Tax, it is still one of life's eventualities

[1stLand]

Former PM Paul Martin says hello.

Or his Canadian Steamship company registered overseas to avoid taxes does.
lol.

[Bring_Back_Shantz]

Originally Posted by Azure

Well someone put a report out the other day that said the US government loses about $3 trillion PER YEAR in revenue due to loopholes, deductions and various other 'schemes.'

But nice of them to take this so seriously.

After taking literally 20 seconds to google this, I found out that Federal Income tax revenue for 2012 was $1.4 Billion.
Do you honestly think people outsmart the IRS out of 2/3 of their potential tax revenue?

[PIMking]

Originally Posted by Bring_Back_Shantz

After taking literally 20 seconds to google this, I found out that Federal Income tax revenue for 2012 was $1.4 Billion.
Do you honestly think people outsmart the IRS out of 2/3 of their potential tax revenue?

Well, with all the deductions for kids, and write offs a ton don't pay, and lets be honest here, it's not like we are dealing with a real bright bunch of people.

[Bring_Back_Shantz]

Originally Posted by PIMking

Well, with all the deductions for kids, and write offs a ton don't pay, and lets be honest here, it's not like we are dealing with a real bright bunch of people.

So you honestly believe that the average person pays only 1/3 of the tax that they should, and that the IRS is staffed by below average people?

Besides, think of what you're saying.
People aren't avoiding paying taxes because of deductions, they are paying the taxes they owe according to the law.
Saying that the government is missing out on that revenue is no different than saying that the government is missing out on the 70% of the income that they don't take from the average Joe becasue the tax rate is only 30%.

[Five-hole]

Tax evasion is only a problem if they catch you. Until then, it's awesome.

[Azure]

Originally Posted by Rathji

Deductions are a problem?

Like the I-have-3-kids-and-pay-less-taxes-because-of-it deductions, or were they just talking about bad deductions?

I guess you can call them bad deductions.

1. Tax Expenditures: $1.25 trillion
2. Tax Underpayments: $450 billion
3. Tax Havens: up to $250 billion
4. Corporate Taxes: $250 billion
5. Financial Transaction Tax (FTT): $500 billion
6. Payroll Tax: $300 billion
7. Estate Tax: $100 billion

The total surpasses $3 trillion. The figures may be on the high end, and there may be some overlap, and wealthy Americans may argue that much of it is legal. But the system of loopholes and deductions and exclusions is a statement by the rich that they don't have to pay for their lopsided share of benefits, and that middle-income Americans should give up their own earned benefits to pay the country's bills.

http://www.huffingtonpost.com/2013/0...p_ref=business

[Azure]

Originally Posted by Bring_Back_Shantz

So you honestly believe that the average person pays only 1/3 of the tax that they should, and that the IRS is staffed by below average people?

Besides, think of what you're saying.
People aren't avoiding paying taxes because of deductions, they are paying the taxes they owe according to the law.
Saying that the government is missing out on that revenue is no different than saying that the government is missing out on the 70% of the income that they don't take from the average Joe becasue the tax rate is only 30%.

I'm not saying they are doing it illegally. I'm saying there are billions being lost in revenue because wealthy people/companies are exploiting loopholes they setup to help benefit themselves.

[Rathji]

Why is a deduction for a rich person is any less valid than a deduction for a poor person.

I can see why not actually paying the tax bill is an issue, as with the OP, but if I have a deduction for XYZ, why is it bad if I use it?

The deduction is there for a reason, so either complain that it needs to be changed or don't, but don't treat it like these people are in the same boat as people who just don't file or don't send a cheque.

[AR_Six]

Originally Posted by Rathji

Deductions are a problem?

Like the I-have-3-kids-and-pay-less-taxes-because-of-it deductions, or were they just talking about bad deductions?

Forget those, how about the "I have a business and get to deduct my business expenses from business income" deductions?

Also who gets to decide what are "bad" deductions?

[Bring_Back_Shantz]

Originally Posted by Azure

I'm not saying they are doing it illegally. I'm saying there are billions being lost in revenue because wealthy people/companies are exploiting loopholes they setup to help benefit themselves.

