Raise taxes on the rich

[Richard]

Those of you that advocate this, and I know there's many of you, I have a simple question.


How?


I'm willing to entertain some scenarios here.  You tell me what Mr. RichGuy does for a living, and I tell you what I do to reduce his taxes.

For example:


1) Mr. RichGuy is an investor and a day-trader and works for himself from home.  He buys and sells all sorts of securities from all over the world.  He makes $20 million a year in profit.

Solution: Company registered in Seychelles Islands with bearer shareholders.  He is the only shareholder and his share certificates are kept in a private vault in Switzerland (contents of safe deposit boxes are not public knowledge).  His trading account is with any brokerage company in the world and the corporation authorized him as a trader on their behalf through a power of attorney form.

Is it illegal?  No, but Mr. RichGuy is supposed to disclose all money he receives from this company.  Does he?  Nope.



2) Mr. RichGuy2 owns his own internet business selling widgets.  He lives in Texas and has an office and warehouse he is renting.  He employs about 50 people that processes orders and ships the widgets.

Solution: Mr. RichGuy2 owns a corporation in Cyprus that is the sole licensed provider of said widgets worldwide.  All sales are made in Cyprus; your credit card gets charged there, money is deposited in to a bank account in Bermuda, etc., all in the name of this corporation.  This corporation is owned by a trust registered in the Netherlands Antilles.  All profits are made in the Cyprus corporation and is paid to the trust, from where it can be paid to any of the beneficiaries.  The Texas corporation invoices CyprusCorporation every month for all the widges shipped, rent, salary expense, etc.  Just enough to cover all the expenses.  As a result, the Texas company never makes a profit.

Is it illegal?  No, but Mr. RichGuy2 is supposed to disclose all the money he receives from the trust.  Does he?  No.  (Illegal)

To be legal again, the trust pays a corporate beneficiary in Denmark money.  All the investments are kept in Denmark because foreign control of a Danish corporation pretty much exempts the corporation from tax.  This corporation pays dividends to Mr. RichGuy2 in the USA, and by treaty with Denmark the tax rate on dividends out of Denmark to Mr. RichGuy2 is only 5% (or sometimes 0%).


If you make more than $500,000 a year, we can save you money.  Massive amounts of money.  We will pretty much eliminate your tax.  How aggressive and illegal you want to be is only up to you.  But why go illegal to eliminate all taxes if you only have to pay 5% and then be 100% legal?


So by all means.  Raise taxes on the rich.  It only serves to discourage the middle class (upper) from working harder.

[Marokai Backbeat]

Paging Dr. Beet, paging Dr. Beet.

[Person Man]

So uh....we just let them do this?

[Ban my account ffs!]

Those of you that advocate this, and I know there's many of you, I have a simple question.


How?


I'm willing to entertain some scenarios here.  You tell me what Mr. RichGuy does for a living, and I tell you what I do to reduce his taxes.

For example:


1) Mr. RichGuy is an investor and a day-trader and works for himself from home.  He buys and sells all sorts of securities from all over the world.  He makes $20 million a year in profit.

Solution: Company registered in Seychelles Islands with bearer shareholders.  He is the only shareholder and his share certificates are kept in a private vault in Switzerland (contents of safe deposit boxes are not public knowledge).  His trading account is with any brokerage company in the world and the corporation authorized him as a trader on their behalf through a power of attorney form.

Is it illegal?  No, but Mr. RichGuy is supposed to disclose all money he receives from this company.  Does he?  Nope.



2) Mr. RichGuy2 owns his own internet business selling widgets.  He lives in Texas and has an office and warehouse he is renting.  He employs about 50 people that processes orders and ships the widgets.

Solution: Mr. RichGuy2 owns a corporation in Cyprus that is the sole licensed provider of said widgets worldwide.  All sales are made in Cyprus; your credit card gets charged there, money is deposited in to a bank account in Bermuda, etc., all in the name of this corporation.  This corporation is owned by a trust registered in the Netherlands Antilles.  All profits are made in the Cyprus corporation and is paid to the trust, from where it can be paid to any of the beneficiaries.  The Texas corporation invoices CyprusCorporation every month for all the widges shipped, rent, salary expense, etc.  Just enough to cover all the expenses.  As a result, the Texas company never makes a profit.

