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On August 04 2015 21:53 Velr wrote:
I doubt 500k-1M property makes anyone even "qualify" for serious tax evasion (let alone actually moving the Country)... As yearly income probably but even then its most likely on the low side (for moving).
I meant liquid assets not property.
Anyway yeah you're right for most millionaires it's not worth it to move their money abroad. Only the super rich do it and they're really a class of their own.
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On August 04 2015 19:26 WhiteDog wrote:Show nested quote +On August 04 2015 09:16 warding wrote:
Everyone talks about tax evasion but that's not the only problem with high income taxes. The higher the income tax, the lower the incentive to work at the margin. Thankfully the richest barely work at all to earn their money. More realistically, this argument is also flawed and has been proved wrong by empirical studies. The incentive to work more or less just disappear after a certain level of revenue.
Not the research I've seen:
http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/articles/impact-of-taxes-on-economic-behaviour.pdf
Anecdotally, had Elon Musk been a French resident, he'd never have had the capital to invest in Tesla or SpaceX. He'd probably also not have the incentive to work maniacally in his ventures.
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On August 04 2015 09:16 warding wrote:
Everyone talks about tax evasion but that's not the only problem with high income taxes. The higher the income tax, the lower the incentive to work at the margin.
This incentive is overstated I believe.
For many rich people and entrepeneurs money is not the main incentive.
Am sure that if you ask elon musk about what is important to him and what his motivation is that money wont be in the 1st place,nor the 2nd probably.
Its a myth that entrepeneurs and succesfull business people would work less hard when the taxes would get raised.
At one point the amount you make does not matter anymore,if it would be 10% less it would mean nothing.
They would work just as hard,only make a bit less.
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On August 04 2015 23:07 Rassy wrote:Show nested quote +On August 04 2015 09:16 warding wrote:
Everyone talks about tax evasion but that's not the only problem with high income taxes. The higher the income tax, the lower the incentive to work at the margin. This incentive is overstated I believe. For many rich people and entrepeneurs money is not the main incentive. Am sure that if you ask elon musk about what is important to him and what his motivation is that money wont be in the 1st place,nor the 2nd probably. Its a myth that entrepeneurs and succesfull business people would work less hard when the taxes would get raised. At one point the amount you make does not matter anymore,if it would be 10% less it would mean nothing. They would work just as hard,only make a bit less.
From the source I quoted:
"In addition, Robert Carroll and his colleagues (1998) found that “a 5 percentage point rise in marginal tax rates would reduce the proportion of entrepreneurs who make new capital investment by 10.4%. Further, such a tax increase would lower average capital investment by 9.9%” (1998: 2)."
Also, the first thing Elon Musk did when he got rich was to buy a McLaren F1. Money may not be his prime motivation but he does enjoy expensive things. That was besides my point, however - had he not been able to keep most of the money he made with Zip2 and Paypal, he wouldn't have had the capital to successfully undertake both Tesla and SpaceX. Do you trust the French State more than the Elon Musks of the world with the capital that these same entrepreneurs generate?
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For every Elon Musk there are 10 Marc Richs.
And i trust basically every democratic state in the world to do more good than Marc Rich.
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On August 04 2015 23:29 warding wrote:Show nested quote +On August 04 2015 23:07 Rassy wrote:On August 04 2015 09:16 warding wrote:
Everyone talks about tax evasion but that's not the only problem with high income taxes. The higher the income tax, the lower the incentive to work at the margin. This incentive is overstated I believe. For many rich people and entrepeneurs money is not the main incentive. Am sure that if you ask elon musk about what is important to him and what his motivation is that money wont be in the 1st place,nor the 2nd probably. Its a myth that entrepeneurs and succesfull business people would work less hard when the taxes would get raised. At one point the amount you make does not matter anymore,if it would be 10% less it would mean nothing. They would work just as hard,only make a bit less. From the source I quoted: "In addition, Robert Carroll and his colleagues (1998) found that “a 5 percentage point rise in marginal tax rates would reduce the proportion of entrepreneurs who make new capital investment by 10.4%. Further, such a tax increase would lower average capital investment by 9.9%” (1998: 2)." Also, the first thing Elon Musk did when he got rich was to buy a McLaren F1. Money may not be his prime motivation but he does enjoy expensive things. That was besides my point, however - had he not been able to keep most of the money he made with Zip2 and Paypal, he wouldn't have had the capital to successfully undertake both Tesla and SpaceX. Do you trust the French State more than the Elon Musks of the world with the capital that these same entrepreneurs generate?
I personally don't mind the Elon Musks of the world. I thoroughly dislike the Paris Hiltons of this world, though. They did absolutely nothing to earn the billions of dollars that they inherited from their daddies. Hell, even Paris Hilton's daddy did nothing much of note, although her grandfather was a genius entrepeneur, just like her great-grandfather. Once a family is stupidly rich, all you really have to do to stay really rich for a long time is not fuck up. Living off the rent the whole Hilton family, including all cousins, second-cousins and further could all live happily off the rent for another few generations. That is quite ridiculous.
