Bill Gates' Taxes Require Special Computer 428
NightWulf writes "News AU claims Bill Gates said in an interview, his fortune is so big, that the IRS needs a special computer, because a normal one can't handle the numbers. The IRS must have had to switch from PC's to Macs just for Gates."
Re:I don't buy it (Score:5, Interesting)
The IRS is apparently still using a computer system that became operational in 1967 (see this announcement [house.gov] for example).
Reminds me of.. (Score:5, Interesting)
When Seymour Cray was told this he supposedly replied with "That's funny, because I'm using an Apple computer to design(the Cray supercomputers)".
I don't buy it either. (Score:5, Interesting)
They do segregate some accounts because of the sheer volume of transactions but the database systems and transaction handling systems are on separate 'farms'
of machines so this article seems to be utter fabrication.
Re:I don't buy it (Score:5, Interesting)
Yes, but corporate taxes are probably held by a different division than personal taxes.
I worked for a year at the IRS in the early 90s and things are BAD. I wouldn't be surprised if he had to have his personal stuff moved over to the corporate computers.
Think about it this way, if you are running on older databases on older computers -- you have specific field sizes. Its hard to retroactively recode these without possible killing a large number of other items (I worked on modernizing some code at my department -- it was a pain in the ass). And beyond that, just because 0.00001% of the population needs a field size of a few hundred digits to calculate a value -- this will mean EVERYONE gets the same value size and require the same sorts of calculations slowing down the whole process and requiring a lot more memory (on computers that are no longer manufactured or were custom pieces -- because when I worked there, it was the battle of the lowest bidder and they ALWAYS made sure that just because they were lowest, it didn't mean they didn't make up for this fact a few years down the road with purposely propriatary parts they never told anyone about even though it was against the original spec sheet).
So I wouldn't be surprised to know a few dozen billionaires had their own computer system and were managed by a single individual (where as a single individual might manage a few million from a data perspective otherwise). And when you think about it, as much taxable income that man is bringing into the gov't -- it makes PERFECT sense that they'd put a $30k employee on to manage one guy that is chipping in a hundred million a year in taxes...
I could say more, but I won't because I still have security clearance with the IRS...at the same time, I'm going to post this anonymously even though I didn't give out any information that was secret (or even all that interesting).
Re:I don't buy it (Score:5, Interesting)
Bill didn't say that his tax records were the *only* one on that special computer. It is very likely that Mr. Buffet's records are on that computer too, as well as the records for any high net worth individual with complicated tax situations. I completely buy the story. I work in estate and gift tax planning and at least from that perspective, there are myriad of complicated structures (ie LLCs, FLPs, trusts, promissory notes) that require incredibly intense accounting. And I'm not even exposed to the more esoteric tax issues.
I did some work for a billionaire with only a *fraction* of Bill Gates' fortune once and I had to invent a whole new set of models for keeping track of the spider web of entities. The guy's accountants had it even worse, because they had to keep track of transactions in hundreds of entities by and among various family members...I just had to track the data for one individual. It was my understanding that if this particular family ever underwent a Section 754 Election, where the cost basis of the underlying assets is adjusted to market value (or something like that), the cost in legal, accounting and IT resources could run into the millions.
Re:Is this the Intel Math bug??? (Score:4, Interesting)
Bill's salary is given away.
Bill's home mortgage (if it exists) does not exist.
He earns roughly: $705,000,000 per year.
That quite certainly puts him in a high tax bracket:
If taxable income is over-- But not over-- The tax is:
$326,450 no limit $88,320.00 plus 35% of the amount over 326,450
(So he pays $705M - $326,450)*35% + $88,320
246635742.5+$88,320 =
$246,724,062.50 in taxes
Since we don't use the cents collumn in fed tax does anyone know whether the
I make about $42K a year.
So dear billy pays in taxes what I make in over 5 _THOUSAND_ years.
Yeah, I'd say your guess was conservative alright. We haven't even figured in state taxes and I think he earns more than 1.5% in interest and divadends per year.
-nB
Re:I don't buy it (Score:3, Interesting)
Yep- and it's because the IRS does not have the job you think they have. Collecting taxes is the minor, unimportant job. The important job is catching people who cheated on the Earned Income Tax Credit, and other low-income loopholes.
Re:That taxes requires a computer at all is a sham (Score:5, Interesting)
I used to agree with you, but I've since found the that picture isn't so simple.
Taking taxes at transaction time means pushing a situational-tax only system. In other words, pay tax on a sale of goods or services or the such, which pushes a larger percentage of the tax burden farther down the economic ladder (remember that everyone has to eat and buy things). The richer you are, the lower the percentage of situational tax with respect to your income/net worth. That's not good. Thus, income and estate taxes are pushed as a way to readjust the percentages to make the wealthy pay a larger percentage of their net worth than the poor per annum. Additionally, speaking as someone who was there, taking even 15% of my income when I only make $10k or $20k is pretty onerous, if not simply not possible. But taking even 30% of my income now that I make six figures would pinch, but is far more doable. Speaking as the hypothetical Bill Gates, taking as much as 45% of my $50B, leaves me with enough cash on hand to own a small nation and still manages to do an amazing amount of collective good for the nation.
Also, deductions are an absolutely necessity of the system. Let me explain by example:
If I own a business and that business brings in $100k in gross profit, without deductions, I pay tax on $100k. However, looking at the bigger picture, If my business is anything like the norm, only about 30% of that gross stays in my pocket. That means, I had to pay employees (who are taxed on that pay), advertising (which is taxed on the service provider), and office supplies (which were already taxed at the OfficeMax counter). I have to be able to deduct business expenses otherwise the remainder of the gross that I hold in my hand after business expenses will go, in total, the IRS and I end up having run a business that did $100k in profit and I, as the owner, have exact $0 to show for it (if I don't end up oweing.
Deductions of the other sort exist to encourage charity. There are those who would give to charity out of kindness, but to the same extent? As frequently? What about the rest. We can't forget that charity write-offs really work. Americans give a tremendous amount to charity every year. How much who those charities get if there were zero benefit to the giving? Not nearly as much. Sure, those who give anonymously would still give, but as for the rest, the numbers would drop drastically.
Al Gore---not my favorite guy in the world---had a great idea. Tax breaks for people who make beneficial environmental choices (buy hybrids, use solar, etc...) to encourage people to lessen our dependence on foreign fuels. His ideas never came to full fruition (a real shame, regardless of whether I like him or not), but they would only work if the tax base can claim deductions as incentive.
Brevity is not my strong suit, so sorry for the long ramble, but you get the idea.
I work with the IRS for comptuerized taxes .... (Score:3, Interesting)
The icing on the cake? The company that has been contracted to build the MEF system? IBM.