Careful. The two articles rely on vastly different cherry-picked definitions of who counts as rich, and neither claim is even remotely true anymore if you use the other definition. The top 1% are indeed audited at about the same rate as the working poor, but they also pay higher taxes than everyone else. This NYT article on the other hand picks out the top 400, who apparently pay lower taxes but are much more aggressively audited by the IRS than less wealthy people even with the funding cuts limiting their ability to do so. (According to the linked letter from the IRS, they heavily audit roughly the top 20,000 most well-off Americans.)

> The two articles rely on vastly different cherry-picked definitions of who counts as rich, and neither claim is even remotely true anymore if you use the other definition.

One of the most important things to understand about tax discussions is that there are two broad classes of "rich" -- high paid salaried employees vs. wealthy investors.

When you see claims like "the top 20% of people pay most of the taxes", that's mostly the high paid salaried employees. Cardiologists making six figure salaries pay high tax rates, and there are a lot of doctors and lawyers and engineers in the population, so they pay most of the taxes.

When you see claims about rich people paying low tax rates, that's corporations and wealthy investors hiring accountants to minimize their taxable income.

The distinction is really important because it means the problem isn't marginal rates, it's the complexity of the tax code which allows people with large fortunes to game the system. A simple VAT with some kind of dividend/UBI to make it more progressive would eliminate most of those games. It would also mean that individuals wouldn't have to file tax returns at all, which would save hundreds of millions of man hours every year.

The rich spend a smaller share of their income, so a VAT scheme would in practice produce a regressive taxation scheme, with the lowest incomes paying relatively the most, because they have to spend all of their income.

What's the possibility of implementing this in combination with a luxury rate adjustment that takes something like median values for product categories and then scales rates as you move above or below that?

Because it would seem to me that consumption of low-income earners will trend toward below-the-median while consumption of the wealthy will trend toward above-the-median, giving you an additional handle to make this taxation progressive.

Well, it all depends on how you define product categories. Is a macbook pro the same product category as a chromebook? You can slice the market in such a way that luxury goods would all be bucketed into “median” price range.

IMHO it’s easier to construct a “fair” tax system on the income side than on the expenditures side, provided you count all income equally. Currently income from labor is usually taxed higher than income from investment, and that’s not fair.

What about a flat transactional tax that occurs any time money changes hands? I found this not too long ago and have been enamored with the idea:

http://apttax.com/execsummary.php

I’m not really understanding how this is different from the VAT taxation scheme.

VAT means Value Added Tax. @Forbo's was talking about a transaction tax.

The difference can be explained by this completely made up example: A steel mill buys iron ore for $1 a kilo and makes steel of that. A nail factory buys steel for $1.50 a kilo and makes nails of that. A distributor buys those nails wholesale for $2 a kilo. A hardware store buys those nails from the wholesaler for $2.50 a kilo. A contractor buys those nails from the hardware store for $3 a kilo. The subcontractor bills $3.50 a kilo for those nails. The general contractor bills you $4 a kilo for those nails.

With VAT you/the general contractor/all businesses involved pay taxes on a total of $4.

With a transaction tax, it would be paid on $17.50.

But the above is a simplified example. In the real world there are probably a lot more businesses (each specializing in their own niche) and therefor transaction involved in getting that nail into your wall.

Fuck me, right? Would be nice to know why this is seemingly such a shitty idea, but guess I'll never hear why.

The problem with it is that it creates a powerful incentive for vertical integration and puts everyone else out of business.

If you have a product that goes from mine to mill to factory to wholesaler to retailer to consumer, the tax is paid five times. But if the same company owns the mine as operates the retail store, it's paid only once.

That's an insurmountable advantage for vertically integrated companies, so no others remain and tax-wise you end up with the same result as sales tax or VAT (i.e. the tax is paid on the total final value) except that you've needlessly destroyed every non-vertically integrated business.

That is the problem that VAT solves, by giving longer supply chains the same tax treatment as vertically integrated corporations.

Simple answer? Economies perform better when money changes hands more frequently. Disincentivizing that is generally a bad idea. Additionally, taxes like that disproportionately affect the poor, who often have to spend their income as soon as they get it, and barely affects the rich, who have lots of money sitting around not being spent.

It's a great idea for the bitcoin and cash community.

That's why you pair it with a UBI, as the poster above said - if you add in more than the average cost of taxes on the UBI among people making less than, say, $150,000, it becomes significantly more progressive, even if they spend the entirety of the UBI.

Lower tax rates, not necessarily lower taxes.

This is a very important point. Tax rates and taxes are very different.

We have a marginal tax system so effective rates should be higher for those that make more. Them paying lower tax rates (like Buffet said) is them having more loopholes in the system.

Lower tax rate is indeed my definition of lower taxes.

A lower tax payment is a different thing.

The problem is that "tax rate" is an ambiguous term because different kinds of income at taxed at different rates.

So, for example, if someone makes most of their money on dividends, then they pay capital gains tax, and it appears like they are unfairly paying a lower rate than everyone else. ...but that's not a fair comparison because it's a different sort of income, with a VASTLY riskier risk profile. Taxing it at the income rate wouldn't make sense.

In the past, in the US, capital gains wasn't taxed at all because it was considered double taxation (since the investment was already taxed). ...and in some other countries, there is no tax on capital gains.

