Comment by lotsofpulp
4 years ago
> On one hand, these strategies can save companies many millions of dollars, but on the other, they really produce nothing of value and are just a product of the complexities of a (human designed) tax system
Businesses that spend less money on taxes can spend more money on expenses, such as payroll and higher quality materials and land, or it can allow them to sell products/services at a lower price, providing a competitive advantage.
But they are a product of a human designed tax system, which may or may not be bullshit. There is no single clear, correct way to implement taxes.
> Businesses that spend less money on taxes can spend more money on expenses...
Does that actually happen? Small businesses, sure. My cousin's restaurant directly ploughs that money back into the business.
But it seems large corporations mostly do executive bonuses and stock buybacks.
I guess my pendant comes down to my objection over treating all "business" as the same, morally and economically. As though megacorps are same as my cousin's restaurant, my uncle's farm.
Whereas I favor excessive generosity for small and young businesses (and farmers), anything less than levying repeated radical cashectomies against large firms is a moral disaster and economic selfown.
Tax avoidance just moves the tax burden around, it doesn't create value.
Tax collection and tax compliance does create value, but spending time specifically figuring out how to pay as little taxes as possible creates no value. It see likely that some level of bullshit jobs are an unavoidable side-effects of value producing activities. The interesting part of the idea comes from thinking about how we can structure those value producing activities to minimize the bullshit side-effects and thus increase economic efficiency.
Taxes are an area with a lot of low hanging fruit, unfortunately Intuit and other tax prep companies spend a lot of money lobbying to maximizing the bullshit jobs side effects of taxation because it makes them more money.
I disagree here. Instead of calling it “tax avoidance” let’s just talk about reducing your tax burden as much as possible. This is the prudent move for any individual or tax paying entity.
Taking advantage of your roth, 401k, homestead exemption, writing off losses, etc… absolutely provides value to the tax payer. The value is literally more money for the tax payer who can now further participate in the economy.
The accounting industry employs loads of people. Is that not “value?”
> Taking advantage of your roth, 401k, homestead exemption, writing off losses, etc… absolutely provides value to the tax payer. The value is literally more money for the tax payer who can now further participate in the economy.
But it's zero-sum - every dollar they gained was a dollar taken out of the public purse. And worse, hours of human labour were spent on this moving around rather than something productive.
Tax benefits are (notionally) intended to be positive sum, but that can only happen to the extent that they change actual behaviour. If I put more into a pension fund because it's tax-advantaged, that's (theoretically) win-win - I get more to spend in the long term, the government reduces the risk of having to support a penniless future me. Similarly if I buy a bicycle through the cycle to work scheme, that (on average) reduces the government's medical costs. But claiming a tax writeoff for something I was doing already is zero-sum, and changing my corporate structure so that it pays less tax while doing economically equivalent things is likely to be negative-sum (because the new structure will likely have (marginally) lower real-world productivity - otherwise I'd be doing it that way already).
> The accounting industry employs loads of people. Is that not “value?”
No, quite the opposite - it's taking those people away from things that are real-world productive. Sometimes the costs of accounting might be outweighed by the benefits (e.g. giving companies information they need to make business judgements, or exposing fraud earlier). But often they're not.
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You seem to have entirely missed the point.
> let’s just talk about reducing your tax burden as much as possible
For the purposes of the discussion, it is irrelevant if the overall tax burden should be raised or lowered. Given any target level of tax burden, it is inefficient to meet that tax burden by requiring large amounts of regulatory compliance by tax payers. If you can make tax rules simpler and easier to comply with, then you reduce the amount of bullshit work.
> The accounting industry employs loads of people. Is that not “value"?
Some of it is, some of it isn't. Simply providing jobs alone doesn't always produce value. If so, we could always grow the economy by paying people to dig holes and fill them back in.
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> Tax avoidance just moves the tax burden around, it doesn't create value.
only if you believe that taxes paid is automatic value added to society.
> pay as little taxes as possible creates no value
it doesn't create value, it retains value for those who created it.
If you don't believe that government has any value, then there isn't much to discuss with you as your views on the topic are extremely fringe and we likely won't agree on much.
If you do believe that government can create value, then it easily follows that paying / collecting taxes can create value. There is no need to assume that taxes always provide value or that all parts of government create value (since that would also be a extremely fringe view.)
> it doesn't create value, it retains value for those who created it.
Yes, at the cost of higher taxes on others who created value or a reduced revenue for the government.
If you believe the goverent needs less revenue, then lower taxes. The "bullshit jobs" are created when you have a complex set of rules and loopholes that incentives wasting manpower to find ways to dodge paying taxes. We would be better off just having lower tax rates and less effort wasted dodging taxes.
You should think of it this way. The reasons that tax policies are complex are that the government uses tax incentives both as a "carrot" to control people; and also to buy political support from interest groups who benefit.
The tax compliance and tax avoidance jobs should be understood to be part of one of these schemes. Either they're low-level enforcers in the government's heavy-handed tax-based system of control; or else they're co-conspirators in the influence-buying grift.
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Avoiding taxes and utilising tax minimisation strategies keeps value with you, but it also distorts your consumption in other ways. EG you are incentivised in the US to purchase more housing (via mortgage interest deduction) than you might want or need.
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Do banks create value?
Governmental spending is a loan (to society) repaid thru taxes.
Call taxes an interest payment if that makes you feel better.
It is almost automatic value added to land values.
The most boring tax system is a landvalue tax and nothing else.