Comment by shkkmo
4 years ago
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.
I guess we just have a fundamental disagreement.
I argue that the increase in savings and therefore money spent participating in the economy is inherently valueable.
In addition companies are less likely to fail, and can continue to generate value. Individuals have a bigger safety net and can be more productive for society. You already touched on the fact that government has reduced burden for social services.
Government tax revenue can be poorly allocated and wasteful.
The accountants provide a valuable service navigating the complex tax laws. This allows me to outsource the work and spend more time being “productive” for society.
A great example is Tesla. They may not have survived without the billions in tax credits they received. Lots of people believe they generate tremendous value for society.
2 replies →
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.
The world is more complicated than you’re letting on. Democracies have complicated tax codes to incentivize certain behavior and also as a political tool. Legislators need to use tax incentives to ensure their base continues supporting them, and to win over new supporters.
Before you say “that’s messed up! Legislators shouldn’t do that!” Think for a second how anyone would possibly win an election and retain their power without that tool. I guarantee you couldn’t do it.
I’m all for simplifying our tax code but it’s not as simple as “this is all BS and those who make the rules are dumb.”
2 replies →
> 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.
Those are some of the reasons taxes are complicated, but not all of them. In the US the tax compliance industry has directly lobbied to keep the tax system as complex as possible so they can keep extracting rent for doing bullshit work.
The "influence-buying grift" jobs are usually classed as bullshit anyways, so that source of the complexity doesn't change the assessment.
There are potentially valid policy goals served by various tax incentives, but it is still worth considering if there are different tax incentives or other regulatory approaches that would create fewer bullshit jobs. With the political problems of raising taxes, government often choose to offload the costs of policy goals onto the public via creating bullshit jobs that cost more overall but avoid the need for tax increases.
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.
Mortgage interest deduction is not utilized much anymore since standard deduction was increased in the 2017 tax changes. You have to itemize to get it, and only 11% of tax filers itemized in 2019.
There is a statistics page that shows this on its.gov, but I am on mobile and it is too much work to find it.
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.