I own two small businesses, a print shop and a landscape company.

I find enough tax deductions from these to zero out my tax bill each year.

As a small business, the loopholes are everywhere. We live in a country where the tax laws were written by and for business.

I have a 36 foot sailboat at a marina in Florida. The marina is a customer of my print shop so I have to go and visit them pretty regularly.
I have my landscape crew cuts all my friends grass for CASH. I can write off the labor.

I keep my Mom and Aunt on the payroll as " consultants". They are elderly, retired and don’t need the money, so they give me the money I pay them back in CASH.

Is this a great country or what?

There are, of course, millions of Americans who don’t have to pay tax because they are elderly, disabled, a student or someone who only earns minimum wage.

A deadline looms today, and it will not be met. Unless Congress fixes the Alternative Minimum Tax (AMT), the IRS will have no choice but to print next year’s tax forms based on current law, which would force 25 million taxpayers to pay, on average, an unexpected, additional ,000 in taxes.

If the AMT is fixed after today’s deadline, the Treasury Department announced in a letter to Congress, then the delay in printing proper IRS forms will create confusion for millions of taxpayers this spring and delay tens of millions of taxpayers’ refund checks by up to two and a half months.

Democrats are the ones responsible for this — for creating the tax in the first place, for raising it, and for failing to fix it in time. Most responsible of all for the current mess, and for Congress’s failure to act, is House Ways and Means Chairman Charlie Rangel (D., N.Y.).

The Alternative Minimum Tax was originally enacted by a Democratic Congress in 1969, in order to stop a handful of wealthy families from using deductions and loopholes to avoid tax liability altogether. But the high income threshold at which the tax is triggered was never indexed to inflation. In 1993, the Democratic Congress and President Clinton raised the AMT tax rate, but again failed to index for inflation.

As a result, inflation is carrying more and more workers across the AMT threshold each year. Congress, therefore, has had to “patch” the tax temporarily each year, raising the threshold at which it must be paid. If Congress does nothing, the government tax collections would increase through the AMT, dramatically and entirely by accident.

Republicans view the AMT’s expanding reach as a mistake. They passed a repeal of the tax in 1999, only to see it vetoed by President Clinton. In more recent years, they lacked the courage to fix it permanently because it would have invited screams of “tax cuts for the rich,” and made future deficits look much worse on paper. Yet when they controlled Congress, at least Republicans “patched” the AMT each year so that millions of taxpayers could avoid paying all that extra money.

Publicly, Democrats pretend that they, too, consider it a “mistake” for the AMT to ensnare roughly 25 million taxpayers. But their actions now speak louder than their words. They passed an AMT “patch” last Friday — H.R. 3996 — but it raises taxes on small businesses and entrepreneurs by billion, in order to recover the revenue that is “lost” by not mistakenly ensnaring millions of Americans in the AMT.

With the Democrats’ so-called “pay-as-you-go” rule in hand, and under the guise of “fiscal responsibility,” Chairman Rangel is essentially blackmailing taxpayers: “Either support us in our mission to hike taxes, or we’re going to let the AMT have all 25 million of you!”

A spokeswoman for Rangel was sticking to this “fiscal responsibility” line on Wednesday, and indicated that the tax-hike bill that Democrats passed last week along party lines took care of AMT, and that was that. But the bill they passed has absolutely no chance of passing the Senate, and even less of being signed by President Bush — something of which House Democrats have been aware all along.

Senate Democrats are not happy about what their colleagues have done here. Even Democrats in the House resented that they were being pressured by their own leadership to vote for a large tax hike. “Why should House members have to walk the plank?” asked Rep. Jim Cooper (D-Tenn), speaking to Congress Daily. “This is a 130 percent tax increase.”

Rangel does not appear to have thought this one through quite as well as he usually does. By failing to act, he may be putting his party’s pinkie finger on a new “third rail” of politics.

Everyone expects the AMT to be fixed this year for the same reason it always has been fixed in the past — failure to do it could cause a taxpayer rebellion. If, as appears likely, Congress fails to pass a real AMT fix before today’s deadline, it will probably be fixed eventually. But many taxpayers will end up with obsolete tax forms (12 different forms are affected by the AMT), creating a huge snag for the IRS. An astounding billion in tax refunds to as many as 50 million people could be delayed for up to ten weeks.

That’s great news if you’re a government bean-counter, because you’re essentially getting an interest-free loan of billion from American taxpayers. It’s very bad news, though, if you are a taxpayer trying to pay your energy bills, your child’s tuition, or your overpriced mortgage.

It might also be bad news if you are a Democratic politician who helped create the Great Tax Confusion of 2008.

No matter what your choice is, does this sound ok to you?

WASHINGTON — Barack Obama has a disturbing habit of saying things that are not true, such as no one who makes less than 0,000 will pay higher taxes under his tax plans.

He is running saturation ads around the country saying this, but the fact is that lots of people will be paying higher taxes beneath that income level (which will raise the top marginal tax rate from 35 percent to nearly 40 percent). In fact, millions of Americans who now pay no income taxes will get "refundable" checks from the government under his plan (but more on that in a minute).

