[parsnipsumthing]

I really dislike the title, tone and dramatic quality of this piece.

I went to law school and got a job as a tax attorney. I don't consider my work or world particularly secretive. The barriers to entry are not peculiarly high and lawyers as a profession are a little too happy to talk about themselves.

There's a great comment on the Atlantic that states this better than I can

"If by secret, you mean extraordinarily complex, then yes. But... that's not the definition of secret.

It's not secret. There are many classes on this (albeit from professional-level degrees) and it's all based on public statutes and court cases. All of which are freely available to any person.

A large part of it being "secret" has to do with people's willingness to listen and understand. I'm a tax attorney, I understand these deals, and I can explain them rather well so even someone unfamiliar with tax law will understand it. However, it still does take a bit of active listening on behalf of an unfamiliar (as in, unfamiliar with tax law) listener to actually understand what I'm talking about, regardless of how much I simplify it."

The most disappointing thing about international tax is how little even professional journalists understand it, or care to. It is simply easier to assert that international tax is a scam and since the general public can barely count to 10 using both hands, there's no way to disprove them.

[SovietDissident]

This was my reaction as well.

When she tells the story about the gentleman who is wary of academics concerned with income inequality, I think it's interesting that she seems to be writing precisely the kind of account that may lead to further scrutiny of his assets and people like him. I would say his concern is well-placed!

There are two ways to look at this issue. First, these rich people are just fleecing the "system" and governmental powers should be increased to prosecute them. Or, the "progressive" tax system is particularly punitive for high net worth individuals, and they will continue to shell out millions to wealth managers while tax laws are actively hostile to their assets. (Tax collections have been ~19% throughout U.S. history, even when tax rates were as high as 90%.[0]) On a purely "practical" level, tax codes should be simplified and taxes lowered so that it's more economical for those of high net worth to comply with the intent of the law, rather than skirt it. As an added bonus, it would also help economic growth generally.

[0] http://www.wsj.com/articles/SB100014240527487035149045756029...

[tankenmate]

When some people's effective tax rates are lower than the lowest tax band in a progressive tax system it can hardly be claimed that the system is "fleecing" them.

[SovietDissident]

If someone were very rich in NYC, between federal, state, local, sales taxes, etc. they would pay ~60% of their income in taxes. Now, many of them pay capital gains, have wealth managers who set up different financial vehicles, and whatnot. But this is exactly the point: individuals will pay as little tax as possible, and the rich spend more money than most getting around these punitive taxes. Further, it should be noted that the wealthy are the most mobile; if they don't like tax policy in a certain country, they will move their assets off-shore (see the original article). What I'm saying is that on a "practical" level, these high taxes don't work! (Hence the consistency in the tax revenue coming in per year despite tax levels, as I cited.) You're better off having lower taxes and actually having the rich pay them.

Practically speaking, high taxes are not an effective way to tax the wealthy, but they are an effective way to send capital overseas. If you want another example, look at the $2.1 trillion in U.S. corporate cash being held abroad, which hasn't been repatriated because companies refuse to pay the high U.S. corporate taxes, and use it to buy foreign companies/assets like Minecraft for a couple billion instead.[0]

[0] http://www.bloomberg.com/news/articles/2015-03-04/u-s-compan...

[wooter]

Your conjecture isn't true though. In the US, the top 10% pay 68% of all federal taxes - the top 1%, 35%.

So how are they effectively paying the lowest band?

[gknoy]

The GP is talking about the percentage of their income being spent on taxes.

If you make 1 million dollars per year, and I make 100k, and my taxes are 30k per year while yours are 100k/year (numbers made up), you'd be paying more total taxes, and a larger slice of the total tax dollars paid.

However, my taxes are 30% of my income, whereas yours would be only 10% of your income. If we paid at the same "band" of taxes, you would be paying $300k instead of $100k.

Because the tax bands tax you at a lower percent the higher up you go, making more money leads to less proportion of taxes.

Consider also that the people who pay the most tax (in dollars) often have a substantial amount of their wealth in real estate, stocks, or stock options, rather than cash income, and those are all taxed differently than the kind of income that most of us have.

[wooter]

Not to be mean, but this is still all false conjecture and no source. The top 1% earn 19% of income yet pay 35% of all Fed Income Tax. The top 10%, 12% of earned, 12% of paid. The bottom 50% earn 12% but pay 3%.

And thats at the federal level. State income taxes vary from place to place, but nowhere is what you are saying true. And a state would have to apply a substantial effective negative income tax rate for high earners which is laughably unheard of.

