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> But such reviews turn up very little evidence of evasion among the extremely wealthy, in part because the rich use sophisticated accounting techniques that ar

> But such reviews turn up very little evidence of evasion among the extremely wealthy, in part because the rich use sophisticated accounting techniques that are difficult to trace, such as offshore tax shelters, pass-through businesses and complex conservation easements. This is a weird set of examples. To start with - the top 1% is a relatively accessible level of "rich." That's an L5/L6 software engineer at Google, or a mid career doctor. Are offshore tax shelters actually available and economically feasible to these people? As for pass-through businesses: I had a pass-through LLC when I ran a consultancy. Was I engaged in tax evasion? I'm pretty sure I wasn't - as I understood, this was exactly what I was supposed to be doing. I think you're essentially required to do this if you run businesses where you're the only partner (but I could be wrong). But even if you're not - that's not a 1% thing. That's basically the best practice pursued by anyone running a single member LLC...which describes a huge number of small businesses. A struggling bakery would realistically have pass-through income. I don't know what "complex conservation easements" are so I can't speak to that.

pizza234 5y ago
> To start with - the top 1% is a relatively accessible level of "rich." That's an L5/L6 software engineer at Google, or a mid career doctor. Are offshore tax shelters actually available and economically feasible to these people? I wonder if "1%" is just a number that is repeated when talking about this subject. Another article debated on HN: https://rantt.com/the-paradise-papers-how-ridiculously-easy-it-is-for-the-rich-to-avoid-taxes https://rantt.com/the-paradise-papers-how-ridiculously-easy-... also refers to "the 1%". There's a detailed article on the 1%: https://dqydj.com/top-one-percent-united-states https://dqydj.com/top-one-percent-united-states EDIT: It seems to me that 1% is beyond accessibility. I think that 10% is a (very generic, rough) threshold that can be reached with effort, but not 1%.
- trutannus 5y ago
  >I wonder if "1%" is just a number that is repeated when talking about this subject. I'm inclined to think it is. Often times I'll see 1% discussed in articles and the threshold is different each time. At this point, I'm certain that 1% is just a rhetorical device used to mean "bad people with money".
  - andrepd 5y ago
    I'm pretty sure you are projecting. The "1%" became a slogan around the time of the Occupy movement, coming frkm the fact that 1% of the world's population owns 50% of its wealth, which is such a hilariously skewed proportion.
    - trutannus 5y ago
      > The "1%" became a slogan around the time of the Occupy movement This is correct. Since then it's become more of a slogan like "power to the people" than a useful statistic. In some countries, 1% would include a couple who are both mid level engineers -- that's well off, but not "ultra rich" by any rational standard. The main reason is that the 1% figure often refers to households, rather than single individuals. It's more a short hand for "ultra rich", rather than an actual measurement of what portion is actually "ultra rich".
      - andrepd 5y ago
        Did you read what I said? The top 1% of income is ~750,000$ individual, hardly mid-level engineers... As for top 1% net worth, it's ~11 mil$, again hardly "upper-middle class".
        maxerickson 5y ago
        You are mixing global and US comparisons.
        trutannus 5y ago
        In the USA, sure, where I'm from it's $300,000 gross household. The United States isn't the representative of the entire world. That's why I specified in some countries.
- throwaways885 5y ago
  Also, people tend to use 1% of the United States, not 1% of the world. It's easy to be angry if you're only looking up the totem pole.
- klaudius 5y ago
  They use 1% because number 1 is an integer and it can represent a whole person. This is useful for scapegoating and hatred. "The 99% vs. the 1% is the modern articulation of this classic scapegoating mechanism. It is all minus one versus the one. And it has to just be the one. 99.99 people or percent is too granular. Scapegoating 0.1 doesn’t really work. You need a whole person to play the victim. Similarly, 98-2 doesn’t quite have the same ring to it either. " Source: https://blakemasters.com/post/24578683805/peter-thiels-cs183-startup-class-18-notes https://blakemasters.com/post/24578683805/peter-thiels-cs183....
  - andrepd 5y ago
    The "1%" slogan arose in the Occupy movement, from statistics such "1% of the people own 50% of global wealth", which such an inexcusable level of inequality. Ah but no, they are the victims, poor them.
- bluecalm 5y ago
  There are a lot of people making 360k+ with effort. You most likely need to be talented and have very good work ethic (rare combination) and then focus on right industry. Big trading firms, programming if you're very good or not that good but not risk averse and willing to take shots to start businesses. Of course not everyone can get there, it's 1% after all but you don't need to be born into it or one in a million genius.
- tjs8rj 5y ago
  Keep in mind the level of churn. An implicit bias easy to make is forgetting that these are percentiles, not people, and most people move through different percentiles at different times in their life. 11% of Americans will be in the 1% for at least 1 year in their life, 39% will be in the top 10% at some point, 61% in the top 20%[1][2]. 94% of those in the top 1% fall out in a year, 99% within a decade[1]. In other words: being a 1%er is a very transient title for the vast majority of even the rich who make it there. [1]: https://www.cato.org/blog/high-turnover-among-americas-rich https://www.cato.org/blog/high-turnover-among-americas-rich [2]: https://www.npr.org/sections/money/2014/05/05/308380342/most-americans-make-it-to-the-top-20-percent-at-least-for-a-while https://www.npr.org/sections/money/2014/05/05/308380342/most...
