My understanding is that if a little guy evades taxes, but then cooperates with the IRS when caught, and agrees to pay all taxes and interest and penalties, then they generally don't get thrown in jail and have all their other money and possessions and responsibilities taken away, as this article seems to imply they should do with billionaires.
I don't see how this is evidence of special treatment for billionaires. The guy paid way more in penalties than he saved on taxes and also had to help prosecute his friend, who evaded way more tax than he did. It doesn't seem to me like he came out on top.
There are four differences. First, the IRS prosecutes a lot more low-income people than high-income people (by percentage as well as by absolute numbers) so a billionaire has much better odds of not getting caught. Second, billionaires have access to better layers, accountants, publicists and politicians to give them negotiating leverage if they do get caught. Third, the payoff for a billionaire successfully cheating on their taxes is much higher than for a non-billionaire. And finally, even if a billionaire does get caught and pays all their back-taxes with penalties, they will still most likely be a billionaire and be able to sustain a pretty posh lifestyle. So the expected value of the tax-cheating lottery is much higher for a billionaire than a normal person.
> even if a billionaire does get caught and pays all their back-taxes with penalties, they will still most likely be a billionaire and be able to sustain a pretty posh lifestyle
By that logic, if they just pay their taxes it won't affect their lifestyle either, so their incentive to cheat is also lower.
> the payoff for a billionaire successfully cheating on their taxes is much higher than for a non-billionaire
In absolute terms, sure. And in absolute terms the penalties are much bigger too.
> the IRS prosecutes a lot more low-income people than high-income people (by percentage as well as by absolute numbers) so a billionaire has much better odds of not getting caught
Your conclusion doesn't follow from your evidence. It's possible that low income people are cheating taxes at a higher rate than billionaires. I really don't have a lot of trouble believing this; small tax fraud is widespread, even accepted by a lot of people.
> billionaires have access to better layers, accountants, publicists and politicians to give them negotiating leverage if they do get caught
I don't see any evidence that this guy got a better deal than he should have.
The point of tax enforcement is not to punish billionaires for being billionaires. The point of tax enforcement is to ensure taxes are collected. If you think taxes are too low, or just want to punish billionaires more harshly because they're billionaires, then Congress is the place that has to be changed.
The point about the IRS auditing poor people more than rich people was in the news some months ago. The IRS confirmed that they don't prosecute the rich because they can't afford to go after them.
I definitely think the wealthy should be held to a higher standard than the poor. Not only is the magnitude of their crime bigger, but their is less justification for it.
There is evidence he worked out a deal with the removal of deductions regarding his charity... why did they remove those deductions? If he’s entitled to them... clearly it was done as a negotiating piece.
How many average Joe’s have 180 million in deductions to negotiate with?
c might sound annoying, but the revenue service has the primary goal of revenue. replenishing the treasury so it can make its own interest payments. you might say, "well take that and still jail the people". okay, I guess. it could have happened here.
all parties in this case acknowledge that a court case would not have any guaranteed results, specifically because of your second sentence:
> Not only is the magnitude of their crime bigger, but their is less justification for it.
The justification is actually broader. Like, sure if the billionaire lacks a justification for paying yes, but the reality is that the government doesn't know WHICH justification the billionaire is using. That's the game. They can be totally blindsided. And then there's the jury, yeah sure a jury with populist sentiment against billionaires combined with a jury judging a black man, doesn't sound great for the defendant but that overlooks everything that was attempted. The man tried to use the amnesty program that the US government set up, and the government denied him! The man already snitched for the government on his first investor who set him up for life! The man tried filing amended tax returns. The jury might actually take a dim view on the state for that, I could totally see a hung jury. And then his lawyers can totally drop some legal opinions they made years ago that showed a justification the government didn't expect at all, shifting liability away from the defendant.
> By that logic, if they just pay their taxes it won't affect their lifestyle either, so their incentive to cheat is also lower.
Not quite.
You need to think about when they have the money. It is “capitalism” after all, not “moneyism.” If you build/invest-in something using $10mil that should have been tax, with a decent ROI you might make that money back in 5-10 years. Now you have the original money, plus own something that continues to make money. Income++, but your “back taxes” are still the same for the earlier fraudulent period.
(assuming the IRS doesn’t take stuff like this into account when dealing with collecting “back taxes”)
The IRS is not stupid. They charge interest and add penalties on top. This guy saved $43m and paid $137m plus a bunch of other stuff. He did not come out ahead.
> Third, the payoff for a billionaire successfully cheating on their taxes is much higher than for a non-billionaire. And finally, even if a billionaire does get caught and pays all their back-taxes with penalties, they will still most likely be a billionaire and be able to sustain a pretty posh lifestyle.
This is the weird part to me. I don't think the marginal payoff is higher for a billionaire, other than in ego or ideological or other less-rational terms.
Someone making 50K who scams an extra 2K out of their taxes has gotten themselves a pretty big boost to their disposable income. While a billionaire already has millions to play with...
I would support higher and harsher penalties for larger absolute amounts of tax fraud, though, because you're depriving your fellow citizens of more if you're keeping larger $$ amounts.
Yeah, it's not intellectually honest to argue "a billionaire committing a billion-dollar tax fraud has a lot to gain, because a billion dollars is a lot of money, but a billionaire getting fined a billion dollars is nothing to him, because diminishing marginal utility."
How is it dishonest? They have a lot to gain financially, and the penalty for doing so (although steep) is not significant enough to have a material impact on the person committing the fraud. That seems like the exact moral hazard that creates this situation.
For a poor person, the same situation is likely life-altering in either case.
$1,000 to you is (probably) not a lot. For someone in a third world shithole it's several years to a life time of earnings. Perspective matters when determining if something is "a lot" or not.
It's clearly both. The behavior of the billionaires makes that clear. Billions of dollars is enough incentive to commit tax fraud, and (hundreds of) millions of dollars in fines has not been enough to disincentive tax fraud.
To the latter part of top post, for a billionaire utility value and expected value are equal as if he gains or loses a few million it doesn't matter. For smaller player they can be completely different, yes a few thousand can be a good income gain, but getting caught can mean they get completely ruined.
So if expected value of tax cheating in vacuum is - lets imagine - 20% of the amount of taxes cheated, billionaire should cheat on taxes in every situation, as they simply gain 20% on average. Smaller player shouldn't, as even though their expected value is the same, their utility value can be completely different as they might take a risk of ruining their business and losing future income and hugely lowering their quality of life.
edit: and also for small amounts the way down is much harsher on the utility value, so being a favorite to gain 10k might not be worth it, if the possible -15k means your lifestyle suffers.
If you're little and scamming a few $k here and there, the ROI (Return on Investigation) for the IRS to go after you is tiny. It's probably not worth assigning an investigator.
If you're HUGE and scamming billions, the ROI is there but you also have the capabilities to defend yourself, obfuscate things, etc so it's unlikely they can destroy you. Therefore, it's not one investigator but a team with forensic accountants, potentially informants, etc.
