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How to avoid paying taxes and save billions

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MilesAhead:
When it comes to taxation and loopholes, my favorite story is Clark Clifford. A big time man of influence, he made a phone call to a contact in the U.S. Senate and saved the owner of a corporation about $3Million in taxes for the year.  He hung up the phone, turned to the head of the company and said, "that will be $25,000 please."  Whereupon the client turned red and propounded that he'd be damned if he was going to pay anyone $25,000 to make a 10 second phone call.  Clifford said "as you wish" and dialed the contact again.  He just said "never mind" and hung up.

I don't know much about how all the stuff would work, accounting and all that.  But I think the reason it took a constitutional amendment in the U S of A to get income taxes is because, once you have income taxes, you have deductions.  Once you have deductions, you have to justify them. Once you have to justify them, then you have "well this amount here, what did you spend that on? You then went here, why did you go there? Was it a business meeting or a vacation?  Who did you talk to and what about?"  yadda' yadda'.  I'd rather just have a 10% sales tax and not keep tabs on my life under pain of perjury.

Perjury should be way more fun than that!

Renegade:
When it comes to taxation and loopholes, my favorite story is Clark Clifford. A big time man of influence, he made a phone call to a contact in the U.S. Senate and saved the owner of a corporation about $3Million in taxes for the year.  He hung up the phone, turned to the head of the company and said, "that will be $25,000 please."  Whereupon the client turned red and propounded that he'd be damned if he was going to pay anyone $25,000 to make a 10 second phone call.  Clifford said "as you wish" and dialed the contact again.  He just said "never mind" and hung up.
-MilesAhead (October 22, 2010, 01:57 AM)
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That's an excellent story. I've never heard it before.


I don't know much about how all the stuff would work, accounting and all that.  But I think the reason it took a constitutional amendment in the U S of A to get income taxes is because, once you have income taxes, you have deductions.  Once you have deductions, you have to justify them. Once you have to justify them, then you have "well this amount here, what did you spend that on? You then went here, why did you go there? Was it a business meeting or a vacation?  Who did you talk to and what about?"  yadda' yadda'.  I'd rather just have a 10% sales tax and not keep tabs on my life under pain of perjury.

Perjury should be way more fun than that!
-MilesAhead (October 22, 2010, 01:57 AM)
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Hahahaha~!

But yeah. It's pretty invasive. There's no reason to know every detail.

Darwin:
Google is “flying a banner of doing no evil, and then they’re perpetrating evil under our noses,” said Abraham J. Briloff, a professor emeritus of accounting at Baruch College in New York who has examined Google’s tax disclosures.
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Well, if you set up the rules of the game that way, and people take advantage of it, can you really blame them?

On a related topic, if you are a US citizen, there is no hope in Hell for you to get around tax. You must have a company set up. The US expects all income from all sources worldwide to be declared in excess of $75,000 (or something like that). So, if you live overseas, you still need to pay Uncle Sam. Corporations do not need to pay Uncle Sam, but private citizens do.

Now, is that messed up or what? I don't need to rant about it. I'll leave the ranting to some of the Americans here. :D
-Renegade (October 21, 2010, 07:15 PM)
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Well... unless you declare non-residency (which is a bit of a hassle and an even greater hassle to "un-do" later), Canadians who live overseas are expected to pay income tax on all foreign earned income at the same rate as they'd pay at home (though usually tax agreements between Ottawa and other governements mean that you pay the difference between tax paid in your country of residence and the applicable Canadian tax). Or has this changed in recent years? Anyway, I was rather jealous of the $75k for free thing that Americans enjoyed! But then, I never made anywhere near that when I lived and worked abroad, so...

jpprater:
There have been a lot of good comments in here, and I respect Mouser's wish to keep this non-political, but I would like to say just a few things with regard to some of what I've read.

1.  Corporate "tax evasion" is not necessarily a matter of selfishness on the part of company owners.  It's a matter of the corporation's owners feeling that they know better about how to spend their own money than the government does.  And so they used their money and influence with the government to try and protect the money that they have earned and their own ability to spend it as they wish.  There are some selfish people running corporations (can you say Enron and Sallie Mae? :P I knew you could), but not all corporations do this for evil purposes.

2.  It is not automatically necessary for a person to be fabulously rich in order to avoid paying taxes.  It's a matter of understanding the law and the ways that money can work.  Charitable donations and gifts up to US$10K are tax-free.  Money spent on certain types of business expenses is deductible from your taxes, up to a certain percentage.  Money utilized in certain types of investments is tax-free until the time of withdrawal.  Anyone can do it if they know how, although it is definitely true that it is easier to do with more money than with less. ;)

3.  Corporations still pay.  But they definitely pay much less, because of the tax rules that come into play with corporations.  A corporation is not a person or group of people.  It's a stack of legal documents.  The tax laws can't apply to it in the same way that they do to citizens.

4.  What Google and other corporations do in regard to their taxes is not evil.  Money is nothing but a tool; how you use it is what makes it evil or good.

Jon

Darwin:
BTW, while I agree that a flat 10% tax may be overly simplistic, I have always assumed from arguments that have been advanced advocating a "flat" tax, that there would still exist a base income below which no tax would be payable, so Perry and Deozaan's concerns about the very poor being discriminated against wouldn't, I think, apply. I still dither about whether I agree with the idea, but from my position of ignorance it sounds reasonable  ;D

I don't make very much (never have, never will), but I have no problem paying taxes. Taxation makes possible the society in which I live and the freedoms that I enjoy. I like sleeping at night knowing that there is a police force patrolling the city. Services like sewers and paved roads are nice, too. However, what does get my scrotum in a knot is that fact that I pay a great deal more than 2.4% income tax on the peanuts that I earn, and I'm helping to support a family of four. Ultimately, this is one of those discussions to be avoided because good arguments can be made from both sides of the issue (corporations employ lots of people and must be profitable in order to continue to do so, etc.). If I think too hard about it, my head spins - must be a sign of a circular argument!

Apologies for continuing the discussion about taxation rates, etc. Couldn't resist.

PS I note that Jon (jpprater) posted while I pecked this missive out... he's made some interesting points  :Thmbsup:

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