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Velr, I doubt your 100 bad guys to 1 good guy ratio. How many tech billionaires in SV are reinvesting their capital and creating even more capital, technology, jobs and wealth? Today there are a lot fewer rich assholes being created in Wall Street than in tech.
Acrofales, actually, Paris Hilton generated millions by herself as an entertainment brand.
Anyway, yes, unlikable rich people certainly exist. That fact on its own and all the anecdotal evidence around it isn't really relevant to the topic on the incentives created by high marginal income taxes.
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10 to 1  .
I just believe that more People are getting (really!) rich due to being shady (or at least "not clean") than by having good ideas and I believe that the People with the truely good ideas won't not follow their Idea because they have to pay 5-10% more taxes....
The Paris Hiltons and others are another Problem. Yes, by now she makes Money herself, but making money like her is only possible when you allready start out as rich and famous kid due to her inherited wealth.
But i still wonder how persons like her make money or why someone is willing to give her money for what she does... Not even as a teen i was interested in that gossipy stuff (and i am and was an outgoing/social person, so a prime target?)...
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On August 04 2015 23:29 warding wrote:Show nested quote +On August 04 2015 23:07 Rassy wrote:On August 04 2015 09:16 warding wrote:
Everyone talks about tax evasion but that's not the only problem with high income taxes. The higher the income tax, the lower the incentive to work at the margin. This incentive is overstated I believe. For many rich people and entrepeneurs money is not the main incentive. Am sure that if you ask elon musk about what is important to him and what his motivation is that money wont be in the 1st place,nor the 2nd probably. Its a myth that entrepeneurs and succesfull business people would work less hard when the taxes would get raised. At one point the amount you make does not matter anymore,if it would be 10% less it would mean nothing. They would work just as hard,only make a bit less. From the source I quoted: "In addition, Robert Carroll and his colleagues (1998) found that “a 5 percentage point rise in marginal tax rates would reduce the proportion of entrepreneurs who make new capital investment by 10.4%. Further, such a tax increase would lower average capital investment by 9.9%” (1998: 2)." Also, the first thing Elon Musk did when he got rich was to buy a McLaren F1. Money may not be his prime motivation but he does enjoy expensive things. That was besides my point, however - had he not been able to keep most of the money he made with Zip2 and Paypal, he wouldn't have had the capital to successfully undertake both Tesla and SpaceX. Do you trust the French State more than the Elon Musks of the world with the capital that these same entrepreneurs generate?
Yes, I do, as a general rule, trust governments more than entrepreneurs. The goal of a goverment (as a whole, if not always of its individual members) is to provide for the common good of the nation. Businesses, and their owners, on the other hand, are interested in money and money alone. Whether that money is obtained through innovation, through frivolous means, or even through straight-up fraud is irrelevant, as long as they aren't punished for it (and as for Musk, he has done all of these - I consider his abuse of government subsidies and inflation of stock price through media hype to be a soft form of fraud).
Would you rather trust mercenaries or a nation's armed forces with national defense? Private parties or government with flight safety? Food safety? Welfare programs? For all their faults, governments do earn more trust than for-profit entities. Businesses do have their advantages over governments (efficiency and speed, primarily), but trust is not one of them.
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On August 05 2015 00:06 warding wrote:That is really not the case. How do you get really rich in developed countries by being shady? Look at the Forbes ranking - and look at people from developed countries - how shady guys can you actually spot? http://www.forbes.com/billionaires/list/2/#version:static
Is this a joke quesiton?
Depending on the Standards you apply... 5-10 in the top 10.
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Abuse of government subsidies? What, the loans he paid back? Media hype? What, when he actually told investors he thought his stock was overvalued?
So are business owners interested by money alone or are they not motivated by money at all? If they are motivated by money then you must concede that higher marginal tax rates effectively reduce the incentive to work and invest capital.
I trust government to provide health, education, rule of law, etc. I trust entrepreneurs with capital to invest in new companies that create more wealth, new technology and more jobs. The latter group, by doing this, are generating more revenue for the government to spend on health, education, etc. Therefore I'd prefer entrepreneurs to keep the capital they manage to generate and the government to get their revenue through taxation that does not distort incentives to work and invest.
EDIT: Velr, then it's clearly not worth evolving on this topic.
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I figured that much after you linked that list .
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On August 04 2015 20:39 Velr wrote:Show nested quote +For some random reasons ? What's the random reason that forces you to live in Switzerland and get Switzerland's passports when with the french citizenship you can already go there and live there since it's in the Schenghen treaty ? Let's be clear, there is no random reasons, they are there to pay less taxes, not because they like Geneve.