For everyone else, the danger is in the middle. Where you have enough that you can lose a life-destroying amount but you don't have the means to protect yourself. That is a great target for investigators.
In short, as you gain more, be careful and have a good accountant who follows the rules to the best of their ability.. until you can make the rules.
> Someone making 50K who scams an extra 2K out of their taxes has gotten themselves a pretty big boost to their disposable income.
another way to think of this is in the difference of relationship to money between a billionaire and a in comparison poor person. give 2K to the avg Joe/Jane they'll circulate it back into the market by purchasing while the billionaire sees themself as a "steward of their fortune" and who would keep in their accounts. (also the reason why trickle-down Reaganomics doesn't work).
Also to a billionaire there is a high chance justifying tax-avoidance (and evasion) is easier since they anyway do it using multinational corporations. And obvs. it's more work to go after big cases where the fight is about proofing overstepping the line between avoidance/evasion while with poor people the case is usually about just evasion.
To a person dealing with the IRS over millions, a whole team of lawyers at $1k/hour each is a drop in the bucket. to a person who cheated uncle sam of $2k, its cheaper to settle (even with penalties) than to hire a single lawyer to represent them. That is why the IRS loves going after the little guys, they don't fight back.
Loves is a strong word. I think it makes more sense to say that the IRS doesn't have the budget or resources to go after the big players. Yes, people cheating only $2k probably won't pay for a lawyer but from the IRS side it's just much simpler to analyze and prove that person is in the wrong. See this article from ProPublica https://www.propublica.org/article/how-the-irs-was-gutted
>This is the weird part to me. I don't think the marginal payoff is higher for a billionaire, other than in ego or ideological or other less-rational terms.
It is higher in a very real and measurable way: it's way more money.
Doesn't have to higher as a "marginal payoff". (Besides that would imply that if the billionaire didn't get any real benefit or pleasure from the non-taxed money, they should face no penalty).
Billionaires think differently about money than non-billionaires. Ordinary people use money to exercise control over their own lives. Billionaires use money to exercise control over other people's lives, and when that is your goal, a few extra billion dollars means a few extra tens of thousands of people you can put on payroll to do your bidding, whatever that might happen to be. It lets you do things like run for president or go into space. It's not my cup of tea, but it's not fair to call it "irrational". Some people just want different things.
> the IRS prosecutes a lot more low-income people than high-income people (by percentage as well as by absolute numbers)
I'm not sure how this is relevant. As of October 2020, there were 614 billionaires in the US[1]. Of those 614 people, only a few of them are likely breaking any sort of tax law (billionaires have a lot of money to make sure they take advantage of loopholes, without breaking the law). So there isn't some big list of billionaires that the IRS could be going after but is choosing not to.
So the question is, are there known billionaire tax evaders that aren't getting prosecuted? That should be the only question that matters. Using statistics in this case would likely lead to more injustice than less, as the only way you could get billionaire vs non-billionaire prosecutions rates to align is by prosecuting billionaires that aren't breaking the law. (edit: unless there are many billionaire tax evaders that are just getting away with it, of course. I don't know if that's the case or not)
the typical billionaire can easily go to another country (and immediately get a passport if they wish). it helps looking at this not just from an US/Western pov but how Chinese, Russian, African billionaires are quickly feeling at home in places like US[1], UK, Switzerland. There is a lot more money to be made (and washed) in places like Africa / Asia that requires a "safe haven"
[1] the US today is one of the biggest tax-havens in the world (source: "Treasure Island") and the OECD crackdown on the usual suspects (Cayman, Channel Islands, ...) never hurt anyone since the US really just wanted a slice of the off-shore pie (which anyway exists whether with or without the US as a tax-haven).
> First, the IRS prosecutes a lot more low-income people than high-income people (by percentage as well as by absolute numbers) so a billionaire has much better odds of not getting caught.
Is there any reason to believe that billionaires don't cheat more? I don't think billionaires are rich because they're more talented. I think they're rich because they're more opportunistic and, quite frankly, shittier human beings.
This is the most condescending response I have ever received on HN. I do not find that link helpful and it's really insulting. You immediately jump from "he doesn't agree with me" to "you are ignorant and need to be educated as such until you agree with me."
Most of my perception is based on billionaires I know in real life. It's anecdata but it's enough to persuade me. I choose not to talk to one after he became rich because he became such a horrible human being. The others roughly follow the same trend. All of them are rich or became rich by shitty means.
If you'd written the post with that second paragraph, i.e. provided a basis for your opinion, I wouldn't have replied that way.
As it was written, though, no basis was provided. The opinion was congruent with that of people who believe economics is zero-sum, which is what I inferred you meant from "shitty means".
As for me, although I've personally met Steve Ballmer, Bill Gates, and Paul Allen, I hardly know them. I have read their biographies, and the biographies of many American billionaires, and would not agree that any of them came by their wealth through "shitty means".
The term "shitty means" isn't exactly an economic term, and I'd be curious what you mean more specifically. I'll start by saying an ethical way to become a billionaire is by providing a product or service that people are happy to pay for. Gates, Ballmer, Allen, Jobs, Bezos, Musk, etc., all fit into that category.
I appreciate the apology and admit I overreacted. I owe you an apology as well. You're right - my first post did not have a lot of information, and my language was belligerent (in both of my replies).
I've been having a bad day and you caught me at a bad time. That's my fault and I need to take a break from the internet. Have a good night.
'IRS estimates that between 21 percent to 26 percent of EITC claims are paid in error. Some of the errors are unintentional caused by the complexity of the law, but some of the claims are intentional disregard of the law'
That statistic is irrelevant since it doesn't distinguish between rich and poor. But the IRS has publicly admitted to not pursuing rich people because "it's too hard."
"The typical audits for higher-income taxpayers involve at least three different tax years, often include related entities, and routinely take years to resolve. The highest income taxpayers face the most significant chance of an examination, and they face the most highly trained and experienced IRS agents and teams utilizing our most sophisticated tools and techniques."
But won't the billionaire be highly unlikely to have any hand in doing their own taxes? I'd imagine that you'd have someone doing that for you and have no idea of the details.
I'm significantly poorer than the billionaires, but the only thing I know about taxes is what forms I need to gather and mail to my tax guy.
It should be taken into consideration that it's much harder to prove that the billionaire actually cheated vs. a regular Joe, who may simply have lied on his taxes. The IRS, in the vein of all prosecutors, will not prosecute unless they can make a strong enough case to make a conviction highly probable.
The IRS has nice little boxes that the low income people can fill in that are blatantly obvious when fraudulent. It's not the IRS's fault that people think they can fudge some number and it not instantly get flagged on entry into the computer.
My dad had a similar experience with the IRS. He had startd a small business and was supposed to be paying something monthly, but he thought it was quarterly. He got fined, and when he mailed in his payment, he included a letter explaining that it was his first time running a business, and it was an honest mistake. ~6 months later he got a check back from the IRS for the fine amount, plus interest. They seem to be pretty lenient as long as you aren't actively trying to make their lives difficult.
