There will always be people who simply are failures, and they will always be poor, no matter how much force you use.
Give Oil Company profits to the people
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If everybody were educated to a high degree you wouldn’t see such specialization in employment and if you did the income spreads would be minimal.
I disagree on the former. You would have highly intelligent people across all sectors. Phd janitors (not really)..etc..etc.
On the latter, you DO see this in some socialized nations. The difference is that the professionals (used to, anyway) take 6 months off and vacation in the Canary Islands at their villas.
Quote:
Equality cannot exist without equal opportunity and a university education can be simply out of reach of many people due to cost. Others may not have the time required due to family circumstances.
Well, we've already determined that there isn't room for an entire population to be "well educated" with gainful employment as a goal. Now I don't see it being a waste just for that reason ..just like I do not see "dumbing down" of your population as a sensible thing just because they won't have it equate to $$.
Some societies use the needs of the society to determine where they invest their higher educational $$. We use a class system for the most part. Now just about anyone can borrow their way to a lottery ticket ..but the higher the price of the ticket (Ivy League ..etc.) the more of a chance you have to win a slot in the upper strata.
That is no amount of education can fix your poverty "as a nation" unless other things are altered to facilitate its eradication. It's often sold as a personal solution ..but you're still in a competitive lottery. The socialization that education brings may make your poverty more adherent in civil obedience ..and would probably make a better society ..but at these costs ..it's just another economic burden for most with very little ROI. It's more of an "avoided costs of NOT doing it".
If everybody were educated to a high degree you wouldn’t see such specialization in employment and if you did the income spreads would be minimal.
I disagree on the former. You would have highly intelligent people across all sectors. Phd janitors (not really)..etc..etc.
On the latter, you DO see this in some socialized nations. The difference is that the professionals (used to, anyway) take 6 months off and vacation in the Canary Islands at their villas.
Quote:
Equality cannot exist without equal opportunity and a university education can be simply out of reach of many people due to cost. Others may not have the time required due to family circumstances.
Well, we've already determined that there isn't room for an entire population to be "well educated" with gainful employment as a goal. Now I don't see it being a waste just for that reason ..just like I do not see "dumbing down" of your population as a sensible thing just because they won't have it equate to $$.
Some societies use the needs of the society to determine where they invest their higher educational $$. We use a class system for the most part. Now just about anyone can borrow their way to a lottery ticket ..but the higher the price of the ticket (Ivy League ..etc.) the more of a chance you have to win a slot in the upper strata.
That is no amount of education can fix your poverty "as a nation" unless other things are altered to facilitate its eradication. It's often sold as a personal solution ..but you're still in a competitive lottery. The socialization that education brings may make your poverty more adherent in civil obedience ..and would probably make a better society ..but at these costs ..it's just another economic burden for most with very little ROI. It's more of an "avoided costs of NOT doing it".
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Originally Posted By: javacontour
I'd hardly say he's not paying SSI, if he has folks working for the company, he's paying the company 1/2 of their SSI. Joe Average doesn't have to pick up an extra approx 7% FICA for his employees. A business owner does. So to suggest that anyone who owns a business is not paying FICA is missing the big picture. They are likely paying more than us, if they have a few employees.
Also, even if he's only taking a small salary to stay in the 10% FIT bracket, he's really paying approx 14-15% FICA since his business picks up the other half of the FICA tab.
He's taking a risk. He's banking on the value of the company rather than taking the money now.
If it folds up, he has nothing to show for that labor.
There are two sides to that coin.
Most businesses fail. So for every success, how many failed?
Here's, what I term, another form of the "entitlement mentality" ..except it's for higher earners or (alleged) entrepreneurs.
How is his risk any higher than any one of his employees in terms of his business going "belly up"?
He's not taking a larger salary to avoid taxes. His risk is by his own choice to slight his SS contributions and whatnot ..and one would assume that he's not in business to "break even". He's there for all the power and mobility that the revenue provides ..without the typical liability that being a wage earner would require under the same conditions.
It's a risk he chose to take ..and he deserves to be at peril for it ...not buffered so that it's not a risk at all.
I'll give you a hypothetical situation ..and you'll just have to fill in the blanks for the minor details.
I'm a millionaire. Current machine shop rates are XXX.xx/hour. I go and buy a bunch of CNC/etc. machinery because I can afford the ante to enter into the market ..and due to the ante ..the market is limited. This supports the high rates. I hire machinists at the competitive going rate ..steal a few from the competition..blah..blah..blah.
Where's my risk? That no one is going to use me? Not likely ..but we'll assert (for demonstration) that I will have a decent competitive market share. Given the high cost of machining ..just how likely am I ever gonna "lose money" ..unless not making my target ROI is considered losing money.
Essentially this comes down to an ROI that is not only a requirement ..but an assured reward for having the ante.