I've seen people claim that country XYZ has higher tax rates than the US, but then when you look closed, they have zero capital gains taxes.

> it's a different sort of income, with a VASTLY riskier risk profile

Yes, earning the money with labor is vastly riskier. Telling a financial advisor where to put money incurs no risk to your life.

Compare that to being a welder, tree feller, home builder, where your health or life is a daily concern.

I really don't understand why those who go out and work hard every day have to pay more in tax (as a percentage) than those that just sit on the couch and watch their wealth grow.

In the end the real tax rate is simply government spending as a percentage of GDP. Everything else is just shifting around who pays what and when not what the average ends up as. In the US that’s 41.6 percent GDP which is in line with Canada at 42%: https://en.m.wikipedia.org/wiki/Government_spending#As_a_per...

PS: Either lower taxes on capital gains or allowing people to deduct losses is reasonable in the name of risk, but we do both.

Really what we should do with capital gains is allow people to deduct losses including inflation, so that we tax the total real value gain at the ordinary rate, and do so when the money is actually divested rather than only moved from one investment security to another (because one of the arguments for lower capital gains rates is that higher rates causes money to be locked into securities the investor wouldn't otherwise continue to hold).

Or just use a consumption tax, which is largely the same thing but a lot less complicated.

> what we should do with capital gains is allow people to deduct losses including inflation

Yes, I've come to this conclusion too. The long-standing argument that capital gains rates should be low is about what happens, for example, if your gain on an investment exactly matches inflation: you'd pay taxes on it, but you haven't made any profit in real dollars. The right fix for that is not to divide your paper gain by some amount before taxing it; it's to subtract the loss due to inflation. In times of low inflation, as we have now, this won't make much difference, but if inflation picks up again at some point, it will make quite a large difference.

Of course, such a plan raises the question of exactly what inflation estimator one should use. I'm not enough of an expert to have a strong opinion, but the T-bill rate [0] seems like a reasonable first cut, since it's a good estimator for the risk-free rate of return. Paper gains from holding T-bills would thus not be taxed at all.

Whatever the inflation estimator used, the more important (and likely more controversial) aspect of the proposal is that gains beyond that amount be taxed as ordinary income. The argument is one of simple fairness: once the inflation problem is handled, how can one justify doing otherwise?

[0] https://www.investopedia.com/terms/t/treasurybill.asp -- Okay, I see there isn't just one rate, since the rate depends on the maturity interval, but we can go with the highest one, which is the one for the 52-week bill. This creates the oddity that holders of shorter-term bills will actually get a tax credit, but it will be small; I think we can live with this.

Continuously compounding the prevailing t-bill rate for the holding duration of any asset is doable but sounds like a mess.

You wouldn't want to do it by hand, but it's straightforward to program.

How about tax only on real terms, but on liquidation taxes are retroactively paid as though you bought and sold the asset each year.

This means you don't get an interest free loan from the government to continue to invest in an asset just because you haven't sold yet.

The problem there is that you effectively force liquidation in order to pay the taxes, even if you wouldn't have sold the asset. Not such a problem for index funds, but a big deal for small business owners who would have to sell a stake in their business as soon as it starts doing well in order to pay the tax on its higher current market value, which includes the net present value of expected future profits that haven't yet been realized and so can't be used to pay the tax today.

Having the government give people de facto interest free loans of their own money in order to continue to investing it is also optimal anyway, because the government borrows at an interest rate significantly lower than the average market rate of return. They actually come out ahead by lending the money to investors who are then collecting taxable interest on it, because the tax on the interest can be more than the rate the government pays to issue bonds in the meantime, not even counting the overall economic benefit of stimulating investment (i.e. more/better jobs for people who are themselves paying taxes).

I'm saying that you do the calculations retroactively on sale. No taxes are due until then. Even if the asset spikes, no taxes are due if ultimately sold at a loss.

Dont tariffs on imports\exports make this not true? Or is simply true enough?

Those are also a tax; if you import a million dollars of something subject to a 10% tariff, you pay 100k to the government for the privilege.

One thing that complicates the above is that the US does tend to run a larger deficit than Canada.

> but that's not a fair comparison because it's a different sort of income, with a VASTLY riskier risk profile. Taxing it at the income rate wouldn't make sense.

Ah yes, the riskiest activities of them all: investing in fortune 500, government bonds, index funds and inflating real-estate prices. They all count as capital gains.

Most of those are higher risk than interest on cash or TIPS (not all government bods are safe) ask the shareholders of Thomas Cook or Going back a bit Enron about risk.

Ask the people who worked for Thomas Cook about risk.

They will in the UK at least get some back pay via RB2 (I have had to fill out one of those).

RB2 Is the form you fill out if an employer goes bust, to get some cash from the government.

Yes, but you now don't have a job, even if you get paid for every hour you worked. Jobseekers is only a partial safety net. On the other hand, nearly everyone who saw their shares in Thomas Cook go to 0 had investments in a number of other things, so only took a minor hit.

The risk of investing is, in the large, "my £10,000 might be worth £9,500 tomorrow", not "tomorrow I might lose my job through no fault of my own and suddenly have to make a major lifestyle change".

Do stunt-men, soldiers, arctic explorers and other jobs with risk to life and limb pay no tax?

