Obama lately has been on this kick about the wealthy paying their fair share.
Being we are coming up on an election year you are going to hear all kinds of theories and numbers that you can’t really take to seriously… Promises are gonna be made… stats will be made up…
All I can do is talk from my own experience.
I felt like I have always paid my fair share.
The one thing I have learned is that the more money I have made in my life the more “opportunities” there are to pay less taxes.
Lets for a second forget about the 3 companies I have sold in the last 5 years. Total combined investment of probably 200k of post taxed income but millions and millions in return which I only had to pay 15% income tax on.
But I pay a very low amount of tax by deferring money. In my case a huge percentage of my income is tax sheltered for many years.
Thus bringing down the total amount of tax I pay by about 40% over all. Course the money is not available to me. But I don’t need it either.
Fact of the matter is a very small percentage of people pay the majority of taxes.
Fact of the matter is politicians will always promise the world to the lower class but in the back rooms are always making deals with the wealthy to ensure that the rich always win.
Here is what I propose. Call it the ShoeMoney FU tax act.
Get rid of every single deduction. EVERYTHING.
Everyone pays an equal percentage on all income earned. EVERYONE
When you die you give up all your money
Imagine how much money we would save with no IRS and no accountants trying to decipher and argue tax code. Just pay a flat percent on all tax earned.
Imagine how our economy would keep humming if people can’t pass on millions/billions to their children. I have 2 little girls right now and the last thing I want to do is cripple them by giving them millions of dollars when I die some day.
What I FOR SURE don’t want to do is give our government no more money. Since I have been old enough to notice they consistently waste money.
About the author...
Jeremy Schoemaker – who has written 2424 posts on ShoeMoney.com.
Hi I am Jeremy Schoemaker and ShoeMoney.com is my blog. 99% of the post here are done by me but you will see others occasionally make guest posts. This blog is fun to write but for my day job I run several online companies.
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{ 22 comments… read them below or add one }
Not a bad idea, however I disagree with giving up all your money when you die. I have a daughter as well and though I would like for her to work and make something of herself I would like for whatever I do have to go to her to help support her on the way. Just my opinion on that =]
I like it! Not to mention all those lame tax lawyers who would have to find new jobs! Whoohoo!
That is never going to happen, as for passing on the money to children is concerned, that is a personal decision and state shouldn’t interfere in that! If you want, you can will away all your money to the state, charity or your dog, no one is going to argue against that, then why force those who wish to pass on their heritage to their children to cough it out to the government?
Sounds good…except for not being able to pass my money along to my children. You don’t want to leave your money to your kids…fine…leave it wherever you want and I will do the same but it shouldn’t be a ‘blanket’ rule made up by some politician or anyone else to decide except for me and my family. It simply comes down to the fact that if I made it and I pay taxes on it while I’m alive then it should totally be up to me to leave it to whomever I want to and not leave it up to the Feds. I defiantly don’t want the same people you say squanders money away having any say so on what I do with the money I have made and paid taxes on to ‘choose’ for me where my money goes. The more we get these jokers out of our lives the better off everyone will be.
Seems like one of those things that is great on paper, but not sure about the execution. Still, I do agree… I wish someone would try to make it work. We waste so much time arguing about all of this crap that it would be best to just do it this way in the end.
You had me at “Get rid of every single deduction. EVERYTHING. Everyone pays an equal percentage on all income earned. EVERYONE”
You lost me at “When you die you give up all your money”
Not everyone will be “crippling” their children with millions of dollars. Some people will scrimp and save all of their life to leave 10k to their kids. No way they should have to forfeit that.
What’s to stop me from writing my kid a big fat check on my death bed?
I agree with you about the crippling effect of giving people just about anything, let alone money, but it would be so ridiculously easy to get around that…unless you die in a fiery plane crash or something.
Shoe, can you do a post about sheltering your income. Some of your readers are like you, making much more money each year than they need. Those readers are maxing out solo 401k plans, and other things, and still have more money than they need. How do you go about sheltering several hundred thousand dollars of earned income each year?
I agree with all you’ve said except the death tax.
Money is the abstract representation of the productivity you’ve generated in your lifetime. You *own* that, and you get to decide how it is disposed of – and that includes when you die.
