Forum adverts like this one are shown to any user who is not logged in. Join us by filling out a tiny 3 field form and you will get your own, free, dakka user account which gives a good range of benefits to you:
No adverts like this in the forums anymore.
Times and dates in your local timezone.
Full tracking of what you have read so you can skip to your first unread post, easily see what has changed since you last logged in, and easily see what is new at a glance.
Email notifications for threads you want to watch closely.
Being a part of the oldest wargaming community on the net.
If you are already a member then feel free to login now.
2018/01/01 21:29:23
Subject: Re:Fiction becomes fact: two straight men marry to avoid paying tax.
...and to keep the current conversation kosher to the thread... the two men marries to avoid paying tax are simply legalized gaming the system.
No one likes paying taxes and many will do whatever it takes to mitigate their tax liabilities... at what point, do we allow a complicated system to have so many loopholes (in this case) and special interest carve outs?
Taxes policy is often brutally pragmatic: the idea is to get the money we need from those that can pay, with the least harm to the economy. And dynastic wealth is the fat of the land. It's the low hanging fruit. As noted above, this wealth has seldom been taxed at a high rate, if at all.
I don't mind that the rich paying a higher percentage... I'm concerned that those with these levels of wealth game the system to mitigate their tax liabilities, such that, it makes it impossible to determine if they're paying their "fair share".
Or at least, friggin close it for those uber big companies, like GE and Apple.
Live Ork, Be Ork. or D'Ork!
2018/01/01 22:03:13
Subject: Re:Fiction becomes fact: two straight men marry to avoid paying tax.
...and to keep the current conversation kosher to the thread... the two men marries to avoid paying tax are simply legalized gaming the system.
No one likes paying taxes and many will do whatever it takes to mitigate their tax liabilities... at what point, do we allow a complicated system to have so many loopholes (in this case) and special interest carve outs?
Well, I think most people would find the loophole for spouses to avoid the estate tax to be wise. Ignoring community property laws, it's wildly unfair to tax a widow on wealth when she at least indirectly helped create it. And at it's basic level, civil marriage is a contract that makes two people next of kin. There are some rules for who can enter that contract, but for a variety of reasons our laws see married couples as single entities for many different purposes.
don't mind that the rich paying a higher percentage... I'm concerned that those with these levels of wealth game the system to mitigate their tax liabilities, such that, it makes it impossible to determine if they're paying their "fair share".
Or at least, friggin close it for those uber big companies, like GE and Apple.
The tax code isn't complicated like string theory, it's closer to complicated like Second edition Dungeons and Dragons or Fantasy Football. It's Arcane, in that it takes specialized knowledge to really track who benefits, but a reasonably smart person with public documentation can pretty easily figure out who benefits from what.
A corporate flat tax actually makes a lot of sense, as does a corporate alternative minimum tax. Corporate taxes aren't really progressive, so having a single hard tax on profits makes sense. But as long as you have credits or deductions that allow you to reduce your taxable income down, the rate really doesn't matter. Apple doesn't have a lower rate, it's just able to exclude it's income. It really doesn't matter if the corporate tax rate is 0% or 100%, Apple's tax burden wont' change much.
Cleaning that up will require a lot of work, and opposing a lot of lobbyists. The oil industry will run countless attack ads against anybody that want's to eliminate their tax credits, claiming that "Senator Jones hates oil workers."
I think recent events have shown that congress works for it's donors (meaning corporations and large share holders), and not the voters.
Automatically Appended Next Post:
Ouze wrote: OK, I understand now. Thank you for explaining it.
I hope that made sense. That was boiling down about a year and a half of tax law and policy into a few paragraphs.
This message was edited 1 time. Last update was at 2018/01/01 22:04:05
2018/01/02 00:02:45
Subject: Fiction becomes fact: two straight men marry to avoid paying tax.
While I already understood most of that, you put it in a much better way than I would have been able to.
Even then, I don't see it as double taxation. Same as I don't see taxing dividends as double taxation. Income tax has always been about taxing transfers of wealth from one entity to another. That's pretty easy to see for estate taxes. With corporations, you have to realize that they are seperate legal entities from their owners. Thus dividends are a transfer of wealth from one entity to another. (For the record, spouses are not seperate legal entities for taxation for the most part so wealth transfers between them are tax free).