>My understanding is that if a little guy evades taxes, but then cooperates with the IRS when caught, and agrees to pay all taxes and interest and penalties, then they generally don't get thrown in jail and have all their other money and possessions and responsibilities taken away, as this article seems to imply they should do with billionaires.
Maybe, but that's sort of like how a person who slaps somebody usually doesn't get jail time compared to the person who beats somebody to a pulp.
The billionaire tax cheat has much larger impact on society. And the billionaire has much less justification for doing so (if they pay their taxes properly they're still a billionaire).
The IRS has a lot of leniency because they know paying taxes is hard. Tax Court is one of the few places where you can SOMETIMES claim ignorance of the law as a valid defense to get penalties and such removed.
Yes, why don't we prosecute a one-time shoplifter the same as a guy who stole so much he used it to fund a shoplifting conspiracy, then paid a bunch more to various PACs and related contributions to not go to prison for it?
The obvious, trivial answer of course is that in tax law, how much you evaded determines the severity of the crime.
Yeah, generally criminal prosecution is reserved for the really egregious cases, such as complete failure to file or failure to claim large amounts of income for substantial time periods.
The claim is that he didn't declare $200M in income and hid it in off-shore accounts over a decade. Sounds like a large amount of money and a substantial time period.
>> My understanding is that if a little guy evades taxes, but then cooperates with the IRS when caught, and agrees to pay all taxes and interest and penalties, then they generally don't get thrown in jail
Where in the world did you get this idea? If you don't pay fully or on time, but don't lie, they just make you pay, because that's not "evasion."
Elaborate premeditated lying using fake books or shell corporations to deliberately hide assets is a serious crime, which the rest of us can't get out of with our armies of lawyers and well placed phone calls to politicians.
> My understanding is that if a little guy evades taxes, but then cooperates [..] then they generally don't get thrown in jail
This is how it more or less works in my country but you do have to file a "active repentance" form and spill out of your misdeeds. Otherwise, anything you tried to hide, will work even harder against you.
Is it certain that he had saved only 43 million though? Couldn't it be the case that they only found 43 million? If there's more hidden away and out of reach of the authorities, then he could still have beaten the system if that sum exceeds the penalties paid.
You have no basis for believing this. All I know about this is what I read in the article, and the article is clearly intended to show this guy in the worst possible light. If there was any hint that your conjecture might be true then I expect it would have been mentioned.
I don't believe it. I'm trying to ascertain the likelihood of it being true. I've seen people escaping these authorities by using cryptocurrencies and whatnot.
Billionaire John Kapoor is in prison for another half decade for bribing doctors to prescribe opioids. Another example is the Jeff Skilling who went to prison for 15 years for ripping off customers, employees and shareholders, most of whom were not rich people. I don't think your narrative accurately reflects the facts.
> Why should Bernie Madoff gone to jail then?! if some guy can steal a car then?
Fraud and tax fraud are different crimes, and even if they were the same the number of counts in Madoff's case would be vastly different.
In other words, you're much better off committing tax fraud than running a Ponzi scheme targeting rich people. Plus, I suspect that if Madoff had walked he would have died shortly thereafter in some freak accident or an apparent suicide .
> Barr signed off on a non-prosecution agreement...required Smith to admit he had committed crimes, pay $139 million and cooperate against a close business associate indicted in the largest tax-evasion case in U.S. history—Texas software mogul Robert T. Brockman
Prosecutorial discretion is a tricky thing to judge. On one hand, it's a black box. On the other hand, it has to be. It's a human judgement around which investigations are worth pursuing given the facts and circumstances, the law and the will of the polity.
Within the confines of the rules, this looks...fine? It sounds like Smith was fined more than he aimed to save. And if it bags a bigger fish, particularly if with jail time, it seems like the trade would be worth it. At the very least it makes tax evasion riskier going forward--your billionaire co-conspirator is now a real liability.
Without knowing the odds around that case, it's difficult to judge this decision.
Is it tricky to judge though? I think the reason why such stories get more attention is because they shouldn't be decided inside a black box.
This person admitted guilt, he also admitted that at the time he made the deal with Brockman he knew it was sketchy. He only tried to course correct when he knew he was being investigated.
If this individual makes a mistake, I can understand the leniency but essentially he made a deal that he knew at the time to be wrong and knowingly kept defrauding the government till he couldn't anymore due to discovery, and essentially came out of it with not so much as a scratch, maybe some stress from all this. And he's continued to whitewash the narrative around this with 'philanthropy'.
In my opinion it shouldn't be about him being fined more than he aimed to save. That essentially encourages others to strike similar bargains with other bad actors as the net result is the consequences are relatively small compared to the upside.
> It sounds like Smith was fined more than he aimed to save.
That might be true in absolute terms, but saving the money at the time likely enabled him to grow his wealth faster, putting him in a better position now, even accounting for repayment, than he otherwise would have been.
Companies do this all the time when they take on debt. Having the money now, even if you need to repay it layer, lets you grow fast, and the longer you can put off repayment, the more you can compound your gains.
I feel this article is gas-lighting the audience. Buried midway through the article is the important tidbit that as part of the DPA, Smith has agreed to pay $139 million USD. And, over the years, he has given away more money to charity than owed in taxes, making him very sympathetic to a jury.
Ergo there’s no chance of prosecution, he’s given more than he owes to charity, and has still agreed to pay back most of what he owes. It’s not perfect, but the system is working.
Notice that his charitable giving began after he was aware the IRS was after him. There is evidence he committed criminal tax fraud, giving the money back or giving the money to charity doesn't ameliorate that. To make an analogy, suppose you robbed a bank and were about to get caught. If you gave back the money, and made some donations to charity, would that absolve you of criminal liability? This seems like an accurate analogy to me, with the "bank" being the US taxpayer in this case.
Here's another article that highlights how he became a major, high profile philanthropist only after it became clear the feds were on his case:
> And, over the years, he has given away more money to charity than owed in taxes, making him very sympathetic to a jury.
It should be the voters‘ decision where the money goes to. Charities can also be a place to store money. If you control them you can also decide where the money is invested in. You just need to put a bit each year into some charitable cause where again you can spend that money buying products from wherever you want.
So in consideration for a fine and cooperation against a bigger fish, he got a deal in connection with a nonviolent offense. Exciting because of all the extra 0's, but sounds like an everyday occurrence in DA offices across the country.
I see this as a cynical mass-media emphasis on an individual tax case, while a multi-national corporate tax-evasion party continues larger than ever.
--
As a US citizen with some decades behind me, I can say that the US has lost balance with taxes badly. On the one hand there are "illegal" laborers with no working benefits and little protection, paying who-knows-what for tax; secondly, in the 90s, international money transfer by corporations ran rampant for tax evasion. The Clinton's became super-powers on Wall Street for turning a blind eye to it, and later the Ms. of the family became essentially the official enabler of this with the US State Department Foriegn Aid office ($8 billion a year slush fund, on top of dollar-based commerce tax evasion). Saavy multi-national corporations pay little to no tax here, and it is widely documented.
