So much for the 10 percenters not carrying the water

[Deleted]

Dec 11, 2013 11:15:20 GMT -5 @investorbob said:

@atlanticcoastoffloridapaul , I only meant that counting food stamps, unemployment insurance, etc as being effectively negative taxes doesn't make sense.

Bob do you click on the poster that is presented by the search? Cause there paul shows up as plambeachpaul.

ETA - nevermind, you caught it.

[Value Buy]

A little history lesson for posters here complaining about the ten per-centers.

Back in the 1770's we had a little thing called the Tea party in Boston Harbor.

Something about taxation without representation, or some nonsense like that

Who actually fomented the Revolution?

    Was it the lowly uneducated masses and indentured servants?

No, it was the richest of the rich in America.

George Washington, some think he was the richest person in America at the time.

Thomas Jefferson an uneducated pauper?

Look who signed the Declaration of the Independence.

A who's who of the five per-centers of America. The richest of the rich.

And it was all about taxation without representation......

Or was it? Maybe it was more about, what is mine is mine, and what you think is yours, is mine too.

What they did accomplish was rallying the masses to THEIR CAUSE and fight the Revolution for them.

Somehow, our current ten per centers have gotten off message, and the Democrats have fed the masses enough freebies to hold them in servitude.

Eventually the ten per-centers will throw in the towel and move on to more favorable looking countries to ply their trade and businesses.

Moving the factories over seas was just the first step.

Right now the ten per-centers cannot control the political process in D.C. regardless of people claiming they own the politicians. If they truly did, the bottom 25 per-centers would have been cut off from government largesse decades ago.

We are reaching the ideal of, taxation without representation for the ten per-centers of America again in our history.

Do the rich foment a new revolution, or take there marbles and move?

Remember, by  all accounts, the big economic growth of the future is not here. It is Asia and South America.

The rich go where the money is.

Right now, our government is making the ten per-center's choice rather easy for them.

I think we have to differentiate between ten per-centers and mega corporations.

I would not disagree corporations hold pull over D.C.

They are not always the same thing.

[AgeOfEnlightenmentSCP]

Dec 11, 2013 11:11:09 GMT -5 laterbloomer said:

Dec 11, 2013 11:06:53 GMT -5 AgeOfEnlightenmentSCP said:

I am definitely not a fan of corporate welfare - I am not convinced that the same moral hazard doesn't exist for businesses as individuals- and if you provide a company with a guaranteed government check, they're going to be just as lazy and unproductive as an individual in the same situation.

Okay, while we are agreeing on this much, can we do something about the compound interest on the debt? Changing that would save a boatload of money as well. If you give me corporate welfare and compound interest and cutting defense spending I'll take a second look at the benefits and see where we can trim some fat.

I'm afraid you caught me uninformed about what you mean by the compound interest on the debt?  I mean, I know what compound interest is- but is it that simple to change the terms?  I'm not a defender of the big bloated Pentagon budget- again, what's good for the goose, is good for the gander.  I favor true across-the-board cuts-- everyone's ox gets gored.  And there's no reason to think that the Pentagon is some prestine, virtuous agency of government that isn't big, bloated, and over-stepping its bounds like the rest of the mess.  

With welfare, the best thing we could do is demand efficiency-- merge the myriad programs and agencies that administer them, cut back on staffing, and get to an 80/20 situation- MAX (where 80% of the money MUST go to beneficiaries vs. administration-- it's good enough for the insurance companies under ObamaCare-- it's good enough for federal agencies).  

There are currently 69 means-tested federal welfare programs.  I'd like to see it paired down to three: housing subsidies, nutrition assistance, and ONE cash assistance program distributed through employers as a wage subsidy-- so the employer actually gets the subsidy. Nobody that does not work would qualify for the cash assistance.  And then I'd like to phase ALL federal welfare programs and shift to a flat-rate block grant to states with a REQUIREMENT that state welfare programs meet the principles outlined in the 1995 Contract With America welfare reform bill signed by Bill Clinton.  THEN, FINALLY- I'd like to see the block grant phased out.  Welfare is NOT the role of the federal government.  States may do as they please.

