It's hard to justify, but our spending problems are much deeper than that. There's waste across the board. It's hard to justify giving more money to the government when there's so much spending to be cut.
american ignorance on how our tax system works
- Thread starter Free Thinker
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It's hard to justify, but our spending problems are much deeper than that. There's waste across the board. It's hard to justify giving more money to the government when there's so much spending to be cut.
With a tax code as complex as ours it depends on the business. Which is why our tax code needs to be fairer and simpler. There are obviously deductions that are real business expenses, like food in a restaurant or rent.
bullshit that's when any kind of debt interest was deductible not just housing.
Though once there were "published" tax rates of 70-91%, very few ever paid taxes at those rates. Back then, there was something called "leveraged non-recourse tax shelters" that wealthy people used to eliminate as much as two-thirds of their tax burden. In addition, most very wealthy individuals kept a large percentage of their wealth offshore (e.g. Switzerland) where it was hidden from the IRS. A study by the US Treasury in 2003 estimated that the richest people in the country paid about 30% of their income in federal taxes during those high tax rate periods (1950s-1960s).
In the 1960s, Kennedy lowered tax rates; then Reagan further lowered the rates and also eliminated non-recourse loan tax shelters.
People often argue about taxing the rich, but they seldom want to define what rich means. Everyone agrees that Warren Buffet is rich, but is a small-business owner who makes $500k per year really rich? I'm amused by the number of people who claim that the high tax rates of the 1950s kicked in at $250k per year, and therefore $250k per year defines rich. They don't stop to consider that $250k in 1955 is the equivalent of about $3 million in today's dollars. (Back in the 1950s you could buy a house in Beverly Hills for $80k or a new Cadillac for $3k.) So the question remains: What does "rich" mean?
In the 1960s, Kennedy lowered tax rates; then Reagan further lowered the rates and also eliminated non-recourse loan tax shelters.
People often argue about taxing the rich, but they seldom want to define what rich means. Everyone agrees that Warren Buffet is rich, but is a small-business owner who makes $500k per year really rich? I'm amused by the number of people who claim that the high tax rates of the 1950s kicked in at $250k per year, and therefore $250k per year defines rich. They don't stop to consider that $250k in 1955 is the equivalent of about $3 million in today's dollars. (Back in the 1950s you could buy a house in Beverly Hills for $80k or a new Cadillac for $3k.) So the question remains: What does "rich" mean?
no i am talking about things over and above those. it is so easy for small business to reduce tax bills to almost nothing. things like:
1. Health care tax credit: Small businesses that pay at least half of their employee's health coverage can get a significant tax refund.
The maximum credit goes to businesses with 10 or fewer full-time employees with annual wages that average $25,000 or less. The break phases out for firms with 25 employees or that pay average wages above $50,000.
2. Health insurance deduction for self employed: Are you your own boss and paying for your own health insurance?
Normally, you can deduct your insurance costs from your business profits, but you can't deduct those costs from your self-employment taxes.
But in 2010, the self-employed can deduct their health insurance costs from their business profits for both taxes.
3. Super-charged 'Section 179' provision: OK, this one is a little wonky. But it's worth knowing about.
The extension of "Section 179" of the tax code allows businesses to write off the full amount of qualifying equipment or computer software made in 2010 or 2011, up to $500,000 per business, per year.
4. Bonus depreciation extension: For 2010, there is an accelerated depreciation schedule: The point is to get cash into the hands of small businesses quickly. Unlike Section 179, you can depreciate items even if your business is in the red for the year.
Bonus depreciation covers new equipment only, and can be taken in addition to a Section 179 write-off, if the item is eligible for both benefits. You can depreciate "tangible property," like buildings, machinery, vehicles, furniture, and equipment, as well as "intangible property," such as patents, copyrights and computer software.
5. Depreciation on a business car or truck: Did you buy a new car, van or truck for your business last year? Ka-ching!
For 2010, business owners who buy and use a brand new passenger vehicle will depreciate much more than usual -- $11,060 for a car, and $11,160 for a light duty truck or van. That includes an extra $8,000 bonus depreciation, on top of the usual first-year depreciation. If you buy an SUV or heavy pickup, the rules are slightly different, said Brosi.
6. specialized retirement plans that allow you to sock away way more than an employee can.
many others including:
1.Home office
2.Office supplies
3.Furniture
4.Other equipment
5.Software and subscriptions
6.Mileage
6.Travel, meals, entertainment and gifts
7.Insurance premiums
8.Retirement contribution
9.Social Security
10.Telephone charges
11.Child labor
if you make more than 99% of the rest of the world are you rich?
Though there are deductions that a small business can take advantage of to reduce their tax liability, your statement that tax bills can be reduced to "almost nothing" is a gross exageration. (In addition to my trading business, I'm an investor in two small businesses and on the board of a small privately held company. I have over 20 years of experience with small businesses.)
The businesses I'm involved with all pay significant local, state and federal income taxes even after taking full advantage of every deduction on your list, and even a few more. The only business expense higher than taxes is payroll.