Comment by rank0
4 years ago
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.
> 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.
It's zero-sum though - you've increased individuals' savings but reduced public funds (which can be spent in the economy through e.g. public infrastructure, and/or used to provide a safety net, probably in a more efficient way since the risks are pooled).
> Government tax revenue can be poorly allocated and wasteful.
Sure. So can individual or corporate wealth. Even if you think the tax rate is too high, the most efficient solution would be to change the tax rate, not add a bunch of loopholes.
> The accountants provide a valuable service navigating the complex tax laws.
The argument is that that complexity is largely bullshit.
> 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.
Corporate tax avoidance means the government has less money from which to offer that kind of targeted tax credit.
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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.
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.”
> Legislators need to use tax incentives to ensure their base continues supporting them, and to win over new supporters.
If it's legislators serving the interests of their constituents directly and thus get re-elected, that is one thing. However often legislators make these decisions to serve corporate lobbyists (such as Intuit's) and are working against the interests of their constituents so they can raise money from corporate doners to get reelected. This is why the IRS has been prevented from offering any sane method of filing personal taxes and wastes unmeasured amounts of tax payer time, effort and money every year.
> it’s not as simple as “this is all BS and those who make the rules are dumb.”
I didn't say that at all. Optimal taxation strategies are hard, but we haven't really tried to fix taxation in decades, meanwhile the length of the tax code has ballooned to several times what it used to be.
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