1. Joined
    13 Mar '07
    Moves
    48661
    23 Jan '13 22:25
    Originally posted by normbenign
    I can see little incentive to work for $30k and receive only a third of it. I would work less, if hourly, or seek less responsibility, if salaried.
    I would assume that employers are going to have factor in current tax rates when they set salaries. So if this hypothetical person's job is 10,000 dollars more demanding than that of the person who earns 73,000 dollars, the employer is going to have to find the 30,000 dollars needed to supply that extra 10,000 net salary, plus 20,000 tax.

    Up to a point, the result of high tax rates on upper income brackets is likely to be higher gross incomes for employees.
  2. The Catbird's Seat
    Joined
    21 Oct '06
    Moves
    2598
    23 Jan '13 22:42
    Originally posted by Teinosuke
    I would assume that employers are going to have factor in current tax rates when they set salaries. So if this hypothetical person's job is 10,000 dollars more demanding than that of the person who earns 73,000 dollars, the employer is going to have to find the 30,000 dollars needed to supply that extra 10,000 net salary, plus 20,000 tax.

    Up to a point, ...[text shortened]... of high tax rates on upper income brackets is likely to be higher gross incomes for employees.
    "I would assume that employers are going to have factor in current tax rates when they set salaries."

    That would be my economic assumption as well. However the consequence of that is likely to be finding other ways of getting jobs done. Let's see, we need x work performed, and it will cost us $30k of which the worker get $10k. Can we just hire a part time worker and pay the $10k directly? Or can we automate the function, creating unemployment?

    The problems come from the fact that human actions are the result of thinking humans doing their best to relieve uneasiness. (Mises) If acting makes me more uneasy, I am likely to avoid those actions, and choose alternative courses.

    As long as the employee doesn't think about the amount deducted from gross earnings, the higher gross earnings, and proportionately smaller net pay checks work. But for educated, higher level workers, it becomes evident that moving, or taking part or their work underground may be advantageous.
  3. Standard memberno1marauder
    Naturally Right
    Somewhere Else
    Joined
    22 Jun '04
    Moves
    42677
    23 Jan '13 23:31
    Originally posted by sasquatch672
    If you're a US citizen earning income anywhere you're subject to US federal income tax. We're the only industrialized country in the world that taxes its expatriates.
    Good though there are rather large exclusion limits OR you can elect a credit for foreign taxes paid.http://www.taxmeless.com/IRS593Publication.htm

    Generally though you pay taxes where you earn income so simply moving your residence doesn't relieve you of any tax burden.
  4. Standard membersasquatch672
    Don't Like It Leave
    Walking the earth.
    Joined
    13 Oct '04
    Moves
    50664
    23 Jan '13 23:37
    Originally posted by no1marauder
    Good though there are rather large exclusion limits OR you can elect a credit for foreign taxes paid.http://www.taxmeless.com/IRS593Publication.htm

    Generally though you pay taxes where you earn income so simply moving your residence doesn't relieve you of any tax burden.
    No, you're clearly right, it doesn't, but you don't get double taxed. Maybe at the end it's 6/1...I was always in a tax free zone.
  5. Standard memberspruce112358
    Democracy Advocate
    Joined
    23 Oct '04
    Moves
    4402
    24 Jan '13 20:40
    Originally posted by no1marauder
    Where you live is irrelevant to US federal income taxes; if you earn income in the US you are subject to federal tax on it.
    AND you are taxed on income earned outside the US, if the amount is over the Foreign Earned Income exclusion (~$92,900) regardless of where you live.

    As far as I know, France does not tax its citizen's income if they are non-resident -- but does tax ANYONE's worldwide income if they ARE resident - theoretically including non-French income even if it is never brought into France.

    Which is why you actually have to be a non-resident to escape them.
  6. Standard memberspruce112358
    Democracy Advocate
    Joined
    23 Oct '04
    Moves
    4402
    24 Jan '13 21:06
    Here's a fun fact about tax policies: US corporations are holding $1.7 trillion in their overseas affiliates to avoid US taxes. BUT those overseas affiliates do their banking and investment -- guess where -- in the USA!
    ----
    When a corporation holds its money overseas, you'd expect it to keep its cash, well, overseas. But a report in the Wall Street Journal reveals that many large American companies, including Google and Microsoft, have large foreign cash reserves in U.S. financial institutions.

    Kate Linebaugh reported the story, and explains how it works.

    "My headquarters might be in Connecticut, but I have another operation in Ireland," she says. "And that operation in Ireland keeps their money at a bank in New York."

    And Linebaugh's imaginary scenario isn't rare. American banks and securities hold $1.7 trillion of foreign corporate cash. Why? Taxes, of course.

    "Any income that any U.S. company earns around the world, if they bring it back to the U.S., they have to pay a 35 percent tax on it," Linebaugh says. "If they say, we need this money for our foreign operation, they don't have to pay the tax."