I'd hardly say he's not paying SSI, if he has folks working for the company, he's paying the company 1/2 of their SSI. Joe Average doesn't have to pick up an extra approx 7% FICA for his employees. A business owner does. So to suggest that anyone who owns a business is not paying FICA is missing the big picture. They are likely paying more than us, if they have a few employees.
Also, even if he's only taking a small salary to stay in the 10% FIT bracket, he's really paying approx 14-15% FICA since his business picks up the other half of the FICA tab.
He's taking a risk. He's banking on the value of the company rather than taking the money now.
If it folds up, he has nothing to show for that labor.
There are two sides to that coin.
Most businesses fail. So for every success, how many failed?
Here's, what I term, another form of the "entitlement mentality" ..except it's for higher earners or (alleged) entrepreneurs.
How is his risk any higher than any one of his employees in terms of his business going "belly up"?
He's not taking a larger salary to avoid taxes. His risk is by his own choice to slight his SS contributions and whatnot ..and one would assume that he's not in business to "break even". He's there for all the power and mobility that the revenue provides ..without the typical liability that being a wage earner would require under the same conditions.
It's a risk he chose to take ..and he deserves to be at peril for it ...not buffered so that it's not a risk at all.
I'll give you a hypothetical situation ..and you'll just have to fill in the blanks for the minor details.
I'm a millionaire. Current machine shop rates are XXX.xx/hour. I go and buy a bunch of CNC/etc. machinery because I can afford the ante to enter into the market ..and due to the ante ..the market is limited. This supports the high rates. I hire machinists at the competitive going rate ..steal a few from the competition..blah..blah..blah.
Where's my risk? That no one is going to use me? Not likely ..but we'll assert (for demonstration) that I will have a decent competitive market share. Given the high cost of machining ..just how likely am I ever gonna "lose money" ..unless not making my target ROI is considered losing money.
Essentially this comes down to an ROI that is not only a requirement ..but an assured reward for having the ante.
Originally Posted By: Gary Allan
Where's my risk? That no one is going to use me? Not likely ..but we'll assert (for demonstration) that I will have a decent competitive market share. Given the high cost of machining ..just how likely am I ever gonna "lose money" ..unless not making my target ROI is considered losing money.
Essentially this comes down to an ROI that is not only a requirement ..but an assured reward for having the ante.
Try doing that in the Toronto area.
Where's my risk? That no one is going to use me? Not likely ..but we'll assert (for demonstration) that I will have a decent competitive market share. Given the high cost of machining ..just how likely am I ever gonna "lose money" ..unless not making my target ROI is considered losing money.
Essentially this comes down to an ROI that is not only a requirement ..but an assured reward for having the ante.
Try doing that in the Toronto area.
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You don't count! You've got "managed" stuff.
Originally Posted By: Gary Allan
Originally Posted By: javacontour
I'd hardly say he's not paying SSI, if he has folks working for the company, he's paying the company 1/2 of their SSI. Joe Average doesn't have to pick up an extra approx 7% FICA for his employees. A business owner does. So to suggest that anyone who owns a business is not paying FICA is missing the big picture. They are likely paying more than us, if they have a few employees.
Also, even if he's only taking a small salary to stay in the 10% FIT bracket, he's really paying approx 14-15% FICA since his business picks up the other half of the FICA tab.
He's taking a risk. He's banking on the value of the company rather than taking the money now.
If it folds up, he has nothing to show for that labor.
There are two sides to that coin.
Most businesses fail. So for every success, how many failed?
Here's, what I term, another form of the "entitlement mentality" ..except it's for higher earners or (alleged) entrepreneurs.
How is his risk any higher than any one of his employees in terms of his business going "belly up"?
Most folks working the 9-5 don't have everything they own invested in going to work. So if the plant goes down, his income stream drops, but he doesn't have his whole life savings invested in going to work.
So he just starts looking for another job. Yes it's harder if more and more people are in the labor market. But yet it's still easier in most cases to get a new job than it is to start a new business. Especially if you don't have those funds to start a new business like you did last time.
Originally Posted By: Gary Allan
He's not taking a larger salary to avoid taxes. His risk is by his own choice to slight his SS contributions and whatnot ..and one would assume that he's not in business to "break even". He's there for all the power and mobility that the revenue provides ..without the typical liability that being a wage earner would require under the same conditions.
It's a risk he chose to take ..and he deserves to be at peril for it ...not buffered so that it's not a risk at all.
If he's not taking the money, he's reinvesting it back into the business, and the way the laws are currently written, if he's buying goods and services to grow the business, he's not making a profit. The business may be growing in value, but that value is not realized until the business is sold.
Now we can argue if this is appropriate tax policy. But to say he's being shelters is not realistic. If he loses money, there are limits to how much he can write off.
Originally Posted By: Gary Allan
I'll give you a hypothetical situation ..and you'll just have to fill in the blanks for the minor details.