[AgeOfEnlightenmentSCP]

Dec 11, 2013 11:15:20 GMT -5 @investorbob said:

AgeOfEnlightenmentSCP, I only meant that counting food stamps, unemployment insurance, etc as being effectively negative taxes doesn't make sense.

I see what you mean, but I think it makes sense in the context of cash-in, cash-out.  It looks strange-- more than 100% of taxes, and taxes isn't the right word, but it does illustrate effectively what's going on.  And it gets the reader's attention, and makes them ask the question, "What in the hell...?"

[djAdvocate]

Dec 11, 2013 11:11:23 GMT -5 AgeOfEnlightenmentSCP said:

Dec 11, 2013 11:08:55 GMT -5 djAdvocate said:

then what ARE you talking about?

i breathlessly await your reply.  my mind is starving for enlightenment.

What I'm talking about is fairly obvious- perverse incentives lead to perversity.  We are going to have more people arranging their affairs so as to "qualify for benefits"

you're right.  i am still not getting this, Paul.  are you talking about the poor, here?  you must be, because the rich won't qualify for benefits.  HELL, even the middle class won't.  so, how would the poor "arrange their affairs" soas to qualify?

than we are going to have that willingly pay outrageous, confiscatory tax rates. 

you mean the tax rates that have not been this low since the 20's?  those outrageous confiscatory taxes?

And the more skewed the numbers get- the more like Greece we become.

the tax rate for those making over $100k is amazingly flat.  in fact, it's slope is slightly negative.  this is well studied and well documented.  but i agree that the revenue problem and the failure to fix it will lead to a Greece like situation, if that is what you are claiming.

[djAdvocate]

Dec 11, 2013 11:20:41 GMT -5 Value Buy said:

A little history lesson for posters here complaining about the ten per-centers.

Back in the 1770's we had a little thing called the Tea party in Boston Harbor.

Something about taxation without representation, .

i see.  so the 10% are represented about as well in 2013 as 1776?

that is f-ing rich.

[Deleted]

Dec 11, 2013 11:24:48 GMT -5 AgeOfEnlightenmentSCP said:

Dec 11, 2013 11:11:09 GMT -5 laterbloomer said:

Okay, while we are agreeing on this much, can we do something about the compound interest on the debt? Changing that would save a boatload of money as well. If you give me corporate welfare and compound interest and cutting defense spending I'll take a second look at the benefits and see where we can trim some fat.

I'm afraid you caught me uninformed about what you mean by the compound interest on the debt?  I mean, I know what compound interest is- but is it that simple to change the terms?  I'm not a defender of the big bloated Pentagon budget- again, what's good for the goose, is good for the gander.  I favor true across-the-board cuts-- everyone's ox gets gored.  And there's no reason to think that the Pentagon is some prestine, virtuous agency of government that isn't big, bloated, and over-stepping its bounds like the rest of the mess.  

With welfare, the best thing we could do is demand efficiency-- merge the myriad programs and agencies that administer them, cut back on staffing, and get to an 80/20 situation- MAX (where 80% of the money MUST go to beneficiaries vs. administration-- it's good enough for the insurance companies under ObamaCare-- it's good enough for federal agencies).  

There are currently 69 means-tested federal welfare programs.  I'd like to see it paired down to three: housing subsidies, nutrition assistance, and ONE cash assistance program distributed through employers as a wage subsidy-- so the employer actually gets the subsidy. Nobody that does not work would qualify for the cash assistance.  And then I'd like to phase ALL federal welfare programs and shift to a flat-rate block grant to states with a REQUIREMENT that state welfare programs meet the principles outlined in the 1995 Contract With America welfare reform bill signed by Bill Clinton.  THEN, FINALLY- I'd like to see the block grant phased out.  Welfare is NOT the role of the federal government.  States may do as they please.

I can agree to making the administration more efficient.