Is it illegal?  No, but Mr. RichGuy2 is supposed to disclose all the money he receives from the trust.  Does he?  No.  (Illegal)

To be legal again, the trust pays a corporate beneficiary in Denmark money.  All the investments are kept in Denmark because foreign control of a Danish corporation pretty much exempts the corporation from tax.  This corporation pays dividends to Mr. RichGuy2 in the USA, and by treaty with Denmark the tax rate on dividends out of Denmark to Mr. RichGuy2 is only 5% (or sometimes 0%).


If you make more than $500,000 a year, we can save you money.  Massive amounts of money.  We will pretty much eliminate your tax.  How aggressive and illegal you want to be is only up to you.  But why go illegal to eliminate all taxes if you only have to pay 5% and then be 100% legal?


So by all means.  Raise taxes on the rich.  It only serves to discourage the middle class (upper) from working harder.

Oh trust me, Richius... being the largest economy on earth has its benefits.  We could always pull the "if you want to do business in the United States of America, you are going to play by our rules" card.  How about a 90% tax on profits earned within the United States for companies with HQs in known tax havens.

How about a 90% inheritance tax on estates located within the U.S? 

How about a stiff luxury item tax on items either bought within or imported into the U.S? 

We can always find someone willing to point a gun at your head for failure to comply.

[○∙◄☻¥tπ[╪AV┼cVê└]

They should clearly pay taxes on the money they earn just like everyone else. The poors and middle classes have their income taxes withheld so that they can't cheat on taxes like this. Tax loopholes are just for the greedy rich who should pay their fair share.

[True Federalist (진정한 연방 주의자)]

RichGuy 1 is the myth of the lone day-trader.  Such persons can make money for a period of time by being lucky, but they can't do so consistently, and if they could, they'd make more money by forming a hedge fund than pulling a tax scam.  In any case, you're already admitting he;s not even bothering to be legal with his scamming.

RichGuy 2 shows why corporate income tax should be a tax on gross income instead of a tax on net income, or even better, to avoid companies moving production offshore, make that a sales tax with an identical tariff rate so that a company selling a good in the United States pays the same tax regardless of where it is made or how the corporate structure is organized.

[TeePee4Prez]

RichGuy 1 is the myth of the lone day-trader.  Such persons can make money for a period of time by being lucky, but they can't do so consistently, and if they could, they'd make more money by forming a hedge fund than pulling a tax scam.  In any case, you're already admitting he;s not even bothering to be legal with his scamming.

RichGuy 2 shows why corporate income tax should be a tax on gross income instead of a tax on net income, or even better, to avoid companies moving production offshore, make that a sales tax with an identical tariff rate so that a company selling a good in the United States pays the same tax regardless of where it is made or how the corporate structure is organized.

Now with RichGuy2 there should be a two-tiered system like the City of Philadelphia has with it's BPT/NPT where both Gross Receipts and Net Income are taxed.  A similar corporate tax system should be explored in this case.  Of course, in Philadelphia's case the BPT is what repells any potential business however, but a similar model might work.

[opebo]

1) Solution: Company registered in Seychelles Islands with bearer shareholders.  He is the only shareholder and his share certificates are kept in a private vault in Switzerland (contents of safe deposit boxes are not public knowledge).  His trading account is with any brokerage company in the world and the corporation authorized him as a trader on their behalf through a power of attorney form.

Don't allow any such companies from the Seychelles, etc. to do business in the US, and/or tax the incomes disbursed from the brokerage company.  Force the brokerage companies to reveal every detail about their customers and activities or close them down, confiscating all their assets.

2)
Solution: Mr. RichGuy2 owns a corporation in Cyprus that is the sole licensed provider of said widgets worldwide.  All sales are made in Cyprus; your credit card gets charged there, money is deposited in to a bank account in Bermuda, etc., all in the name of this corporation.  This corporation is owned by a trust registered in the Netherlands Antilles.  All profits are made in the Cyprus corporation and is paid to the trust, from where it can be paid to any of the beneficiaries.  The Texas corporation invoices CyprusCorporation every month for all the widges shipped, rent, salary expense, etc.  Just enough to cover all the expenses.  As a result, the Texas company never makes a profit.

