Tax Cuts

Posted on December 2, 2010

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Here we are still fighting in Congress about the “Bush Tax Cuts” . Both sides are still making their stand. From the left,no tax cuts for the rich. From the right, tax cuts for all. And the battle still rages. The big question is should the rich get an increase of 4 % in their tax rate. All of the arguments seem sound. It’s going to cost the taxpayers 700 billion dollars over 10 years to give people who can easily afford to pay more. It’s going to hurt jobs because that small group at the top is the people who are producing the jobs we all need. Taxing those people is a jobs killer. And because both sides have strong arguments, we can’t seem to move forward on this issue.

But where does the truth really fall in all of this. Will extending the tax cuts really make for new jobs? Well the cuts are in place right now and have been for the last 10 years. Is anyone complaining that there are to many jobs right now? The rich have been enjoying the tax breaks over the last 10 years and there are no jobs. So my guess is that if they lose this tax break there will be less jobs. We can all argue this forever. Unless we can really see into the future no one will really ever know. The same with the cost of extending the tax cuts. Where does the 700 billion number come from? It’s a projected number. How do we really know that in ten years that is honestly what will be lost? Again no crystal ball. No real proof. Just a bunch of projected numbers that will change if anything at all happens differently over the next 10 years.

But lets go back to the 4 % increase. It just doesn’t seem like much. It hardly seems like an added 4 % will change how anyone does business. I know right now your looking at that statement and thinking , what the hell is he talking about. This is how I’d answer that question. Do you really think that any rich person will really pay 39 % in taxes? They have never payed the 35 %. With the way the tax code is written , the rich pay less than 20 %. Because of the fact that they have money, they can do what most Americans cannot do. Take advantage of ever tax break and loophole in the tax code as it is now written. The real truth is that if you want to make this country play on an even playing field your going to have to address how the Government collects taxes. The tax code needs to be rewritten to fix all the loophole and make it fair to the rich and  middle class alike.

Look how most of us, the biggest part of society works under current tax codes. Most of us spend money on doctors and going to work and on renting. But we can never claim all the deductions we should because the threshold for deductions is to high. If we all own homes we would get a bigger tax break at years end. How many times have you or someone you know been told you can’t ITEMIZE  because you don’t have enough deductions? Now the rich can ITEMIZE  all of it. Everything. And they get to cheat and lie too.

Here is an example of what really happens. I know more than one person who has done this. They own a business. They have a wife and kids. They have a girlfriend. They have a wine cellar. They take clients out to dinner. And now here is the reality. The wine cellar is stocked with wine purchased through the business. The girlfriend is the most often client they take to dinner. She also works for the company and has the use of a company car. The kids go to concerts and hockey or football games at the company expense. Again clients. He has a company car which stays home so his wife can use it and he goes to work everyday with a car service. Work gets done at the business and in reality it’s really being done at his home or the girlfriends home. And the girlfriend is making 100k a year as his private secretary but she is hardly ever at the work site. Does any of that sound familiar ? It happens everyday. If you really want to save 700 billion dollars over the next 10 years, just make the tax code fair. Cut out the deductions the rich actually get and make them pay what they should. Make it simple so there are not as many loopholes. Get ride of the silly deductions anyone in business can take without ever having to worry about getting caught.

But the standing argument is should we tax the upper 2 % more to save some money. And we all fall for the stupid argument. The truth is you can tax them any rate you want. Bring it to 50 %. It’s not going to matter. Sooner or later any good accountant will show them how to make it work in their favor. Stay below the radar and no one will question what your doing. The fight for the last year should have never been about extending the Bush tax cuts or not. The fight should have been to reform the current tax laws to make it impossible to avoid paying your taxes.

And just like health care and all the rest of the political fighting we do in this country , nothing real gets done. Washington has us all fighting about the small things and we lose sight of the things we should be doing. The arguments about health care is a classic. We’re all going to get health care. But by their own admission 20 million people will still be left out. And because you mandate care only means one simple thing to the guy who couldn’t afford it before. He is left paying the penalty for not getting something he couldn’t afford in the first place.

Start making your phone calls today. Tell Washington your not interested in the bullshit argument of extending tax cuts or not. Tell them you want to fix the real problem. You want tax reform. Turn that tax code back into a 300 page document that we can all understand, and your sick and tired of all the tax loopholes. Tell them your not really interested in all the complicated deductions that do not fairly apply to all Americans. How about keeping it simple? Make 3 brackets. Lower end pays “x” to State and Federal Governments. Next group pays a little more and the last group pays the most. It comes right out of your pay. No return at the end of the year. You earned it , you paid it , your done. End of story.

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