Tax Deductions - Who gets them and what is it worth

Richard Nixon proposed a flat tax. He wanted to charge everyone a certain percentage, for the sake of discussion we will say 15%. If you made $100,000 you would pay $15,000 and if you made a million dollars, you would pay $150,000. A very simple and equitable concept. Now, theoretically we have a graduated tax that has people who make more pay a slightly higher percentage. Theoretically, the top earners pay around 35% and lower earners pay 10%, with different levels in between; but, there is something else at work and that is tax deductions.

When we begin reading the tax code we discover all kinds of deductions; but, the vast majority will never apply to wage earners. The average person deducts for being married, having kids, charitable deductions and their house payment. There are some others you may use such as medical expenses over a certain amount; but, there are very few that the average wage earner gets.

Now, lets look at what wealthy people can deduct. It is a little known fact that if you produced a Broadway play and it lost money, you could deduct the money you lost on producing the pay dollar for dollar. That tax deduction may or may not still be in effect; but, it at least survived into the 1980s. Many people saw the play or the movie "The Producers", that was part of the scheme. The producer involved took money from rich old ladies, financed the show at well over a hundred percent, the play fails and the old ladies don't get hurt because it is a straight deduction. How many of us can really afford to put on a Broadway play and why should that deduction be better than the deduction on your house payment?

The vast majority of the tax code deductions really only apply to businesses and the wealthy. In addition the rate for how you earned your income is different. The tax rate paid on investments is lower than the tax rate paid by someone making $80,000 a year. If you go to a flat tax on all earnings and eliminate all deductions, the average person would actually pay less; but, the wealthy would be forced to pay the same percentage of their income as the rest of us.

The issues are not as complicated as some would like to make them. The reason the tax code is so complicated is so that the rich will not have to pay the same percentage as the rest of us, they pay less. Often people attempt to focus on income that is only derived from employment; but, that is to ignore all other income streams. The tax on investment income is less than the tax on wages. If you win the lottery (and lets face it, investments are nothing more than gambling) you are taxed as if it was income from employment.

It is not enough to focus on the taxable percentage when the tax code is primarily focused on deductions that only apply to those who make the most and are not available to the rest of us. The tax code is overly complicated so that the majority of us will not understand who is really paying what.

Star and flag for the effort man, it's frustrating when you put a good bit of thought into a thread and it doesn't even get a reply. Oh well it happens though, keep at it.

reply to post by Pressthebutton


Dear Pressthebutton,

Thank you so much, I like you more and more. Many of my threads are ignored because I am a Christian and can state my beliefs in a logical manner, some don't like that. This particular thread was actually important for people to understand with the upcoming elections. Peace.

reply to post by AQuestion


Glad to hear it ATS can be a real popularity contest sometimes but we don't need to go there. I appreciate having logical Christians around this site because I'm so logical myself that I often times lose my faith due to all of the atheist and extremely rational postings on here, which there's nothing wrong with atheists but I do appreciate seeing a clear minded and factual religious dude! It can really help.

This is what people should be interested in instead of Trump's latest drama.
Great post!!

reply to post by FreebirdGirl


Dear FreebirdGirl,

Thank you so very much.

I had a business and studied tax deductions so I could lower my taxes. I invested much of my money back into the business at the end of the year to deduct it from my income. This gave me a lot of tools to expand my business and allowed me to have a computer when they were expensive. My daughter would help me to enter my information into the programs regularly and for that was allowed to use the computer to do her homework and research on the net. There wasn't a social network like there is now and dial up was the only service we had. She learned to use Quickbooks Pro and Microsoft office when she was young. By eleven she was helping me prepare for tax time. Because of the fast typing and data entry she learned she is now subcontracting with a medical scanning company. It's funny how my deduction gave the government a good return in the long run. You would think she would save receipts from helping me organize mine. She pays way too much taxes because she doesn't take the time to do this. Oh well, the government needs all the money it can get.