I'm sorry my google isn't pulling it up right away, but there was a law changed that allowed compound interest to be added to the debt. I've read the numbers many times but it was a while back. If we went back to only paying interest on the principle borrowed we would be saving a lot of money that would help pay down the debt.

Okay, while we are making all of these changes can we simplify income tax to a straight percentage system without the thousands of pages of exceptions, exemptions and loopholes?

[djAdvocate]

Dec 11, 2013 11:20:41 GMT -5 Value Buy said:

I think we have to differentiate between ten per-centers and mega corporations.

I would not disagree corporations hold pull over D.C.

They are not always the same thing.

if we are talking about ownership, they are largely the same thing.

[djAdvocate]

Dec 11, 2013 11:27:11 GMT -5 AgeOfEnlightenmentSCP said:

Dec 11, 2013 11:15:20 GMT -5 @investorbob said:

AgeOfEnlightenmentSCP, I only meant that counting food stamps, unemployment insurance, etc as being effectively negative taxes doesn't make sense.

I see what you mean, but I think it makes sense in the context of cash-in, cash-out. 

that is a "disposable income" accounting.  totally different.

It looks strange-- more than 100% of taxes, and taxes isn't the right word, but it does illustrate effectively what's going on.  And it gets the reader's attention, and makes them ask the question, "What in the hell...?"

if the reader is not a single mom that is latched onto the teat of half a dozen government programs, he or she will take home the vast majority of their pay.  and if they ARE such a person, they will be forced to pay for those programs, which means that the government will NOT have to pay for them.

how is that NOT a good thing.

[Deleted]

Dec 11, 2013 11:27:11 GMT -5 AgeOfEnlightenmentSCP said:

Dec 11, 2013 11:15:20 GMT -5 @investorbob said:

AgeOfEnlightenmentSCP, I only meant that counting food stamps, unemployment insurance, etc as being effectively negative taxes doesn't make sense.

I see what you mean, but I think it makes sense in the context of cash-in, cash-out.  It looks strange-- more than 100% of taxes, and taxes isn't the right word, but it does illustrate effectively what's going on.  And it gets the reader's attention, and makes them ask the question, "What in the hell...?"

No it's not. Because all programs are not paid out of income tax. We could as easily claime they are paying 110% of the defense budget or something.

[AgeOfEnlightenmentSCP]

Dec 11, 2013 11:36:49 GMT -5 laterbloomer said:

Dec 11, 2013 11:24:48 GMT -5 AgeOfEnlightenmentSCP said:

I'm afraid you caught me uninformed about what you mean by the compound interest on the debt?  I mean, I know what compound interest is- but is it that simple to change the terms?  I'm not a defender of the big bloated Pentagon budget- again, what's good for the goose, is good for the gander.  I favor true across-the-board cuts-- everyone's ox gets gored.  And there's no reason to think that the Pentagon is some prestine, virtuous agency of government that isn't big, bloated, and over-stepping its bounds like the rest of the mess.  

With welfare, the best thing we could do is demand efficiency-- merge the myriad programs and agencies that administer them, cut back on staffing, and get to an 80/20 situation- MAX (where 80% of the money MUST go to beneficiaries vs. administration-- it's good enough for the insurance companies under ObamaCare-- it's good enough for federal agencies).  

There are currently 69 means-tested federal welfare programs.  I'd like to see it paired down to three: housing subsidies, nutrition assistance, and ONE cash assistance program distributed through employers as a wage subsidy-- so the employer actually gets the subsidy. Nobody that does not work would qualify for the cash assistance.  And then I'd like to phase ALL federal welfare programs and shift to a flat-rate block grant to states with a REQUIREMENT that state welfare programs meet the principles outlined in the 1995 Contract With America welfare reform bill signed by Bill Clinton.  THEN, FINALLY- I'd like to see the block grant phased out.  Welfare is NOT the role of the federal government.  States may do as they please.

I can agree to making the administration more efficient.

