I was talking to my trading buddy the other day, listening to him complaining about his IRS audit, which, btw, went fine, np, paid an extra $21 because of an unclear business receipt, and that was it.
But, his words are still haunting me, perhaps because our experiences are quite similar. IRS' main complaint was that although his "topline revenue" ie, all stocks bought added together across 5 accounts spread across 3 brokerages, was close to $1B, he was justifying only $830M - some initial (stock purchasing) costs hadn't made it to his 2007 tax return and the sale price was seen as the total profit. So, my friend had to dig a bit deeper into his TS account to get the missing data, which he did. Meanwhile, the IRS lady went over his business expenses and found a small one that was lacking proper receipt; and that ended the audit, np.
Just think about it: almost $1B in topline revenues (day/swing trading stocks) resulting in a respectable low-mid six figure net profit, and not a single employee in sight other than my friend and his wife who handles "the office" in their basement and communications with brokers, information sellers etc. It used to take factories and thousands of workers to get that kind of business working, right?
And then you had unions and affirmative action and complaints galore from everyone. After all, my friend is a white male who makes more than what Obama feels is appropriate... ie, in the eyes of many he's the scum of the earth. Why would he even think of branching out in a larger sense, hire people to grow his business in a more traditional way? He's happy with what he makes and he thinks that he has a chance to get to double his current income with no extra help, just work smarter and with better technology, ie trading robots as they mature and become more reliable.
Which brings me to my point: You cannot enslave the human spirit. You call the most creative and productive among us all sorts of names, you tax them to death, and they find a way to escape, make a good living without playing your game. Who gets hurt in the process? Young people who just want a job, and all those multitudes who just want to be taken care of, that's who.
What's more, what keeps my friend from moving to a business-friendlier and lower tax climate, like the Caribbean or Switzerland, and doing the same job from there (like all those big businesses move their factories to low-labor-cost China)? His two kids are in college, he says... after they graduate he'll think about it. After all, to paraphrase that gangster at the meeting in Godfather, my friend is not a Socialist.