[devonkim]

The argument is not complete only looking at the amount paid - you must account for what assets and income people get taxed upon. If the top 10% own 80% of all the income and assets, if they're paying about 40% of all the income and assets in the country (not an actual figure, just using for sake of cohesive argument), they are not paying their fair share. Then there's the fact that most high net worth individuals do not have most of their income from direct work anymore as much as passive income through stocks - the few exceptions are Hollywood celebs and similar that wind up getting taxed quite heavily. For example, most people's assets are primarily a single home and a retirement account in the form of a 401k or fixed income via pensions and social security, but this isn't similar to the asset distribution of the wealthy today almost ever. In fact, I remember someone noted how pro athletes that spend their money like how normal people do in direct proportion would wind up bankrupt quickly.

[gozo]

The title is, as usual, editorialized by the newspaper. The original title, as per the title tag, is "How Wealthy People Protect Their Money".

There's a pretty big difference between being a tax attorney and being an offshore consultant where secrecy is one of the selling points. It's not a coincidence that voluntary corrections of tax statements go up significantly when new information sharing agreements are made.

And again she's not a journalist, she has a PhD in Sociology from Harvard and is an associate professor of economic sociology.

[Nrsolis]

Secrecy isn't necessarily an indicator that there is law-breaking involved. Sometimes secrecy is desired for someone who has had negative attention focused on them by the general public for no other reason than they present a fat, juicy target for lawsuits.

Many people I know who have significant assets bemoan the challenges that present themselves when trying to engage in anything resembling a negotiation involving finance. If one side KNOWS you have the capability to pay more, then you're at a disadvantage.

And don't get me started with the lawsuits. People who have money seem to attract lawsuits the same way that children catch colds from kindergarten. As they say: "You know you're rich when you're finally sued frivolously."

[vanderZwan]

> Secrecy isn't necessarily an indicator that there is law-breaking involved.

So? Abusing loopholes in the law is also by definition perfectly legal, but still dubious practice. In fact, that's exactly what this sentence from the article alludes to:

> By the same token, when Oxfam estimates that just 1 percent of the world’s population will own more than 50 percent of the world’s wealth by 2016, it’s important to realize that such a state of affairs doesn’t just happen by itself, or even through the actions of individual wealthy people. For the most part, the wealthy are busy enjoying their wealth or making more of it; keeping those personal fortunes out of the hands of governments (along with creditors, litigants, divorced spouses, and disgruntled heirs) is the job of wealth managers.

> Given the little that is known about the profession and its role in global inequality, it seemed imperative to learn more about how wealth managers pull off this sleight of hand: Without breaking any laws (for the most part), they enable their clients to sidestep many laws and policies—especially those designed to prevent the kind of neo-feudal concentrations of wealth emerging now.

You're right on all other points of course.

[Nrsolis]

I'll make you a deal: let's stop using tax policy to try and create certain social outcomes. That way, you can get rid of all of the loopholes that everyone hates.

[tripzilch]

> Many people I know who have significant assets bemoan the challenges that present themselves when trying to engage in anything resembling a negotiation involving finance. If one side KNOWS you have the capability to pay more, then you're at a disadvantage.

But really, a disadvantage compared to whom?

There's of course the 99.99% [0] of people that simply can't have this "disadvantage" because they're not rich enough to "suffer" it. Given that the fact that the 0.01% will still be 0.01% after this terribly disadvantageous negotiation, it's not really a disadvantage. I say "fact" because it is both expected from the qualities of exponential wealth distributions, as well as evidenced from the real world where there's very little movement at the top.

Then there's the specific party on the other side that KNOWS. They are of course part of the 99.99% too, so the same thing happens. Before the negotiation they are at a huge disadvantage compared to the ultra-rich, and after the negotiation they are roughly at the same disadvantage, except insignificantly less so.

Say I were to go on holiday to a country where cost of living is much, much lower than at home. In some countries, at some point I'd notice I'd get "screwed over", paying 5x the price for a taxi or a drink, which is still not a significant amount to me either way. Of course I will get miffed about it at first, because of the apparent unfairness.

That's natural. It's how we're wired. That deep instinctual feeling of fairness and unfairness, it's part of our primate programming. It probably used to be an important evolutionary trait for group-survival, or something.

I hope that I do not need to explain that what is "natural" does not equate what is "right".

In fact, to be a good person, is for a large part defined by our ability and willingness to observe, rationally criticise our base programming / urges, and decide whether or not to act on them.

And thus, one would happily pay the still-cheap 5x "normal" price for a drink or taxi fare, because it's the right thing to do, and there's really nothing rationally "unfair" about it.

[0] nines pulled from thin air, giving about 73 million "ultra rich" on this planet.

[mc32]

Someone could easily put out an article titled, inside the secretive world of the atlantic article titling to increase page views. That's about as illustrative as this article.

