[southernmissouri2007]

If Taxes are raised on the Rich the Rich going to try to find ways to hide or cheat or to avoid higher Taxes they will try to find loopholes and Tax shelters and other ways to avoid high Taxes they will not keep their money/wealth inside their Businesses create Jobs and hire Workers to avoid higher Taxes they will try to get round the higher Taxes with loopholes don't you agree they will try to find ways to reduce their Tax Burden they will not reinvest/invest just to avoid higher Taxes because they have other ways to avoid higher Taxes ?

One of the more notorious examples is the tax shelter. Because the sale of capital assets are taxed only when they are profitable, investors hid much of their income in these shelters. In the late 70s, when capital gains became much lower taxed than income, tens of thousands of useless or empty office spaces were opened up nationwide, designed to "lose" money. Many of these tax shelters were for esoteric assets like collectibles, freight cars and even llama breeding. Between 1979 and 1985, tax shelter "losses" jumped from about $10 billion to $160 billion a year. (1)

Another role of tax shelters is to convert highly taxed income into low-taxed capital gains. This represents a pure revenue loss to the IRS, with neutral or even negative consequences to the economy.

When the government artificially raises the profitability of an asset, especially through highly specific loopholes, then investors will start making sub-standard investments that the free market would otherwise refuse to make.

http://www.huppi.com/kangaroo/L-capgainsspur.htm

[Modernjan]

So, given the way I have been prone to think about this over the years, I'd say it's better not to increase taxes because people tend to distrust a country where the taxes go up. It's also not intelligent to LOWER them because then you may have to raise them later. What seems to me is more useful is to keep the labor regulations sane (not like say in Spain or Venezuela), avoid corruption, make sure the ports move cargo fast and the customs systems work, keep crime down, train kids so they can be trained to work hard, and keep changes (including environmental regulations) to a minimum, because the big guys really hate to have things change when they are investing a ton of money. So you can be as tough as you want, but for god's sake don't rock the boat too much. We really don't like to see volatility, what we like is to see things steady as she goes, make money, stash it away, and keep on dreaming ways to make more money. And in the end, if the system is tuned properly, that generates a ton of jobs - ask the Germans how they do it, it works very well for them.

Germany has higher effective taxation rates and more labor and environmental regulations than the US, while its population is also aging faster. Their economy is still doing better. I'd say Germany is the quintessential proof that countries don't have to bend over for multinational corporations in order to have a healthy economy. Good infrastructure, and as you pointed out, the efficiency and reliability of the legal system can attract investment despite high costs.

[Meta777]

If Taxes are raised on the Rich the Rich going to try to find ways to hide or cheat or to avoid higher Taxes they will try to find loopholes and Tax shelters and other ways to avoid high Taxes they will not keep their money/wealth inside their Businesses create Jobs and hire Workers to avoid higher Taxes they will try to get round the higher Taxes with loopholes don't you agree they will try to find ways to reduce their Tax Burden they will not reinvest/invest just to avoid higher Taxes because they have other ways to avoid higher Taxes ?

Businesses already do all of that stuff at the current tax levels.
Unless tax rates are set to 0%, business are likely always going to try to find ways to cheat the tax system.
I believe that the solution is simply to identify all the loopholes and other ways businesses use to cheat the system and eliminate them all.
All the ways businesses use to cheat the system that is.

-Meta

[southernmissouri2007]

Meta777 my question for you if what would you do to stop this under a Progressive Tax System ?

[Meta777]

My solution might be different for each individual issue,
but I would probably start by getting rid of all the loopholes that exist explicitly in the tax code.

-Meta

[Dr House]

Hey Doc, i see you have 23,082 posts and you are a "student", very cool

Eh, whatever.

[Social_Critic]

Guys, they don't cheat the tax system. Their behavior is altered to avoid taxes. In other words, I don't think you can send me to jail for cheating if I decide to keep profits overseas when the US wants to tax them. If there are no viable investment opportunities in the US, then why repatriate profits?

