23 Jan 13
Originally posted by normbenignI 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.
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.
Up to a point, the result of high tax rates on upper income brackets is likely to be higher gross incomes for employees.
23 Jan 13
Originally posted by Teinosuke"I would assume that employers are going to have factor in current tax rates when they set salaries."
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.
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.
23 Jan 13
Originally posted by sasquatch672Good though there are rather large exclusion limits OR you can elect a credit for foreign taxes paid.http://www.taxmeless.com/IRS593Publication.htm
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.
Generally though you pay taxes where you earn income so simply moving your residence doesn't relieve you of any tax burden.
23 Jan 13
Originally posted by no1marauderNo, 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.
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.
24 Jan 13
Originally posted by no1marauderAND 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.
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.
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.
24 Jan 13
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!
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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.
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http://www.marketplace.org/topics/business/17-trillion-foreign-corporate-cash-held-us-banks
26 Jan 13
Originally posted by spruce112358Nobody, 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?
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!
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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
So it only makes sense that tax increases seldom catch all the revenue they project. People adjust.
26 Jan 13
Originally posted by normbenignThat might have more to do with the fact that politicians tend to be overly optimistic in order to look better to their voters.
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.
26 Jan 13
Originally posted by spruce112358US 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.
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!
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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
27 Jan 13
Originally posted by KazetNagorraWell 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.
That might have more to do with the fact that politicians tend to be overly optimistic in order to look better to their voters.
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.
27 Jan 13
Originally posted by normbenignUmm 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 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.
28 Jan 13
Originally posted by KazetNagorraWell, 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.
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.
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.
28 Jan 13
Originally posted by no1marauderActually, I think sometimes you have to see a thing in action before you appreciate fully how people are interpreting it.
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.