I'm a millionaire.
That's a stacked scenario. Most new business ventures are not started by millionaires, but folks who put their homes, savings, etc up to start a business.
Originally Posted By: Gary Allan
Current machine shop rates are XXX.xx/hour. I go and buy a bunch of CNC/etc. machinery because I can afford the ante to enter into the market ..and due to the ante ..the market is limited. This supports the high rates. I hire machinists at the competitive going rate ..steal a few from the competition..blah..blah..blah.
Where's my risk? That no one is going to use me? Not likely ..but we'll assert (for demonstration) that I will have a decent competitive market share. Given the high cost of machining ..just how likely am I ever gonna "lose money" ..unless not making my target ROI is considered losing money.
So how did established steel mills lose money then? Oh, someone was able to do it overseas for less money, and other businesses figured out it was cheaper to buy foreign steel and ship it than to buy domestic steel.
Even high barriers to entry in markets is not enough to keep one from losing money. If this was the case, no franchise business would ever fail, nor would steel mills, etc.
There is ALWAYS risk that a business will fail, even a well establish business. There are always new technologies.
How do you think pay phone manufacturers are doing today? Probably some steep barriers to enter that business, yet with cell phones, pay phones are all but dead.
So to cite barriers to entry is not realistic.
To cite millionaires or billionaires starting business is not the typical case either. It's folks like you are me who think we can build and sell a better mousetrap who start most new businesses.
Originally Posted By: Gary Allan
Essentially this comes down to an ROI that is not only a requirement ..but an assured reward for having the ante.
I don't think anything is assured, at any socio-economic strata.
Originally Posted By: javacontour
I'd hardly say he's not paying SSI, if he has folks working for the company, he's paying the company 1/2 of their SSI. Joe Average doesn't have to pick up an extra approx 7% FICA for his employees. A business owner does. So to suggest that anyone who owns a business is not paying FICA is missing the big picture. They are likely paying more than us, if they have a few employees.
Also, even if he's only taking a small salary to stay in the 10% FIT bracket, he's really paying approx 14-15% FICA since his business picks up the other half of the FICA tab.
He's taking a risk. He's banking on the value of the company rather than taking the money now.
If it folds up, he has nothing to show for that labor.
There are two sides to that coin.
Most businesses fail. So for every success, how many failed?
Here's, what I term, another form of the "entitlement mentality" ..except it's for higher earners or (alleged) entrepreneurs.
How is his risk any higher than any one of his employees in terms of his business going "belly up"?
Most folks working the 9-5 don't have everything they own invested in going to work. So if the plant goes down, his income stream drops, but he doesn't have his whole life savings invested in going to work.
So he just starts looking for another job. Yes it's harder if more and more people are in the labor market. But yet it's still easier in most cases to get a new job than it is to start a new business. Especially if you don't have those funds to start a new business like you did last time.
Originally Posted By: Gary Allan
He's not taking a larger salary to avoid taxes. His risk is by his own choice to slight his SS contributions and whatnot ..and one would assume that he's not in business to "break even". He's there for all the power and mobility that the revenue provides ..without the typical liability that being a wage earner would require under the same conditions.
It's a risk he chose to take ..and he deserves to be at peril for it ...not buffered so that it's not a risk at all.
If he's not taking the money, he's reinvesting it back into the business, and the way the laws are currently written, if he's buying goods and services to grow the business, he's not making a profit. The business may be growing in value, but that value is not realized until the business is sold.
Now we can argue if this is appropriate tax policy. But to say he's being shelters is not realistic. If he loses money, there are limits to how much he can write off.
Originally Posted By: Gary Allan
I'll give you a hypothetical situation ..and you'll just have to fill in the blanks for the minor details.
I'm a millionaire.
That's a stacked scenario. Most new business ventures are not started by millionaires, but folks who put their homes, savings, etc up to start a business.
Originally Posted By: Gary Allan
Current machine shop rates are XXX.xx/hour. I go and buy a bunch of CNC/etc. machinery because I can afford the ante to enter into the market ..and due to the ante ..the market is limited. This supports the high rates. I hire machinists at the competitive going rate ..steal a few from the competition..blah..blah..blah.
Where's my risk? That no one is going to use me? Not likely ..but we'll assert (for demonstration) that I will have a decent competitive market share. Given the high cost of machining ..just how likely am I ever gonna "lose money" ..unless not making my target ROI is considered losing money.
So how did established steel mills lose money then? Oh, someone was able to do it overseas for less money, and other businesses figured out it was cheaper to buy foreign steel and ship it than to buy domestic steel.
Even high barriers to entry in markets is not enough to keep one from losing money. If this was the case, no franchise business would ever fail, nor would steel mills, etc.
There is ALWAYS risk that a business will fail, even a well establish business. There are always new technologies.