I use the above as an example of altered behavior caused by the tax code. I could use other examples. However, there are ways in which the tax code can be changed. For example, in many countries we see multinationals lend money to themselves (they do it via captive banks). When they lend money to their own subs, the subs get to write off the interest paid every fiscal year. Meanwhile, the entity making the loan and earning the interest is placed in a lower tax environment (say the Cayman Islands). This is utter bullshit, but it goes on.

[Meta777]

Cheating is just a metaphorical way of speaking of it, and probably isn't the best way to refer to what actually goes on.
Technically speaking, they do not cheat the system, because their actions are legally acceptable by current law.

-Meta

[southernmissouri2007]

The Rich don't keep money/wealth in their Company and create Jobs to avoid higher personal income taxes they shelter their wealth to avoid higher taxes.

http://www.investopedia.com/terms/t/tax ... z1aap6BN1S

http://money.howstuffworks.com/personal ... elters.htm

[Meta777]

Tax shelters should be abolished.

-Meta

[southernmissouri2007]

The idea that the Rich keep money/wealth in their Company and create Jobs to avoid higher personal income taxes is nonsense because the Rich shelter their wealth to avoid higher taxes not by keeping money inside their Company.

[Meta777]

The rich do all sorts of things to gain more money, they don't do just one thing.
There is a limit to how many people one person can hire at any given time.
And there is a limit to how much one can utilize certain types of tax shelters.
Usually, the more money goes through these type of things,
then the more likely someone is to take notice.

-Meta

[FDR]

Thing is, businesses make great tax shelters. If you invest your business revenue in expanding the business, this is treated as a business expense and is deducted from revenue when you calculate the profit. If, instead, you don't invest in your business, but withdraw the money as income, you pay income tax on that, then you take this smaller amount of money to invest in a tax shelter.

The idea that the Rich keep money/wealth in their Company and create Jobs to avoid higher personal income taxes is nonsense because the Rich shelter their wealth to avoid higher taxes not by keeping money inside their Company.

[Modernjan]

Thing is, businesses make great tax shelters. If you invest your business revenue in expanding the business, this is treated as a business expense and is deducted from revenue when you calculate the profit. If, instead, you don't invest in your business, but withdraw the money as income, you pay income tax on that, then you take this smaller amount of money to invest in a tax shelter.

Sure, but you can't enjoy money that's stuck in an investment. Eventually you'll want to withdraw that money and buy something with it, a tax shelter lets you do that (you can buy a private jet in Switzerland, no problem), a business doesn't.

[FDR]

You can buy the same private jet as part of the business, pay the business back for expenses when the trips are strictly personal, and still have enough money left over for the business to buy a limosine to take you to and from the airport.

Sure, but you can't enjoy money that's stuck in an investment. Eventually you'll want to withdraw that money and buy something with it, a tax shelter lets you do that (you can buy a private jet in Switzerland, no problem), a business doesn't.

[ralfy]

The problem isn't the number of taxes or tax rates but tax cuts:

"The Misinformed Tea Party Movement"

http://www.forbes.com/2010/03/18/tea-pa ... tlett.html

[southernmissouri2007]

The Rich keep money/wealth in their Company and create Jobs to avoid higher personal income where is the evidence that this works ? What I mean is if the Business Owner is making less Income a smaller paycheck would he have any Incentive to hire new Workers and or is this claim that higher taxes creates Jobs nonsense because not every Business Owner is going to hire to avoid higher taxes thank you ?

[Meta777]

You can draw your own conclusions from those graphs.

-Meta

[southernmissouri2007]

Reinvesting money in your company is one way to avoid taxes however there are many other ways. Purchasing equipment and hiring outside firms to do do things are just a couple of ways to reinvest without hiring. Labor costs are something that most companies try to keep low. The liability is high and the new truck or equipment can't sue you like a person can.

Personally I see NO connection between avoiding taxes and hiring.

[Meta777]

Reinvesting money in your company is one way to avoid taxes however there are many other ways. Purchasing equipment and hiring outside firms to do do things are just a couple of ways to reinvest without hiring.

Aren't all these things reinvesting money into your company?
And don't they all ultimately hire someone, even if not directly?
You do have to pay the people who build the equipment or the external firm, right?

-Meta