    That's despite the fact that the money is in U.S. banks. Neither the government nor corporations are happy with the tax code as it stands now. Some members of Congress want additional revenue from companies, who in turn want to be able to more freely spend foreign cash that's in the U.S.

    "The corporate tax system as its set up right now is not working for anyone," Linebaugh says.

    One example she cites: Microsoft. The company keeps 93 percent of its "foreign cash" in the U.S., totaling $53.94 billion.
    ----
    http://www.marketplace.org/topics/business/17-trillion-foreign-corporate-cash-held-us-banks
  7. The Catbird's Seat
    Joined
    21 Oct '06
    Moves
    2598
    26 Jan '13 01:53
    Originally posted by spruce112358
    Here's a fun fact about tax policies: US corporations are holding $1.7 trillion in their overseas affiliates to avoid US taxes. BUT those overseas affiliates do their banking and investment -- guess where -- in the USA!
    ----
    When a corporation holds its money overseas, you'd expect it to keep its cash, well, overseas. But a report in the Wall Street J ...[text shortened]... ketplace.org/topics/business/17-trillion-foreign-corporate-cash-held-us-banks
    Nobody, knowingly pays more tax than they are required to by law. Almost everyone tries to minimize their liability. Why would it be any other way?

    So it only makes sense that tax increases seldom catch all the revenue they project. People adjust.
  8. Germany
    Joined
    27 Oct '08
    Moves
    3118
    26 Jan '13 09:14
    Originally posted by normbenign
    Nobody, knowingly pays more tax than they are required to by law. Almost everyone tries to minimize their liability. Why would it be any other way?

    So it only makes sense that tax increases seldom catch all the revenue they project. People adjust.
    That might have more to do with the fact that politicians tend to be overly optimistic in order to look better to their voters.
  9. Standard memberno1marauder
    Naturally Right
    Somewhere Else
    Joined
    22 Jun '04
    Moves
    42677
    26 Jan '13 15:28
    Originally posted by spruce112358
    Here's a fun fact about tax policies: US corporations are holding $1.7 trillion in their overseas affiliates to avoid US taxes. BUT those overseas affiliates do their banking and investment -- guess where -- in the USA!
    ----
    When a corporation holds its money overseas, you'd expect it to keep its cash, well, overseas. But a report in the Wall Street J ...[text shortened]... ketplace.org/topics/business/17-trillion-foreign-corporate-cash-held-us-banks
    US tax laws work just like those who write them intend. The government is well aware of this loophole and has done nothing to correct it.
  10. The Catbird's Seat
    Joined
    21 Oct '06
    Moves
    2598
    27 Jan '13 18:45
    Originally posted by KazetNagorra
    That might have more to do with the fact that politicians tend to be overly optimistic in order to look better to their voters.
    Well that too. But it stands to reason, that unless the taxed person sees personal advantage in paying the tax, he may adjust behavior. The reaction may not be instant, for example if the person owns and runs a factory or other capital intensive business, he can't just discard the capital goods and move immediately due to a tax increase.

    However, someone with a fairly mobile business can and will move. The less mobile operator, may plan several years ahead, and move later after capital goods are used up, vis. his factory becomes obsolete.
  11. Germany
    Joined
    27 Oct '08
    Moves
    3118
    27 Jan '13 19:16
    Originally posted by normbenign
    Well that too. But it stands to reason, that unless the taxed person sees personal advantage in paying the tax, he may adjust behavior. The reaction may not be instant, for example if the person owns and runs a factory or other capital intensive business, he can't just discard the capital goods and move immediately due to a tax increase.

    However, someo ...[text shortened]... years ahead, and move later after capital goods are used up, vis. his factory becomes obsolete.
    Umm sure, but most millionaires aren't business owners (in a legal sense) and most business owners and/or people who make these kind of decisions for businesses aren't millionaires.
  12. The Catbird's Seat
    Joined
    21 Oct '06
    Moves
    2598
    28 Jan '13 00:59
    Originally posted by KazetNagorra
    Umm sure, but most millionaires aren't business owners (in a legal sense) and most business owners and/or people who make these kind of decisions for businesses aren't millionaires.
    Well, it is virtually impossible to earn even 1 million dollars in a calendar year by simple labor. It can only be done by a business or by investment.

    As to the decision makers, the hired management of enterprises, yes they are more often than not, below the million dollar a year threshold. But they do often make the decisions on tax matters, and recommend best actions for their boss.

    Nobody gets the news of a big tax increase, and just says I guess I'll just have to pay.
  13. Standard memberspruce112358
    Democracy Advocate
    Joined
    23 Oct '04
    Moves
    4402
    28 Jan '13 02:41
    Originally posted by no1marauder
    US tax laws work just like those who write them intend. The government is well aware of this loophole and has done nothing to correct it.
    Actually, I think sometimes you have to see a thing in action before you appreciate fully how people are interpreting it.
Back to Top

Cookies help us deliver our Services. By using our Services or clicking I agree, you agree to our use of cookies. Learn More.I Agree