The argument that any transfer of wealth is double taxed is really nonsense as all wealth has been taxed innumeral times. The profits from a business that are taxed comes from the paycheck of a worker (that was taxed) that comes from a business expense (that was not taxed) that comes from a worker's paycheck (that was taxed) ad infinitium.
2018/01/02 13:06:40
Subject: Fiction becomes fact: two straight men marry to avoid paying tax.
AllSeeingSkink wrote: It mostly makes me wonder why inheritance tax is a thing in the first place. Why should the government have a say in to whom you leave your property.
It's a slight aside, but as I understand it - historically, inheritance tax was applied at a level that meant it only ever affected the landed gentry: the sort of people who were passing down, say, ownership of the best part of a county to their children. But after many years of inflation, and the threshold not being correspondingly adjusted, it now affects the average home-owner... :(
Inheritance tax threshold (UK, not sure about NI) is currently £325k, average house price is £225k, so the 'average' person doesn't have any tax to pay when passing assets on.
2018/01/02 13:34:56
Subject: Fiction becomes fact: two straight men marry to avoid paying tax.
AllSeeingSkink wrote: It mostly makes me wonder why inheritance tax is a thing in the first place. Why should the government have a say in to whom you leave your property.
It's a slight aside, but as I understand it - historically, inheritance tax was applied at a level that meant it only ever affected the landed gentry: the sort of people who were passing down, say, ownership of the best part of a county to their children. But after many years of inflation, and the threshold not being correspondingly adjusted, it now affects the average home-owner... :(
Inheritance tax threshold (UK, not sure about NI) is currently £325k, average house price is £225k, so the 'average' person doesn't have any tax to pay when passing assets on.
I grew up in Surrey and now live in Hampshire. Regardless of national averages, round our way it definitely affects the average home-owner.
2018/01/02 14:51:15
Subject: Re:Fiction becomes fact: two straight men marry to avoid paying tax.
whembly wrote: ...and to keep the current conversation kosher to the thread... the two men marries to avoid paying tax are simply legalized gaming the system.
And it's not like this hasn't happened before. Elderly people without heirs (or even some with heirs) marry their personal assistant/nurse/housekeeper/handyman because they think this one deserves the stuff more than the state or those grandchildren who never visit while waiting for them to die. Many or even most of those cases weren't about any sort of sexual relation, just someone passing their stuff on to the one they thought deserved it. And since it was male and female no one usually challenged it, because that would have been rude. The only thing different in this case is that it's two straight men gaming the system.
2018/01/02 16:06:47
Subject: Fiction becomes fact: two straight men marry to avoid paying tax.
The Commons and Lords are full of wealthy people built on inherited money, don’t hope for them to pass anything that hits their own wallets any time soon.
2018/01/06 02:13:09
Subject: Re:Fiction becomes fact: two straight men marry to avoid paying tax.
Just saw a report of this finally happening in the Army to get out of the barracks. I hope the Commander makes them attend any future balls together. Make sure to seat them right next to one another, no other dates allowed.
Automatically Appended Next Post:
BuFFo wrote: Back when I was in the US Army circa 2000, I knew plenty of gay couples (gay man and gay woman) who got married for the benefits.
If the system is crap, people will do whatever they can to get around it for their benefit.
Yea, I've been saying this for years. When you get inspected every day, but told this is your home get comfortable, its sends a conflicting message. With privatization it only got worse. I considered a contract marriage before I started dating my wife just to get the hell of of the billets. I was tired of showering next to other guys all the damn time.
This message was edited 1 time. Last update was at 2018/01/12 03:23:29
10k CSM
1.5k Thousand Sons
2k Death Guard
3k Tau
3k Daemons(Tzeentch and Nurgle)
2018/01/12 06:52:22
Subject: Fiction becomes fact: two straight men marry to avoid paying tax.
Crispy78 wrote: It's a slight aside, but as I understand it - historically, inheritance tax was applied at a level that meant it only ever affected the landed gentry: the sort of people who were passing down, say, ownership of the best part of a county to their children. But after many years of inflation, and the threshold not being correspondingly adjusted, it now affects the average home-owner... :(
In the UK around 4% of homes will pay Inheritance Tax. In the US its less than 1% of estates. The idea that inheritance tax is hitting the average person is a myth.
Automatically Appended Next Post:
Ouze wrote: I would be wary of situations where double taxation would be applied. If I sold a bunch of stock and paid capital gains tax on the sale, and die, then why should the government be double dipping into my estate when I die? I'm not wholly averse to the estate tax, but double dipping seems pretty crappy.