How do you think pay phone manufacturers are doing today? Probably some steep barriers to enter that business, yet with cell phones, pay phones are all but dead.
So to cite barriers to entry is not realistic.
To cite millionaires or billionaires starting business is not the typical case either. It's folks like you are me who think we can build and sell a better mousetrap who start most new businesses.
Originally Posted By: Gary Allan
Essentially this comes down to an ROI that is not only a requirement ..but an assured reward for having the ante.
I don't think anything is assured, at any socio-economic strata.
I'll chime in here.
My town has a population of roughly 180K since almagation.
Seven years ago, we had the sixth-highest unemployment rate in the country. We have two huge mines (nickel, copper, etc.), and yet, for some reason, this town was stagnant. The folks just quietly ignored that their city, with their voted politicians, was a socialist's dream (more-so than Toronto). The hand-outs were HUGE. There was no motivation to work, and the tax-rates were astronomical for businesses. No ROI = no jobs, plain and simple.
Fast-forward to today. Alot has changed. We now have new infrastructure going up, jobs are available, and we have a viable international marketplace.
Low-paying jobs are a stone-throws away from each other. So if you screw up, or get fed up, hop-on over to the next place. Where-as higher-paying jobs like mine, you don't screw up, because they are a bit harder to get, particularly without an education. We still pay some pretty high taxes, but in the scheme of things, if you want a stable market, you need to create a situation where lower-paying jobs exceed the people available to work, and have a neutral or positive population for the higher jobs. Having said that, getting those lower-paying jobs is only going to happen by allowing the businesses to prosper, not strangling them to death with taxes.
My town has a population of roughly 180K since almagation.
Seven years ago, we had the sixth-highest unemployment rate in the country. We have two huge mines (nickel, copper, etc.), and yet, for some reason, this town was stagnant. The folks just quietly ignored that their city, with their voted politicians, was a socialist's dream (more-so than Toronto). The hand-outs were HUGE. There was no motivation to work, and the tax-rates were astronomical for businesses. No ROI = no jobs, plain and simple.
Fast-forward to today. Alot has changed. We now have new infrastructure going up, jobs are available, and we have a viable international marketplace.
Low-paying jobs are a stone-throws away from each other. So if you screw up, or get fed up, hop-on over to the next place. Where-as higher-paying jobs like mine, you don't screw up, because they are a bit harder to get, particularly without an education. We still pay some pretty high taxes, but in the scheme of things, if you want a stable market, you need to create a situation where lower-paying jobs exceed the people available to work, and have a neutral or positive population for the higher jobs. Having said that, getting those lower-paying jobs is only going to happen by allowing the businesses to prosper, not strangling them to death with taxes.
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Quote:
Most folks working the 9-5 don't have everything they own invested in going to work.
Why would you assume that every owner proprietor does? You're broadly applying ideals across a sector ..one that I know quite well.
Quote:
If he's not taking the money, he's reinvesting it back into the business
Why would you assume this? He's driving company cars and using company gas and company insurance. So is his wife. He's embezzling every dime he can and getting away with it.
I know ..for all he does ...he deserves it. He's "entitled" to it. After all, he amasses the mojo to pull it off ..the least you can do is afford him some bennies for the fond feelings that it stirs within you.
I could easily show you that I "made" around $65k in 1980 (gross revenues of around $110k+/- I can also show you that I "made" so little that I qualified for state tax forgiveness.
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That's a stacked scenario.
Exactly. Do you think Mr. Joe Sweat and Toil is the only one who takes advantage of this "entitlement"? Surely you aren't that naive.
Go open a McDonald's franchise. You need just shy of a million $$$ ...($500k + almost the same in liquid assets). Now if you have a million $$ ...do you really need to buy yourself a job?? No, you don't, but you may need some place to shelter your wealth.
Quote:
So how did established steel mills lose money then?
Antiquated technology where the owners, based on ROI, didn't feel that they could justify retooling ..especially in the face of competition. For (relatively) many years ..there was no competition. The rest of the globe was blown to pieces.
Quote:
I don't think anything is assured, at any socio-economic strata.
This is true. As soon as one sanctuary of wealth becomes "comfortable" ...then they get raided too. There are all kinds of evolutions and pauses in our elongated economic thrusts ..but I've rarely seen the "from the ground up" little guy hitting it big. I've typically seen the inheritance ..the land speculation ..usually it's always the "exceptional circumstances" that produces our para Norman Rockwell image of our imaginary poster boys ..not someone exceptional rising from the commonality. Now it surely happens ..but it doesn't mean that a majority aren't riding in the wake of that image.
Most folks working the 9-5 don't have everything they own invested in going to work.
Why would you assume that every owner proprietor does? You're broadly applying ideals across a sector ..one that I know quite well.
Quote:
If he's not taking the money, he's reinvesting it back into the business
Why would you assume this? He's driving company cars and using company gas and company insurance. So is his wife. He's embezzling every dime he can and getting away with it.