  - snypher 5y ago
    >11% of Americans will be in the 1% for at least 1 year in their life 11% of Americans will make over $500k a year, or have $12M in assets, for one year? This cannot possibly be true. Oh, Cato Institute? Say no more.
    - pseudo0 5y ago
      Is 11% earning $500k for at least one year really that surprising? For example, a mom and pop small business selling their store in order to retire could qualify for one year, but that money would likely be the bulk of their retirement savings. It's probably not a useful metric though, if most of those people break $500k due to one-off lump sum payments.
    - tjs8rj 5y ago
      The npr source said 5% of Americans will be in the 1% for 2 consecutive years, so the Cato numbers aren’t far from what you might expect.
  - bumby 5y ago
    What matters more, I believe, is wealth rather than income. It’s been awhile since I’ve read it, but The Meritocracy Trap outlines the case that wealth can be less transitory.
okprod 5y ago
To start with - the top 1% is a relatively accessible level of "rich." That's an L5/L6 software engineer at Google, or a mid career doctor. Are offshore tax shelters actually available and economically feasible to these people? The article's use of $200K is very weird, and the top 1%-5% definitely make much more than that (and they don't depend on an annual income/salary). $200K after taxes is not that much, especially if you have a house, more than one car, children, student loan debt, want to save, etc. I don't know of anyone at $200K or even more to be involved in any sort of offshore tax shelters. As for pass-through businesses: I had a pass-through LLC when I ran a consultancy. Was I engaged in tax evasion? I'm pretty sure I wasn't - as I understood, this was exactly what I was supposed to be doing. Pass-through isn't tax evasion, but as an example opposite to yours, I used to know someone who created an LLC and then bought things as LLC expenses (like computers, printers, etc) that were really for personal use. Edit: I have no idea how to quote text on HN
- alistairSH 5y ago
  Top 1% in the US is a hair over $500k/year. https://www.usatoday.com/story/money/2020/07/01/how-much-you-need-to-make-to-be-in-the-1-in-every-state/112002276/ https://www.usatoday.com/story/money/2020/07/01/how-much-you... Top 5% is around $160k/year. Those are both household numbers. So, the top 1% wouldn't be unusual for a couple in mid-career working for a FAANG on the West Coast. But, definitely not normal or easy, especially anywhere else in the country. Top 5% would be just about any dual-income, white-collar household in a reasonably sized metro area.
- alistairSH 5y ago
  Pass-through isn't tax evasion, but as an example opposite to yours, I used to know someone who created an LLC and then bought things as LLC expenses (like computers, printers, etc) that were really for personal use. Not necessarily a pass-through technique, but the example that pops to mind is the tax treatment of vehicles over 6500lbs GVWR. It's a major incentive for any business owner to over-spend on luxury SUVs when either a nice sedan (realtor, sales people, etc entertaining clients) or a smaller van/truck (many painters, florists, etc) would be more than sufficient.
- 5y ago
burlesona 5y ago
Looking at income alone is misleading. To be in the top 1% of income you only need to make about $500k per year. But to be in the top 1% of net worth, you need to have almost $12M. Just to make the math simple, supposing you made $500k/year and saved every penny that’s 24 years of savings before you crack the top 1% in net worth. Of course in reality you don’t save every penny, and you may have a lot of student loans to pay off, and some of your savings is surely investments that compound so it’s impossible to say how long this would take in practice, but it’s still fair to say at least a decade if not multiple decades. This is why I think it’s misleading to say that FAANG engineers are all 1%ers. There’s a huge difference in someone who just cracked $500k in income for the first time at age 35 and someone who has been earning that foe their career and has more than $10M net worth at the end of their career. Even more difference with someone who started off with a $5M starter fund from mom and dad.
- neogodless 5y ago
  Wealth of $4.4 million USD seems to get you to top 1% globally[0]. If you earn $500k and put $300k into a total market index fund that earns you 7% net growth per year over 10 years, after 10 years, your wealth will have grown to $4.4 million[1]. (If you use the $200k the article uses for top 5%, assuming all income could somehow be invested, it'll take a bit over 13 years.) [0] https://www.businessinsider.com/net-worth-to-be-in-1-percent-top-richest-wealth-2021-2 https://www.businessinsider.com/net-worth-to-be-in-1-percent... [1] https://www.bankrate.com/calculators/savings/compound-savings-calculator-tool.aspx https://www.bankrate.com/calculators/savings/compound-saving...
  - bumby 5y ago
    Is this extending the OP example that you have no living expenses? The effective tax rate from what I could quickly find ranges from 32% (Texas) to 43% (NYC). In the latter, your take home isn’t enough to cover $300k/yr and in the former you’re left with $35k/yr. Maybe doable in the latter case but not the most likely lifestyle for someone making over 10x the median salary.
- tjs8rj 5y ago