I'm sorry my google isn't pulling it up right away, but there was a law changed that allowed compound interest to be added to the debt. I've read the numbers many times but it was a while back. If we went back to only paying interest on the principle borrowed we would be saving a lot of money that would help pay down the debt.

Okay, while we are making all of these changes can we simplify income tax to a straight percentage system without the thousands of pages of exceptions, exemptions and loopholes?

HELL YES, we can.  We just won't.  Too many hands in the cookie jar.  Trying to slap the lid on now likely won't work.  We're going to end up seeing full blown collapse.  We can't even DISCUSS the end of "QE" without major market upheaval- so we'll collapse the whole thing instead of fixing the problem:

[AgeOfEnlightenmentSCP]

Dec 11, 2013 12:14:01 GMT -5 @patstab said:

We claim our wealthy people are going to leave? Was reading last night that the Chinese are buying up Detroit

they are trying to get money out of the country to a place of safety. They also said as many Chinese millionaires

as can are coming to America as fast as they can to get out of China. But here we only hear how people

are leaving this country. Look again the people of the world still look to America as a safe haven. And they

will add to the 10 percenters.

And when China comes looking for their money- guess who's going to give it right back?

[Value Buy]

Dec 11, 2013 12:14:01 GMT -5 @patstab said:

We claim our wealthy people are going to leave? Was reading last night that the Chinese are buying up Detroit

they are trying to get money out of the country to a place of safety. They also said as many Chinese millionaires

as can are coming to America as fast as they can to get out of China. But here we only hear how people

are leaving this country. Look again the people of the world still look to America as a safe haven. And they

will add to the 10 percenters.

When you realize these people coming here are not paying any income tax to the Feds, you may realize what a scheme the government allows for foreigners.

Ask how many "independent gas stations" run by foreigners actually pay income tax in the first seven (I believe that is the correct number) years.

Then they go back home, and a son or other family member replaces him here repeating the process. all the while selling illegal bath salts to our children.

[The Captain]

Dec 11, 2013 13:34:36 GMT -5 Value Buy said:

Dec 11, 2013 12:14:01 GMT -5 @patstab said:

We claim our wealthy people are going to leave? Was reading last night that the Chinese are buying up Detroit

they are trying to get money out of the country to a place of safety. They also said as many Chinese millionaires

as can are coming to America as fast as they can to get out of China. But here we only hear how people

are leaving this country. Look again the people of the world still look to America as a safe haven. And they

will add to the 10 percenters.

When you realize these people coming here are not paying any income tax to the Feds, you may realize what a scheme the government allows for foreigners.

Ask how many "independent gas stations" run by foreigners actually pay income tax in the first seven (I believe that is the correct number) years.

Then they go back home, and a son or other family member replaces him here repeating the process. all the while selling illegal bath salts to our children.

And how exactly are they managing that?

[djAdvocate]

Dec 11, 2013 12:14:01 GMT -5 @patstab said:

We claim our wealthy people are going to leave?

i don't think so, Pat.  what Paul APPEARS to be saying is that the rich will "hide their income" to avoid paying historically low tax rates.

that seems like a really bizarre assertion to me, but i am breathlessly awaiting his holiness to fill my mind with the One Truth.

[djAdvocate]

Dec 11, 2013 12:37:10 GMT -5 AgeOfEnlightenmentSCP said:

Dec 11, 2013 12:14:01 GMT -5 @patstab said:

We claim our wealthy people are going to leave? Was reading last night that the Chinese are buying up Detroit

they are trying to get money out of the country to a place of safety. They also said as many Chinese millionaires

as can are coming to America as fast as they can to get out of China. But here we only hear how people

are leaving this country. Look again the people of the world still look to America as a safe haven. And they

will add to the 10 percenters.

And when China comes looking for their money- guess who's going to give it right back?

the US is one of the few debt markets with enough liquidity to handle China.  but obviously, being the all knowing oracle you are, you realize that.

