So, in summary, what you're saying is "we shouldn't try do to anything about it because the really rich people are going to find loopholes anyway"? I'm not trying to be a jerk, I'm actually trying to confirm that that's your point.

The point is valid. Every measure has a cost, including changing the tax code. If there's some certainty that the cost of implementing this tax hike won't be offset by the actual new revenue, there's no point on implementing it.

I don't know if that's true. But it makes sense that people earning more than $10M don't show it in the W2.

Close the loopholes, not hike the taxes.

"Loopholes" are often things that benefit society though. It's sort of an indirect tax. Like donating to a charity. Basically the government is saying that they'll lower your tax burden if you use your money in a way that benefits society as a whole instead of just enriching yourself.

Thing is, the very existence of a company benefits society as a whole: it produces and trades goods that people need and want, and also gives stable source of income for sometimes dozen thousands of its employees.

That's why we should be carefull with excessive taxes for bussiness - if some companies go bankrupt, or lay off 20% of their workforce as a result it might be a net loss to society.

And before you start arguing that sometimes companies make money on shady things: yes, they do, but then you don't punish them for that with taxes, there are criminal laws for such things.

There are thousands are companies that exist solely as a tax dodge for some other company or in order to prevent paying workers at a different company. Some companies exist to just play games with money on the market, which has at best only very indirect benefit to the society as a whole and has a definite chance of being a harm to society. Some companies exist simply to drain all of the money out of other companies before they go bankrupt.

None of this is illegal, but it's hard to argue a benefit to society in general.

Each loophole has a base, people who care deeply about it. Against this is a vast population that doesn't even know it exists. Closing each loophole is an enormous political battle with very little payoff in tax revenue. If you add a new tax bracket or raise the capital gains tax, you get much more revenue for the same political lift. This is setting aside the marginal value of a dollar for the different populations taxed and the effect of economic inequality on corruption, democratic institutions, and social cohesion.

No one would ever pay 70% tax, even without the accountants and advisors, because 70% would be the top marginal rate. Their first $10M would be taxed at a lower rate.

I might be wrong but I think that's part of the reason why the proposed rate is 70%. If they're just going to obscure so much of their capital anyway, you might as well tax what they can't at an especially high rate to compensate for that.

If any of that is true why did they bother lowering the rates last year?

For most families (who earn under $200k/year or so), the extra return and/or reduction in taxes actually spur spending, which drives growth. The top earners spend less, meaning less whole-economy growth.

Personally, I don't think it's right to have more than 50% tax rate at any level, and beyond say $50k/year would say that a 20-30% tax all the way up without deductions would be better. Eliminate corporate taxes, limit corporate capital holdings requiring either reinvestment or divestment to shareholders (who are then taxed).

Simplifying and automating the system better would work better for everyone involved. But confusion keeps Intuit/H&R Block and others in business.

> Even if this became the law no one with more than a half of brain would ever pay 70% tax. People earning north of $10M usually have a team of tax advisors, and a lot of options of avoiding income tax: offshore companies, charity foundations, etc. The discussion about this is just a distraction from more pressing matters.

It's a fallacy verging on propaganda to argue that a reform should not be pursued because another policy can be used as a loophole. All that means is that the reform needs to be more holistic to be successful.