The liberal senator would raise capital-gains tax rates on the sale of stocks or other assets on the gain in their value when they’re sold. That would mean higher taxes on millions of American families preparing for their retirement.

He’d raise taxes on dividends, too, that would impose higher taxes on Americans whose income depends on those hard-earned dividends.

If you run a small business that earns 0,000 or more and you pay taxes on its earnings as an individual taxpayer (though you pay yourself less than that), you will be hit by his higher income tax.

His plan proposes to get rid of a lot of corporate tax "loopholes," which would mean higher taxes that would be passed on to their customers who make a lot less than 0,000.

But the most disingenuous part of his tax plan is his claim that he will give 95 percent of all American workers a "tax cut," because he does not mention that it will mean sending checks to millions of tax filers who pay no personal income taxes.

Critics say that looks "suspiciously like welfare" or income redistribution from wealthier taxpayers to lower-income Americans. But it also raises the question, How can he call it a "tax cut" when its recipients pay no income taxes?

Under his "Making Work Pay" income tax cut for low- to middle-income people, he will give a "refundable" 0 tax credit to low- to middle-income workers or ,000 to couples. It would begin to phase out at ,000 for individuals and 0,000 for a couple.

But because he makes it "refundable," he will pay the equivalent amount to those who have no income-tax liability after taking the usual tax credits and deductions in the tax code. Those checks would come from taxes to be paid by higher-income Americans.

The Internal Revenue Service says nearly 46 million tax filers — one-third of all filers — had no tax liability in 2006, so you can hardly call this a tax cut because they pay no taxes.

"What he’s really talking about doing is mailing a check and, to me, that looks more like a welfare program than the kind of real tax relief that would encourage work, savings and investments," said Phil Kerpen, policy director at Americans for Prosperity, a free-market advocacy group.

Obama claims that almost all workers (95 percent) will benefit from his "tax cuts." But Investor’s Business Daily points out that Obama’s "’working families’ does not include all households. Throw in singles, retirees, students and the unemployed, and the share getting some tax-related benefit is a good deal less."

The Tax Policy Center, a nonpartisan tax-analysis group established by the liberal Urban Institute and the Brookings Institution, dismisses his 95 percent figure, saying that about 80 percent of households would receive a tax cut. Throw in the tens of millions of tax filers who owe no taxes, and the percentage of taxpayers getting real tax cuts falls a lot lower.

The Obama campaign’s chief economist Jason Furman told me in an e-mail that "the tens of millions of families working hard and paying payroll taxes do not think that tax cuts are a form of ‘welfare’ or ‘redistribution’ — they think it is only fair to reward work."

Roberton Williams of the Tax Policy Center said "one can argue" that workers who don’t pay income taxes "are paying Social Security payroll taxes, and this is a tax cut against that."

But is this just another clever way for Obama to redistribute the nation’s income, taking from high-income taxpayers who pay the lion’s share of all income taxes and giving it to lower-income workers who pay none?

Williams doesn’t dispute this. "You could view it that way because both (tax) proposals are in the same tax plan," he said. "There’s no question that’s one way to perceive the tax plan." Exactly.

So this is what’s at the core of Obama’s economic policies — taking more money from one group of taxpayers and directly transferring it to those in the lower- to middle-income tax brackets who pay little or no income taxes to begin with.

Instead of cutting everyone’s taxes to encourage work, investment and savings by enlarging the economic pie, Obama would redivide the pie into smaller slices and redistribute it through the tax system.

This is the Europeanization of the economy that awaits us under an Obama presidency.

Right now we have one of the highest if not the highest taxes on corporations in the world. As a result jobs and companies are leaving at a high rate. Even smaller companies (like the one I work for) are looking to send the work they do outside of the USA. What can the US Government do to reverse this trend?

I’ve a novel plan that should satisfy almost everyone. Before you say it’s pure BS think about it. No corporate taxes at all. Over seas companies would be moving here, and in droves. And no federal taxes other than personal income taxes. I know your first thoughts are that can’t possible work. But it can. I’ll explain how.

Corporations are in business to make money period. If they don’t they don’t stay in business. But although they want to make money that also don’t want a lot of money lying around doing nothing. They want it working as well. So they put it to work. They renovate, renew, or rebuild their facilities. The purchase new equipment, update older equipment, retool, and other things like that. All these things means the money keeps moving. And when money moves someone makes a profit. Sooner or later all that money will end up with individuals in some shape, form, or fashion.

HERE is where the taxes come in. Any salary, wage, commision, or benefit given to an individual is subject to being taxed. And here’s where you start. If someone is living above the poverty line thay will pay some tax. How much will they pay depends on how far above the poverty line they are. No flat tax, but a graduated tax with no upper limit. It make no sense to tax someone making K at the same rate as someone who makes M a year. Democrats are always saying they ony want to increase taxes on the uber-rich while lowering the taxes on the lower and middle class people. Here’s their chance. I’ll leave it to the statisticians and mathmaticians to figure out how fast the percentage curve rises.