I'm not a fan of inheritance taxes, in part because of double taxation, but I'd add the qualifier that we have such chronic problems with tax avoidance among the very rich that we can't assume the estate was taxed the first time around. In lots of cases that estate tax may be the first time any tax was paid at all.
By all means remove estate taxes, but do it while building tax code and proceses that mean tax is actually paid by the wealthy when the money is earned.
Automatically Appended Next Post:
Polonius wrote: If my employer gives a $50 bonus, I pay taxes on it. If I win $1000 in the lottery, I pay taxes on it. but if my gives me $7,000 to pay off my credit card, I don't pay taxes on that.
Just to add some context, the employer's gift is deemed a remuneration for services rendered. You do work for them, they 'gift' you a bonus, everyone knows it was given as a reward for the work, so its income.
The US is I believe unique in taxing lottery winnings, and it's a deeply bonkers bit of tax law and completely inconsistent with the rest of US tax law and the general principle of taxing earned income and ignoring windfall gains.
As for the government interest, inheritance is actually one of those matters where the government matters a great deal. Even in a libertarian paradise, there will be probate courts parceling up a persons goods.
If a probate court is needed then it will charge the estate for its services. Inheritance tax is not in any way needed to recover the cost of administering the will.
Also, money is constantly double taxed. Dividends were taxed first a corporate profit, then as a capital gain to the recipient (although current laws have lowered both dramatically).
You are right that double taxation does happen, but in this example you've gotten things a bit wrong. Dividends and capital gains are distinct forms of income. Dividends are the share of profits paid by the company to the shareholder, capital gains are the share of profits retained by the company which the shareholder realises on sale of shares. It's actually an example of tax law effectively capturing all sources of an investment's income and only taxing each once.
The estate tax is a crude mechanism for avoiding dynastic, unearned wealth. But dynastic wealth is not good for society, and is almost certainly at least somewhat harmful.
True.
This message was edited 3 times. Last update was at 2018/01/12 08:01:50
“We may observe that the government in a civilized country is much more expensive than in a barbarous one; and when we say that one government is more expensive than another, it is the same as if we said that that one country is farther advanced in improvement than another. To say that the government is expensive and the people not oppressed is to say that the people are rich.”
Adam Smith, who must have been some kind of leftie or something.
2018/01/12 07:28:47
Subject: Re:Fiction becomes fact: two straight men marry to avoid paying tax.
Peregrine wrote: Dynastic wealth is bad because it's unearned wealth. Someone who inherits a ton of money isn't wealthy because they have worked hard for it, or provided any useful service to society. They just happened to be lucky enough to be born into a family that had money and live in a society that makes it absurdly easy to continue to be wealthy once you get your initial fortune. They never have to work, or build anything, or do anything but pay a decent salary to some investment managers who make sure that the fortune continues to accumulate faster than they can spend it.
One issue is that the wealth and the prosperity of society as a whole comes from capital being put to its best use. Society is richer when the smartest, most capable people are deciding what wealth should be invested in. Inherited wealth pretty much leaves that money with randomly selected people. One fairly famous example is Fred Trump, who ignoring business ethics, was pretty good at investing, and who built a whole lot of houses and played a role in growing the economy. His son, Donald Trump, then inherited something north of $300m of mostly NY real estate at the start of a 30 year real estate boom. Donald isn't as good in business, so that's been $300m that went in to bankrupted casinos, failed mortgage broking, failed airline etc Trump's wealth has still grown, because end of the day it is NY real estate 1980 to 2010, but if that money had instead been at the disposal of some of the genuinely sharp investment minds of our time the level of wealth and economic growth is vast. Trump's maybe generated 3 to 5% return over his life*. In contrast Buffet is around 15%. That ineffective investment has probably cost several trillion in growth that could have greatly increased total economic activity.
One interesting solution is to stop taxing profits and capital gains. You tax wealth. So if a person has $100m in assets, instead of taxing the $8m profits he made at 25%, instead you tax the $100m at 2% and don't care how much money the owner can make out of it. This will change things considerably when you look at Trump, making 3%, he'll lose most in taxes, so wealth will not accrue or even be maintained in his mediocre hands. But Buffet will be barely impacted by the wealth tax because he's making 15% on his wealth. Money will flow to the most skilled investors.
*Maybe, Trump's assets and his ownership shares are extremely opaque.