> In the past, in the US, capital gains wasn't taxed at all because it was considered double taxation (since the investment was already taxed)

The same thing can be said about every tax ever. Every time you tax money as it changes hands, that same money has changed hands before and was probably taxed then.

True but all of this tax discussion is about perceived fairness. I may pay a few thousand and a billionaire will pay millions in taxes but if the overall tax rate is lower for the billionaire then I'm going to get upset. It's just human nature.

From TFA:

> They have constructed a historical database that tracks the tax payments of households at different points along the income spectrum going back to 1913, when the federal income tax began.

It may be reading the book for the full detail on methods and results. I plan to.

I was saying that the reason the IRS would audit richer people more is because they would pay more taxes even though they might have lower tax rates.

> The top 1% are indeed audited at about the same rate as the working poor, but they also pay higher taxes than everyone else.

But they don't. That's the point. Your conventional wisdom is wrong.

The USA has a large number of regressive taxes, which tax the poor more heavily than the rich. These have been steadily expanded. And it has one, only one, progressive tax - the federal (not state) income tax - which has been steadily made less progressive in recent years to the point where overall taxation is at best flat and more likely slightly regressive.

> The USA has a large number of regressive taxes, which tax the poor more heavily than the rich. These have been steadily expanded. And it has one, only one, progressive tax - the federal (not state) income tax - which has been steadily made less progressive in recent years to the point where overall taxation is at best flat and more likely slightly regressive.

Citation needed. Saying the US has "only one" progressive tax is a bit ridiculous. The income tax is by far the largest tax almost anyone pays. It's certainly the largest tax I, and everyone I know, pay. And that only increases as you get richer.

> And that only increases as you get richer.

Correct. Which is why income is such a miniscule fraction of the 1% (and above's) earnings. It's all out there in the open. Pick any CEO in the top-100 corporations. Look at their income. Then look at their overall earnings. The bulk falls under capital gains due to stock. Then there is deferred compensation, where taxes are lowered even MORE if you agree to postpone being paid. There are so many clever ways for the very very rich to avoid taxes it boggles the mind.

So go ahead and keep talking about the income tax, they've got you distracted.

CEOs are probably a bad example for your point, because stock awards are generally taxed as income, not capital gains: https://www.forbes.com/sites/antoinegara/2016/09/01/apple-ce...

> However, the day Cook was awarded his multi-year payday Apple immediately withheld and sold 656,117 of Cook’s shares to cover his tax bill. All told, Apple sold $70.9 million in Cook’s stock at a price of $108.03, equivalent to or 52.1% of Cook’s total $135 million performance award.

You’re talking about a relatively small number of investors who derive most of their income from capital gains. (Capital gains account for just about 6% of total personal income.) It just so happens that many prominent examples (Trump, Buffet, Romney) happen to fall into that group. But even among CEOs, professional like Jack Welch (who pays over 30%) will take a lot or most of their compensation as ordinary income.

> Pick any CEO in the top-100 corporations.

The top is about 3.5 millions people. Being one of the top-100 CEOs is very, very different from being a random one percenter.

> Pick any CEO in the top-100 corporations. Look at their income. Then look at their overall earnings.

Warren Buffet is probably the easiest person to look at here. A quick google says that [0] he made $11m in 2016, and on that he paid $1.85m in federal income tax, and he claims a large portion of the remainder was paid in state tax. Even ignoring his state taxes, yes he paid a marginal rate of 16%, but he still paid more in income tax than the average 1%er's salary. I'm certainly not a right wing advocate, but the spin associated with the "rich are not paying enough tax" doesn't really help the conversation much.

[0] https://fortune.com/2016/10/10/presidential-debate-donald-tr...

>A quick google says that [0] he made $11m in 2016,

The amount he made in 2016 is the point of contention. Sure he made 11m in income, but for that same year, BRK.A increased a staggering 25% in share price. Even if Buffet owns a 1% of BRK.A, that represents a paper gain of 4 Billion dollars.

Now, sure, he might not have sold any stock so that won't count against his capital gains tax, but to me, its a bit deceptive to say that Buffet only made $11M.

when your house goes up by 100k in a year did you “make” 100k?

What's your point? If my house goes up by 100k in a year, in most US states, my property taxes would rise accordingly, whether or not I realized the true value of the home. Housing is a poor analogy as stocks are treated better than housing in this situation.

(California is not one of those states, due to Proposition 13, which is also very controversial and is argued to be one of the causes of California's rising housing costs)

When it comes to "if the rich are being taxed enough", you bring up a good point - if my home rises in value I pay more - however Buffet makes several billion in paper gains, and his taxes are largely unchanged.

The house is a strawman of sorts. The rich pay property taxes too.

Most of the bottom ~50% or so of households pay no (or negative) federal income tax, due to low income, EITC, various offsets for children, etc.

At the lower end, you need to factor in payroll taxes as well ( FICA )

Also things like sales taxes or even DMV fees can be significant percentages of lower income's taxes.

There are also:

* FICA, which is strongly regressive at the higher end.

* Sales taxes, which are also strongly regressive since (citation needed) the poor likely pay more of their income on taxable goods. ("There's only so much filet mignon you can eat," according to a government professor I once had.)

* Property taxes.

* Fees.

Also, all of our morality or "sin" taxes are highly regressive: tobacco, booze, pot, soda, etc.