And here’s another thing that will make it work. All the loopholes in the present tax code will cease to exist. The only things you would be allowed to deduct would be for each member of the household(plus on additional deduction for special needs cases) and family health insurance. But other than that NO DEDUCTIONS.

This years US Budget was about Trillion (that’s 12 zeros) to provide for every man, woman, and child, legal and illegal (about 300M) living in the USA. You do the math, I could have made a mistake. But doesn’t that figure out to be about K each? I don’t know about you but I’m not sure I got my K worth of services out of the Federal Government. How much of that was eaten up in buracracy. But that is an whole ball of worms. Let individuals pay all the taxes. What’s wrong with that idea?
G-gal- If you ask me this is about as fair as tax can get. A flat tax or sales tax hits really hard on the people that can least afford it. 10% tax on someone just over the poverty line knocks them back below the poverty line. 10% tax on someone who makes millions or billions and they never even notice it.
E-smile. Under my idea there would be no advantage to play fast and loose with the companies books. Creative financing goes out the window. Companies only do that to avoid taxes.

OH, and under my system before anyone claims a loss they have to actually lose something. Paper loses don’t count!
To all of you who said it wouldn’t work. If’ I’ve replied to you via E-mail I hope I answered your questions. To all of those I didn’t reply to– Shame on you for not allowing the discussion to continue because YOU wouldn’t allow E-mail.

My wife and I are not eligible to use contributions to our Traditional IRAs as pre-tax deductions because we both have employer sponsored retirement plans. In the past year, my wife’s employer offerred a new Roth 401K which we changed her full contributions to so her entire 401K contribution is now after tax. Having said that, does that open the door to make tax deferred contributions once again to her Traditional IRA since only one of us has a pre-tax retirement qualified plan? Other than muni bonds or getting a business license, I’m pretty much out of methods to reduce my taxable income and am looking for any loopholes possible.

Conservatives often point out that our corporate tax rates are the second highest in the world. However what they omit is the large amount of deductions and loopholes in the government, the IRS itself concludes that a quarter of corporations in the US don’t pay any corporate taxes at all. In effect even though the tax rate is lower in Ireland corporations pay more due to fewer deductions. Also European countries afford lower corporate tax rates by having MUCH higher taxes on income as well as employer funded entitlements. So are conservatives just misinformed that is it is cheaper to do business in Germany, or are they cherry picking the facts to starve the federal government yet again(by cleverly omitting the other taxes in Europe) and skirt the federal guidelines that are tied to the deductions?

Take away all loopholes and deductions for people and corporations everybody pays 10% of what they make. My taxes go down and the businesses and rich goes up.

It makes the tax code a little simpler for individuals by repealing the AMT after 2007 and expanding the standard deduction, and a bit simpler for businesses, who will trade
unnecessary tax breaks for a lower corporate tax rate. The bill’s corporate loopholeclosing measures would enhance the economy overall because fewer business decisions would be made for tax reasons (to exploit loopholes) rather than sound
economic reasons. It makes the tax code fairer by providing a larger standard deduction and tax credits low-income working people and by scaling back the Bush tax cuts for the wealthy.
Finally, the bill stops the dangerous pattern of the Bush administration of cutting taxes more and more and putting the cost on the national credit card. Instead, the bill pays
for the tax cuts it provides to the vast majority of Americans in a responsible way.

http://www.ctj.org/pdf/rangelbill.pdf

Thoughts?

And I mean flat across the board. Everybody pays 5%, for example. But to make sure everybody pays that 5%, no exemptions for yourself or dependents. Not deductions for work, charitable donations, etc. No deductions for business losses. Capital gains are considered income and taxed at the same rate. So you bought your house for K, sold it for 0K, you made k that year, it gets taxed like any other income. You inherited cash property or anything else, it’s income and gets taxed 5%. And all income gets taxed the exact same 5%. No hiding money for the future in 401(k) plans or IRA plans–no need to anyway, since the flat tax defeats the purpose. All income of any kind, a flat tax. No exceptions, including churches, which are currently tax exempt.

Anybody for that?
Let me clarify some things about my question. One, I am not sure whether I am for a flat tax or not. But I have thought that richer people have more opportunities to get out of paying taxes than poorer people do. So I wondered if richer people would still be for a flat tax if the the playing field were completely level–ie, no tax-sheltered retirement accounts, no itemized deductions for charitable contributions, no loopholes of any kind, as well as calling and income at all as taxable income, including the sale of private property, and also doing away the the tax-excempt status churches and not-for-profit organizations enjoy. Totally fair. Would they still go for it?

I am just wondering why we have so many deductions and credits in our tax system. Wouldn’t it be much simpler for everyone (businesses, the public and the government) if we all just paid our share and we had fewer deductions and loopholes? I understand some of the deductions we give such as deductions for children (obviously a family should pay less than a single guy only supporting himself), and some other deductions which offer incentives for doing things that are beneficial (such as tax breaks to green energy companies to research new energy). But why do we have SO MANY deductions and credits?