Meanwhile, a 20-something engineer at a six-figure salary can tell you how much of that they get to keep.
(hint about half here in California)
> Meanwhile, a 20-something engineer at a six-figure salary can tell you how much of that they get to keep. (hint about half here in California)
This is patently false. Before even counting any deductions a married couple with a joint income of $300k in CA pays an effective income tax rate (Fed,State,Local) of 29%. Single at the same income pay 38%.
Once you add 401k contributions and the variety of pretax spending benefits, it goes even lower.
You have to be earning $3 million a year before you hit an effective tax rate of 50%.
People making that kind of money and more in SV aren't usually making it via regular income but rather via tax minimizing deferred compensation plans taxed at much lower rates.
Payroll taxes (FICA) are included in the effective tax rates I quoted, and furthermore are split between the employer and employee. The employee portion for 300k income is 4.6%
Who hands over the money is not relevant, IMO. If we made the entire payment “come from the employee” or “come from the employer”, it’s still logically coming out of the employee’s pay.
I often see this “half” income lost to taxes figure on HN and it often doesn’t stand up to scrutiny (at least in the US). Are you including 401k contributions as part of the half not kept?
This is a quibble, but 35% for the top bracket of your income is not the same as a 35% federal tax. You would need to be a quite high income for this to be true since the top bracket currently is 37% and the second highest is 35%. Someone making $200k today has an effective tax rate of 20%. You would need to make $2 million today to have an effective tax rate of 35%.
> This is a quibble, but 35% for the top bracket of your income is not the same as a 35% federal tax.
That's not a quibble at all, it's a very important point. The number of people who confuse "tax bracket" with "effective tax rate" is regrettably quite large.
> Aren't state and local taxes also deductible from federal income taxes?
Yes, but the Trump tax changes put a $10,000 cap on this deduction, which is significantly lower than the standard deduction. Combined with low mortgage interest and the lower cap for new mortgage balances whose interest is deductable, a lot of people went to the standard deduction.
I'm picking the year 2015 because you're clearly talking about the past in your statement, so bear in mind the numbers change over time.
In order to hit 8% (8.82%) in NYS in 2015, you needed to make a little over a million dollars a year (single) or 2 million (joint).
The next lowest is 6.85%, for 212k single, 318k joint.
For federal to hit 35%, you need to make 411k (single or joint.. which makes no sense).
So your numbers more or less stand up to scrutiny for marginal income, but I would guess not even close to that for effective tax rate. I don't think it's fair to present your marginal tax rate as "your tax rate" in a discussion about how much of your income you get to keep. That's even more so when it's before you account for deductions.
They absolutely are. You don’t get to artificially limit scope just because it suits you. If you get robbed both at the ATM and on the way home you’re still coming back with less cash!
I didn't say I don't consider them to be taxes. I said I don't consider them in this discussion because they're not part of how much of your salary you take home.
To look at it from another point of view... If _all_ the money you made came from long term capital gains, the taxes you pay on it would be based on totally different tax rules. Capital gains taxes are certainly impacting how much you "spend" on taxes, but they don't impact how much of your "salary" goes to taxes.... because you don't have a salary.
The marginal tax rate can be ~50% for many high-income earners in CA. If you make ~550k, you would be paying 37% to federal and 11-12% to state.
Therefore, when thinking about increasing/decreasing my earnings at that margin (raises, changing pre-tax contributions like 401k or FSA, etc), it would be correct to use that 50% number.
This is obviously incorrect if you wanted to talk about effective tax rate. But using effective tax rate is also incorrect when changing marginal income. So it depends on context.
> This is obviously incorrect if you wanted to talk about effective tax rate. But using effective tax rate is also incorrect when changing marginal income. So it depends on context.
The GP said "a 20-something engineer at a six-figure salary can tell you how much of that they get to keep.", which can only mean "effective tax rate".
Although it's a common and dishonest rhetorical tactic of those who oppose taxation to conflate the two when advocating for lower taxation. There's nothing wrong with arguing for lower taxation, but it's wrong to misrepresent the rates you use to argue that.
I disagree here. Quite frankly, I don't pay any attention to what my effective tax rate is. It is only brought up when debating politics - it has no bearing on my everyday decisions. Parent poster asked why people talk about 50% tax rate and I responded with the reasoning.
The number that does matter to me is my marginal tax rate. That is the number that I have to use when thinking about how my everyday decisions impact how much money I am bringing home. How do I consider 401k? FSA/HSA? Tax-deferred instruments? Charity donations? Additional income (second jobs,etc)? Time to hold stocks (capital gains vs income)? Tax deductions?
All of those are based on marginal tax rate. I understand your desire to call out conflation, but I specifically differentiated the two in my comment. I am not misleading anyone
Please tell me when you care day-to-day about effective tax rate (other than tax return time and arguing on the internet). Why would you? You can't change it. Marginal tax rate actually impacts your decisions.
> Quite frankly, I don't pay any attention to what my effective tax rate is. It is only brought up when debating politics
> Please tell me when you care day-to-day about effective tax rate (other than tax return time and arguing on the internet). Why would you?
I didn't suggest that you should pay attention to effective tax rate, nor give any guidance about personal finance. You're arguing a totally different subject (personal tax optimization strategies) than the one I addressed (misrepresentation of the effective tax rates in CA).
The GP's post I replied to was specifically political in its misrepresentation of marginal tax rates as the effective tax rates, which is why I wrote:
> The GP said "a 20-something engineer at a six-figure salary can tell you how much of that they get to keep.", which can only mean "effective tax rate".
I was not responding to GP - only the parent who asked:
> I often see this “half” income lost to taxes figure on HN and it often doesn’t stand up to scrutiny
Elsewhere on HN, many people do use their marginal tax rate (and do so correctly). I was only explaining how that 50% is a good benchmark to use and why so many use it.
You are correct that if I was responding to GP, my comment would be misleading. Unfortunately, I think my brain short-circuited when I saw "Clinton" in GP's post and I skipped by it :)
It is tax avoidance technically because it is legal. Still a problem and arguably an even bigger problem. But the distinction is crucial. If you were head of the IRS and tried to score big by going after tax avoiders for tax evasion you will lose in court badly by precedents.
> Saavy multi-national corporations pay little to no tax here, and it is widely documented.
> Meanwhile, a 20-something engineer at a six-figure salary can tell you how much of that they get to keep.
Isn't this actually a good situation, from the point of view of the tax collector? Corporations can afford to spend a lot of money figuring out tax loopholes and financing schemes so they can avoid paying taxes. But your average high-income individual can't. You might as well let the large corporations have lower taxes, pass on the extra revenue to shareholders and employees, and then tax the shareholders and employees.
How much in taxes do you have to cheat as a middle class tax payer to be investigated and tried in your mind?
