LET'S TALK TAXES

The Republicans ought to be ashamed of themselves and they know better. How can they argue, with a straight face, against the plan to end the tax cut on individuals making more than $250,000.00 per year?

They claim that it hurts Small Businesses - the ones that create jobs and keep America running.. THEY KNOW THAT THE TAX CUTS ONLY HELP THE BIGGEST CORPORATIONS AND VERY WEALTHY INDIVIDUALS. Yes, they know better.

It's interesting who they have making those arguments: multi-millionaire Congressmen and people like Joe The Plumber - who we all know doesn't have a business. I have not seen any small business people making the argument because they know what the Congressmen know. SMALL BUSINESSES DON'T MAKE $250,000.00 per year. If they do, then they need another accountant and attorney. I will explain.

Businesses are taxed on their income left over after their business expenses.. So the magic $250,000.00 taxable income is what is left over. Here is why small businesses don't make $250,000.00 taxable income. Even if they Gross a lot of money, the trick is to spend it in such a way that its a tax deductible event to the business (reducing taxable income), and such that the business owner gets the benefit of it without being taxable income to him/her. It's all legal as long as you don't go crazy and do something like pay the light/phone bill at your house from business income and try to deduct it without claiming it as personal income.

Some good legal examples include: health/life insurance; the company car and all of its insurance, maintenance and repairs; business trips where you actually conduct business (but also sort of a mini family vacation). Sometimes they just happen to be at a nice resort. Another good example is college tuition for company officers and key employees or directors. OK- hire your kids in key positions or add them to the board of directors or make them Vice president of Whatever. They can consult on the telephone and work when they're home on break. Oh, you can put them on the payroll too - the same money you would have given them anyway. Finally, you can hire your spouse and add him/her to the payroll and file separate tax returns.

The spouse is a good one. Let me explain. Let's say that after all the deductions you can get, you still have $250,000.00 left over as taxable income and you file jointly as husband and wife. At 36% you would pay $90,000.00 in taxes. Now, lets split that and file separately with each spouse making $125,000.00 and dropping down to the 28% tax bracket. So now each spouse pays $35,000.00 in taxes for a total of $70,000.00 or a $20,000.00 savings. Out of the same $250,000.00, you can reduce the incomes even lower and therefore lower the tax bracket by adding the kids to the payroll.

Ideally you want spread out that $250K so that eventually its taxed at 15% for each person getting money. All the money comes in the same household, but at 15% instead of 36%. Ha! a savings of $52,500.00. That is a total of $250K broken down into small pieces. 250K x 15% = $37,500.00. Instead of $250,000.00 x 36% = $90,000.00. The savings is $52,500.00 . NOT BAD.

The only people who can't "fix" their income in this legal way are the very wealthy and the largest corporations. They just make too much money. And that's good; they just ought pay the taxes on that "over the top income".

Small businesses are not complaining because they know better; the Republicans know better, but they are trying to protect their wealthy contributors. So they recruit Joe who really doesn't know any better. The problem they all talk loud and a lot of other people just like Joe jump on the band wagon.

President Regan used to call them the "silent majority". I always called them the "ignorant majority". Not ignorant in a negative way; put simply, they just suffered from a lack of knowledge of what's really going on. They were and still are being used and don't even know it.

THANK GOD, FINALLY THEY ARE THE IGNORANT "MINORITY". Let's keep them in the minority.

BB

ECONOMICS / POLITICS 101

Obama has been President for less than 3 weeks and the economy is in a real mess. But make no mistake about it, this is George Bush's mess. It didn't just happen over night; it's been in the making for a long time.

NOW, I don't know or care if you're a Dem or a Repub, but consider this. For 6 out of the last 8 years, we had a Repub President and a majority of Repubs in both the House and Senate and they are the ones who "drove the bus in the ditch" when they were in control.

NOW that the Dems have inherited this mess and are in control (President, House and Senate), the Repubs think they know everything and disagree with everything that is proposed. GO FIGURE! It's a good thing they are finally in the minority. If they knew everything or anything, we wouldn't be in this mess in the first place.

They, Repubs, are pushing the same old tired, worn out message. GO FIGURE! Supply side economics with tax breaks to the wealthy has never worked and will never work. Why can't they figure that out? If you give tax cuts and other money incentives to the wealthy with the hope that they will start businesses, why would they when there is no demand for the goods and services that they would offer because people are not working? THEY WILL PUT THE MONEY IN THEIR POCKET OR IN OFFSHORE BANKS. That's why the bus is in the ditch in the first place. They've done that for 6 of the last 8 years, plus other Repub administrations before Bush. And when the final curtain was coming down, they kept taking money of the top, even as the ship was sinking. Paying bonuses with bailout (tax payer) money---HOW ARROGANT AND SELFISH CAN YOU GET? Well, then the sheriff made it possible in the first place and is clearly looking the other way, why not?

HELLO! A strong stimulus package is in order. Give the money to the people; they will spend it and create the demand for products and services. Now that is an incentive for the wealthy to take their own money or get bank loans to start businesses to supply the goods and services to meet the demand. DEMAND SIDE ECONOMICS WORKS--ALWAYS HAS AND ALWAYS WILL.

If you are old enough then you will remember, or if you are not old enough to remember then study history, and look at how things were under the following administrations: Roosevelt, Johnson (Lyndon), Clinton, just to name a few. ALL DEMS. Well the economy was booming. Let's go there again.

Now some claim that a massive "give away" would be irresponsible. Maybe so, but a responsible thing to do is put people back to work. Make them earn it. Government spending is absolutely appropriate to create jobs.

Some immediate hand outs are OK, but put people to work and let them shop and pay taxes and the and the money will turn over again and again and the economy will grow. The Repubs are just talking loud and saying nothing.

DON'T BE MISLEAD!

BB

"Obama can do whatever he like"

Now we know President Obama is going to work with both sides of the aisle for the greater good of our country, but this video came by email, and it's pretty amusing. The Ron Clark Academy students were very good to T.I.'s beat. This is just pretty funny...

Tax System: If the "smart people" can't understand, what about us "common folk"?

There seems to be lots of failure to pay taxes going on for some of Obama's nominees (Timothy Geithner, Tom Daschle, Nancy Killefer). The good thing for them, is that so far they have been able to pay the back taxes and penalties with the stroke of a pen on a check. As someone commentated on the site of a major news source: no wonder the system has no money. The problem for the rest of us, is that when we make an honest mistake on our taxes, we often cannot afford the past tax bill and the penalties and interest.

Just makes you wonder about lots of other folks out there and their true tax status. And, these are educated people, many with CPAs who are making these tax errors. Is our system so complicated? If these people can't understand the system enough to pay properly... how can we "common folk"? The reality of the situation is that many of us common folk are often paying too much in taxes because we don't fully understand the deductions we are entitled to.

Is it possible that these educated people who miss paying taxes are really taking a calculated risk? If they aren't audited (or appointed to a high level position by the President), that's just money in the bank.