Reply to Taxes - where should top tax rate be set and at what %?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]It's very easy to pay no taxes if you don't get a W-2. You set everything up as a business, run all passive income (dividends, cap gains, rental income, etc) through the business and charge all your expenses to the business and zero everything out. That's the goal of every CPA.[/quote]

As a business owner I can assure you that what you wrote is BS.[/quote]
I also own a business, and you can only deduct business expenses. What about rent, food, clothing, the repairman for your A/C, a movie ticket, dinner out with friends, gas, vacations, etc.? (You can deduct housing expenses proportionate to the space allocated for your business, if applicable.) If a CPA is advising what you suggest, it's tax fraud.[/quote]

The tax system clearly favors businesses over individuals, and the argument of whether or not it should is separate.  Businesses earn income, expense everything, and pay taxes on the smaller amount of net/taxable income that's left over.  [b]Individuals pay taxes mostly on gross income[/b], and then pay expenses out of what's left.  And of course businesses deduct all kinds of expenses that individuals can't, and its not fraud.  For example, a business owner will often expense his car payment (lease) and cell phone, both of which reduce taxable income.  An individual, again, is taxed first and then pays for his car and cell phone.[/quote]

PP, you really don't know much about this. And to correct you would take too much time. So, let's just take one area.

A business, and the majority are not corporations so you should specify which before lumping them as one entity, deducts the cost of doing business. They can only expense according to IRS guidelines. Those guidelines are fairly extensive and limiting. As a business owner of a LLC I can only deduct things purchased for my business, cost of advertising, rent, utilities...things directly related to my business. I can deduct some mileage but again, there are rules and logs that have to be kept. What's left is what I pay taxes on as personal income. That's called net income for the business and gross income on my personal. And btw, where your company matches your social security, I pay 100%, not half. I am allowed to deduct half for purposes of income tax liability but that doesn't cover it, just part.

And NO ONE pays tax on their gross income. At the very least they get to take a personal exemption and a general deduction in lieu of itemizing deductions or they itemize. Then they pay taxes on the net after deductions. Some then get credits such as the child tax credit. So, guess what, me, a business owner, takes my gross income, my personal exemptions etc. and pays taxes in full. After that I pay my utilities, car payments, insurance on the cars and house...just like the rest who get a W-2.[/quote]
Yup! I'm a business owner, too, and it's amazing how people think we get away with all these great ways to save money and/or avoid taxes. I can't tell you how many times I've been out to dinner with a friend, and she'll say....well, I can just have my business pay for it. No....first, I can't just have my business pay for it since it's not business related. And second, do they think that when my " business pays for whatever" (legitimately, as a valid expense) that it's not costing me anything? It's money I won't have to pay taxes on, but it's still an expense that ultimately lowers my net income.

As I read over a lot of these threads, I see a lot of "politics of envy".....the whites have white privilege and enjoy all great perks....no, the blacks get easier admissions to schools and jobs...no, the business owners get all sorts of breaks over employees....etc., etc. Maybe we should all admit that the grass only LOOKS greener on the other side, and until you actually experience the position, you don't really understand the advantages and disadvantages[/quote]

Well said.[/quote]

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