I know ..for all he does ...he deserves it. He's "entitled" to it. After all, he amasses the mojo to pull it off ..the least you can do is afford him some bennies for the fond feelings that it stirs within you.
I could easily show you that I "made" around $65k in 1980 (gross revenues of around $110k+/- I can also show you that I "made" so little that I qualified for state tax forgiveness.
Quote:
That's a stacked scenario.
Exactly. Do you think Mr. Joe Sweat and Toil is the only one who takes advantage of this "entitlement"? Surely you aren't that naive.
Go open a McDonald's franchise. You need just shy of a million $$$ ...($500k + almost the same in liquid assets). Now if you have a million $$ ...do you really need to buy yourself a job?? No, you don't, but you may need some place to shelter your wealth.
Quote:
So how did established steel mills lose money then?
Antiquated technology where the owners, based on ROI, didn't feel that they could justify retooling ..especially in the face of competition. For (relatively) many years ..there was no competition. The rest of the globe was blown to pieces.
Quote:
I don't think anything is assured, at any socio-economic strata.
This is true. As soon as one sanctuary of wealth becomes "comfortable" ...then they get raided too. There are all kinds of evolutions and pauses in our elongated economic thrusts ..but I've rarely seen the "from the ground up" little guy hitting it big. I've typically seen the inheritance ..the land speculation ..usually it's always the "exceptional circumstances" that produces our para Norman Rockwell image of our imaginary poster boys ..not someone exceptional rising from the commonality. Now it surely happens ..but it doesn't mean that a majority aren't riding in the wake of that image.
Originally Posted By: Gary Allan
Why would you assume this? He's driving company cars and using company gas and company insurance. So is his wife. He's embezzling every dime he can and getting away with it.
Try this and see what happens to you.
Why would you assume this? He's driving company cars and using company gas and company insurance. So is his wife. He's embezzling every dime he can and getting away with it.
Try this and see what happens to you.
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It's done every day. It's not true embezzling ..it's misuse of tax deducted expenses. It's not like he/she's stealing from anyone but themselves.
Go on vacation and talk about your business ...company pays.
Your car- a company car
Your insurance, gas, repairs -
..and whatever else you can put on the company books.
Lease payments ...
Now if you do get audited, they'll disallow some of it ..automatically ..but you'll never face charges.
You fill the boat up with the company credit card ...and maybe have the boat bought by it too (that might be a stretch) ..but if it has a mortgage ..what's the difference, you get to deduct the interest on that too
Wealth needs this type of help
Go on vacation and talk about your business ...company pays.
Your car- a company car
Your insurance, gas, repairs -
..and whatever else you can put on the company books.
Lease payments ...
Now if you do get audited, they'll disallow some of it ..automatically ..but you'll never face charges.
You fill the boat up with the company credit card ...and maybe have the boat bought by it too (that might be a stretch) ..but if it has a mortgage ..what's the difference, you get to deduct the interest on that too
Wealth needs this type of help
That would be illegal in Canada. Are you suggesting that everyone breaks these laws?
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They're not actually breaking laws, per se~. Just taking extra advantages of allowances.
Suppose he's also the salesman, with an expense account? Etc..etc..etc. Very broad latitudes for the business owner.
I mean, you can write yourself off to bankruptcy too if you are just a spending fool.
Here's one false impression. I'm a major national commentator. I have a multimillion dollar contract with some network. I don't get a paycheck. The contract is between my production company and the network. I draw a paycheck that puts me in a sensible bracket to substantiate my current personal holdings. My corporation then invests my excess revenues in whatever they can ...let's say Manhattan real estate ..which they then mortgage to the max ...and show zero profit ..throw it in some black box of deferred pension benefits ..whatever the accountant pulls out of his/her behind. Essentially hide the baloney (totally legal).
I've just increased my real wealth by millions per year ..I've had all the clout and mobility that it brought ..and I got the government to assure that any rate of return was to the tune of 30%+ in avoided costs of taxes over just getting paid.
It's a nice racket if you qualify. That's why you hear me say that it's painfully obvious that wealth needs assistance. They get it
Suppose he's also the salesman, with an expense account? Etc..etc..etc. Very broad latitudes for the business owner.
I mean, you can write yourself off to bankruptcy too if you are just a spending fool.
Here's one false impression. I'm a major national commentator. I have a multimillion dollar contract with some network. I don't get a paycheck. The contract is between my production company and the network. I draw a paycheck that puts me in a sensible bracket to substantiate my current personal holdings. My corporation then invests my excess revenues in whatever they can ...let's say Manhattan real estate ..which they then mortgage to the max ...and show zero profit ..throw it in some black box of deferred pension benefits ..whatever the accountant pulls out of his/her behind. Essentially hide the baloney (totally legal).