Automatically Appended Next Post:
AlmightyWalrus wrote: Sweden also taxes lottery winnings, why is it bonkers? You're earning money, no?
Do you get to claim a deduction if your ticket doesn't win? Money shifted through games of chance aren't taxed because if we taxed the gains, we would have to provide a deduction for the loss.
Consider if we're both high rollers, and we both put $10k down on a table, winner takes all based on a coin flip. You win. You take the $20k, and that's $10k more than you started the game with - should you pay tax on the $20k gained? But what about me, I've got $10k less than I started with, do I get a $10k deduction?
This message was edited 1 time. Last update was at 2018/01/12 08:08:17
“We may observe that the government in a civilized country is much more expensive than in a barbarous one; and when we say that one government is more expensive than another, it is the same as if we said that that one country is farther advanced in improvement than another. To say that the government is expensive and the people not oppressed is to say that the people are rich.”
Adam Smith, who must have been some kind of leftie or something.
2018/01/12 11:44:22
Subject: Fiction becomes fact: two straight men marry to avoid paying tax.
Crispy78 wrote: It's a slight aside, but as I understand it - historically, inheritance tax was applied at a level that meant it only ever affected the landed gentry: the sort of people who were passing down, say, ownership of the best part of a county to their children. But after many years of inflation, and the threshold not being correspondingly adjusted, it now affects the average home-owner... :(
In the UK around 4% of homes will pay Inheritance Tax. In the US its less than 1% of estates. The idea that inheritance tax is hitting the average person is a myth.
As I said above, regardless of national averages, where I live it definitely affects the average home owner.
"Most of the sales in Hampshire over the past year were terraced properties which on average sold for £261,478. Detached properties had an average sold price of £509,096 and semi-detached properties averaged at £315,279.
Hampshire, with an overall average price of £325,020 was more expensive than nearby Isle Of Wight (£234,101), but was cheaper than Berkshire (£424,874) and West Sussex (£365,398). The most expensive area within Hampshire was Hambledon (£1,232,143) and the cheapest was North End (£186,920).
In the past year house prices in Hampshire were 6% up on the year before and 14% up on 2015 when they averaged at £286,023."
My kids will almost certainly be paying inheritance tax on our estate when we pop off. We are not oligarchs or wealthy land-owners. I do IT support and my wife is a school science technician. We are average middle-class professionals, like the vast majority of the people that live in our area.
2018/01/12 16:50:28
Subject: Fiction becomes fact: two straight men marry to avoid paying tax.
To answer the question on the coin flip. Per US tax law, the person that wins can deduct the $10k provided they itemize their deductions(gambling losses are part of the itemized deductions). The loser is not allowed to deduct anything as the deduction for gambling losses is limited to gambling winnings.
Automatically Appended Next Post: As for taxing wealth as opposed to income. That is a bad idea. Mostly because wealth is very often not liquid whereas income is. That makes actually paying/collecting the taxes easier it also avoids the feel bad moments of having to sell something to pay your tax bill.
One thing that would improve stuff is not taxing earned income at a significantly higher rate than investment income.
This message was edited 1 time. Last update was at 2018/01/12 17:05:20
2018/01/16 02:50:30
Subject: Fiction becomes fact: two straight men marry to avoid paying tax.
"Most of the sales in Hampshire over the past year were terraced properties which on average sold for £261,478. Detached properties had an average sold price of £509,096 and semi-detached properties averaged at £315,279.
The UK has now added a special exemption for the primary residence, of up to £1,000,000. It changed this year, precisely because of the issue you are talking about. However while the intent is clearly to stop people being landed with large tax bills jut for leaving their home to their kids, the law is set up kind of strangely and so there's a chance that if you don't structure your will correctly you may still get caught out. So if your home is worth more than £600,000 (or is likely to go to that value at some time before you die) talk to a tax planner and get your will done right.
I hope this helps.
skyth wrote: As for taxing wealth as opposed to income. That is a bad idea. Mostly because wealth is very often not liquid whereas income is. That makes actually paying/collecting the taxes easier it also avoids the feel bad moments of having to sell something to pay your tax bill.
I think you're making some assumptions there. The proposal isn't to start hitting up every asset everywhere. Nanna won't be having to sell her jewelry just to make the wealth tax payment on her home. This tax would have a primary residency exemption, and on top of that you could have it only kick in once you'd reached a certain level of wealth, maybe $500,000, maybe $1,000,000. Once you're at those levels then there's going to be liquid capital and asset churn so the funds will be there to pay the tax. It's about people currently paying dividend tax and capital gains on large asset bases, instead of paying on income, they'd pay based on the value of their asset base.