pizza234 5y ago

> To start with - the top 1% is a relatively accessible level of "rich." That's an L5/L6 software engineer at Google, or a mid career doctor. Are offshore tax shelters actually available and economically feasible to these people? I wonder if "1%" is just a number that is repeated when talking about this subject. Another article debated on HN: https://rantt.com/the-paradise-papers-how-ridiculously-easy-it-is-for-the-rich-to-avoid-taxes https://rantt.com/the-paradise-papers-how-ridiculously-easy-... also refers to "the 1%". There's a detailed article on the 1%: https://dqydj.com/top-one-percent-united-states https://dqydj.com/top-one-percent-united-states EDIT: It seems to me that 1% is beyond accessibility. I think that 10% is a (very generic, rough) threshold that can be reached with effort, but not 1%.

trutannus 5y ago
>I wonder if "1%" is just a number that is repeated when talking about this subject. I'm inclined to think it is. Often times I'll see 1% discussed in articles and the threshold is different each time. At this point, I'm certain that 1% is just a rhetorical device used to mean "bad people with money".
- andrepd 5y ago
  I'm pretty sure you are projecting. The "1%" became a slogan around the time of the Occupy movement, coming frkm the fact that 1% of the world's population owns 50% of its wealth, which is such a hilariously skewed proportion.
  - trutannus 5y ago
    > The "1%" became a slogan around the time of the Occupy movement This is correct. Since then it's become more of a slogan like "power to the people" than a useful statistic. In some countries, 1% would include a couple who are both mid level engineers -- that's well off, but not "ultra rich" by any rational standard. The main reason is that the 1% figure often refers to households, rather than single individuals. It's more a short hand for "ultra rich", rather than an actual measurement of what portion is actually "ultra rich".
    - andrepd 5y ago
      Did you read what I said? The top 1% of income is ~750,000$ individual, hardly mid-level engineers... As for top 1% net worth, it's ~11 mil$, again hardly "upper-middle class".
      - maxerickson 5y ago
        You are mixing global and US comparisons.
      - trutannus 5y ago
        In the USA, sure, where I'm from it's $300,000 gross household. The United States isn't the representative of the entire world. That's why I specified in some countries.
throwaways885 5y ago
Also, people tend to use 1% of the United States, not 1% of the world. It's easy to be angry if you're only looking up the totem pole.
klaudius 5y ago
They use 1% because number 1 is an integer and it can represent a whole person. This is useful for scapegoating and hatred. "The 99% vs. the 1% is the modern articulation of this classic scapegoating mechanism. It is all minus one versus the one. And it has to just be the one. 99.99 people or percent is too granular. Scapegoating 0.1 doesn’t really work. You need a whole person to play the victim. Similarly, 98-2 doesn’t quite have the same ring to it either. " Source: https://blakemasters.com/post/24578683805/peter-thiels-cs183-startup-class-18-notes https://blakemasters.com/post/24578683805/peter-thiels-cs183....
- andrepd 5y ago
  The "1%" slogan arose in the Occupy movement, from statistics such "1% of the people own 50% of global wealth", which such an inexcusable level of inequality. Ah but no, they are the victims, poor them.
bluecalm 5y ago
There are a lot of people making 360k+ with effort. You most likely need to be talented and have very good work ethic (rare combination) and then focus on right industry. Big trading firms, programming if you're very good or not that good but not risk averse and willing to take shots to start businesses. Of course not everyone can get there, it's 1% after all but you don't need to be born into it or one in a million genius.
tjs8rj 5y ago
Keep in mind the level of churn. An implicit bias easy to make is forgetting that these are percentiles, not people, and most people move through different percentiles at different times in their life. 11% of Americans will be in the 1% for at least 1 year in their life, 39% will be in the top 10% at some point, 61% in the top 20%[1][2]. 94% of those in the top 1% fall out in a year, 99% within a decade[1]. In other words: being a 1%er is a very transient title for the vast majority of even the rich who make it there. [1]: https://www.cato.org/blog/high-turnover-among-americas-rich https://www.cato.org/blog/high-turnover-among-americas-rich [2]: https://www.npr.org/sections/money/2014/05/05/308380342/most-americans-make-it-to-the-top-20-percent-at-least-for-a-while https://www.npr.org/sections/money/2014/05/05/308380342/most...
- snypher 5y ago
  >11% of Americans will be in the 1% for at least 1 year in their life 11% of Americans will make over $500k a year, or have $12M in assets, for one year? This cannot possibly be true. Oh, Cato Institute? Say no more.
  - pseudo0 5y ago
    Is 11% earning $500k for at least one year really that surprising? For example, a mom and pop small business selling their store in order to retire could qualify for one year, but that money would likely be the bulk of their retirement savings. It's probably not a useful metric though, if most of those people break $500k due to one-off lump sum payments.
  - tjs8rj 5y ago
    The npr source said 5% of Americans will be in the 1% for 2 consecutive years, so the Cato numbers aren’t far from what you might expect.
- bumby 5y ago
  What matters more, I believe, is wealth rather than income. It’s been awhile since I’ve read it, but The Meritocracy Trap outlines the case that wealth can be less transitory.