Don't forget government run lotteries

> it has one, only one, progressive tax - the federal (not state) income tax

The estate tax is very progressive, at 40% for estates over $11.4m, and 0% for estates worth less.

Many state taxes are progressive as well.

For most taxpayers, social security and medicare payroll taxes (highly regressive) are the largest tax they pay.

Citation?

Try sales taxes. The poor aren't excluded from them, yet someone who is poor is far more likely to spend a larger percentage of their income on them than anyone with enough income to save and invest.

Most of the sales taxes I’ve seen exempt things like food and other necessities.

That doesn't refute anything I said.

The actual article contains charts that seem to support the claim that the top 1% pay higher taxes

I think there is a key language ambiguity here. Whatever your position on what the rich should pay, there is a question of what is being paid as a proportional rate of total income, vs what is being paid in absolute terms. Confounding that difference are also issues of income tax rate, vs capital gains rates and wealth vs income.

The wealthy pay in absolute terms, more dollars, but they pay a lower rate than others.

No, according to this article, the 1% continue to pay a larger percent of their income. It is only once you move into the 1% of the 1% that the rate again decreases.

All of this is true, but it's beside the point. The perception in America is that the rich pay more in taxes as a percentage of their income than the middle class do. The marginal tax rates imply that, with middle class people paying either the 22% or 24% marginal rate, and rich people paying at at 35%+ rate. Thus, people think that we have a progressive system.

However, if you look at the data in this chart, you can see it's not true any longer. The actual combined rate paid by most Americans is between 22-28%. (It's on the lower end for the poorest Americans, and for the wealthiest as well) Fundamentally, the total taxes paid is flat.

I think most people think that the taxes paid chart looks like what it did in the late 70s/early 80s. In that chart, the poorest Americans pay about 20%, and the richest about 45%. That's where we should be, instead of where we are now.

The percent of all taxes paid by the bottom 50% has been going down for the last few decades.

That's an indicator of wealth inequality, no? The top 50% are paying less as a % of their income, but because their income is rising faster (relative to the bottom 50%) than their total tax rate is falling, they end up paying more in total, mainly because the bottom 50% have less to give.

Is that the case if you include payroll taxes? (We could include sales tax too, but those are usually state and local, so we'd then have to add state income tax, and possibly property tax, and that would get complicated)

I’ll go ahead and preface this by saying “I don’t know” but for people at the very top, are there undisclosed tax incentives to encourage them to spend their money?

By undisclosed I mean negotiated. When you are trying to get somebody to spend a ton of money to open a business, donate to charity, bring a bunch of jobs, etc is there a negotiation that happens to provide lower tax options to encourage that spending?

Evidently, as evidenced by every large spending project since the dawn of time (probably?).

As I posted elsewhere in these comments:

Everyone expects a discount on goods and services when purchase in bulk.

Why should taxes be any different?

The wealthy also receive the lions share of benefits from stability and especially international infrastructure maintained by the US state.

Some would argue that taxes are different because of the issue of fairness in society, and for the fortunate who have vastly more than needed to survive, more should be expected to help everyone else. This is in the self interest of the wealthy, as economic growth is actually stunted by inequality.

There are other ways to balance fairness other than progressive taxation, but those too are often anathema to ruling economic policy makers.

I tend to agree with the idea that the wealthy should be taxed more, in a progressive taxation sense.

Perhaps I should have prefaced by previous comment with “playing devils advocate”.

Total income, or "earned income" from a tax perspective?

There's so many technically correct but misleading definitions it's very hard to know what the "real truth" is in these discussions.

> The wealthy pay in absolute terms, more dollars, but they pay a lower rate than others.

There’s at least one perspective where this makes sense:

Everyone expects a discount on goods and services when purchased in bulk.

Why should tax be abt different?

Paying taxes is not "buying the government" and paying higher taxes is not buying "more" of it, or buying it in bulk. For starters: bulk rates are lower, in part, as an incentive to get people to buy more of a product at once. Since paying taxes is (ostensibly) mandatory, this doesn't apply.

Ostensibly being the key word here as there appears to be some scenarios where none of those things are true.

barely, and the point of the chart is that over the past 70 years the gap has gone from being being very progressive to almost flat or regressive based on income level.

2003: The 99.999%ile (?) pays the highest taxes; the Top 400 and the rest pay marginally lower.

2011: The rate is mostly flat, especially above the 80-90%ile. The 99.99%ile pays the highest.

2018: The 99.99%ile pays the highest, the Top 400 appear to be paying a lower rate than almost anyone.

Somewhere between 2003 and 2011, the 0-10%ile began paying more than the immediately higher percentiles.

Yup. That's the strategy the Military uses - https://www.rollingstone.com/politics/politics-features/pent... "At a cost of $400 million, some 1,200 auditors charged into the jungle of military finance, but returned in defeat. They were unable to pass the Pentagon or flunk it. They could only offer no opinion, explaining the military’s empire of hundreds of acronymic accounting silos was too illogical to penetrate"

Remember when Rumsfeld announced that 2.3T USD were missing from the military? https://www.city-journal.org/html/americas-missing-money-157...

Yeah, nor do most people.

The date he announced that? September 10, 2001. The section of the Pentagon hit? The accounting wing with all the records.