In my experience (misreported some accounts due to a misunderstanding, which had a ~25% impact on what taxes I paid) the IRS sends you what you owe with a nominal penalty. I believe I paid ~5% extra. I paid it, and life went on.
I think there's a huge misunderstanding around the IRS "going after the little guy." For you to actually be convicted of tax fraud, the IRS would have to take you to court (expensive) and prove you set out commit fraud (hard to do in most cases).
At the point where this is worth it for the IRS to do, are you really 'the little guy' any more?
This is a systemic problem with tax enforcement in the US in recent years, caused in part by reduced funding for the IRS. Wealthy people can afford expensive legal defenses, which makes it more expensive for the IRS to pursue these cases, so they focus instead on easy to win cases against low income people.
>According to data released by the IRS last week, millionaires in 2018 were about 80% less likely to be audited than they were in 2011.
Audits of the rich continue to plunge while those of the poor hold steady, and the two audit rates are converging. Last year, the top 1% of taxpayers by income were audited at a rate of 1.56%. EITC recipients, who typically have annual income under $20,000, were audited at 1.41%. [1]
Partly, the tax prosecutor had a solid case but in Barr's mind there was a chance of failure. And the incestuous relationship of private and federal lawyers didn't help. Barr's former colleagues were sitting the otherside of the meeting table.
Do you think the typical construction contractor or engineer has anything near that? They'd be prosecuted, found guilty, and offered some sort of reduced or delayed sentencing.
I replied to another comment with this story which has now been downvoted to oblivion, but I'd highly recommend another article on the topic from the washington post[1], it has a far better narrative (in my opinion).
At the start of his career as a private equity investor, he got one of those offers he couldn't refuse, a billion dollar investment from a single source that came with some strings. When the strings came undone in the form of govt. investigation into the tax obfuscation, he tried to fix it by applying for a IRS program which was rejected. He then went 0 -> 100% on headline making philanthropy.
Essentially he made a deal with the devil and came out of it without a scratch, relatively speaking. Perhaps came out ahead would be a better way of phrasing that. Obviously none of this takes away from the work/drive that went into making Vista successful, but it's still an interesting story of how he got his start.
> Brockman’s offer set Smith up with his own private equity firm, Vista Equity Partners, and more than $1 billion in capital to invest, according to Smith’s statement to prosecutors. That arrangement eventually allowed Smith to become a billionaire himself.
Both aspects stem from a deal Smith and Brockman made 20 years ago, one that joined the unlikely pair in a venture with vast ambitions. Smith, the determined son of Denver schoolteachers, was then an aspiring financier; Brockman was older and far wealthier, a man who had already made a fortune with a company that sold software for the automotive industry.
These two sides of Smith — the impressive generosity on one and the admitted tax evasion on the other — may be hard to reconcile. But they are inextricable, according to documents reviewed by The Washington Post, including charity filings with tax authorities and Justice Department court filings.
Smith applied for the IRS program in March 2014 but was quickly rejected. This is typically a sign the agency already is scrutinizing the applicant’s tax filings, former federal prosecutors said.
It is about this time that Smith became a major philanthropist, frequently making headlines with his generosity.
Although there was a tax compliant way to accomplish everything they did, still without paying more to the US, The divorce started all this.
Divorce laws are far too simplistic and rely on the concept of a “unit” with both spouses being equal partners by mere nature of showing up. This seems to be a stretch of the imagination with a reality having diminishing returns. For example, even with a spouse providing some form of unpaid labor, the level of utility in how that helps the other spouse is not unlimited, it would be closer to (O)logn. It should have a specific value that is quantifiable. This does not seem to be part of discussions and in most places seems to be the most egregious thing one could suggest! In any other form of financial partnership, this is easy to quantify or at least there is greater flexibility in setting it up. One example - which I am not suggesting is applicable to marriage - is how vesting agreements really help give the (O)logn compensation path.
I have seen some divorce laws that seem holistic, specifically Monaco’s. Which provides a limitation on alimony as well.
For people that actually own assets outright (not mortgages but the whole asset) There is also fairly easy estate planning possibly even in “community property” states to separate assets from before a marriage. So thats another wealthy privilege.
Fixing all of that would fix what would even be attempted to be listed in a divorce court proceeding.
I'd be hesitant to view marriage as a financial partnership though. To me, marriage is more of a life partnership where both parties are "all in". A lot of the benefits of having a "life partner" stem from having someone who unconditionally watches your back and keeps your needs in mind. You can't put a price on that type of a partnership by definition (you introduce a monetary condition).
I agree that someone with real wealth could hire folks to manage their assets, administrate, listen to their thoughts/concerns, provide intimacy, etc, at the cost of a fraction of their net worth well below 50%.
Maybe people worried about protecting their wealth should just hire out those roles instead of getting married. I wonder why they don't. :)
> I'd be hesitant to view marriage as a financial partnership though.
Acknowledging the problems with the contract requires looking at the realities of the contract.
The reality of that contract is that it has financial components and financial consequences, which are assumed to scale linearly, when that’s not true. Someone “having your back” could just as arbitrarily be worth 10% of assets or a retainer or a monthly rate. The point being that starting at 50% and working down is just as arbitrary. I would say it would not actually scale infinitely, just as much as a key salaried employee does not have compensation that scales proportionately to the earnings of that corporation.
I absolutely do not care about how these comparisons make you feel as that is completely a product of conditioning. This is still a flawed contract, lets acknowledge that it is a flawed contract whether your line in the sand is “cant put a price on” or something else.
Here's an article arguing your transactional view of marriage is wrong that that you shouldn't apply economic models to marriage. Quote "You are not in a transaction with your spouse; you're in a relationship."
I don't expect it to change your view, but here it is for what it's worth:
I agree with everything in that article which is about not obsessing over dividing tasks equally.
It isn't about the shitty contract itself. You extrapolated it to be about something the article is not by seeing "marriage + transaction" as the similarity.
Divorce is a probability in a marriage, this article isn't about that.
Whether divorce is a 50% probability or a 10% probability (which it is miraculously now close to, for the new class of wealthy spouses marrying economic equals for the first time in history), these are still non-negligible odds. These are horrible odds of adversity in any other kind of agreement that “coincidentally but ah I want to ignore it” have explosive financial consequences.
The article is specifically about chores but in general discusses how you shouldn't apply economic models to relationships, you are correct I extrapolated it.
I'm not so interested in your complaints about divorce (though I don't think you have a good understanding of laws surrounding prenups and how they function in the American legal system and you should learn more ) but I mainly responded because I felt your attempt to apply the economic model of "utility" to a human relationship was a pretty bad idea.
Prenup doesn't affect alimony which is just as peculiar.
I can see how in a vacuum here that one would see my thoughts as bad, but they are reactions to other ideas which seem to have more consensus that are based on valuing specifically women’s unpaid labor in the home. There is a finite value to how much that contributed to an aspirational and successful man (or more generally spouse / breadwinner’s) success regarding earnings. Courts should have the marriage contract based on that maxim, as it is not linearly, and rely on couples to do separate business arrangements if they are so inclined to be business partners. Some couples do this and pride themselves in this. Lets decouple it from the marriage contract.