Its pretty obvious that you didn't even read my post and therefore your answer is totally missing what i said. Congratulations. Fun fact: I actually agreed with you. Show nested quote +but having to pay taxes in 2 countries just because for some random reason you got 2 passports/nationalities is a bit "strange".. This had obviously nothing to do with France, because it doesn't apply to France.
I still have a difficult time understanding but well sorry.
On August 04 2015 20:41 RvB wrote:Show nested quote +On August 04 2015 01:08 WhiteDog wrote:
RvB in France our income taxes also tax capital revenu too - it´s the famous ISF (impot sur la fortune). From what I understand from wiipedia companies are excluded though? Companies is where most wealthy people actually have their wealth not their personal bank account. Capital gains also has a different tax rate based on profit which is basically most of their income. Show nested quote +On August 04 2015 01:49 cLutZ wrote:
Or...tax at reasonable rates so that the costs of noncompliance are equal to or lower than compliance. If your implementing all the things you are talking about you aren't getting much, if any, of the benefits of capitalism anyways. Or punish more heavily non compliance and fight against fiscal heaven, like Luxemburg, Switzerland, etc. Most rich people (the ones who have like €1m or something not the super rich) don't move their money to tax havens at all. It's expensive, you have to comply to all kinds of laws and rules to do it without commiting a crime and most of them just don't feel comfortable with it. Having €500k - €1m also doesn't automatically make you rich btw. What happens a lot is that someone had a company, sold it for a big amount and has to use the money as a pension for when he/she retires. Let's say you live 20 years after that it means you have 25k-50k a year to live on. Yes it's a good middle class income but it's not actually rich. Anyway this is just my experience having worked in private banking for a while in The Netherlands.
Yeah, the ISF consider that people are "rich" when they have above 1m in capital assets (you don't pay it under 1m). Somehow this 1m can come quite fast if you just get an appartment in Paris by inheritance but well...
And I disagree with you : having 25 k to 50 k a year without working is rich.
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On August 04 2015 23:29 warding wrote:Show nested quote +On August 04 2015 23:07 Rassy wrote:On August 04 2015 09:16 warding wrote:
Everyone talks about tax evasion but that's not the only problem with high income taxes. The higher the income tax, the lower the incentive to work at the margin. This incentive is overstated I believe. For many rich people and entrepeneurs money is not the main incentive. Am sure that if you ask elon musk about what is important to him and what his motivation is that money wont be in the 1st place,nor the 2nd probably. Its a myth that entrepeneurs and succesfull business people would work less hard when the taxes would get raised. At one point the amount you make does not matter anymore,if it would be 10% less it would mean nothing. They would work just as hard,only make a bit less. From the source I quoted: "In addition, Robert Carroll and his colleagues (1998) found that “a 5 percentage point rise in marginal tax rates would reduce the proportion of entrepreneurs who make new capital investment by 10.4%. Further, such a tax increase would lower average capital investment by 9.9%” (1998: 2)." Also, the first thing Elon Musk did when he got rich was to buy a McLaren F1. Money may not be his prime motivation but he does enjoy expensive things. That was besides my point, however - had he not been able to keep most of the money he made with Zip2 and Paypal, he wouldn't have had the capital to successfully undertake both Tesla and SpaceX. Do you trust the French State more than the Elon Musks of the world with the capital that these same entrepreneurs generate?
Your data seems far fetched to me (it's a paper taking the results of a collective of study without any explanations on the way they obtained those results, and it's coming from 1990-2000 papers, so it's quite old). Most recent work see way less effect. In fact, a decrease in marginal tax rate has overall no effect on the economy except - possibly - on business formation. Here is an exemple, that I just googled, of a recent analysis on 1920-1930 data (where the marginal tax rate in the US changed a lot a lot).
This paper uses the interwar period in the United States as a laboratory for investigating the incentive effects of changes in marginal income tax rates. Marginal rates changed frequently and drastically in the 1920s and 1930s, and the changes varied greatly across income groups at the top of the income distribution. We examine the effect of these changes on taxable income using time-series/cross-section analysis of data on income and taxes by small slices of the income distribution. We find that the elasticity of taxable income to changes in the log after-tax share (one minus the marginal rate) is positive but small (approximately 0.2) and precisely estimated (a t-statistic over 6). The estimate is highly robust.
We also examine the time-series response of available indicators of investment and entrepreneurial activity to changes in marginal rates. We find suggestive evidence of an impact on business formation, but no evidence of an important impact on other indicators.
[p.39-40] The estimates have four important features. First, consistent with what one would expect given the tremendous identifying variation, they are very precise. Second, they show that taxes are indeed distortionary: the null hypothesis of no effect is overwhelmingly rejected. Third, they indicate that the distortions are small. Our baseline estimate of the elasticity of taxable income with respect to the after - tax share is approximately 0.2.[...]