[Value Buy]

Dec 11, 2013 13:48:44 GMT -5 djAdvocate said:

Dec 11, 2013 12:37:10 GMT -5 AgeOfEnlightenmentSCP said:

And when China comes looking for their money- guess who's going to give it right back?

the US is one of the few debt markets with enough liquidity to handle China.  but obviously, being the all knowing oracle you are, you realize that.

So..... how many trillions of dollars do we print to "handle" China?

[djAdvocate]

Dec 11, 2013 13:51:14 GMT -5 Value Buy said:

Dec 11, 2013 13:48:44 GMT -5 djAdvocate said:

the US is one of the few debt markets with enough liquidity to handle China.  but obviously, being the all knowing oracle you are, you realize that.

So..... how many trillions of dollars do we print to "handle" China?

wiseass reply: as many as it takes.

[Value Buy]

Dec 11, 2013 13:36:10 GMT -5 The Captain said:

Dec 11, 2013 13:34:36 GMT -5 Value Buy said:

When you realize these people coming here are not paying any income tax to the Feds, you may realize what a scheme the government allows for foreigners.

Ask how many "independent gas stations" run by foreigners actually pay income tax in the first seven (I believe that is the correct number) years.

Then they go back home, and a son or other family member replaces him here repeating the process. all the while selling illegal bath salts to our children.

And how exactly are they managing that?

Do you think these millionaires from China are working at Seven Eleven, earning a pay check?

They would not be allowed to leave China with their millions in pocket.

They are not (in most cases) establishing permanent residency. Many are buying homes, apartments for their children to live in while studying here in America.

And just like millionaires from all over the world purchases residences here, does not automatically mean they are paying Federal income taxes.

As far as the gas station and small inner city grocery stores, there are regulations in place, staving off income tax for a few years.

[djAdvocate]

there was a more serious reply to that, of course, VB.  the serious reply is:

"where is China going to park their money?"

i know that is answering a question with a question, but it really IS the crux of the problem for them.

[Value Buy]

Dec 11, 2013 13:56:53 GMT -5 djAdvocate said:

there was a more serious reply to that, of course, VB.  the serious reply is:

"where is China going to park their money?"

i know that is answering a question with a question, but it really IS the crux of the problem for them.

Agreed.

But that does not mean we do not have a heck of debt payment with no way of actually paying it off.

[djAdvocate]

Dec 11, 2013 13:58:47 GMT -5 Value Buy said:

Dec 11, 2013 13:56:53 GMT -5 djAdvocate said:

there was a more serious reply to that, of course, VB.  the serious reply is:

"where is China going to park their money?"

i know that is answering a question with a question, but it really IS the crux of the problem for them.

Agreed.

But that does not mean we do not have a heck of debt payment with no way of actually paying it off.

since we have run nothing but red ink since the 60's, how is that different than...say....1986?

[The Captain]

Dec 11, 2013 13:56:41 GMT -5 Value Buy said:

Dec 11, 2013 13:36:10 GMT -5 The Captain said:

And how exactly are they managing that?

Do you think these millionaires from China are working at Seven Eleven, earning a pay check?

They would not be allowed to leave China with their millions in pocket.

They are not (in most cases) establishing permanent residency. Many are buying homes, apartments for their children to live in while studying here in America.  Then they are paying real estate taxes.  If they have no income what is there to tax?  No different than what American citizens who own property overseas do.  No different than US citizens who have no income due.  Or are you saying instead of an income tax we should have a wealth tax?

And just like millionaires from all over the world purchases residences here, does not automatically mean they are paying Federal income taxes.  Of course not, nor should it if there is no INCOME to tax.

As far as the gas station and small inner city grocery stores, there are regulations in place, staving off income tax for a few years.  

You alluded to independent gas stations run by foreigners not paying income tax.  That is what I'm questioning.

Anyone with passive income or wage earnings in the US will pay US income tax.  The question is only as to timing or rate.

