Taxes and Tax Information

The universal answer to every human problem, according to today’s left, is to raise taxes and soak the rich. My question is, does this work?

There are countries that have done this. Did they function well? Guess which nations did this absolutely? You got it.

The Soviet Union of Russia, the old East Germany, the old communist China, and today’s Cuba, among others. They all had the liberal dream of universal health care, low CEO pay, government funded education and so on.

What was the result? The worst economies in the history of the modern world. Poor agricultural output, stagnant industrial growth, and little or no scientific innovations. Their health care was among the worst in the world. Their educational systems produced few noted scholars.

At the same time, the United States of America, using capitalism, grew to be the largest economy in the world. Why?

The Apprentice Factor

I have watched Donald Trump’s The Apprentice since its beginning, just as a human interest phenomena. What you see on the show is that the contestants are willing to do just about anything to become Donald’s apprentice. Of course this means the chance to become a CEO for one of Trump’s businesses. This means a bright future with all the compensations of a CEO. Yes, this includes million dollar salaries and above, plus all the perks, like stock options and so on. All the evils that liberals hate.

What’s the result? These people are willing to kill their mothers to win. Or, are they? What becomes apparent is that yes, they are willing to do almost anything—but that Trump will always “fire” them if they don’t demonstrate good character and fair play along the way, in addition to being competitive.

Does this happen in business too? Yes, of course. People who cheat their companies usually get found out and never rise to become CEO’s. Instead, most often, as in The Apprentice, the people who become CEO’s are the ones in a company who work the hardest, the longest, the cleverest, and with the best communication and political skills of anyone in the organization. They are almost willing to kill their mothers to get the job, but they restrain themselves to remain fair. Are they cutthroat? Yes, probably. Do they contribute to the wellbeing of the company? Yes, or they wouldn’t have risen to the heights they have.

American CEO’s often make 300 to 400 times the salaries of their workers. Is this too much? European and Canadian CEO’s make about 20 times the salaries of their workers. Is this better?

I don’t mind if we study the issue, so let’s do it. Which companies do better? The ones that pay their CEO’s outlandish salaries and perks, or the ones that pay them less?

Let me apply logic first. Then, I’m willing to peruse any studies that are out there, and I invite economists and experts to weigh in.

Again, what about the Apprentice factor? What would you be willing to do to earn 300 to 400 times what you are making now? Would you work nights and weekends? Would you try to be innovative? I think the answer is yes. You’d be willing to work your tail end off. Which is what happens. A worker in a communist country usually doesn’t work very hard because there’s no pot of gold at the end of the rainbow. It doesn’t matter how hard they work, so why should they exert themselves more than is necessary to just survive?

The Post Office Factor

The same thing happens in American companies that have no great incentives to work hard, like the Post Office. These companies are often inefficient, with poor service, bad customer relations, and poor treatment of workers. Why do their workers “go postal?” killing their co-workers and bosses? Because they are treated badly, and work in a poorly functioning environment. Most post office workers do a good enough job, but few of them are busting their tails like the up and coming CEO’s of other American corporations.

Take away the outlandish CEO compensation of American corporations and you take away the Apprentice factor. What do you have then? The Post Office Factor. The liberal dream of a corporation. One giant Post Office.

Soak the Rich

Most people want to become rich, except for a few “saints.” If you give most people the winning lottery ticket, a small percentage of them will donate the money away to charity. The majority of us would keep almost all of the money.

Many of us are working hard to make more money, and the more money the better.

Most Americans, the more money they make, the more money they do wind up giving away anyway. The richest people usually do give the most to charity, as with Bill Gates.

Yet, the prevailing liberal philosophy is, if you do get rich, we want to confiscate your money. We don’t want to give you the choice. Just give it to us. We know better what to do with it; we are more generous than you are; and money in the hands of the government is much better than in your dirty, grubby fingers.

Government programs are the solution to all the world’s ills.

The extreme of this kind of thinking, again, is communism. A lesser extreme is socialism. An even lesser extreme is capitalistic socialism. The most “selfish” kind of economy is pure capitalism.

So, did Soviet Russia work? Or Communist China? No. They took all the rich peoples’ money away and gave it to the government. Everyone had free health care. That health care, again, was among the worst in the world. The people had barely enough food to eat.

What about lesser extremes? The socialists? Israel, for example, was a purely socialist country for many years. Everyone had free health care and so on. Here again, their economy was a mess, with stratospheric inflation, high unemployment and little growth. Then, they turned capitalistic, in the 1980’s, and their growth took off. The same thing is happening in China today. They are turning away from soaking the rich, turning away from communism and towards capitalism. The result? Their economy is booming. Everybody in China is benefiting. The workers on up to their CEO’s.