okprod 5y ago

To start with - the top 1% is a relatively accessible level of "rich." That's an L5/L6 software engineer at Google, or a mid career doctor. Are offshore tax shelters actually available and economically feasible to these people? The article's use of $200K is very weird, and the top 1%-5% definitely make much more than that (and they don't depend on an annual income/salary). $200K after taxes is not that much, especially if you have a house, more than one car, children, student loan debt, want to save, etc. I don't know of anyone at $200K or even more to be involved in any sort of offshore tax shelters. As for pass-through businesses: I had a pass-through LLC when I ran a consultancy. Was I engaged in tax evasion? I'm pretty sure I wasn't - as I understood, this was exactly what I was supposed to be doing. Pass-through isn't tax evasion, but as an example opposite to yours, I used to know someone who created an LLC and then bought things as LLC expenses (like computers, printers, etc) that were really for personal use. Edit: I have no idea how to quote text on HN

alistairSH 5y ago
Top 1% in the US is a hair over $500k/year. https://www.usatoday.com/story/money/2020/07/01/how-much-you-need-to-make-to-be-in-the-1-in-every-state/112002276/ https://www.usatoday.com/story/money/2020/07/01/how-much-you... Top 5% is around $160k/year. Those are both household numbers. So, the top 1% wouldn't be unusual for a couple in mid-career working for a FAANG on the West Coast. But, definitely not normal or easy, especially anywhere else in the country. Top 5% would be just about any dual-income, white-collar household in a reasonably sized metro area.
alistairSH 5y ago
Pass-through isn't tax evasion, but as an example opposite to yours, I used to know someone who created an LLC and then bought things as LLC expenses (like computers, printers, etc) that were really for personal use. Not necessarily a pass-through technique, but the example that pops to mind is the tax treatment of vehicles over 6500lbs GVWR. It's a major incentive for any business owner to over-spend on luxury SUVs when either a nice sedan (realtor, sales people, etc entertaining clients) or a smaller van/truck (many painters, florists, etc) would be more than sufficient.
5y ago

burlesona 5y ago

Looking at income alone is misleading. To be in the top 1% of income you only need to make about $500k per year. But to be in the top 1% of net worth, you need to have almost $12M. Just to make the math simple, supposing you made $500k/year and saved every penny that’s 24 years of savings before you crack the top 1% in net worth. Of course in reality you don’t save every penny, and you may have a lot of student loans to pay off, and some of your savings is surely investments that compound so it’s impossible to say how long this would take in practice, but it’s still fair to say at least a decade if not multiple decades. This is why I think it’s misleading to say that FAANG engineers are all 1%ers. There’s a huge difference in someone who just cracked $500k in income for the first time at age 35 and someone who has been earning that foe their career and has more than $10M net worth at the end of their career. Even more difference with someone who started off with a $5M starter fund from mom and dad.

neogodless 5y ago
Wealth of $4.4 million USD seems to get you to top 1% globally[0]. If you earn $500k and put $300k into a total market index fund that earns you 7% net growth per year over 10 years, after 10 years, your wealth will have grown to $4.4 million[1]. (If you use the $200k the article uses for top 5%, assuming all income could somehow be invested, it'll take a bit over 13 years.) [0] https://www.businessinsider.com/net-worth-to-be-in-1-percent-top-richest-wealth-2021-2 https://www.businessinsider.com/net-worth-to-be-in-1-percent... [1] https://www.bankrate.com/calculators/savings/compound-savings-calculator-tool.aspx https://www.bankrate.com/calculators/savings/compound-saving...
- bumby 5y ago
  Is this extending the OP example that you have no living expenses? The effective tax rate from what I could quickly find ranges from 32% (Texas) to 43% (NYC). In the latter, your take home isn’t enough to cover $300k/yr and in the former you’re left with $35k/yr. Maybe doable in the latter case but not the most likely lifestyle for someone making over 10x the median salary.
tjs8rj 5y ago