I didn't take half the deductions I could have taken because I wasn't big enough and didn't have a tax attorney. I just had an accountant that I met with in tax season. He advised me what deductions to take so I didn't have to be getting audited every year. I figured I'd rather be working and making money than be stuck in a meeting with an IRS auditor so rarely deducted meals and refreshments I bought for the crews. I also rarely claimed motel room charges when going out of town for supplies or to work. I could have claimed a lot more legal deductions if I wanted to. I see how big businesses can get many deductions including golf club memberships for their execs and fancy car deductions. They have attorneys under contract and that's even a deduction.

Originally posted by Pressthebutton
reply to post by AQuestion

 

Glad to hear it

ATS can be a real popularity contest sometimes but we don't need to go there. I appreciate having logical Christians around this site because I'm so logical myself that I often times lose my faith due to all of the atheist and extremely rational postings on here, which there's nothing wrong with atheists but I do appreciate seeing a clear minded and factual religious dude! It can really help.

Dear Pressthebutton,

While I myself spent a decade as an agnostic, I don't have an issue with people being non-believers. I enjoy it when they say that believers are stupid, incapable of logical thought, delusional and question the history of the bible. None of these are new questions. There are many Christians that are quite successful and capable of creating colleges and universities and businesses, so there are many logical Christians. There are also many that just don't bother asking themselves questions because they are afraid they may not like the answer. As how this is my thread and nobody read it, we can continue just a bit more and then ask that we U2U about the bible or Christianity rather than place in this thread.

I was asked to write a book on Accounting by a brilliant accountant. My area of expertise in accounting has to do with looking beyond the numbers to the meaning, to the impact. When we spread costs, overheads (the cost of leasing a building when we work for ten different companies) can be spread evenly; but, we many not spend as much time for each account. It might be spread by total dollar amount of each account; but, some are easier than others. The same is true of taxes and there are those who are trying to say that the rich pay more; but, they ignore the percentage that is taxed and focus on the total dollar amount. Because of this, they seek a tax structure that taxes the poor at a higher percent than the rich. This same approach should be applied to our spirituality, it is good to have questions and best to not accept rote answers. Peace.

Originally posted by rickymouse
I had a business and studied tax deductions so I could lower my taxes. I invested much of my money back into the business at the end of the year to deduct it from my income. This gave me a lot of tools to expand my business and allowed me to have a computer when they were expensive. My daughter would help me to enter my information into the programs regularly and for that was allowed to use the computer to do her homework and research on the net. There wasn't a social network like there is now and dial up was the only service we had. She learned to use Quickbooks Pro and Microsoft office when she was young. By eleven she was helping me prepare for tax time. Because of the fast typing and data entry she learned she is now subcontracting with a medical scanning company. It's funny how my deduction gave the government a good return in the long run. You would think she would save receipts from helping me organize mine. She pays way too much taxes because she doesn't take the time to do this. Oh well, the government needs all the money it can get.

I didn't take half the deductions I could have taken because I wasn't big enough and didn't have a tax attorney. I just had an accountant that I met with in tax season. He advised me what deductions to take so I didn't have to be getting audited every year. I figured I'd rather be working and making money than be stuck in a meeting with an IRS auditor so rarely deducted meals and refreshments I bought for the crews. I also rarely claimed motel room charges when going out of town for supplies or to work. I could have claimed a lot more legal deductions if I wanted to. I see how big businesses can get many deductions including golf club memberships for their execs and fancy car deductions. They have attorneys under contract and that's even a deduction.

Dear rickymouse,

What a fantastic example of what I am trying to get at. I was talking about personal income regardless of source. A business does not get personal income, the employees and shareholders do. Taxing the "company" seems more like taxing the owners twice. We are in agreement I think. If you hire someone than with a flat tax, I would tax them and not the company. If you bought raw materials, I would tax the people that produced them and not the material sale. If we had a true flat tax, we would have no need for a sales tax or deductions. You tax the people getting the money when they get it. You tax at the end of the stream and not the beginning because all money ends up in someone's hands. Thanks for chiming in.