What about Europe? I’d like to hear from Europeans what it is like to live in socialistic countries. I know I had a girlfriend from London a few years back who broke her arm. She had to wait for months before she received proper treatment. This is what we’ll get with socialism and universal health care.

Problems with the U.S. Economy

The U.S. is the most successful economy in the history of mankind, and yet I know there are still problems. The distribution of wealth is always an issue. Again, why do C.E.O.’s make so much money and the workers so little? That’s why unions were invented. Yet unions have caused problems too. Unions have driven several airlines out of business, and American steel makers, and automakers, and on and on.

Globalization has hurt the common man/woman in America too. A cheaper labor supply overseas means lower wages here.

Plus, illegal immigration has provided another source of cheap labor that drives down wages. Everyone from construction workers to truck drivers make less money because of the abundant supply of cheap labor provided by illegal immigration.

Greedy CEO’s versus Lazy Bureaucrats

What is the solution? Take all the rich people’s money away, and become communist, or socialist? Again, those economies don’t grow very fast, have high unemployment, and provide lousy universal health care. Do we want that?

Raise the minimum wage? Maybe, but that hurts business, especially small business, and will mean fewer jobs.

I’d like a solution to a more even distribution of wealth, but I don’t want it to be the government stealing money and using it for programs that just enrich their administrators. Then, instead of rich, energetic CEO’s, we’ll have lazy, fat cat bureaucrats.

A Modest Proposal

Let me propose one kind of solution. It’s not confiscatory, and yet it forces companies to share the wealth. Let’s pass a law that every company over a certain number of employees be forced to sell a portion of its ownership to its employees. This percentage of ownership need not grow so large as to present a threat to the decision-making in the companies, but it will be large enough that the workers will have a share in profits. Then, their wages and profits will grow naturally, with the success of the company.

For example, just for argument’s sake, let’s say we create a pot of 10% ownership that is set aside for the employees. This means that employees can buy their share of this 10% as time passes. The pool of “owners” will grow with time, but the workers can also sell their shares too. Anyway, they’d be ahead of the game. They’d be getting their salaries plus this partial ownership of the company, maybe with dividends, maybe without.

Workable? I don’t know. I studied some economics in university and am a former stockbroker, but this stuff is still above my pay grade. I think ideas like this, though, are worth considering. This kind of idea seems better to me than merely stealing money from the rich with higher taxes. Give the money to the people, not the government. Plus, it’s not a giveaway. The workers buy their shares.

And, with this idea, you still have the Apprentice Factor, giving people the incentive to work hard. You aren’t stealing money from the rich, but you are sharing the wealth. Think about it. Economists, let me know if I’m on to something, or if the idea is half-baked. Liberals, go ahead and tell me why it’s better just to steal the money from the rich.

The Choices

Do you want Cuba, with its universal health care, or the United States of America, with its uneven distribution of wealth? Or Europe, with its high unemployment rate?

I’d choose the U.S., but I’d try to be innovative. Let’s find capitalistic-friendly solutions to health care and the distribution of wealth. Yes, this includes privatization, another liberal taboo. According to liberals, the government can always do things better than the people. They always know better than you what to do with your money. You aren’t fair, but trust them, they’ll take your money and give it to the poor. And the poor will invest that money wisely.

Rock’s Plan for Economic Prosperity

1. Keep the Apprentice Factor. It helps your company prosper.

2. Find a capitalistic-friendly way to share the wealth of your company.

3. Create capitalistic-friendly ways of providing an economic safety net for the poor, and health care for everyone.

4. Send every liberal to university for free to take basic economics courses, where they can learn how economies and money markets work.

The most effective measure of all would be point number 4. I’d vote for any initiative that would give this free education to all liberals, to everyone in the Democratic Party, and to any of the up-and-coming communists and socialists that we are breeding in our schools and universities. Send the professors to these courses too. I’ll even let you raise my taxes to pay for this free education.

Rock

Truth—The No Spin Politically Incorrect Zone

Tags: get tax help, tax relief, tax help, taxes, paying tax

Popularity: 6%

Over the last 30 years, limited liability companies have become a very popular choice as a business entity among small businesses. While the entity is a good choice, there are some tax issues that must be considered.

Limited Liability Companies and Taxes

The entity known as the limited liability company [LLC], was created by a legislative act in Wyoming in 1977. Instead of immediately becoming popular, the entity just kind of sat for 10 years. The primary reason for this was a tax issue. Simply put, the IRS took some time to getting around to inspecting it and then wasn’t really sure what to do with it. The problem was the entity looked like a corporation, but the law indicated it was to be taxed as partnership. Since state law is not binding on the IRS, a federal agency, a complex quandary was created.