I've just increased my real wealth by millions per year ..I've had all the clout and mobility that it brought ..and I got the government to assure that any rate of return was to the tune of 30%+ in avoided costs of taxes over just getting paid.
It's a nice racket if you qualify. That's why you hear me say that it's painfully obvious that wealth needs assistance. They get it
Here is my observation from a few of my friends' way to take advantage of business expense:
1) Business expense their wedding, by putting a fraction of time up to their multilevel marketing program. They invited 2 to 3 customers and defer their contract date, to justify the write off of the wedding expense.
2) Have a beater that they never drive as their personal vehicle, and the nice car as a company car. Since they have a personal vehicle, they can write off the entire company car expense.
3) Vacation to various "offices" of the multilevel marketing's local office, like Hawaii, business paid.
4) The usual meals with friends as business expense.
5) Depreciation of rental properties that makes them almost no/low income.
6) Donate stocks that has a gain instead of selling it and donate cash. You get to use pretax money to donate. I don't think you can do that with pre-social security or pre-medicare salary to do that.
Now, for the super rich, the following:
1) Have the company buy a private jet/boat for executives only, and have the executives pay a coach airfare price every personal use. Perfectly legal, but questionable.
2) If you made it big with a company's stock, never sell it. Defer the sales and borrow money against your stock instead. You do not have to pay tax for a loan, but if you fail to pay it back, then the bank can repo your stock, tax free. Moreover, if you can get the loan with an interest lower than your stock growth, you can get a compound growth faster than selling. (see Larry Ellison)
For business:
1) If you manufacture in China, make sure you pay your Chinese division a huge price, so that most of your money is made there, with lower tax rate. You end up paying lots of Chinese tax, but not much US tax. That's why many US companies aren't paying income tax at all.
2) As Gary Allen said, reinvest all the profit into high debt and high yield deals are a sure fire way to make more money before tax, but this is risky to the business too, so it is also not always a good move.
Off topic: many of the Israeli co-workers told me how they work in Israel. The tax is so high, that the companies give very good benefits instead of salary because you will be taxed to death (70%... max) otherwise. Everyone has free company car, free lunch, free health care, free educations, gas allowance (almost free gas), almost free housing (low quality ones however).... It is almost a communist state. Everything is so expensive that whenever they come to the US for business trip, they spend every night shopping for clothes and electronics to bring back home.
1) Business expense their wedding, by putting a fraction of time up to their multilevel marketing program. They invited 2 to 3 customers and defer their contract date, to justify the write off of the wedding expense.
2) Have a beater that they never drive as their personal vehicle, and the nice car as a company car. Since they have a personal vehicle, they can write off the entire company car expense.
3) Vacation to various "offices" of the multilevel marketing's local office, like Hawaii, business paid.
4) The usual meals with friends as business expense.
5) Depreciation of rental properties that makes them almost no/low income.
6) Donate stocks that has a gain instead of selling it and donate cash. You get to use pretax money to donate. I don't think you can do that with pre-social security or pre-medicare salary to do that.
Now, for the super rich, the following:
1) Have the company buy a private jet/boat for executives only, and have the executives pay a coach airfare price every personal use. Perfectly legal, but questionable.
2) If you made it big with a company's stock, never sell it. Defer the sales and borrow money against your stock instead. You do not have to pay tax for a loan, but if you fail to pay it back, then the bank can repo your stock, tax free. Moreover, if you can get the loan with an interest lower than your stock growth, you can get a compound growth faster than selling. (see Larry Ellison)
For business:
1) If you manufacture in China, make sure you pay your Chinese division a huge price, so that most of your money is made there, with lower tax rate. You end up paying lots of Chinese tax, but not much US tax. That's why many US companies aren't paying income tax at all.
2) As Gary Allen said, reinvest all the profit into high debt and high yield deals are a sure fire way to make more money before tax, but this is risky to the business too, so it is also not always a good move.
Off topic: many of the Israeli co-workers told me how they work in Israel. The tax is so high, that the companies give very good benefits instead of salary because you will be taxed to death (70%... max) otherwise. Everyone has free company car, free lunch, free health care, free educations, gas allowance (almost free gas), almost free housing (low quality ones however).... It is almost a communist state. Everything is so expensive that whenever they come to the US for business trip, they spend every night shopping for clothes and electronics to bring back home.
Pandabear...they started doing that in Oz some time ago when the 48.9% tax rate kicked in at $49,500.
So Govt decided to tax "Fringe Benefits", the famous FBT. Politicians realised that they would be liable for taxation on all of their lurks and perks, so made the FBT payable by the employer offering the fringe benefits.
So Govt decided to tax "Fringe Benefits", the famous FBT. Politicians realised that they would be liable for taxation on all of their lurks and perks, so made the FBT payable by the employer offering the fringe benefits.
