questionable claims that you got away with.

All of which is why I'd rather see a flat income or preferably consumption tax. The one time I was energized enough to actually engage in political activism in a hands-on way was in support of the Fair Tax. Want to remove the ability for corporations to lobby for tax breaks? Stop taxing the corporations, start taxing consumption. There are some international implications that get quite complicated, so I'm only raising this to illustrate what I think is fair, and what I think the government could be doing about it.  I'm also resigned now to the fact that it can't happen, because those corporate donors already bought their political power, and no Congress is ever going to take away their power to do favors in exchange for campaign funds. I wholeheartedly agree with your assessment that our current crop of entrepreneurs, old money, and power brokers are never going to loosen their grip on the people making and enforcing the rules that could constrain them. Look at how they howled and howled until they managed to eviscerate the CFPB. Now under Biden they are getting modest support, but ultimately will remain too weak to really restrain any big banks. The penalties they can levy are a pittance compared to what companies rake in.

Fenring

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Re: Problems with the IRS
« Reply #23 on: December 29, 2022, 01:35:16 AM »
Thank you for your remarks, Drake. Although I usually type quite quickly, resulting in typos that I miss, I try to use my faculties as well as I can when answering so that something can be added. I try to avoid dismissive posts.

I think everything you say makes sense if you equate capitalism with "maximize profit to the exclusion of all other values, restricting only by what is illegal".

It's not that I equate capitalism with this moral (or immoral) imperative, but rather that I identify it as the ecosystem in which reward/loss results. One is perfectly free to "lose on purpose", if you want to call it that, and decline to leverage capital to gain more capital. I was actually discussing this with my wife the other day: how could one be sure to avoid any zero-sum interactions with others? The conversation started when I asked her whether any 'moves' in the financial markets could be construed as immoral in and of themselves. For instance, could shorting stock be considered to be problematic? Some people (usually those with skin in the game) say yes, because you profit by others losing and are thus hoping for a company to fail. But on the other hand, it's simply a prediction, and how can an accurate prediction be construed as having a moral component? Is truth immoral? These and other questions were discussed, and finally it became evident that all financial interactions - at least in our present time - must contain at least some zero-sum component, where your gain is someone else's loss, or at least their relative loss. For instance if your fortune increases a million-fold, and someone else is sitting on the sidelines, you've made them 'lose' insofar as you now control a vast majority of all resources compared them, even though they never ever thought to enter the arena with you. And the simplest version of all is applying for a job: you get it at the expense of anyone else getting it. You win by them losing. Nothing else could be more straightforward. So this type of thinking, applied at the macro scale, leads me to conclude that the game must have winners and losers, and that declining to try to win doesn't mean you're not in the game, it just means you are deciding (consciously or not) to have a weak position in it where others decide your fate.

Let me put it a different way: do you believe it's wise for people to put away money in their 401k for retirement? Should they not be hoping for maximal return in so doing? And if so, is any ceiling on their return not simply a result of them not knowing how to do better? Who wouldn't say to their stock broker or fund manager "Do better if you can!" You want your wealth to leverage more wealth. That is capitalism. It's not a question of whether it's 'at the exclusion of all other values', but rather just a matter in almost all cases of "how much of a return can I get?" The moral side almost never enters into it unless you're in a very strong financial position indeed, like corporate board members, CEO's, or powerful fund managers. And then...do they not have a responsibility to their investors to make profits? It's not as simple as saying "to the exclusion of all else" when it's hard enough to ensure profits at all sometimes. So, what...if you can buy a bond at 4% should you decline and say, "hey hey now, that's too much, give me a bond at 3% instead"?

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I don't know if Costco lobbies the government to get sweet tax deals. They might. But I would bet they don't push the envelope like other companies. Now, I can't say if that is altruism. It could be profit-driven. Knowing that customer service is much better when you've got the cream of the employment pool for that type of position, when workers are happy and motivated. In many cases, I believe that is true. But either way, it is "good" capitalism.

I don't disagree that one can govern with moral principles, or without them. In Costco's case I suspect it is all profit-driven, although I can't be sure. If so, it then becomes merely a coincidence that the best profits are made from acting in a humane fashion. What if the reverse was the case? Is the hotdog price rule enforced there a matter of principle, or of PR? Incidentally, I would like to mention that Costco seems to have morphed away from their "Price Club" roots and have become a rather expensive store, not unlike Whole Foods, whose claim to fame is reasonable prices for mid-upper ends goods from a label you trust. That's fine, but their corporate choices have certainly led them away from being a bulk discount store. So like it or not they've ended up being priced out of their original business model. At present they are actually more expensive than most other grocery stores near me.

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If you go out with a friend and then say "huh huh, huh huh, I mentioned my business that you're not involved in, now I'm deducting this lunch, you are entering a gray area.

I get it, you mean that dishonest reporting should be avoided. Generally it's not vague at all from one's POV whether a deducted expense is in the spirit of the law or not. But it sounds like you mean that you should indeed otherwise make every last legitimate claim you can?

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Then there's trying to leverage a law clearly not intended for you. Like a tax break directed to help farmers who raise livestock, that you exploit by planting just enough sheep on your golf course to try to claim it. If it doesn't hold up, oh well, that's just a calculation of doing business. If they reject your claims, you just pay some penalties that are offset by other questionable claims that you got away with.