Require that the Cyprus corporation submit itself to american taxation or be banned from access to the US market.

I realize that our neoliberal world economy is built on this kind of 'free trade', so that reasonable police actions like the ones I mentioned would run afoul of that concept.  It would probably be necessary to get around this by setting up a sort of WTO (World Taxation Organization) in order to equalize tax rates around the world at the highest possible levels, or at least bring responsible states together to allow full investigation of criminals.  This probably wouldn't be too hard as most of the tax havens are small and would be easy to make into pariah states.

Keep in mind Richius that it is not some cleverness on your part (or their part) that gaurantees the privileged the right to avoid retrubution, but rather their actual political power. 

[k-onmmunist]

My point on this issue completely. By raising taxes on the rich, you cripple our society by destroying the enterpreuner's wealth.

[ChrisJG777]

My point on this issue completely. By raising taxes on the rich, you cripple our society by destroying the enterpreuner's wealth.

Not that old chestnut again...

I mean, how?  I'm no economic expert (and it's late as I type this), and as nigh on impossible they are to get your head around, I don't think any tax system on this planet is that f^**ed up!  Raising taxes on a business or an individual that earns enough does not destroy their wealth, sure they're a bit ticked off by having a tiny bit less cash in the pocket, but they're still earning a ridiculous amount of money!  It may be possible to tax paupers to death, but surely not millionaire individuals and corporations, or even ones with incomes in the hundreds of thousands?

I've never bought that argument, or anything else the likes of Friedman, Thatcher or Reagan espoused, that argument especially (which is one of the worst in my opinion). 

[Torie]

Raise taxes on the "rich" because some commit criminal tax fraud  (which is what the hypos in the original post in fact are)? Is that the proposition?  Money earned overseas is taxed in the US immediately except for offshore corporations engaging in certain kinds of active businesses rather than investments.

No, the answer is to do what we are doing, and make banks in the havens tell all about their foreign bank accounts. The US is putting the squeeze on Switzerland as we speak, and if Switzerland does not play ball, we should slap trade sanctions on them.  They can sell their rolexes to someone else.

[Richard]

Oh trust me, Richius... being the largest economy on earth has its benefits.  We could always pull the "if you want to do business in the United States of America, you are going to play by our rules" card.

We always do.

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There will simply be no profit dude.  Another company will charge a management fee equal to the taxable amount of profits in the operating company.  The operating company will make $0 profit while all the profit is moved out to where it can't be taxed.

Oh you want to disallow that?  Not so easy since there are thousands of companies that do provide management consulting services and charge say, $200/hour to advice management about decisions to be made, etc.  Is this all of a sudden not tax deductible?  You just killed thousands of companies then that legitamtely provide this service.

Besides, then we artificially jack up our cost of sales.  Ie, all our materials are purchased from a supplier (that we happen to own) at prices set so that the operating company make no money.  The suppliers are, of course, foreign companies.  Profit moved out.

Oh you want to restrict that too?  Gee, it just so happens the intellectual property I use is owned by an offshore company and they charge me 10% royalties to use the brand name.  *poof* gone is all the profit

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Dad has worked 40 years to build up small but successful business doing home renovations.  He employes 10 people and has about $1 million in assets in the company (some land, a small building, some vehicles, some equipment).  Dad dies.  I inherit his company and wants to continue, but now face a $900,000 tax bill.  I instead liquidate and 10 people lose their job.

How would I get around it?  Partnerships of course...

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I suppose you could.  Would you like to pay double for your iPhone?  For your laptop?  Your car?  Your <insert something here>?  Depending how inelastic demand is, I'd see the customer carrying most of the tax costs, not the corporation.

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Oh but I always comply!

RichGuy 1 is the myth of the lone day-trader.  Such persons can make money for a period of time by being lucky, but they can't do so consistently, and if they could, they'd make more money by forming a hedge fund than pulling a tax scam.  In any case, you're already admitting he;s not even bothering to be legal with his scamming.