Tax evasion/avoidance is illegal in Canada, and you can get in trouble for most of what is described above, if you are caught. Sure, some people do this, but not everyone. If you have lots to lose, you have to play by the rules.
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Originally Posted By: oilyriser
Tax evasion/avoidance is illegal in Canada, and you can get in trouble for most of what is described above, if you are caught. Sure, some people do this, but not everyone. If you have lots to lose, you have to play by the rules.
Now you see the other side of the border, oily ..and the other side of the coin.
I don't really begrudge these things for how they're intended to inspire growth. As with most things, there's the other shoe that always drops.
For example, during the 80's a tax incentive was introduced to enable the investment in domestic industries to counteract the exodus of manufacturing offshore. A day or two later hmmm (iirc) USX (?), an existing steel company, bought BP (or the other way around) an existing oil company... at a whopping $150M discount (or some incredible figure). Both were existing companies ..and no jobs were created in the process. As XS650 offered, some are sitting there reminiscing ..saying "Boy ..those were the good old days when you could pull off a coup like that".
You want to see a true "Sweat & Toil" entrepreneur? Look at Otis Beaver (FP) or Frank Miller. Molacule would be another one. Hopefully Pablo in the future. Those are the type that we envision when we discuss these things and do indeed want to enable (help) those efforts bear much fruit ...
..but they are trumped big time by the nature of the system that is almost a custom fit for relative easy money in avoided taxation. They're parking wealth.
Tax evasion/avoidance is illegal in Canada, and you can get in trouble for most of what is described above, if you are caught. Sure, some people do this, but not everyone. If you have lots to lose, you have to play by the rules.
Now you see the other side of the border, oily ..and the other side of the coin.
I don't really begrudge these things for how they're intended to inspire growth. As with most things, there's the other shoe that always drops.
For example, during the 80's a tax incentive was introduced to enable the investment in domestic industries to counteract the exodus of manufacturing offshore. A day or two later hmmm (iirc) USX (?), an existing steel company, bought BP (or the other way around) an existing oil company... at a whopping $150M discount (or some incredible figure). Both were existing companies ..and no jobs were created in the process. As XS650 offered, some are sitting there reminiscing ..saying "Boy ..those were the good old days when you could pull off a coup like that".
You want to see a true "Sweat & Toil" entrepreneur? Look at Otis Beaver (FP) or Frank Miller. Molacule would be another one. Hopefully Pablo in the future. Those are the type that we envision when we discuss these things and do indeed want to enable (help) those efforts bear much fruit ...
..but they are trumped big time by the nature of the system that is almost a custom fit for relative easy money in avoided taxation. They're parking wealth.
Quote:
So poor = dumb...that's nice.
There is no way that applies to what I posted as a flat statement, though I knew someone would try.
Quote:
I'm a millionaire. Current machine shop rates are XXX.xx/hour. I go and buy a bunch of CNC/etc. machinery because I can afford the ante to enter into the market ..and due to the ante ..the market is limited. This supports the high rates. I hire machinists at the competitive going rate ..steal a few from the competition..blah..blah..blah.
Where's my risk? That no one is going to use me? Not likely ..but we'll assert (for demonstration) that I will have a decent competitive market share. Given the high cost of machining ..just how likely am I ever gonna "lose money" ..unless not making my target ROI is considered losing money.
I see that you have little background in manufacturing.
And how did the millionaire get to be that way? Magic?
The idea that there is no risk is nuts.
Quote:
Small Business Survival Rates
Small Business Openings & Closings:
There were 671,800 new businesses, and 544,800*business closures.
Two-thirds of new employer firms survive at least two years, and about 44% survive at least four.
Findings do not differ greatly across industry sectors.
http://www.score.org/small_biz_stats.html
On the plus side:
Quote:
Small Business Effects on the Economy
The estimated 25.8 million small businesses in the United States:
Have generated 60 to 80 percent of net new jobs annually over the last decade
Employ 50.6 percent of the country’s private sector workforce
Represent 97 percent of all the exporters of goods
Represent 99.7 percent of all employer firms
Generate a majority of the innovations that come from United States companies
25.8 million small businesses in the US. Nearly one for every 10 people in this country. Are one in ten people here millionaires? I don't think so.
As far as tax loopholes, those are generated by the government due to them trying to play with the economy. There are bound to be unintended consequences from doing this as there always is. The fact that accountants can out smart Congress people should not be surprising.
So poor = dumb...that's nice.
There is no way that applies to what I posted as a flat statement, though I knew someone would try.
Quote:
I'm a millionaire. Current machine shop rates are XXX.xx/hour. I go and buy a bunch of CNC/etc. machinery because I can afford the ante to enter into the market ..and due to the ante ..the market is limited. This supports the high rates. I hire machinists at the competitive going rate ..steal a few from the competition..blah..blah..blah.