So you've never claimed an RRSP, or tuition refund, or any of the numerous deductions everyone uses every year? I'm assuming the answer to that is a resounding no, so why is that any different?

[Bill Bumface]

Originally Posted by 1stLand

Former PM Paul Martin says hello.

Or his Canadian Steamship company registered overseas to avoid taxes does.
lol.

Have you ever seen a large cargo ship registered in Canada or the US? I doubt it.

http://en.wikipedia.org/wiki/Flag_of_convenience

[Kybosh]

So you're saying I don't have to pay taxes? Interesting. Very interesting.

[Rathji]

Originally Posted by AR_Six

Forget those, how about the "I have a business and get to deduct my business expenses from business income" deductions?

Also who gets to decide what are "bad" deductions?

So I buy a server for $4000 to install for a client.

I charge them $20,000 in total, and I should be paying taxes on the whole $20,000 and not just on the $16,000 I actually earned after paying for my expenses (the server)?

[Azure]

Originally Posted by Rathji

Why is a deduction for a rich person is any less valid than a deduction for a poor person.

I can see why not actually paying the tax bill is an issue, as with the OP, but if I have a deduction for XYZ, why is it bad if I use it?

The deduction is there for a reason, so either complain that it needs to be changed or don't, but don't treat it like these people are in the same boat as people who just don't file or don't send a cheque.

I'm not calling all deductions bad. I would imagine there are various other loopholes that are being exploited by wealthy people to get out of paying taxes.

As for the deduction for rich people versus poor people. IMO taxes should be fairly even based on income. If you want to implement a system where lower/middle class people can deduct certain things to keep a little more income, I'm fine with that. But when super-rich people do it to the tune of millions, billions or trillions of dollars, I don't see the point.

And no that doesn't mean I agree with a 75% tax rate for rich people. I'm the last person on CP who agrees with MORE taxes. I just don't believe that rich people in the US are paying fair rates.

Hell even Facebook was under fire for hiding billions offshore to avoid paying taxes.

[Azure]

Originally Posted by Rathji

So I buy a server for $4000 to install for a client.

I charge them $20,000 in total, and I should be paying taxes on the whole $20,000 and not just on the $16,000 I actually earned after paying for my expenses (the server)?

You're already paying taxes on the full $20,000 if you consider that you pay taxes when you buy the server. Provided of course you can't claim back GST/PST.

[Rathji]

Aside from the administration cost, GST is not relevant to this example, since it offsets GST I would need to pay to the government.

[AR_Six]

Originally Posted by Rathji

So I buy a server for $4000 to install for a client.

I charge them $20,000 in total, and I should be paying taxes on the whole $20,000 and not just on the $16,000 I actually earned after paying for my expenses (the server)?

Just the opposite. You should be able to deduct the cost of the server (it's on income account) and the client should be able to deduct the amount of the bill allocated to the server (say $7500 after markup) over time as capital cost allowance. Both parties should get an input tax credit on any GST charged.

I am agreeing with you. Characterizing "deductions" as a bad word is insane. Hell, the use of "tax avoidance" as a buzzword to lob at Romney in the Presidential election was a shameful example of preying on ignorance. That stat is just nonsense.

[MoneyGuy]

Originally Posted by Five-hole

Tax evasion is only a problem if they catch you. Until then, it's awesome.

Seriously? I hope they catch your sorry ***. No sympathy for cheaters.

[undercoverbrother]

Originally Posted by MoneyGuy

Seriously? I hope they catch your sorry ***. No sympathy for cheaters.

isn't every thing on the internet trackable?

[vektor]

Lets get one fact straight that none of you mentioned:

the reason these people are dodging the tax is because they believe the income tax in the U.S. goes to pay the interest on the national debt, the national debt accrued by the formation of the Federal Reserve. It is an act not against the IRS or public services, it is most often a direct protest against the unconstitutional debt created by the Federal Reserve that arose out of the fiat currency that was also created at the same time as the income tax that did not exist before the federal reserve. People feel they have legal and moral superiority in the U.S. Whether any of this is true is beyond me, but it's the fundamental issue here that none of you mentioned. It is in defiance of the economic system that people find rationale to defy the governments will.