One thing that would improve stuff is not taxing earned income at a significantly higher rate than investment income.
Absolutely agree. It's inherently problematic that there are different rates for different sources of income (why should two people in the exact same circumstances, same income, same dependents etc, pay different rates of tax just because they get their income from different sources?) To the extent that such a thing could be justified it would be to give a lower rate to the guy actively working over the guy passively receiving income, but right now in the US its the guy who passively receives his income who is taxed at a much lower rate.
But note the suggestion about a wealth tax isn't just about reworking the distribution of the tax burden. It's about fundamentally reworking how investment is taxed, to reduce the burden on people able to generate high returns, and increase the burden on people with lots of assets that they generate little revenue on.
This message was edited 1 time. Last update was at 2018/01/16 02:50:54
“We may observe that the government in a civilized country is much more expensive than in a barbarous one; and when we say that one government is more expensive than another, it is the same as if we said that that one country is farther advanced in improvement than another. To say that the government is expensive and the people not oppressed is to say that the people are rich.”
Adam Smith, who must have been some kind of leftie or something.
2018/01/16 12:36:55
Subject: Fiction becomes fact: two straight men marry to avoid paying tax.
"Most of the sales in Hampshire over the past year were terraced properties which on average sold for £261,478. Detached properties had an average sold price of £509,096 and semi-detached properties averaged at £315,279.
The UK has now added a special exemption for the primary residence, of up to £1,000,000. It changed this year, precisely because of the issue you are talking about. However while the intent is clearly to stop people being landed with large tax bills jut for leaving their home to their kids, the law is set up kind of strangely and so there's a chance that if you don't structure your will correctly you may still get caught out. So if your home is worth more than £600,000 (or is likely to go to that value at some time before you die) talk to a tax planner and get your will done right.
I hope this helps.
Sounds very helpful. Will hopefully save me a few hundred grand when my parents pass on, too... *eyes Forge World*
2018/01/16 15:04:36
Subject: Fiction becomes fact: two straight men marry to avoid paying tax.
skyth wrote: As for taxing wealth as opposed to income. That is a bad idea. Mostly because wealth is very often not liquid whereas income is. That makes actually paying/collecting the taxes easier it also avoids the feel bad moments of having to sell something to pay your tax bill.
I think you're making some assumptions there. The proposal isn't to start hitting up every asset everywhere. Nanna won't be having to sell her jewelry just to make the wealth tax payment on her home. This tax would have a primary residency exemption, and on top of that you could have it only kick in once you'd reached a certain level of wealth, maybe $500,000, maybe $1,000,000. Once you're at those levels then there's going to be liquid capital and asset churn so the funds will be there to pay the tax. It's about people currently paying dividend tax and capital gains on large asset bases, instead of paying on income, they'd pay based on the value of their asset base.
I still think this would be a bad idea. You will see less money invested as you need cash around to pay the tax bill. Plus there will be a lot of churn in the investment market as people have to sell investments to pay for them. There is already a problem with the corporate world being almost entirely focused on short term gains with little long term thinking. This would make it worse as 'gains' is pretty much solely reflected in the stock price and all the selling required would make stocks less valuable. You really want to encourage people to hold on to investments long term so that more long term thinking can prevail instead of the constant chaos of having new owners, etc etc etc.
Plus with how volatile some investments can be it's hard to properly plan for how much you should have tucked away to pay the tax bill.
Really, for simplicity's sake, taxing income makes more sense. As it's easy to calculate thus creates less chaos. Plus there is a lot more liquidity when things become income as opposed to an asset.
2018/01/16 17:31:25
Subject: Fiction becomes fact: two straight men marry to avoid paying tax.
Nothing new for folks to have financial reasons for marriage - for a long time it was pretty much the norm for the wealthy and nobility.
If not when the marriage takes place, then looking to the future.
The Auld Grump
This message was edited 1 time. Last update was at 2018/01/16 17:33:02
Kilkrazy wrote:When I was a young boy all my wargames were narratively based because I played with my toy soldiers and vehicles without the use of any rules.
The reason I bought rules and became a real wargamer was because I wanted a properly thought out structure to govern the action instead of just making things up as I went along.