We find no evidence that cuts in marginal rates increased machinery investment or business construction, but suggestive evidence that they increased business formation.
http://www.nber.org/papers/w17860
You must also take the current degree of concentration of wealth to understand what we are talking about. Increasing the marginal tax rate in a rather egalitarian society can have a lot of effect, but considering that today there are overwhelming inequalities, the negative effects of an increase in marginal taxation rate are completly balanced by the positive effect of taxation.
May I add that the french social security is one of (if not the) most efficient social security of the world (cost wise). So yeah I trust way more my old social security than any rich dude. State does not always mean failure. The same can be said about the NASA and SpaceX btw.
So are business owners interested by money alone or are they not motivated by money at all? If they are motivated by money then you must concede that higher marginal tax rates effectively reduce the incentive to work and invest capital.
Men are interested by power. Money is a form of power, but there are others.
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On August 05 2015 00:06 warding wrote:That is really not the case. How do you get really rich in developed countries by being shady? Look at the Forbes ranking - and look at people from developed countries - how shady guys can you actually spot? http://www.forbes.com/billionaires/list/2/#version:static
Going by the taxation rules in my own country, I'd say it's impossible to really get rich without being shady. By being shady in my view includes hiring top-level accountants and fiscal lawyers to "optimise" taxes or plain evade them.
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On August 05 2015 00:18 warding wrote:
Abuse of government subsidies? What, the loans he paid back? Media hype? What, when he actually told investors he thought his stock was overvalued?
He's really quite clever about it, honestly - he uses government money to get the company to appear to be worth more than it is (the same way Greece grows GDP by injecting loan money) and pays it back using stock sales, which he got by making the companies appear to be worth more than they actually are. None of his current ventures are proven business models, but he has done an excellent job of making his fortune through spectacle and easily fooled investors.
On August 05 2015 00:18 warding wrote:So are business owners interested by money alone or are they not motivated by money at all? If they are motivated by money then you must concede that higher marginal tax rates effectively reduce the incentive to work and invest capital.
They do. However, there is absolutely no reason to assume by default that more money for business owners is always a good thing.
On August 05 2015 00:18 warding wrote:I trust government to provide health, education, rule of law, etc. I trust entrepreneurs with capital to invest in new companies that create more wealth, new technology and more jobs. The latter group, by doing this, are generating more revenue for the government to spend on health, education, etc. Therefore I'd prefer entrepreneurs to keep the capital they manage to generate and the government to get their revenue through taxation that does not distort incentives to work and invest..
The only one you can really trust them with is wealth creation - the other two will be incidental, or maybe they won't happen at all. Businesses obviously do have their place in the world - they just aren't trustworthy entities, since they are by design self-serving, even if at a cost to society as a whole.
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Whitedog's view of the world is far too cynical. "men seek power". really. people just work to earn a living and provide for themselves, their families and whatever you're interested in. You see evil in every man, but for some reason the state is free from sins? Ridiculous. France's state is corrupt and works with a caste system.
There isn't a single French politician worth two baguettes.
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On August 05 2015 00:18 warding wrote:
Abuse of government subsidies? What, the loans he paid back? Media hype? What, when he actually told investors he thought his stock was overvalued?
Just as an aside on Musk, his 3 "cool" companies Tesla, SpaceX, and Solar City are all government dependent enterprises. Obviously SpaceX is primarily a government contractor, whether those bids are won fairly and competitively is out of my realm of expertise.
Tesla's cars have a $7500 federal and $2500 California subsidy, this is ~20% of the cars cost. The federal portion of this will dry up eventually (it is capped based on units sold) and it is the primary reason his car outcompete Honda, GM, etc in the electric car market. Additionally, they are able to sell "environmental" credits to other polluters in a mini cap and trade system.
SolarCity has a 30% subsidy on solar installations from the federal government. California also has subsidies for solar panels.
All three have also received direct infusions from either state or federal programs, although most of those can be chalked up to just regular cronyism. The underlying business model, however, is classic rent seeking.
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On August 05 2015 03:34 Incognoto wrote:
Whitedog's view of the world is far too cynical. "men seek power". really. people just work to earn a living and provide for themselves, their families and whatever you're interested in. You see evil in every man, but for some reason the state is free from sins? Ridiculous. France's state is corrupt and works with a caste system.
There isn't a single French politician worth two baguettes.
The state is not free of sins. The state is not a entity (or at least it's not supposed to be this way), it's a way to coordonate the actions of people - much like the market in fact. The state being imperfect, it is oftentime (if not always) controlled by the dominant class and thus defend specific interests and not collective interests (which are pretty hard to define).
I never said the state is all perfect but I still prefer that the society as a whole, trying to dictate its desire throughout the state, take control over the massive unused wealth that annuitant just stacked thanks to exploitation or inheritance.
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EPT