Doesn't this get into the originalist/literalist etc legal debate we've seen on Ornery from time to time? Should people really be hunting for the purpose a tax law was created, or should they merely follow the law, and if it has usable loopholes to use them? Isn't that something legislators should correct, rather than taxpayers? The golf course example seems pretty simple, but maybe there are other cases that really aren't. At a certain point maybe the game design is what it is and the problem should be identified as design flaw rather than tax cheating? That's a complicated topic, maybe. For instance many people would accuse Trump of cheating on his taxes, using real estate loopholes to avoid taxes. But I'm not so sure. If those laws exist, and he abides by them, should he not use them? There are after all many risks in business that the government gives you no help with, and yet you're punished if your venture fails. Maybe a little extra help through tax law is actually warranted, depending on the case.

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All of which is why I'd rather see a flat income or preferably consumption tax.

I sometimes debate with myself whether consumption taxes are worthwhile. Don't they punish the activity the society needs most in the current system?

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I wholeheartedly agree with your assessment that our current crop of entrepreneurs, old money, and power brokers are never going to loosen their grip on the people making and enforcing the rules that could constrain them. Look at how they howled and howled until they managed to eviscerate the CFPB. Now under Biden they are getting modest support, but ultimately will remain too weak to really restrain any big banks. The penalties they can levy are a pittance compared to what companies rake in.

Yes, the fines vs profits calculation, which auto manufacturers and banks frequently make. But what I would like to point out is that the current state of things is IMO a necessary result of an over-capitalized system. The more things are for sale, the more those who own them will have more and more power. That's one reason why I am wary of crypto, beyond the facts regarding their solvency, real value, and honesty: I do not think it is a good idea to add more and more things that can be monetized and turned into tradeable securities. The appeal is obvious, that very rich people love crypto because it introduces more and more realms (blockchain, NFT's, digital concoctions in general) that become the new real estate, for those with deep pockets to occupy, leverage, and dominate. And this is natural, since there is already a global problem of there not being enough stuff to buy. That's a different and complicated discussion, but long story short there's a reason why the whole world looks to plant $$ in the U.S. - because there aren't that many other great options that are safe. It stands to reason that opening up brand new markets would be very appealing to Capitalists. While I can and do blame the 'old money' you mention (although much of it is actually new, not old, but is perhaps old 'in spirit') I don't blame them, exactly, for things being this way. That is a result of the capital markets such as they are. They verge toward consolidation over time. The monkey wrench in that machinery is the advent of mega-corp tech companies which can arise relatively quickly, which is another problem largely attributable to dominance in capital markets.

I guess my ultimate point after this long diatribe is that the system doesn't generate these results by accident, whether the dot-com bubble, the GFC, the takeover of real estate by Blackstone, or any of the other parts of it. It's just what happens when markets are set up like this. Regulation acts as band-aids for old problems (like Basel III for the GFC) but doesn't stop the new problems. I guess I feel like using IRS loopholes is kind of the least of our problems, or at least not at the top of my list of worries in the system. I wouldn't be too bothered by the ultra-wealthy having to pay more taxes; not at all.
« Last Edit: December 29, 2022, 01:40:37 AM by Fenring »

TheDrake

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Re: Problems with the IRS
« Reply #24 on: December 29, 2022, 12:08:12 PM »
I certainly can't argue that IRS loopholes are the biggest problem - they aren't even the biggest tax problem. Rather I see them as an illustration of the larger idea that all income tax is theft, and that "winning" means having the biggest bankroll. Now I don't know what changes might be necessary to achieve that. I'm certainly not donating any extra money to social security, despite the fact that I think those taxes should not cut off when someone gets rich.

If your 4% bond option is in a UAE construction company using what amounts to slave labor, is that a better choice than a 3% bond in the French construction company that pays livable market wages to essentially the same migrant labor pool?

The system is rigged to avoid making decisions like that. If the UAE company looks attractive to the ETF manager, then most people looking to maximize their 401k never even know it is happening. A sliver of a percentage might actually read the prospectus and understand it, and the full details will be hidden as proprietary. That person will also have severely limited choices as to the funds they can invest in. They would be forced to try to make interest only in municipal bonds if they were available, but guess what. That money is also being spent by that government flowing to energy companies that may act in unethical ways.

Capitalism in the form of equitiy markets absolutely does drive towards the results that you describe, as the more removed the provider of the capital is from the action, the more money is unfettered by any ethical consideration unless it gets blown up in social media, celebrity awareness campaigns, and traditional media.

Blood diamonds, fair trade coffee, and other ethical business have risen to the level of public awareness. Am I "losing" when I pay more for goods based on sustainable practices and compassion? Are my free range eggs the sign of a sucker?

I pick the IRS to talk about because that's the thread and I try to hew to the OP at least a little bit of the time. But also because it seems the lowest lying fruit because it's possible. Changing the tax code is impossible with a Republican house. Changing how capital markets work is virtually impossible. But maybe, just maybe, IRS can dredge out some garbage cheaters who are not in a gray area. Or at least be as good as the roadside speed indicators that tell you to slow down. People will still speed, but maybe fewer or closer to the limit.