Are you an accountant, mommie4life?

I don't mean to offend anyone here but the whole "rich people don't pay much in taxes because of the loopholes" is the fairly typical ignorant claptrap one can expect to hear at the family Thanksgiving dinner from the uncle or aunt whose day job is working at the mill or driving a truck or some other job that has nothing to do with managing large sums of income.

Unless there is someone else in this thread who's making $3M+ in income, I would think a little bit of modesty might go a long way before someone starts saying I have "lousy" tax accountants (I mentioned that I use a big 8 firm for my taxes). 

There are certainly means to reduce ones tax liabilities in terms of payroll taxes and the like. But in terms of actually reducing ones real tax liability, it's very difficult to legally do this and make substantial (as in a significant %) differences in taxes being paid.

I certainly don't mind paying for roads, schools, police. That's where my property taxes and the 4% that goes to the state largely goes to. 

The federal governmnent, however, is taking 35% of the income over $357,000 (Which means, most of it).  And what are they doing with it? Mostly, it gets paid directly to other people for all manners of social programs.

And do those people appreciate this free boon? No. Instead, they sit around rationalizing the money they received by saying that "the rich" don't "need" that money or that "the rich" have loopholes from paying their fair share or that they are merely getting back what they "paid into the system" (when in reality the tiny amunt in net taxes they paid wouldn't cover a fraction of what they're getting back) whatever and thus vote for politicians who promise to give them even more free money taken forcibly from other people.

People have an immense capacity for rationalizing the unpaid use of someone else's labor. I see this in software piracy threads all the time where it's even more clear cut than the modern welfare state. So it's not surprising to see serious people trying to honestly justify the wholesale theft of other people's labors in order to pay for "essential" government programs that largely amount to other people getting free money.

I wish I had the current credentials to be a full fledged accountant. I am working on that, as I said further up in this thread. Honestly if it was up to me we'd take the huge salaries that the politicians give themselves and cut those down to pay for the special programs they want funded. California did that and it helped them out tremendously, one of the million things that Schwartzeneger fixed from Grey Davis' stupidity. I appreciate every penny of income that we get and always have. I'm not trying to say that the rich don't need money what I'm trying to say is it's a lot easier for you to pay that high of a rate than it would be for me.

It goes along with what someone said about our poor not being poor. They upped welfare, they upped food stamps and all sorts of other government programs to excess. Yes, I agree. Do I think they do the military right, well, could probably start another thread on that, but that doesn't have to do with the current thread.

Want a flat tax rate? I'm all for it, I've said that before. But when you have families trying to come up with that other $30 to make the ends meet and then other people complaining because they lost out on $357,000 that they don't need for survival, sorry I don't care if I was the one who made the three million or whatever I wouldn't complain about paying it forward. Sorry, maybe just my point of view, but it is. I'm not here to argue with you over whether or not the rich should pay taxes, that's not what I started out to do. Do some people take advantage of government programs? Most definately. Do some people acutally need the help? Yep, they do.

Tiring for the perp's maybe, Doesn't wear me out bringing it up. Of course if you support that kind of thing, I can see you like liking someone speaking harshly of your nanny.

Richard it only good sense to know who your host on this site is, of course you may know him as Draginol of Stardock fame. Member # can be a good indicator.

http://www.theonion.com/content/video/in_the_know_should_the_government

The Onion rules.

I just assumed frogman was a Stardock partner. I had no idea Brad liked being a chameleon. I suppose #1 doesn't change.  btw, today I have posted a blog on Nanny.

 "rich people don't pay much in taxes because of the loopholes"

No, it applies to almost everyone, but because the well-off have more bucks and have many avenues of shelter they manage to put away much more for a rainy day than do most others. May I suggest you look up Daschle's tax consultant? You might be able to write off your Porsche.

so... if they don't LIVE here... its tax dodging? Why should I be entitled to get roads paid for by someone who lives in another country?

They avoid PROPERTY tax by having a buziness in a different city from where they live? why should they be obligated to run a business in the same location as where they live? business move to whereever they are most wanted (aka, whereever they are treated best).

They are paying taxes, they are just paying them to someone else, someone who might be less greedy and demand lower taxes.

Who decides what someone needs to "make ends meet"?

I worked 91 hours last week and nearly that many hours the week before.  Had I note done that, a major project would have failed and we would have to lay off 23 people over the next 90 days.

What percentage of people have both a valuable skillset and a willingness to work insane hours (away from their wife and children)?  Not many.  And for that, I am well compensated.

But if you tax away my incentive to use my valuable skillset in the way I do and you end up with a lot fewer jobs -- 23 in just that one example.  And in turn, those 23 highly paid (average salary $65k so we're talking well over a million in salary) are now in a tighter job market. And of course, all the things they were doing (buying houses, cars, etc.) are put off.

Obviously, statistically, there aren't that many people like me.  Less than 1% of the population. Let's say 2 million as a ballpark.  Those 2 million create jobs for over 40 million of our highest skilled people and those jobs only exist because people like me are willing to use a very specialized set of skills and talents in a way and for a duration that most humans are simply unwilling to do.  