It’s a lot easier on your sanity to just accept that (insanely) crazy coincidences happen. If it helps, that number jumped to 6.5T a few years later and now stands at 21T and the military and Pentagon have simply stalled all attempts at enforcing audits. They have the gall to simply refuse to account for the discrepancies and believe they cannot be taken to task for misappropriated funds; they don’t need to blow up records when no one does anything if they simply refuse to make them available.

I do not doubt that the waste and accountability are a huge problem in the DoD, but $21T sounds extreme. The FY19 total military budget, according to Wikipedia, is a bit under $700B and you need to misappropriate 30 years of that to embezzle $21T. And that assumes everything is misappropriated (no salaries, no fuel to fly planes, etc.) and does not account for growth (30 years ago the budget was a lot smaller than it is today). My 2c.

It’s not really $21T in cash but rather $21T worth of book-cooking “adjustments” to make the numbers align. This article gives a good overview: https://www.nytimes.com/2018/12/03/us/politics/fact-check-pe...

The NYT article claims that’s the absolute value of cooked assets and liabilities rather than the net amount but in truth it’s misappropriation so many levels deep (and recursive in parts) that you can’t even tell whether dollars are being made or lost. Purposely, I can only presume.

> It’s a lot easier on your sanity to just accept that (insanely) crazy coincidences happen.

Perhaps if your goal is peace of mind rather than correctness. All crazy things are not necessarily coincidences.

What would you think about the whole thing if the missing money announcement came on the 9th of September ("can you believe it came less than 48 hours after Rumsfeld came public with this info!?)? The 8th? The 4th? The 1st?

The 10th of September, 2001 was a Monday. What percentage of announcements are delayed until the start of the business week? How close did this particular announcement come to being delayed to Tuesday (in which case it wouldn't have even happened)? There are so many factors that pivot on the most tenuous or whimsical of things that it actually is borderline ridiculous to read too much into any one single aspect of it.

Perhaps you didn't notice the word necessarily in my sentence.

Yes, Rumsfeld did make this speech on the day before the attacks. It's actually a great speech too! He talks about the cumulative bureaucratic waste of the previous few years of the Department of Defense, and poor auditing.

https://www.c-span.org/video/?c4623026/donald-rumsfeld-speec...

https://www.cbsnews.com/news/the-war-on-waste/

https://www.quora.com/What-does-the-missing-3-trillion-dolla...

But the section of the Pentagon that was hit was not the "accounting wing". There is (and was) no "accounting wing". The specific areas that were hit were mostly "Naval Command Center" and "Defense Intelligence Agency", but even then, the area was relatively unoccupied due to renovations that started in 1998.

https://en.wikipedia.org/wiki/File:FirstFloor_Pentagon_Bodie...

https://media.washingtonpost.com/wp-srv/national/images/pent...

https://en.wikipedia.org/wiki/American_Airlines_Flight_77#Cr...

https://en.wikipedia.org/wiki/The_Pentagon#September_11,_200...

Forgot to note that, the money wasn't "missing" in the sense that it disappeared. It was definitely spent, over many projects, over many years. The problem he was trying to point out was that the auditing and tracking is poor and it is difficult to retroactively see where it was spent. I'm not trying to downplay it too much, because it obviously was (and IS) a huge problem. But there wasn't any implication of nefariousness or intentional fraud. (Caveat: There may have been smaller cases of fraud to make up that number, but the $2.3trillion itself wasn't implied to be all fraud).

It wasn't "wait, wtf happened to all this money? >:( ".

It was more "ah crap, we didn't do a good job tracking all this money... :*("

The nuance is subtle and easily hand-waved away by truthers, but such is politics.

If they were going to fly a plane into the pentagon to cover up 2.3T in missing funds, why would they bother to announce the shortfall beforehand?

You don't orchestrate an elaborate cover-up, and also publicly announce the thing you're trying to cover up.

Because that's, like, what they want you to think man. :)

Rofl! I needed that today. Thanks!

I don't buy into this particular conspiracy theory, but the answer to your question is really simple. Try to imagine the US government as a mob. "Helpful" services it runs are like fronts. So when the government builds a library, it's like the mob running a garbage collection company. The helpful services are fronts for complex murderous organizations with many factions. Once you see it that way, it's easy to see why one faction might tattle or fight against another faction within the mob, even though they are still all kind of in on the game together.

As though the US government would have to orchestrate several terrorist attacks just to obscure some bad finances which are basically meaningless anyway.

Yeah, that's the funny thing, we're supposed to trust that the Rumsfield thing is 100% legit but then they'd turn around and run a plane into the records to "hide" it.

They could have just like not said shit.

It's amazing how often conspiracy theories rely on the Illuminati DMV

Conspiracy theories are always so impractical. It would’ve been way easier to just ship all of the documents to an incinerator and yeah, just not say anything.

Alternatively, the terrorist attack didn't actual hit the records in question (or at least not as many as are implied) and is unrelated, but was used as a convenient cover for bad finances that are basically meaningless anyway.

I do recall that, and recall discussion of it after 9/11.

As for what I infer is an implication of the 9/11 attack being motivated by a desire to cover this up, I can't find any reference to the outer ring of the west wing of the Pentagon being "the accounting wing". Even if it were, I can't imagine that we're doing our federal accounting in the 21st Century on paper that's stored only in one central location.

