I always hear that the Rich or the Wealthy have and use tax loopholes ?

[mikejohnson2006]

I always hear that the Rich or the Wealthy have and use tax loopholes and offshore bank accounts with their good accountants my question is is it just a mystery as to how this all works since it is secret ?

http://www.wisegeek.com/what-is-a-tax-loophole.htm

[mikejohnson2006]

Thanks for your answers and replying.

[brandon]

lol give it some time buddy you only posted this 10 minutes ago.


The tax code is about 7 times as big as the bible, so it's impossible for any one person to entirely understand the US tax code. Just because someone found a part of the tax code that lightens their burden doesn't mean they are exploiting a loophole.

[bossman068410]

There are a lot of legal ways to not pay taxes...

1) Tax free foundations
2) If you want to pass your children money when you die you buy insurance.. when you die the insurance pays out tax free.
3) Loop holes in the tax code for specific industries.

Those are 3 that i know of I know there are many more....

[The Free Hornet]

Sometimes local real estate taxes are avoided by having a farm (build a mansion, buy a few chickens, and plant some corn).

The stuff that Warren Buffet is complaining about is, arguably, BS as the corporation is paying taxes in the US. He is ignoring part of the equataion just as most of us disregard the payroll taxes paid on our behalf by employers.

I wonder if it even matters who pays the taxes - within reason. If we had a very regressive tax code such that the first 90% of $100,000 went to Uncle Sam and then the rate dropped to 10%, then what would our economy look like? Assume this is the *ONLY* tax. Assume a single worker requires a minimum of $19,000/year to live (after tax) . This would mean the pre-tax cost of 1 person's labor per year is $110,000 for a full time job. Would it be fair to say that the "poor" were paying the bulk of the taxes? Or is it the rich people who need the poor person's labor the one footing the bill?

If I had to pay less taxes, then I could demand less salary. More likely, someone else in competition for my job would offer to work at a discount. So you can cut my taxes but someone with similar talents can then undercut my current salary.

This is why I think it is fair to say taxes are more of a drag on the economy and it is hard for anybody to avoid them whether rich or poor. It doesn't matter if you see the bill if everyone that would demand your labor has to pay the taxes (our current situation). Reverse the situation, and someone else is footing the bill but we all end up more or less the same. We still suffer for bloated, inefficient government and for distortions to the economy which push jobs overseas or encourage extreme outsourcing.

The bottom line is I don't think you can tax someone and not have it affect you as well. Loopholes do pick winners and losers and distort the economy (negatively).