The US has always been a place with a love hate relationship with the wealthy. We like building people and personae and tearing them down lest they get too comfortable in their perches.

The Atlantic continues this tradition of faux populism but with a twist to drive readership.

[marincounty]

I think is human nature to examine, and scrutinize the one's who utilized a relatively safe/encouraging environment in order to get to that perch.

I have seen too many wealthy individuals legally bend the rules the poor, and middle class can't in order to get to that perch.

Whether by hook, or crook, luck, family backing, and yes--sometimes honest hard work that person makes it to the perch; the peons will look up at that perched individual, and their resultant behavior. We watch what that perched individual does with their goodies. If they narcissistically waste their goodies, we get annoyed. If they buy up apartment building, and kick out section 8 recipients we get annoyed. If they buy up houses so they don't need to look at the peons, we get annoyed. If they waste money while their neighbors are starving, we get annoyed. Basically, if they act like jerks, we get annoyed.

Why, because we all inhabit the same little space. "Want to act like a jerk--fly to another planet." This one is too small.

In American, we provide a pretty good starting pad for most people. They can go and do pretty much whatever they want. They make their money, and then go to extreme, complex lengths to not give back to the nest---is frustrating, and ugly. It's no wonder--sometimes we want to pull them from their perches?

(Excuse the avian metaphors--it's early, and I can't write.)

[Kalium]

People grow ever-more-sensitive to the acts of those on perches. There's remarkably little consensus on what constitutes being a jerk. This is a bad combination.

When there is zero room for error and all jerk-ish-ness is punished by trying to drag someone from their perch, you've created a dangerous place to visibly be on a perch. When you couple this with a society where it's virtually impossible to not be a jerk, you've created a society where those on perches will quickly grow deaf to being called a jerk. When you have both, the people on perches will just do whatever they want, because they will conclude that they will attacked all the same no matter what they do.

And if you're going to be considered a jerk no matter what you do, why should you care about the people who call you a jerk?

[jmcmichael]

No, I think what the author of the article means by 'secret' is not the very complex processes themselves, but the secrecy those complex processes provide to the wealthy - secrecy and privacy that the hoi polloi do not enjoy. Also, the secrecy that allows these people to remove themselves from social and democratic processes that the rest of us must follow, like taxes and the law.

[Retric]

Secrets don't need to be actively hidden. It's reasonable to talk about the secret world of E.R. doctors not because there hiding, but because it's not widely known.

Sure, the rules may be public the play is not.

[samstave]

Question: There was a post a while back on HN where there was advice given on finding a former IRS employee to help with certain tax issues. There was a specific name for this type of employee who now is a private sector consultant...

Do you happen to know of the thread, or even the term for this person? I need to use that advice now and I cannot find the comment thread or recall the term used.

Thanks

[DanBC]

This one?

https://news.ycombinator.com/item?id=7789363#up_7789806

[gknoy]

I think it's clever (and, in this case, appropriate) that you linked to the anchor for upvoting. :) I didn't know that was possible.

[antsar]

The upvote anchor seems to be the only unique anchor that exists for each comment, making this the only way of linking to a comment in the middle of a page.

[DanBC]

I can't take any credit for that! It's what Algolia returned.

[samstave]

That's it!!

Thank you "Enrolled Agents" was the term I was looking for.

Appreciated.

[sokoloff]

Your contact info isn't in your profile; if you're in the New England area, I'd be happy to introduce you to my tax preparer, who is an enrolled agent (though not ex-IRS). No connection, other than extremely satisfied and trusting client.

[samstave]

I'm in San Francisco, does that matter for whom he can assist?

[sokoloff]

No, not at all, but it's often most convenient to be able to sit down in the office and explain your situation, look over documents together, etc. (I can give you his contact info anyway; it's just easier if you were local.)

The ability to practice as an EA in front of the IRS is nationwide, I'm pretty sure.

[acheron]

The most disappointing thing about [insert topic here] is how little even professional journalists understand it, or care to.

You've heard of Gell-Mann Amnesia?

[parsnipsumthing]

That made me laugh out loud because it's clearly so correct. Sigh.

[gozo]

Except you still haven't explained what's actually wrong with the article, even though the author seemingly has far more experience than you do. It seem more like you disagree with the view of your profession, something that seem more easily explained by bias than any factual disagreement. Especially since one of the point of the article is the existence of such an in-group bias.

[Nicholas_C]

Now that the double Irish tax arrangement is being mitigated by the Irish government do you see any other tax arrangements for international companies that will become more popular?

Any good books on understanding international tax strategy for corporations?

[dang]

Ok, we changed the title to a representative phrase from the article. If anyone can suggest an accurate and neutral title that is better, please do, and we'll change it again.