Well no, not a myth.  Certainly not many of them around, however, nothing prevents a company from doing that.  You don't think all those hedge funds are registered in the US now, do you?  This just served as an example of how easily a trader, or group of traders, can duck taxes completely, or legally duck most taxes completely.

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Indeed.  I don't see gross income being taxed anytime soon though, but if they do, I can certainly understand companies switching to reporting "net" instead of "gross".

They should clearly pay taxes on the money they earn just like everyone else. The poors and middle classes have their income taxes withheld so that they can't cheat on taxes like this. Tax loopholes are just for the greedy rich who should pay their fair share.

This isn't cheating.  We comply with the law.

[True Federalist (진정한 연방 주의자)]

RichGuy 1 is the myth of the lone day-trader.  Such persons can make money for a period of time by being lucky, but they can't do so consistently, and if they could, they'd make more money by forming a hedge fund than pulling a tax scam.  In any case, you're already admitting he;s not even bothering to be legal with his scamming.

Well no, not a myth.  Certainly not many of them around, however, nothing prevents a company from doing that.  You don't think all those hedge funds are registered in the US now, do you?  This just served as an example of how easily a trader, or group of traders, can duck taxes completely, or legally duck most taxes completely.

Since you say it's not a myth, give me an example of even one lone day-trader of making even $10 million a year (half that figure you quoted) for a period of ten years.  (Indeed, to be making that kind of money, he's going to have to start with considerable capital.)

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Indeed.  I don't see gross income being taxed anytime soon though, but if they do, I can certainly understand companies switching to reporting "net" instead of "gross".

How does that help avoid taxes, assuming they don't cheat and fail to report their sales accurately?  Gross is gross and there's nothing that can be done legally to alter that, even with shell companies.  Indeed with shell companies, they could end up having to pay more for the privilege if they get dinged twice for the same sale, as I'm talking about taxing gross income, not that bureaucratic mess known as a VAT.

[War on Want]

If all of the rich were like Richius, I'd be a Stalinist.

[Richard]

Since you say it's not a myth, give me an example of even one lone day-trader of making even $10 million a year (half that figure you quoted) for a period of ten years.  (Indeed, to be making that kind of money, he's going to have to start with considerable capital.)

Are you really trying to say there's not a single such person in the world?  Well that is daft.  We have several as clients.  Most of them are retired traders that have 40 years of experience and do it while being bored at home.  And yes, many of them make in excess of $10 million a year.  They may have ups and downs (and of course, losses will be transferred back to the high tax country to be used or sold) but they are quite wealthy.

Yes, I realize my basis is skewed because I strictly deal with high net worth clients, but this is who we are talking about, right?

How does that help avoid taxes, assuming they don't cheat and fail to report their sales accurately?  Gross is gross and there's nothing that can be done legally to alter that, even with shell companies.  Indeed with shell companies, they could end up having to pay more for the privilege if they get dinged twice for the same sale, as I'm talking about taxing gross income, not that bureaucratic mess known as a VAT.

Clearly you have not read about net vs gross reporting of revenue in U.S. GAAP.  I'll give you an example.  Suppose I am an advertiser such as Google or Yahoo.  In fact, I'm using an actual example here.

Google and Yahoo act as intermediaries and get paid every time an internet user clicks on an ad.  They also give a small amount of money back to the owner of the website where the ad appeared.  With me so far?  So let us put some numbers together.  For every click on an ad, I (Google) earn $1 of which 80c is mine and 20c goes to the owner of the website.

Google reports as follows:  Revenue 80c

Yahoo reports as follows: Revenue, 100c,  less cost of sales: 20c


Net vs gross.  Yahoo is right because they really did get $1 and they really did pay out 20c; Google is right because legally they're not entitled to the full $1, just the 80c.


Both are acceptable in US and Canadian financial statements.  Both end up with the same tax liability because we tax net income, not gross.  Start screwing with gross and I'll start screwing with how gross is defined.

[Richard]

If all of the rich were like Richius, I'd be a Stalinist.

