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]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.  Individuals pay taxes mostly on gross income, 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]
But it has to be that way for a business. For example, if you're salaried at $100k, your employer provides the computers, supplies, pays for repairs, pays for your staff, pays the rent, etc. Your salary is your "real" earnings. But if you own a business (I do), you have all these expenses, and it's only after you deduct them that you get to your "real" earnings. For example, let's say I gross $300k, but out of that I pay for an employee, rent, utilities, business insurance, and so forth, and end up $100k for myself. THAT is my "real" earnings. If I were taxed on gross revenues, I'd easily have to pay $80k - leaving me with $20k.

The only advantage to businesses over individuals come when they cheat and deduct expenses they should not. I have an exceedingly honest CPA, and I follow his directions to the letter. [/quote]

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