>>Then you imply that individuals are more likely to abuse 'investment' in the pursuit of limiting their tax liabilities.
Correct.
I disagree. Corporations have as much incentive and possibly greater resources (accountants and lawyers) to structure activities in a manner consistent with reducing tax liability.
>>Which apparently includes a judgement that this is 'wrong'.
It is wrong because the latter doesn't add to the common good, i.e., total societal wealth. In fact, it reduces the wealth of the individual using tax avoidance schemes.
I disagree. Tax policy is structured to create incentives by policy makers. You should take issue with the politicians, not the individuals who attempt to comply with the rules established.
>>Then you say that the net effect of the AMT on individuals is to further limit the wealth creation by the wealthy.
The purpose of the AMT is no discourage individuals from abusing their wealth by using it in unprofitable tax avoidance schemes, when it could be used to the benefit of all, especially to themseves.
I plead ignorance on this. Not being subject to the AMT (except for a brief fiasco previously mentioned) I'm not up to speed on its overall impact.
>>Or does the act of investing in a manner that reduces invidual tax liability reduce the wealth creation by the wealthy?
It does. You have forgotten opportunity cost lost, but investent in tax shelters is a guaranteed loser, net.
The purpose of AMT was to stop individuals from making poor, wealth destroying investments.
So you agree with both interpretations, perhaps with qualification and elaboration. I appreciate this, as your statement embedded far too much info to absorb in casual reading. I should plead ignorance again. Instead, I opt to look at a specific example.
What about Section 1029 credits for Coal Seam Gas royalties? Last I heard, these expire next year. But prior to this, an investor in short lived Coal Seam gas wells earned income that produced tax credits in addition to depletion allowance. This 'policy' encouraged the development of wells producing US based energy. It is quite possible (though not being an investor positioned to avail myself of these credits, so I speculate) that an individual could invest in such a stream of cash flow, generating income tax free, if not a negative marginal tax rate on the cash flow.
I can see how it would be argued that the capital tied up in this enterprise might have been better deployed elsewhere, resulting in a net larger pie. But again, is it the fault of the individual who complies with the wishes of the policy makers, or the policy enacted by the policy makers that should bear the brunt of your concern?
>>How does this support that the AMT should exist for individuals but not corporate entities?
Because corporations have a different taxing structure which under AMT hurts the common good more than it does so individuals. Individuals operate for their own interest, but corporations operate beyond the interest of principal owners.
Thanks. I was not aware of this. Not having studied the corporate AMT issues.
>>And how do corporate entities differ from individuals?
In their efficiency of capital utilization. Groups of people in a coordinated effort can produce far more than the same group operating individually.
Hmm. Perhaps groups can gain some synergy, but I don't see this as a reason to exempt them from rules applying to individuals.
An aside, we may be in a new era where economies of scale begin to work against global corporate entities. Witness the need for Nortel and Lucent to halve their workforces to adjust to a rapidly changing investment environment. Witness the ever increasing burdens on those companies that have globalized as a result of terror attacks.
>>Are they not granted the same rights as "real" citizens?
If they were, why would you be making your allegations that Marriott is enaged in deceptions under the tax code when you don't get the same alleged deceptions?
I don't think I've claimed this. I merely stated that there were ways to structure finances in compliance with the given rules that benefited the enterprise. It is the CFO's responsibility to provide this service to the 'group', IMO.
That I choose at this time not to do so has no bearing on the issue. I provided a reference (book) that you could refer to, that could provide the gist of further discussions on what you perceive as tax avoidance schemes.
>>Should they not bear the same social costs as other citizens?
There it is again. Fairness. You know what is fair and you keep your fairness dowser nearby to tell you. Are you bearing the social costs or are you evading them as you have asserted?
I bear them, while trying to understand their implications. As do many others. I occasionly object to policy decisions (like shorter duration curves for Govt Debt) that I believe will increase them with no concurrent offsetting benefits. |