That said, the military is in fact missing a ton of money and is not in compliance with laws that require annual audits of all federal departments. That's a huge problem that should be addressed, but I see no evidence whatsoever that it's in any way related to 9/11.

> I can't imagine that we're doing our federal accounting in the 21st Century on paper that's stored only in one central location. I'm not a conspiracy theorist, nor do I even remotely believe the idea that there's some sort of cover-up. But I will say one should _never_ assume the federal government doesn't do almost everything in the most backward, ancient way possible. Certainly they have tons of meetings, task-forces and plans to update things. Yet mostly they just flounder and keep on using ancient technology... like paper.

I'm trying to deduct what you're implying, and as an armchair conspiracy theory fan¹, I love all of the options! This stuff is so nuts, it's lovely.

¹ I mean that I don't believe in the average conspiracy, but I love reading about them for the entertainment value

ummm, are you making an oblique "9/11 truther" claim?

What is wrong with those facts? Did they keep copies of those files in other locations? Did they explain the unaccounted money later on?

EDIT: According to other comments who explained what's wrong, the "facts" are wrong and belong into the realm of "911truther" propaganda.

Money continued to disappear and in fact keeps disappearing and the Pentagon just says “oops, e we don’t know where it went, we’ll just permanently offset the books to balance them,” with no further accountability than that (across three administrations). They are basically untouchable even with records physically around; they do not need to resort to destruction of physical evidence so long as the military industrial complex is alive and well.

as mentioned elsewhere, the part of the pentagon that was destroyed was not "the accounting wing" which is also not even a concept that makes sense.

Pretty much every 9/11 truther cites "facts" but then has trouble when the facts turn out to be not true or are willful, limited misinterpretations of reality.

This is just a single example but it was eye opening when my friend told me about one of his clients. He is the chief mechanic at an exotic car dealership and one of their biggest customers is an active duty general in the Marines, this guy has millions of USD worth of cars.

Each general is the CEO of a multi-thousand person organization. Whether CEO pay is reasonable is a different discussion, but it would be surprising if generals were not paid well.

According to [0], a major general (O-8) makes something like $160k, depending on years of experience. I'm sure there's additional hazard pay and such, but you wouldn't expect a general to be making millions through their core pay.

[0]: https://www.navycs.com/charts/2019-military-pay-chart.html

Yeah but that doesn't include their kickbacks, consulting fees, etc. Can active duty generals sit on the board of directors of companies? I seem to remember a startup I worked at had one either on the board or heavily involved as a consultant but I can't remember if he was active duty at the time.

Active duty personnel aren't allowed to take on a second job, side hustle, etc. without written permission, and I understand that that permission is relatively uncommon. That doesn't completely answer your question (maybe generals get that permission more often), but it may point directionally.

The other thing that can confuse this issue is that Generals and Admirals generally (sorry) keep their titles after retirement. So if you have "Gen. James McClinton" on your board, that doesn't speak to whether or not they're active.

From looking around, it looks like board recruitment efforts toward Admirals and Generals are targeted at those who are retired or nearing retirement: http://blogs.reuters.com/financial-regulatory-forum/2012/01/...

I believe some positions get a stipend (particularly if they are expected to entertain dignitaries) but are generally (ha) not allowed to serve outside positions that might be a conflict of interest. I couldn't find details yet of a specific article in the Uniform Code of Military Justice (UCMJ), but there are some memos out:

https://ogc.osd.mil/defense_ethics/resource_library/deskbook...

I know a marine general (just retired) and he drives a ten year old Ford Escape. Generals are paid well relative to the rest of the military but definitely are not paid obscene amounts.

Generals are not paid that well, at least not compared to a Silicon Valley software engineer's salary. I think they make ~$200k (https://militarypay.defense.gov/Portals/3/Documents/ActiveDu...), so if any of them are obscenely wealthy, best guess is they make a lot of money off of "speaking events" like any other person with political connections.

They also have many other benefits, including housing subsidies, commissary access, essentially free health care, etc. Officers especially are compensated very well.

combat zone pay, as well, perhaps?

seems like a general with a 40 year career who could (and did) save all of his money could have accumulated a few million dollars in cars without very many shenanigans, if that was their sole financial goal in life.

Without some concrete statistics, it’s hard to analyze that. A non-trivial number of officers have family money.

In the UK id buy that chaps joining the guards regiment their fathers /grandfathers did

I kind of got the impression that the military isn't seen in that way in the USA and didn't have such a high social status

It’s not as high social status as the UK, but there are plenty of officers who come from relatively wealthy families. The officer corps skews upper middle class, with 40% of ROTC recruits coming from the top quantile of households in terms of income. (At Harvard or Stanford, 65% are from the top quantile.) The other major entry point for officers, the service academies, requires excellent test scores and two letters of recommendation from the Vice President or a Member of Congress.

By no means are officers all from wealthy families, but those folks are definitely over represented.

> The other major entry point for officers, the service academies,

Of academy, ROTC, OCS, and direct appointment, I'm relatively certain that, unless things have shifted recently, the academies are the least significant source of commissioned officers in the US military overall, rather than the second major entry point.

Any indication as to whether this was career or family money?

Forgive me if I am misinterpreting, but wouldn't the taxes of an individual general in the Marines be completely different from the Department of Defense itself?