Besides, from an outside perspective, one of two things will happen – your children will be good stewards of the money and will grow it, creating positive external investment, or they will blow it all, which will move it to the hands of others who are good stewards of it.
There is no need for a death tax – just let economic natural selection occur.
I like the idea of a fixed percentage for everyone, but the money not passing on to your children, can’t agree with you there…
What if a guy has 50,000 $ on the bank , and his kids are struggling paying mortgage bills.. they have right to that money…
Maybe put a max on it for the multi millionaires and billionaires.. but.. all.. no..
Honestly I need to learn how you paid that 15% because running a business I thought you would be paying close to 40% taxes? I will do some research now!
You’re the linkbait master. No dolo for your kids? C’mon man.
How come I’m the only one that can pick up the sarcasm here?
Why not just incorporate with you as the sole employee/owner? Corps get taxed A LOT less.
I agree 100%. It’s kind of hilarious because Obama is proposing the Buffett Rule, which is really just a revamped version of the Alternative Minimum Tax…how many people is that hitting now?
It’s hard to believe how naive some people can be, mostly because they don’t understanding anything. Congress will propose a tax on .5% of people, they will generate a $ that will “generate”, Congress will spend that newly generated money, rich people will avoid the tax increase by moving money, and the poor schmuck middle class dude will be worse off…because in any tax increase bill on the rich, there are taxes/fees that hit the middle class.
Realistically, congress will NEVER simplify the tax code because it’s the only way they have to repay favors. They trade exemptions in tax laws for campaign contributions.
I am ok with a flat tax. I am not ok with the death tax. If rich people can’t teach their children to manage and grow the gift they have been given then so be it. However, if you want to really permanently pull people from the lower classes then you need multi-generational wealth IMO.
Also not hot on the death tax because…
(putting on tin foil hat)
I want a faceless institution having vested interest in keeping me alive & producing – not shortsighted interest in me dying.
Plus if my kids are continuing my business they may need some extra capital to float them as they transition into running the show. Because although I’d like to think I would train them well, nobody knows when their number is up.
Otherwise a good plan though I don’t see a flat tax passing anytime in the next century because there are millions of people with jobs around managing taxes. Attorneys, accountants, bookkeepers, and government employees at the Federal, State, and local levels.
Sounds good to me. Actually, anything would be better than the way things have been ran for the past how many years. Obviously the government has no idea what they’re doing financially. What really bugs me, too is that all that’s going to happen by these huge tax increases is that larger companies are gonna say, “screw it”, close shop, and move their headquarters to another country.
Or, look at a company like Solyndra, that after getting a friggen $535 million federal loan, decides they’re shutting down one US plant, and putting off building the other. W-T-F??!!
Brian, the 15% is capital gains tax, selling a biz is capital gains… also look into a S corp. you can pay yourself a small salary and the rest be paid out as capital gains at 15%…. It’s all good unless Obama changes the capital gains rate to 30%!
What about Ron Paul proposal to abolish unconstitutional IRS and income tax. Let’s be reasonable what you propose is actually something that is covered with sales tax and property tax. You pay tax for properties you use during your life and for goods you buy so every sale should have tax attached… that is how america become what is now.
About heritage, it should be also taxed so each generation pays tax for wealth they get and that’s how things should work.
I’m not sure you understand how taxes work. Deductions are exactly what it sounds like, deductions from your income AKA money you didn’t actually make and shouldn’t pay taxes on.
Actually not sure you understand how it works. You can’t classify them that easily. How can you say all the money I spent on cars, software, computers, employees and other stuff I did not make money with? Also my kids I get to deduct them. I have a business in Nebraska that does online advertising so their was some deduction for that (10k per company). I get to deduct my house and some other real estate I own.
All of these things build wealth so you saying it should not be classified as income is silly. As I stated before its all deferred income.
I like the idea of everyone being taxed equally but I disagree with the point of letting the “hard earned” money be given away because most people I know who have built their financial towers would like to give their families a good start off point! Its ashame the govt continues to squander away trillions in tax payer money but I think the best solution is for more of us to start educating our youth on finances, investing, etc at a very young age!! And I mean young…i figure if they can learn how to use ipods, iphones, read books, play various mind challenging games…then we should challenge them with the intelligent uses of money!! Ex’s: Lemonade day and other good programs to teach kids to be entrepreneurs!!