As far as the gas stations and inner city grocery stores, as I've said before I am fairly well versed in taxes and am aware of no regulation which permits non-recongnition of income for US Federal tax purposes.  I'd like to know what I'm missing so would appreciate a cite, maybe I'll change careers so I don't have to pay taxes either.

[Value Buy]

captain, when I was younger, I had conversations over the years with some station owners. I could never understand how middle America mom and pop stations were all being replaced as owners by people from overseas.

They told me how they put 70  to 80 hours a week in their shops, and explained how for the first few years there were provisions for establishing a business here in the states, allowing for income being passed thru with credits, making taxation a very small position. After a few years, another relative would take over.

Maybe they were just blowing smoke in my face, but it was also obvious there was also under reporting of cash sales in their businesses.

I always remember them asking if you could pay cash rather than credit. I think it had more to do with under reporting income rather than paying 4% to MasterCard.

They did talk about that openly, once they felt comfortable with you, although they were never really open about it. You had to read between the lines so to speak.

Urban myth? Maybe, but I do not think so.

[bean29]

Dec 11, 2013 7:53:01 GMT -5 happyhoix said:

Dec 10, 2013 19:52:31 GMT -5 @patiencetried said:

 What Tax advantages do the 10percenters have?
 let's figure...
Joe Sixpack doesn't get to deduct the costs of his Lamborghini or his $5,000 suits... as a "business expense".
 Joe Sixpack doesn't have a "Blind Trust" or  a"Limited Liability Corporation". Joe Sixpack rarely invests in Municipal bonds for the tax break.
 Joe Sixpack doesn't even have an accountant to juggle the books and cook the numbers. 

I seem to recall a certain wealthy person who was able to write off some 70K in expenses spent on room and board for his olympic dressage horse.

Certainly not a deduction I'm ever going to be able to take.

Captain and several others have addressed this pretty well, but I just want to say that Juggling the books and "cooking" the numbers implies doing something dishonest or illegal.  If you are a preparer and you prepare a tax retun that is fradulent there are preparer penalties and sanctions.  So yeah, we all know that Madoff had an accountant and some programmers that were colluding with him but most practicing accountants will not be willing to go there especially if they are CPA's. 

I am not aware of any way that you could deduct clothing as a business expense except maybe clothing for a play or a movie.  If you are taking you lambrogini as a business deduction you better have records of the buisness/personal use of the vehicle and the business purpose of that vehicle use.  In all likelyhood it would be limited or denied at audit.

People tell you you can deduct this stuff a lot, but one needs to beware who  is giving out tax advice and what their qualifications are.  Then if it seems at all suspicious you better do your own research.  I suspect this is why we often hear that has been stars owe ridiculous amounts in back taxes.
You are the one signing the return and you are ultimately liable.

Regarding hobby losses - here is link to the IRS website:

www.irs.gov/uac/Is-Your-Hobby-a-For-Profit-Endeavor%3F
If an activity is not for profit, losses from that activity may not be used to offset other income. An activity produces a loss when related expenses exceed income. The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. It does not apply to corporations other than S corporations.

So the Olympic Racehorse losses are only deductible to the extent they had earnings to offest the losses.  They can not deduct the race horse losses against other income.

[AgeOfEnlightenmentSCP]

Dec 11, 2013 13:48:44 GMT -5 djAdvocate said:

Dec 11, 2013 12:37:10 GMT -5 AgeOfEnlightenmentSCP said:

And when China comes looking for their money- guess who's going to give it right back?

the US is one of the few debt markets with enough liquidity to handle China.  but obviously, being the all knowing oracle you are, you realize that.

Well, yeah- if you count $1 trillion dollars a year in QE as "liquidity", but as the all-knowing oracle you are- you wouldn't think that.

[djAdvocate]

Dec 11, 2013 14:58:55 GMT -5 AgeOfEnlightenmentSCP said:

Dec 11, 2013 13:48:44 GMT -5 djAdvocate said:

the US is one of the few debt markets with enough liquidity to handle China.  but obviously, being the all knowing oracle you are, you realize that.