You are obviously very intelligent, but assigning value to the partner's contribution to a relationship, and seeing it in an economic lens, may be intelligent but is not necessarily wise.
Agreed - You stated more elegantly what I came here to reply with.
I personally love the “idea” or concept of a marriage (the understanding and commitment of two humans to each other for pure love, devotion, or spiritual/religious reasons), but in practice, at least from what I’ve seen in the US, it’s very much about the legal aspects of the “marriage contract”, the financial and legal impacts, as well as to continue to promote the US agenda of the nuclear family unit.
> I absolutely do not care about how these comparisons make you feel as that is completely a product of conditioning. This is still a flawed contract, lets acknowledge that it is a flawed contract whether your line in the sand is “cant put a price on” or something else.
This goes in reverse as well. The only significant reason to get married is social conditioning/pressure. Like I implied above, you can just hire those roles out and not enter the contract. Marriage is absolutely about feelings or else no one would agree to it.
Marriage is not an employment contract, the comparison is fallacious. The conditions for breaking the contract are much more severe because you're not "supposed to" switch partners like you switch jobs.
If you don't believe in marriage more power to you, don't enter into one.
It's worth pointing out that not having a marriage license or registering your marriage with the government, doesn't mean you aren't in a marriage.[1] Divorce laws still apply in this case.
Whatever problems divorce law has, marriage is a voluntary contract. You could enter into an even more lopsided business partnership, with the difference that you could actually set out penalties for breach. In most jurisdictions, if your spouse abandons you little time after your marry, you're mostly going to be returned to the status quo ante, because assets they have before you marry or that are donated to them/inherited by them do not count as common property.
Monaco is actually pretty biased against women in its divorce laws (I think alimony is capped at $100k per annum). There's a reason a lot of rich folks go to Monaco to surprise their spouses with a divorce. Now imagine if you were someone like MacKenzie Scott, who was actively involved with Amazon's founding. While her settlement with Jeff was quite generous on his part, in a Monaco divorce, she would have gotten maybe a mil or two tops. Monaco is in no way holistic when it comes to divorce, just a magnet for boomer millionaires and billionaires.
> Monaco is actually pretty biased against women in its divorce laws
Monegasque divorce laws are not gendered and there are plenty of wealthy women in Monaco.
Alimony also has a fixed time period of 5 years.
What part of that do you find controversial as opposed to practical? Its more like generous severance as opposed to a perhaps merely more familiar concept of alimony.
This would give the liberty for MacKenzie, for example, to be sure that she got her own vesting agreements and her own shares in the organization they founded together. It moves the agency back to the individuals as opposed to assuming they are going to be starry eyed infants that are going to get screwed over. If people want to decouple marriage from any financial considerations, this is the way to do it, focus on the love. If they want to be business partners then write them into the separate business. If they want to have their supporting unpaid labor valued, then their moonlighting as a personal assistant is valued in the six figure ranges just like professionals.
There is a tax compliant way to accomplish everything he did.
Its interesting to me that they went after some of those things too: the prosecution agreement required Smith to not claim the deduction on $182 million donated to charity.
That’s a crafty way of getting money back. Kind of like a ballast system to provide balance.
The key issues here were hiding the existence of accounts and organizations, not the existence of them.
The British Virgin Islands company can exist and its earnings can grow tax free. The same for the Caymans one. The nature of what those organizations do determines what taxes a US citizen owner has to pay, in many cases it would still be substantially lower than “ordinary income”. The key issues would be aiming to avoid passive foreign investment company and controlled foreign company regulations.
The second issue is neglecting the FBAR reporting. Which is another way of telling the US government about bank accounts and companies. Neglecting FBAR alone has criminal penalties.
Merely telling them does not create a tax liability.
But perhaps telling them would reveal other non-compliance or undermine other asset protection plans by the mere nature of someone knowing. Could trigger pursuits by creditors or prior relationships. Not everyone has these problems and as you see they are not necessarily tax problems.
The third issue was using the funds domestically. They bought a house on US soil, strike one, and lived in it, strike two, and not paying taxes on the amount repatriated, strike three. They could have posted collateral with a third party lender and borrowed against it, to get liquid. Paper borrowing without a third party lender (ie. Just writing a contract on behalf of the offshore company you own, and saying you are borrowing) would not be compliant. Collateralized third party lending has stood the test of time. If your collateral gets liquidated you have to pay taxes then, so overcollateralize and pay your interest.
A year in the US Virgin Islands or Peurto Rico could have been used to convert those taxable earnings into post-tax at 0-4% tax rate.
They just didn't and stuck with non-compliant avenues.
They are using non-profits onshore, they could have done a lot more with that to reduce their taxable earnings while retaining control of the funds for the most part.
Given propublica’s investigation into higher audit rates among the poor than the wealthy, I view this as a win. Keep moving in this direction and chase higher payouts with longer periods of nothing rather than volume
The national security issue is surprising... I’m curious what it was. Vista is really more of a large tech conglomerate so they’re in lots of business lines.
That was very surprising. If I buy shares in Lockheed Martin, can I claim "national security" too.
It is a very powerful and opaque defence. Companies use it all the time too to avoid anti-trust action (AT&T did so for decades). Using it in the case of a private equity fund manager seems a stretch..
Imagine being a billionaire and then avoiding taxes. No matter how you look at it you are always going to remain in the tres commas club and afford a fleet of yachts, mansions, rare Nike Jordans and throw parties for instagram models in Tulum.
I assume there’s a risk reward calculation being made where all they care about are their yearly returns.
I know a guy who is quite rich off of Bitcoin (bought thousands when it was $2 and has held most of it). Refuses to pay taxes unless the IRS actually comes after him. So maybe these billionaires are similar. They’ll only pay if the IRS makes them and they’ll drag their feet in whatever way they can.
What taxes to pay in the first place off to? If he didn't sold them bitcoins he didn't make any money. Are you saying you should prosecute for taxes people who hold Picasso paintings because this year Picasso went up 10 times more than previous year, even if they don't sell it?
Remember, bitcoin is art, not money. Or is the same money just like art is.
"some" is the key word here. If he cashed "some" only to buy himself a house, I am pretty sure he doesn't need to pay taxes on that, except maybe the notarial taxes inherent to the transaction itself.
If you are middle class and you don't pay taxes or hide your income, IRS will come down with the full force of the law.
Prosecution for the serfs
Non-prosecution agreements for the Club.
"Its a big club and you ain't in it" - George Carlin
Your assertion is not correct. The IRS is surprisingly reasonable about things. There are penalties and interest for failing to pay your taxes correctly, but they are also willing to cut deals to make things work.
Criminal prosecution is rare and reserved for the egregious and uncooperative. It's something like 2,000 cases per year total.
Virtually no one in the US, rich or poor, is criminally prosecuted for tax evasion. Really the only way to be prosecuted for tax evasion is either to commit a whole bunch of other crimes, and have tax evasion thrown on to the indictment. Or be a public anti-tax activist like Wesley Snipes.