The implication was that they should be distinct but are not.

I didn't get that at all. Can you explain?

Generals do not earn millions in salary. To afford millions worth of automobiles, the general must have misappropriated funds.

> To afford millions worth of automobiles, the general must have misappropriated funds.

Or have, or at least have once had, a lucrative side business (military personnel can do this, legally.)

Or have inherited money.

Or have a spouse with a greater income or inheritance.

Or restore cars, such that the market value of their vehicles vastly exceeds the purchase price.

Or purchase cars that have significantly appreciated in value for other reasons (lots of high-end luxury cars that are limited run not only are pricey but limit sales to selected buyers, and the market value of the cars is almost immediately much higher than the purchase price and appreciates rapidly.)

Or a combination of the above.

What's the most plausible explanation? My wild guess is inherited wealth. The lucrative businesses come after retirement, as far as I know.

xapata's interpretation of solotronics's post is that "Pentagon's impenetrable, unauditable accounting" + "Reports of trillions of dollars missing" + "General with a multi-million-dollar sports car collection" = The sports cars were paid for by embezzlement.

Of course, it's also possible the general saved up, or made lucky investments, or married into money, or there was an exaggeration or misunderstanding.

The Pro Publica link you provided does not show they "audit the poor instead". It shows that the IRS audits poor and rich at the same rates. Unfortunately it seems Pro Publica is succumbing to the same forces as other journalistic outlets and has started to engage in sensationalist headlines.

Here is their title verbatim: > IRS: Sorry, but It’s Just Easier and Cheaper to Audit the Poor

Here is the article's first sentence, verbatim: > The IRS audits the working poor at about the same rate as the wealthiest 1%.

They go on to say this: > ProPublica reported the disproportionate audit focus on lower-income families in April.

Per their own sentence, the poor and rich are audited at the same rate yet they go on to label this "disproportionate". That makes no sense.

Furthermore, they have defined rich and poor in arbitrary ways - the top 1% of taxpayers by income versus EITC recipients. The latter group is 25 million people - 7.6% of the US. So per capita, the "rich" are getting audited more frequently.

Well, the article they link to in April explains this to at least some degree, doesn't it?

https://projects.propublica.org/graphics/eitc-audit

"As we reported last year, the IRS audits EITC recipients at higher rates than all but the richest Americans, a response to pressure from congressional Republicans to root out incorrect payments of the credit. The study estimates that Humphreys [County, Mississippi], with a median annual household income of just $26,000, is audited at a rate 51 percent higher than Loudoun County, Virginia, which boasts a median income of $130,000, the highest in the country."

The article doesn't define rich as "the top 1% of taxpayers"; it simply notes that EITC recipients are audited more frequently than all but that top 1%.

"The five counties with the highest audit rates are all predominantly African American, rural counties in the Deep South. The audit rate is also very high in South Texas’ largely Hispanic counties and in counties with Native American reservations, such as in South Dakota. Primarily poor, white counties, such as those in eastern Kentucky in Appalachia, also have elevated audit rates.

"The states with the lowest audit rates tend to be home to middle income, largely white populations: places like New Hampshire, Wisconsin and Minnesota. Generally, the IRS audits taxpayers with household income between $50,000 and $100,000 the least."

From the article more directly linked with the clickbaity headline, in fact, that headline is also supported if you keep reading the article:

"On the one hand, the IRS said, auditing poor taxpayers is a lot easier: The agency uses relatively low-level employees to audit returns for low-income taxpayers who claim the earned income tax credit. The audits — of which there were about 380,000 last year, accounting for 39% of the total the IRS conducted — are done by mail and don’t take too much staff time, either. They are 'the most efficient use of available IRS examination resources,' [IRS Commissioner Charles] Rettig’s report says.

"On the other hand, auditing the rich is hard. It takes senior auditors hours upon hours to complete an exam. What’s more, the letter says, 'the rate of attrition is significantly higher among these more experienced examiners.' As a result, the budget cuts have hit this part of the IRS particularly hard."

Considering the rich have far higher tax liabilities and custom complex accounting (vs the poor whose income is usually reported by employers as an automatic check against self reports), "proportionate" auditing should be closer to per-dollar than per-person.

No, I wouldn’t expect that at all.

Audits are often driven by the type of deduction. Some are hard to get fraudulently (401k deduction) while others are easier (rental income).

A guy pulling in $500k in salary probably shouldn’t be audited, but someone pulling in $20k in adjusted rental income might need to be.

> Per their own sentence, the poor and rich are audited at the same rate yet they go on to label this "disproportionate". That makes no sense.

They point out that while the rates may be similar, the impact is disproportionate. The rich have the means to hire a tax attorney, probably have a CPA who kept detailed records, etc. EITC recipients don't even know where to start in responding, and as the article indicates, many don't as a result.

> Per their own sentence, the poor and rich are audited at the same rate yet they go on to label this "disproportionate". That makes no sense.

60% of 1000 is less than 60% of 2 million. The cost/benefit of auditing the poor is likely inverted at a small scale. At a large scale, it's the right call. It makes sense, from a particular point of view.

Fortunately four states lost a lawsuit[0] attempting to overturn the 2017 Tax changes, specifically they went after the cap on deductions allowed that could be deducted off Federal taxes with regards to taxes paid to states and cities.