Where's my risk? That no one is going to use me? Not likely ..but we'll assert (for demonstration) that I will have a decent competitive market share. Given the high cost of machining ..just how likely am I ever gonna "lose money" ..unless not making my target ROI is considered losing money.
I see that you have little background in manufacturing.
And how did the millionaire get to be that way? Magic?
The idea that there is no risk is nuts.
Quote:
Small Business Survival Rates
Small Business Openings & Closings:
There were 671,800 new businesses, and 544,800*business closures.
Two-thirds of new employer firms survive at least two years, and about 44% survive at least four.
Findings do not differ greatly across industry sectors.
http://www.score.org/small_biz_stats.html
On the plus side:
Quote:
Small Business Effects on the Economy
The estimated 25.8 million small businesses in the United States:
Have generated 60 to 80 percent of net new jobs annually over the last decade
Employ 50.6 percent of the country’s private sector workforce
Represent 97 percent of all the exporters of goods
Represent 99.7 percent of all employer firms
Generate a majority of the innovations that come from United States companies
25.8 million small businesses in the US. Nearly one for every 10 people in this country. Are one in ten people here millionaires? I don't think so.
As far as tax loopholes, those are generated by the government due to them trying to play with the economy. There are bound to be unintended consequences from doing this as there always is. The fact that accountants can out smart Congress people should not be surprising.
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Quote:
I see that you have little background in manufacturing.
I have plenty of background in manufacturing and have friends how own machine shops. Your point?
Quote:
And how did the millionaire get to be that way? Magic?
Again, this is the assumed myth of the Sweat&Toil millionaire. I could have inherited it ..I could merely be sitting on daddy's worthless farm that was getting to hard to work and just happened to be on the local townships zoning plan for 2 acre subdivisions. Naturally, myself and him being on the township council has nothing to do with it.
Why is it that you see only the purity in the people making it ..and only the evil in those taking it? Neither view has any sensible truth to it as in a real sense.
And of all the businesses that fail ..how many of them are at a loss when the enterprise in itself can be subsidized by over 30% in avoided taxes?? If they never make a dime they're already yielding 30+%.
You park wealth in them. You can do it with lots of stuff. You may create nothing in terms of employment that replaces the amount of money that you took out of the system in terms of tax revenue.
Wealth needs help.
I see that you have little background in manufacturing.
I have plenty of background in manufacturing and have friends how own machine shops. Your point?
Quote:
And how did the millionaire get to be that way? Magic?
Again, this is the assumed myth of the Sweat&Toil millionaire. I could have inherited it ..I could merely be sitting on daddy's worthless farm that was getting to hard to work and just happened to be on the local townships zoning plan for 2 acre subdivisions. Naturally, myself and him being on the township council has nothing to do with it.
Why is it that you see only the purity in the people making it ..and only the evil in those taking it? Neither view has any sensible truth to it as in a real sense.
And of all the businesses that fail ..how many of them are at a loss when the enterprise in itself can be subsidized by over 30% in avoided taxes?? If they never make a dime they're already yielding 30+%.
You park wealth in them. You can do it with lots of stuff. You may create nothing in terms of employment that replaces the amount of money that you took out of the system in terms of tax revenue.
Wealth needs help.
Paying less tax does not equal a subsidy, It equals less being taken away. If the vampire only sucks one pint of my blood, but sucks a quart from my neighbour, am I being subsidized?
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I'm sorry oily, but an avoided loss is a gain. It still comes back to a circumvention of supporting the costs of society under the (in many cases) guise of "enabling more employment" ..that indeed can yield less revenue than it saved. The difference is in who saved it at what point in the economy.
It turns receiving lower income into amassing wealth under the income tax radar. It may require little added effort in whatever got you to the party ..and there's no assurance nor any reason to assume that it benefits the society in the action.
You can lose money under that tax avoiding modality and still increase your wealth.
Essentially there are so many loopholes in the tax system that it's effectively not a tax system above a certain level of income. It's an illusion at that point. Most at that bracket are making more (read as increase in wealth) ROI from their invested (diverted from taxation) money then they do from "working".
I'm not saying that I wouldn't do exactly the same thing if I was in that position. I'm merely dispensing with the window dressing that produces some Normal Rockwell imagery sound bites.
It turns receiving lower income into amassing wealth under the income tax radar. It may require little added effort in whatever got you to the party ..and there's no assurance nor any reason to assume that it benefits the society in the action.
You can lose money under that tax avoiding modality and still increase your wealth.
Essentially there are so many loopholes in the tax system that it's effectively not a tax system above a certain level of income. It's an illusion at that point. Most at that bracket are making more (read as increase in wealth) ROI from their invested (diverted from taxation) money then they do from "working".
I'm not saying that I wouldn't do exactly the same thing if I was in that position. I'm merely dispensing with the window dressing that produces some Normal Rockwell imagery sound bites.
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