Every person has a right to pay the least amount of tax they are legally required to pay.  Why volunteer more?  I never encourage clients to do illegal acts, and I'd say most don't.  But you can bet your left nut I won't let anyone pay more than 15% tax; it is simply not acceptable.

[War on Want]

If all of the rich were like Richius, I'd be a Stalinist.

Every person has a right to pay the least amount of tax they are legally required to pay.  Why volunteer more?  I never encourage clients to do illegal acts, and I'd say most don't.  But you can bet your left nut I won't let anyone pay more than 15% tax; it is simply not acceptable.

No. Being a selfish dickwad gains no sympathy from me. People like you undermine the whole system because you hate the poor and minorities with a sickening passion regardless of the fact that paying the amount of taxes you owe the government wouldn't change your standard of living noticeably. Whatever, you are a fucking psychopath and overall one asshole of a person so your philosophy on the tax code does not concern me.

[Richard]

Don't worry.  It is my mission in life to start a charitable foundation to offer free abortions to those that come of disadvantaged backgrounds.  I do plan on giving back, see?

[War on Want]

So glad to see you doing nice things for the world Mein Fuhrer. Are you going to donate to programs focusing on sterilizing the mentally ill and poor too?

[Richard]

I don't want to pay taxes because the government WASTES so much of it.  Where the hell would you like me to start?  TARP?  Stimulus package?  Cash for clunkers?  Foreign wars of irrelevance?  Wars on concepts such as terror and drugs?  It is all BULLsh**t.

In Canada it is even worse.  I don't use the public health care system because it is sh**t.  Our roads are sh**t.  Public services are sh**t.  We have no army to speak of.  Why in the hell should MORE than 70% of what I work for go to the government?  They just waste waste waste and waste.

I have no interest in subsidizing this bullsh**t stimulus both countries passed.  All it does is to make the real elite, those borrowers of first instance (and thus borrow at the cheapest rate), richer.

[Richard]

So glad to see you doing nice things for the world Mein Fuhrer. Are you going to donate to programs focusing on sterilizing the mentally ill and poor too?

I don't see why not.  Health care should be free, right?  Or do you disagree?

[War on Want]

So glad to see you doing nice things for the world Mein Fuhrer. Are you going to donate to programs focusing on sterilizing the mentally ill and poor too?

I don't see why not.  Health care should be free, right?  Or do you disagree?

Yeah, but doing it for the sake of wanting to kill black people disgusts me.

[Richard]

Yeah, but doing it for the sake of wanting to kill black people disgusts me.

That's OK, the eventual result is the same: fewer babies born to minorities and poor people.  We just do it for different reasons.

Donate to Planned Parenthood.  It is tax deductible.

[War on Want]

I don't want to pay taxes because the government WASTES so much of it.  Where the hell would you like me to start?  TARP?  Stimulus package?  Cash for clunkers?  Foreign wars of irrelevance?  Wars on concepts such as terror and drugs?  It is all BULLsh**t.

In Canada it is even worse.  I don't use the public health care system because it is sh**t.  Our roads are sh**t.  Public services are sh**t.  We have no army to speak of.  Why in the hell should MORE than 70% of what I work for go to the government?  They just waste waste waste and waste.

I have no interest in subsidizing this bullsh**t stimulus both countries passed.  All it does is to make the real elite, those borrowers of first instance (and thus borrow at the cheapest rate), richer.

Your point is? Just because you disagree with the government and disagree where the tax money is going does not give you the authority to throw a temper tantrum like a three year old and refuse to obey the laws. If you don't like the laws in your country, essentially determined by the people, move somewhere else. Besides you have got to be a huge dick butt to think that not paying taxes to the government is going to help public services and roads.

Anyways I don't sympathize with you one bit. Pay your damn taxes and watch the economy recover.

[War on Want]

Yeah, but doing it for the sake of wanting to kill black people disgusts me.

That's OK, the eventual result is the same: fewer babies born to minorities and poor people.  We just do it for different reasons.

Donate to Planned Parenthood.  It is tax deductible.

No because I support legalizing abortion and making them free first trimester to whites too. You support banning abortion for 80% of the population. The difference is there.

I don't really care much about abortion anyways.