In effect what they wanted was for their citizens to be able to write off a much higher level of state and local taxes against the Federal tax debt owed. This is how high tax states in turn claw back money their citizens would other pay to the Feds, by being able to write it off Federal taxes State taxes can be increased and the burden passed along.

Not much different than some subsidies that favor wealthy households over all others in the form of "saving the environment". Watch how holier than thou a hand out is defended with to understand how money is given back to those least needing it. I am guilt of accepting the $7500 handout TWICE for EVs. I have always though that it should have been restricted to much less expensive cars to encourage their development but instead the Federal credit has no limit, car price or income level. IF you pay that much Federal Tax you got it back.

So don't just focus on how much the "rich" pay or don't pay, also focus on all the handouts to people with good to great incomes just masked behind feel good names. (education - in particular master and higher degrees is a subsidy to the same)

[0] https://reason.com/2019/10/07/federal-court-rules-against-bl...

Speaking as someone in a higher-tax state whose taxes went up as a result of the state tax deduction restriction in the 2017 tax bill, I wouldn't mind that if the difference were visibly going to help educate children in poorer states. Instead, it seems that a lot of it is being pocketed by people who already have a lot more money than I do. So although I can see the argument for restricting or eliminating SALT deductions, on the whole I still think the bill was terrible.

I don't think you should feel bad about accepting the EV tax credit. The purpose of that is to help jump-start the industry; restricting it by income level would have diminished the desired effect. I haven't bought an EV (yet), but I'm glad you have.

Would it help to start a fund specific to this purpose? I'd imagine there would be significant ROI on it, in the big picture sense.

Relevant Article: https://www.citylab.com/life/2017/09/the-rise-of-public-sect...

A fund? To what, pay the IRS to target specific individuals? After the IRS targeting controversy [0], I would highly doubt the IRS would accept that money.

[0] https://en.wikipedia.org/wiki/IRS_targeting_controversy

I love the idea but the rich would lobby so hard against it like it's the end of the world.

I've pushed for this before. Your idea: haven't read linked article yet. Mine was an organization that obfuscated working- to middle-class finances as much as rich. It would operate at cost with most legal stuff done as templates and accounting comouterized. It could be a public-benefit company, foundation, or co-op. They'd just charge annual fee to be in, consulting for anything complex, and everything external at cost plus minimal labor.

What yall think?

I thought maybe we need to penalize "complexity". I feel like there is too much incentive to complexify things in society.

Maybe its time we start considering the Fair Tax plan again.

https://en.wikipedia.org/wiki/FairTax

Consumption is a smaller percentage of wealthy household incomes, and that plan doesn't do anything to address equity or other forms of lucrative wealth generation.

I don't agree with that definition of "fair", and I think it would further exacerbate wealth inequality.

Why do we need the fair tax plan to create a flat rate, when the graph in this chart shows that the rate is already pretty flat? Today, most people pay between 22 and 28% taxes.

And the wealthy have moved their income address to a tax free state, saving them an additional 6-12%.

Whereas the poor can't move without losing their job. Yeah, this chart is federal only, but state taxes are also an issue, certainly.

LPT: an organization with an opinion in its name is not a trustworthy organization.

> an organization with an opinion in its name is not a trustworthy organization TO ME

You have a strange life for that to be considered a "tip".

I'm usually ok with the Federal Reserve or Green Peace or Humane Society or whatever.

Ah, yes, the "tax the living hell out of the working poor" tax plan.

You must be thinking of something else. The effective tax rate is negative for the poor due to the basic income provided.

https://en.wikipedia.org/wiki/Distribution_of_the_FairTax_bu...

I'm not seeing that in the page you linked. Is there a specific statistic that you are referring to?

Seems like the correct thing to do is just to send the very rich person the bill for the costs of investigating their tax arrangements if it is substantially obscure. This would both make investigating these arrangements financially viable and disincentivise people from setting up arrangements like that in the first place.

Is the tax man an employee of the tax payer or is it the other way around?

I suppose the question is "which tax payer?" Which is unclear because really it's the "employee" (in the sense that an organisation could be considered an employee at any rate) of a democratically elected government which in principle predominantly represents people who pay tax in general but also some who can't or don't.

And one of their roles is in ensuring the interests of those lower down the income scale (which in this case even includes senior salaried professionals and only moderately successful business owners) such that they do not have an undue burden simply because somebody with far, far greater means has decided to arrange themselves some kind of labyrinthe with the express purpose of ensuring they outwit the rest of society. In this case it of course makes sense to make them feel the burden of their own creation rather than burdening the rest of society with it.

> And one of their roles is in ensuring the interests of those lower down the income scale ...

This is not a responsibility of government as described in the constitution the united states.

I'm not American but which amendment is that out of interest?

None at all. America was not founded with that principle, at least not in paper.

I think even most people mocking Bernie for saying "there should be no billionaires" are more open to much higher estate tax rates.

At least when a wealthy person dies it's easier to count their wealth because there are strong incentives on the parts of the people who stand to inherit their wealth to make sure it's all counted correctly.

The IRS can audit everyones tax returns via automated algorithms, it is just that those kind of audits are very effective on simple tax returns and very not effective on complicated ones.

This seems like the "looking for your keys under the lamp post" joke. https://www.3quarksdaily.com/3quarksdaily/2016/03/the-street...