Well, yeah- if you count $1 trillion dollars a year in QE as "liquidity",

no, that is not what i was talking about.  i was talking about the size of our bond market, which is about $30T.  no other country comes close.

but as the all-knowing oracle you are-

i know nothing.  you said so yourself.

you wouldn't think that.

i just spend my time waiting for you to tell me the One Truth, so i don't have to think.

[AgeOfEnlightenmentSCP]

Dec 11, 2013 15:07:28 GMT -5 djAdvocate said:

Dec 11, 2013 14:58:55 GMT -5 AgeOfEnlightenmentSCP said:

Well, yeah- if you count $1 trillion dollars a year in QE as "liquidity",

no, that is not what i was talking about.  i was talking about the size of our bond market, which is about $30T.  no other country comes close.

but as the all-knowing oracle you are-

i know nothing.  you said so yourself.

you wouldn't think that.

i just spend my time waiting for you to tell me the One Truth, so i don't have to think.

The One Truth is that the last 17 days I experimented with taking you off the "ignore" list, and now I think I'll put you back where you belong and save us both the time it takes to talk past each other.

[djAdvocate]

Dec 11, 2013 12:35:38 GMT -5 AgeOfEnlightenmentSCP said:

Dec 11, 2013 11:36:49 GMT -5 laterbloomer said:

I can agree to making the administration more efficient.

I'm sorry my google isn't pulling it up right away, but there was a law changed that allowed compound interest to be added to the debt. I've read the numbers many times but it was a while back. If we went back to only paying interest on the principle borrowed we would be saving a lot of money that would help pay down the debt.

Okay, while we are making all of these changes can we simplify income tax to a straight percentage system without the thousands of pages of exceptions, exemptions and loopholes?

HELL YES, we can.  We just won't.  Too many hands in the cookie jar.  Trying to slap the lid on now likely won't work.  We're going to end up seeing full blown collapse.  We can't even DISCUSS the end of "QE" without major market upheaval- so we'll collapse the whole thing instead of fixing the problem:

i disagree with you on every point other than the first one: we can, and we will.  we MUST.

[The Captain]

Dec 11, 2013 14:21:13 GMT -5 Value Buy said:

captain, when I was younger, I had conversations over the years with some station owners. I could never understand how middle America mom and pop stations were all being replaced as owners by people from overseas.

They told me how they put 70  to 80 hours a week in their shops, and explained how for the first few years there were provisions for establishing a business here in the states, allowing for income being passed thru with credits, making taxation a very small position. After a few years, another relative would take over.

Maybe they were just blowing smoke in my face, but it was also obvious there was also under reporting of cash sales in their businesses.

I always remember them asking if you could pay cash rather than credit. I think it had more to do with under reporting income rather than paying 4% to MasterCard.

They did talk about that openly, once they felt comfortable with you, although they were never really open about it. You had to read between the lines so to speak.

Urban myth? Maybe, but I do not think so.

Anyone can evade taxes by underreporting income .  However, I would not recommend it but I'm kinda weird that way.

In the 80's there were expensing provisions (section 179) that allowed companies to deduct certain expenditures upfront (rather than capitalizing, then depreciating them).  This would reduce income today but mean a larger capital gain in the future.  Tax Depreciation was also more generous in the 80's.  Those provisions have been ratcheted back significantly.  Even so, that would mean the owner of the business would reduce their basis, or amount invested in to property, which would generate a larger gain on sale.  So in effect, the income recognition was a timing item. Unless they sold their business to their relatives at a loss which doesn't make sense to me.

The US taxes all income earned in the US or from US sources.  The US also taxes worldwide income of it's citizens.  Foreign tax credits are allowed, but the taxes have to be paid somehwere to some jurisdiction.  I don't see how it can be avoided (and this is key) without breaking the law.

People are going to jail for promoting abusive tax shelters, companies have huge reporting requirements in this area (google FBAR).  The US department of Treasury takes this stuff pretty seriously.  Not to say some don't try and successfully get away with it, but our system is not designed that way.