In 1988, the IRS issues guidance that it would tax the new entity as either a corporation or a partnership with the business being allowed to choose. This favorable ruling resulted in most states moving to pass their own laws creating and allowing for the use of LLCs within their borders. In this mad rush to create laws allowing the entity to be used [and fees to be collected by states], the finer points of the IRS guidelines were missed. As a result, many of the acts allowing for the use of LLCs within a state created problems for owners that exist to this very day.

When looking at the LLC, the IRS was confronted with an entirely new business entity that did not fit comfortably within the boundaries of then existing tax law. The IRS was faced with the equivalent of trying to put a square block in a round hole. At first, it re-acted by putting forth complex guidelines regarding how ownership was held and business was conducted to determine whether the entity would be taxed as a corporation or partnership. All hell broke loose and the agency realized their approach simply didn’t work. The business entity was supposed to help small businesses, not pile tax regulations on them. The IRS soon dropped the regulations and went to a check box strategy. Simply put, you checked a box on a form telling the IRS if you wanted to be taxed as a corporation or a partnership. For practical reasons, nearly every LLC chooses to be taxed as a partnership. Another problem soon arose.

In their gusto to help the little guy and create a new revenue source, state governments often included legal clauses allowing for single owner LLCs. Simply put, this meant a sole proprietorship could become an LLC and be protected from personal liability for business debts just like large, publicly traded business. The IRS staff must have groaned. A huge problem had been created.

In general, the legislative process does not produce intelligent laws. The compromises between democrats and republicans often lead to bizarre laws that contradict the basic premises of some area. With LLCs, this was clearly the case. The problem lies in the partnership tax classification and single owner designation.

By definition, a partnership is two or more people pursuing a business activity. How then, could a single owner LLC be taxed as a partnership? The various state governments had blown it again. Surprise, surprise. The friendly chaps at the IRS reported this back to the states, which of course did nothing. The IRS was in a real quandary. Single owner LLCs were about to get a shock. The IRS decided they could not be taxed as a partnership.

If you form an LLC and are the sole owner, you need to understand what happens when it is time to pay taxes. For tax purposes, the IRS ignores your LLC designation. It will not accept partnership tax filings for your business. Instead, it is going to treat you a sole proprietor. This means you are going to pay self-employment tax and other little nasty taxes that you probably were not expecting when you formed the LLC. When the state fees and such are added up, you actually pay far more than being a simple sole-proprietorship. The advantage, however, is you have the shield protecting you from personal liability. At the end of the day, however, the cost may not make a single owner LLC worth the effort.

If you are considering starting a single owner LLC, you need to sit down and talk with an attorney or accountant. It is vital that you understand what you are getting into to avoid a very ugly surprise when it comes time to pay taxes. While there is hope that the IRS will address this issue in the future, chances are slim considering 30 years have passed since the creation of the entity.

Tags: tax season, federal tax, estate tax, tax accountant, tax reduction

Popularity: 6%

Dealing with the IRS when you owe back taxes is a fairly scary thing. The IRS realizes you do not want to talk with its agents and has come up with a solution.

Resolving Your Back Taxes Without Talking to the IRS

Imagine picking up the phone, calling the IRS and telling them you have not paid taxes for a few years. In a poll of the scariest scenes from movies, that has to rank right up there with the stomach scene from Alien and so on. Truth be told, most people will put it off for as long as possible. Many will just stick their head in the sand and hope nothing ever comes of it.

The IRS realizes it has a big, bad reputation. It likes it. If people thought the IRS was friendly, how motivated would they be to actually pay their taxes? Not very! While the IRS likes to maintain this reputation, it does have a backlash impact. Taxpayers that get behind on their tax payments often do not move to resolve things because they fear the IRS ripping them apart if they act. This, of course, means the back taxes don’t get paid until the IRS takes action. It costs the IRS man hours it doesn’t have and puts otherwise law abiding citizens in a worse situation. After years of contemplating this situation, the IRS has come up with a possible answer.

If you owe back taxes to Uncle Sam, it is critical that you take voluntary action to resolve the problem. The IRS takes a much different view towards those who come forward versus those that hide. The IRS even has instituted payment plan programs to help voluntary reporters resolve their issue and get back into the system. The problem with these programs, however, was most taxpayers feared calling the IRS so much that they didn’t take advantage of them.

The IRS has now implemented a new online system for people that owe back taxes. Instead of speaking with an IRS agent, you can now go online and fill out an application for a payment plan to resolve your back taxes. To use the system, you must have filed all relevant tax returns, even if you couldn’t pay the actual tax. If you have not done this, you need to before applying online. Once you have the returns in, you will need to wait for a balance due notice from the IRS. You then go online and apply. You will need the balance due, your social security number, and a pin number that is on the balance due notice.

This new program is a very smart move by the IRS. Imagine resolving your tax problems without every talking to anyone at the agency! To access the program, just go to the IRS site.

Tags: tax accountant, property tax, get tax help, pay less tax, state tax

Popularity: 6%