Now, as others have pointed out, I support a progressive tax system. I agree with the argument that the wealthier should pay more, even as a %, of what they earn.

However, what I don't agree to is that the "rich" are somehow getting out of paying taxes they should be paying.  No one here has been able to list a single loophole that the rich can legally use. Not a single example.  

It irritates me to no one for people (and not saying you) who probably pay trivial amounts in taxes (half the population pays no net income taxes) to complain that the people who pay almost all the taxes are somehow skipping out on paying their "fair share".

First off, people who talk about the Cayman Islands or Swiss bank accounts are typically living off of urban legends. The 50s are long gone.  Today, you cannot legally shelter income in the Cayman Islands or any other off shore account.  What you can do is illegally hide investment income by having it done through an off shore account.

There are a lot of scams that don't really work in the real world. For instance, the tax system wouldn't let make Stardock a Cayman Island corporation where my people are physically located in Michigan.  Where you are resident matters.

Now, if you live in say Michigan but claim you're in the Cayman islands, that's not a loophole, that's fraud. That would be like saying insider trading is a typical activity on the stock market. I know a lot of "rich" people and they all pay monster amounts of taxes.

But let's talk about the propery tax scam:

I have 4 properties.  My home which I pay $N on.  I have a cottage upstate that I pay $M + a penalty because it isn't my primary residence (which is ridiculous since I don't use their services).  I have a property where I'm building future house which is $O + a penalty because it's not my primary residence. And I have my business property where Stardock is located which I pay $Q.

Now, on the business property, I get some tax abatements because the city, county, and state want my business there. It's still tens of thousands a year but it's less than it could be.

But here's the scam:

The state values the property based on what the person actually spends money to develop. 

For example, my 13 acre vacant land is valued by the city for something like $500k.  But if I build on it, that value goes up.  What's up with that? The city had nothing to do with that. If I invest more on the property, I'm penalized for it in the form of taxes. What right does the city have to tax me for what improvements I make? It's a total scam that penalizes making improvements.

And because people recognize it as a scam, people do all kinds of quasi-illegal things to get around having their property re-assessed. I'm not talking "rich people" I'm taking people everwyhere.  Playing games to avoid having their property re-assessed is one of the most common "loopholes" that the middle class play because people inherently understand that the city is ripping them off by increasing their property taxes based on anything other than the *land* itself.

Now you are talking! My sentiments exactly.

Property taxes should be for the land value (and the complete land value) but not the improvements.

The current system rewards speculators who keep land idle in order to make money from people who need land to produce. (But then I think this is pretty much the idea of the current system. Absentee land lords made good members of parliament. They had the time to serve and the money to get elected.)

I have to completely agree about that frogboy. Land taxes should be based on land, not on improvements.

Let me get this straight - if someone spends money improving something (i.e. making it more valuable), it's strange that it's value should increase as a result? If the tax is to be based on property, then it is only right that money spent improving the property/land should be factored in and cause the value to change. Otherwise if improvements to land and property are ignored you'll end up with the bizarre situation of people wanting to buy a blank plot of land and spending a load of money improving it by building a house on it, yet only paying taxes on the plot of land. Meanwhile a tax solely on land rather than property wouldn't make too much sense either - the primary reason for taxing property is it is a very easy way of gauging someones wealth, and property taxes are in effect wealth taxes. It's virtually impossible to get someones actual wealth and tax that, so if you do want to tax wealth property (which will be the combined value of the land and any buildings on it, whose value will increase if they are improved) is the next best thing.

Also since you asked for loopholes, a common one with progressive tax systems (depending on the specific tax legislation) is income splitting. That is, lets say you earn $1m, and you have a close family member (or very close friend) who you like to give money to. Rather than earning the money yourself, and getting taxed at the much higher rate (because you're rich) and then giving it to them, you find a way to get them to earn some of your income. So for example a business owner could employ that person to do a job even if they're not the best person for that job/are paid too much for what they do (within reason, of course - you would be unlikely to get away with employing your son and paying them $100k for filing).

Another 'loophole' is where differences in the treatment of capital gains and income exist, with capital gains often getting more prefential tax treatment, meaning if you can structure your income in a particular way you might get away with classing some of your income as a capital gain. Again the specifics of the tax legislation will affect how the two are defined and are unlikely to give that much scope, but it can still be done especially with a business that hasn't paid a close attention to such issues. Off the top of my head take shares where you can earn an income (dividends) or a capital gain (share increases in value). Since you have double taxation issues the treatment will vary but you are likely to have a difference one way or the other between the tax treatment of the dividend income and the tax treatment of the capital gain. Meanwhile a company can influence which will occur - if it has a load of profits, it can issue them as dividends to shareholders, or it can use the profits to buy up shares, causing their price to rise (given certain assumptions) resulting in a capital gain for the holders instead.

If you can't get away with classing income as capital gains, then you can still always look at that income itself - maybe you can get a non-cash benefit instead of traditional income that happens to get around the various tax rules and not be taxed fully (again the specifics of the tax system would affect the extent to which this is possible, but they've usually got a few incentives put in to allow some items to not be counted fully as income which in turn creates loopholes that can be used).