This isn’t an issue of the rich getting special treatment. It’s an issue of IRS enforcement having highly constrained resources, and preferring to recover penalties, rather than spend resources on expensive criminal cases.
Putting people behind bars doesn’t generate revenue, and revenue is literally the IRS’ middle name.
As rich people never need an employer in the future, a felony and prison time isn't as consequential as it is for others. Many times their white collar crimes are able to be negotiated to just under a year in prison, to avoid felony status. Felonies can limit what kinds of financial services they can offer or be a part of, and can limit which countries they can get into. But it still is not the same consequence as the general population.
So? still applies. That's pocket change for a multi-millionaire. If I drive and break the speed limit having on my right a beautiful Victoria Secret model and paying the $300K ticket is a way to make her wet, guess what I'll do? Remember the scandal a few years back when models from famous fashion houses in Milan and New York were paid a million dollars per night by rich Arab oil magnates? I'd say those 300K are quite cheap in comparison.
No; you misunderstand. The unit fine scales with income and wealth. The man in question had a net worth of about $23M. So for this one speeding offense, the man was fined about 1.3% of that. Bear in mind, we are talking about a speeding ticket here.
Yeah, I think I understood correctly. My entire argument for a 23M worth still holds.
Also if this is in relation to net worth only, that's kinda small. I reckon both Bezos and Musk are worth net a couple of billions only. They are 100+ B only on paper.
Coming back to the 23M net one, if that's his net, imagine his stocks. To pay for the ticket he simple does 2 things:
- sells some actions
- declare the ticket as tax deductible on next fiscal year. Guess he won't care anyway
But they did apply the law. Part of the settlement was an admission of guilt (along with massive fines and turning snitch on at least one business associate).
It sounds like everybody wins. IRS gets revenue in the form of fines that exceeded the avoided taxes. AG's office gets a snitch, which should enable them to fry bigger fish. The criminal pays a large fine, gets his name in the paper for bad reasons, but avoids jail.
Really, what does jail get us in this case? It's a non-violent crime.
Prosecutorial discretion is a different than checks and balances. C&B describes the interrelations between branches of government in furtherance of good governance. Only a single branch of government is involved here - the executive.
There are at least two related principles behind prosecutorial discretion. One is that the system should be biased against prosecuting people because putting people in jail shouldn't be our goal. Another principle is that law enforcement, from the local cop all the way to the US Attorney General, has to have some discretion in how they do their job - e.g. do we really want cops pulling everyone over who is 1 mph over the speed limit?
Imagine getting punished by a robber for trying to evade getting robbed by him. That is basically what happens with "tax evasion". And the IRS are the robbers.
China hangs its fallen oligarchs. Here you just buy off politicians and threaten media with lawsuits if they don't tow the line. Literally a reporter walked off set this week, because a guest strayed too far into lawsuit territory. And a voting machine company sued a politician for a Billion Dollars for disparaging its black box results. All in the last month. While I support everyone having their date in court. I think its safe to say that in the last year, millions of people both left and right have woken up to how politicized and crooked the justice system is.
> And a voting machine company sued a politician for a Billion Dollars for disparaging its black box results.
That's one way to phrase it. Another would be that a highly visible, influential politician used that influence to attempt to destroy a multi-billion dollar company; specifically by using what may well be lies and slander, presenting it as truth.
May or many not be, until we have discovery and actual third party audit.
If corporations can decide which politicians to platform, count the votes, and can sue into bankruptcy politicians that question the results, than clearly power rests with the corporations and the oligarchs. Politicians are just for show.
As a cynical citizen, I'm going to assume that if it wasn't possible to adjust the vote totals, their machines wouldn't have been picked. Responsibility for transparency is on them. Full third party audit, random vote sample statical analysis, and so on. Would be much more preferable to instil confidence in their corporation than suing a disgruntled politician.
I don't get it. If you want the same privileges that Billionaires have then you should work on becoming a billionaire not complaining because nothing will change.
It doesn't make sense for Billionaires to be taxed as it would lead to poor capital distribution in the economy.
I'm all for philanthropy but there is also no law that says Billionaires should give just because they are a Billionaire.
Right. It's so easy to work to become a billionaire and it's not like most of them are born into generational wealth (They didn't have to work for it).
It turns out maybe we can work to make change while not also becoming billionaires. Most people don't need to be billionaires. But everybody needs Food/Housing/Healthcare.
`There is no law`. Well, there are laws. And they do require them to be taxed. And historically their taxes were much higher. But Reagan sold the Trickle Down economics story to the nation, and now they pay dramatically less.
55.8% are self-made. Sure, many come from already middle to upper class which gives them room to fail. Still, a good chunk of them started with nothing.
Nobody thinks its easy to become a billionaire but they shouldn't be treated like everybody else. The wealth they command is wll beyond what most private citizens have at their disposal.
We are also missing out the mid to high 9-digit millionaires who also should be exempt from the asinine taxation policy that is meant to enforce serfdom.
The law is not for the hyper rich ($600MM in assets), they operate under a completely different law that our system is designed to protect.
This is good for efficient capital trickle down effect. We simply cannot be putting ceilings on incentives. It needs to be unlimited and it won't even register in the global economy.
Just because you can't tax billionaires don't mean citizens and the government is getting stiffed. This is exactly what the poor man thinks they think that because they are poor everybody else should be poor and taxed too.
Or did you think USSR had a good trickle down effect? Venezuela? France?
I don’t know why you’re so interested in defending the extreme privilege of people who have more money that you and the next thousand people you will meet several times over but enjoy it.
I don’t understand why people feel such a need to defend and worship those who have the most in our society while there are people who die from starvation/exposure/lack of healthcare in what is allegedly the greatest country on earth.
We don't have free market capitalism. Markets are highly regulated for both good (health, safety) and bad (anti-competitive (as in allowing effective monopoly/price-fixing to occur) reasons.
It certainly doesn't read to me like you think everyone is equally deserving when you're venerating those who have obscene wealth. It especially doesn't read that way when you're being intellectually dishonest by tacitly suggesting that providing the basic necessities to continue to exist is implicitly tied to failed/failing nation-states.
Ludicrous. Laws are not about privilege - laws should be equal for everyone.
If there's one thing China got right, it's that they'll throw your ass in jail, whether you're worth a dollar, or hundreds of millions of dollar - if you can't do the time, don't do the crime. Easy as that.
You know (and I realize that this comment will be highly controversial), you know, it's amazing to me that in this day and age, if someone is rich and/or famous and accused of a crime, it's amazing to me that the media never seems to give them "Due Process"...
"Media Due Process"
For lack of a better term...
It doesn't seem to exist in this day and age.
I'd like to hear the other side of the story before I make up my mind, thank you very much!
Until I do, from the accused own's mouth, I might add, I'm going to presume innocent until proven guilty.
I will not be "the court of public opinion" in response to the media, any media, slighted one way or slighted the other.
I simply refuse.
I don't know the accused, I don't know what happened, and until all of the facts are on the table -- pro and con -- I refuse to make up my mind on the subject.
A single set of facts from a single media outlet, or even several -- are not all of the facts, because they could have been cherry-picked, one way or the other...
I take this approach; this mindset; with all media in this day and age -- not just the media outlet that broke this story...
This person admitted guilt and entered a non-prosecution agreement in which he agreed to help the government build a case against his former business associate.
There was a WSJ article about him last year which went into detail that he agreed to obfuscate income for this former business associate in return for the funding he initially got to get Vista off the ground.
Additionally, that WSJ article detailed that Robert Smith became aware of an investigation into him through back channels and that's the point when he started making a splash with public giving. I'll see if I dig up that article in case anyone's interested.
"The other side" as you put it is him literally admitting guilt. He could have used his massive fortune to fight it, but he'd probably lose control of the firm + other consequences resulting from that.
This comment doesn't strike me as especially controversial so much as annoying and preachy, ignoring the facts around his point of view already being shared. Aggressively drawing lines in the sand on principles without context is meaningless. Pre-empting a comment with "this will be controversial... lambaste me if you disagree" is just asking for an unnecessary fight.
It doesn't matter what you think on the case. Presumed innocent until proven guilty is a good paradigm for courts, but you're just some guy, who is not obligated to hold an opinion on this case at all. It's perfectly fine to say "I don't know and I don't think I've heard enough to judge one way or the other", or, if that's your take, not say anything at all.
Supporting an opinion of innocence without evidence of innocence is equally as dumb as supporting a side of guilt without evidence of guilt.
When you can read the DOJ case filings and all the facts of the case, where he actually agreed that he did in fact commit crimes, there's no need to "hear from the accused's own mouth." You're just making excuses for someone's crimes in the name of some intellectual purity exercise. Do you also believe there were "good people on both sides" in Charlottesville?
If you had actually read this article, you would see that Mr. Smith admitted he was guilty in legal documents under penalty of perjury. Is that enough due process for you?
In fact, this article is mostly focused on how the optics -a high profile (in fact, the wealthiest) African-American man, donates large sums of money to charity, etc.- seem to have concerned the prosecutors enough to accept a non-pros rather than risking trial, if they could get another billionaire's scalp in the bargain as well (said other billionaire did essentially the same thing- Smith claims it was all Brockman's idea, no doubt Brockman will claim it was all Smith's idea).
If you read the article, you’ll see that he has admitted guilt as a part of the deferred prosecution agreement.
The thing that worries me is that he was able to use money to avoid prison. This is an example of a different law for the rich and everyone else — paying a fine (not a big deal for a billionaire) to avoid prison (a very big deal for a billionaire) substantially reduces incentives to actually pay your taxes.
I am writing this in response to HN users: sgpl, 1986, aioprisan, mandevil, ddulaney, spamizbad, liaukovv.
(How many of you post with your real names on HN, by the way? I post with mine...)
But, you basically said the same thing, over and over (much like our news media does), which can be summarized as:
"Robert Smith is guilty because he admitted guilt"
And (by implication) that all that follows, including this magazine article, are perfectly OK and socially permissible by virtue of that fact...
To recap, you said:
o "This person admitted guilt and entered a non-prosecution agreement in which he agreed" (sgpl),
o "Smith acknowledged evading more than $43 million in taxes over a decade and repeatedly filing false tax forms." (1986)
o "he actually agreed that he did in fact commit crimes"
(aioprisan)
o "Mr. Smith admitted he was guilty in legal documents under penalty of perjury" (mandevil)
o "he has admitted guilt as a part of the deferred prosecution agreement" (ddulaney)
o "He admitted guilt" (spamizbad)
o "He admitted committed crimes as part of the agreement" (liaukovv)
Well, I'm not contesting that "fact" in any way shape or form.
In fact, we all agree on it!
But, before we all have a moment of collective victory, before we put on our hats and start celebrating that yes, you can really get agreement from other posters on the Internet, let's pause for a moment, and think about this for awhile...
Let's put this "fact" (that we all agree on!) -- in proper perspective...
You see, "agreements" aka, "the admission of guilt", "the agreement that a crime was committed" -- can be coerced.
A simple example of this would be if you were in another country, and you committed no crime -- but were unlawfully placed in jail under the pretense of having committed a crime...
Now the people running that prison, in that other country, come up to you with an ultimatum... They say that you're going to have to spend 20 (or more) years there(!) -- that is, unless you sign a document (giving the apparency of a legal "agreement" to other people and the public at large -- yet having been made under coercion!) which says, which is an admission that YOU COMMITTED A CRIME... in exchange for a lesser (or no) sentence!
Now what happens when that signed statement -- reaches the media?
Under such circumstances, WHAT WOULD YOU DO?
You see, it's easy to rationalize things, and say (without having been in similar circumstances) what a person should do, what you would do -- under those circumstances.
But it's not equally as easy -- to face those circumstances should you ever be put in them...
You see, that's the larger story -- the set of circumstances under which Robert Smith "agreed" (Prosecutor said, hey Robert, "agree to this or we'll prosecute you, and you'll probably go to jail for 20+ years").
None of you have ever been in a situation, a circumstance -- were all of the Federal Government's Lawyers -- all of them -- have been after you, all at the same time, for whatever reason, real or imagined...
If it were ever you, and they had a case against you (legitimate or not), and you had a deal on the table where you could avoid a 20+ year prison sentence, and all you had to do was rat on your billionaire friend (well, that and subsequently get tarred and feathered in the media!) to "make all of this go away" -- how many of you wouldn't take the easier deal, to "make it all go away"?
Let's start with most of you don't have the ethical character to post with your real names on HN...
I'd not want to be in a position where you had to make a high-level ethical decision -- where my future would be determined as a result of that decision...
Oh, and if the underlying argument is "He didn't pay his taxes" -- then my counter argument is "Paying taxes = Paying one's debt to society = Helping other people" -- but if that's the case, then
WHY ARE THERE SO MANY HOMELESS PEOPLE IN CITIES???
What is the Government (Federal, State, City, Local) -- doing to help them? Why do they continue to exist? Surely with the amount of taxes we Americans pay, you would think that Government (any tier of government) could help?
What is Government doing -- to pay it's fair share -- to society, to those people?
False/coerced confessions are more common than one might think. A study found that "...almost 30 percent of wrongful conviction cases overturned by DNA testing involved a false confession".
Source:
https://www.apa.org/research/action/speaking-of-psychology/f...
>Until I do, from the accused own's mouth, I might add, I'm going to presume innocent until proven guilty.
Rich people don't get that way by following the rules and we're right to be suspicious of them. They don't deserve the benefit of the doubt, because they haven't earned it.
I don't see how this is evidence of special treatment for billionaires. The guy paid way more in penalties than he saved on taxes and also had to help prosecute his friend, who evaded way more tax than he did. It doesn't seem to me like he came out on top.