I’ve got government on the brain since my corporate taxes are due January 15th. And, once again, Uncle Sam is digging deep into my pockets to take all he can get.
Scratch that.
It’s actually more like grabbing me by the ankles and shaking out every last nickel he possibly can, leaving me dizzy, disoriented, and questioning my decision to ever become an entrepreneur.
Why did I sign up for this annual shakedown anyway?
As I’ve said many times before, if U.S. citizens had to actually write checks to the government every quarter or every year, there would probably be a revolution overnight.
The federal government knows this. So the tax system is designed to keep your average citizen in the dark.
The U.S. Tax System: An Exercise in Deception
The U.S. tax system is designed to manipulate the majority of tax payers into thinking that the income tax is a good thing.
Employees hardly think about taxes because they’re paid through automatic payroll deductions. If you’re an employee, you couldn’t give to God first if you tried (unless your god is government, of course).
What’s more, the tax system is set up to make the average citizen feel a false emotional “high” every April 15. That’s because most people get tax refunds even if they’ve claimed the right number of deductions on their W-4 wage withholding form.
Never mind that your refund is your money anyway, or that the government has been keeping it all year; you still feel good getting a chunk of money every spring.
For an employee, taxes are easy. You work, you get paid, your employer remits your taxes for you. Once a year, you file your tax return and usually get money back. Occasionally you have to pay a little bit.
For an entrepreneur, taxes are far more complicated.
You have to track all your income and expenses yourself. You have to track business miles driven. You have to do all your own accounting or pay to have it done for you.
You then have to remit quarterly returns to various state and federal agencies (including the unemployment office, a government unto itself, and one of the worst-run bureaucratic agencies in the history of man).
And, if you’re making any kind of profit whatsoever, you are probably paying thousands of dollars in taxes every quarter, tens of thousands if you pay your taxes annually.
How’s that for a disincentive to start and run a profitable business?
How Taxes Killed a Business Before It Even Got Started
A few days ago, my wife mentioned to me that she wanted to start selling her handmade jewelry on Etsy. I strongly suggested she not do that.
At first she was puzzled. So I explained.
“Okay, so you’ve made a little bit of money from selling jewelry to family and friends — small cash sales that haven’t been reported to the government. As soon as you start running your hobby like a business, you’re going to have to give Uncle Sam his share.”
I could see she was not happy. I continued.
“You’ll have to set up separate business bank accounts for all income and expenses from your jewelry business. You’ll have to do quarterly accounting.
“And probably worst of all, you’ll have to do annual inventory on all the little beads and trinkets you still have on hand at the end of the year. After paying an accountant, you’ll probably be losing money on every necklace, bracelet, and set of earrings you sell.
“Let me put it in perspective. If you turn this into a business, you’ll probably have to make jewelry for the government for at least 3 months straight. The rest of the year you can then keep what you make, if you’re lucky.”
At this point, my wife was visibly angry. “But how can they do that? How can they just take my money? I already pay sales tax every time I buy something.”
“I know. It’s just the way it is. They get you on sales tax, income tax, real estate tax, car registration tax. There’s no end to it.”
My wife walked off, angry and frustrated at the government for placing such a formidable roadblock in front of her plans to run a small jewelry-making business.
Needless to say, she did not open an account on Etsy. And she has no plans to sell her jewelry outside of her friends and family because she has absolutely zero interest in accounting, doing inventory, meeting with a CPA, or filling out forms and sending a third of her earnings to the government.
(Not to mention, making handmade jewelry is low-profit and not scalable in the least — unless you’re hiring an army of Chinese people to do it for you.)
Funny how when it comes to taxes, ignorance truly is bliss — and being informed is borderline rage. It’s unfortunate so few people are informed.
Giving to Caesar What Is Caesar’s
Of course, as angering as taxes are for entrepreneurs and business owners, I much prefer working for myself to the alternative.
And so I labor on, giving the IRS whatever it demands so I can continue writing from home.
My only hope is that some day things will change and the federal government will loosen its grip on my productivity — and my pocket book.
-Ryan M. Healy
P.S. Here’s a good quick read on what happens when there’s too much government intervention: What We Can Learn from Argentina
About Ryan M. Healy
Ryan Healy is a direct response copywriter. Since 2002, he has worked with scores of clients, including BoostCTR, Alex Mandossian, Terry Dean, and Pulte Homes. He writes a popular blog about copywriting, advertising, and business growth, has been featured in publications like Feed Front magazine, and is a regular contributor to WordStream.com, BoostCTR.com, and MarketingForSuccess.com.
Even the best copywriters sometimes get stuck for words and struggle to write winning ads. But what if there was a surefire way to smash through writer's block and write winning copy almost every single time? Good news -- there is. Click Here to Read the Complete Article » |
{ 34 comments }
“A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned – this is the sum of good government.” Thomas Jefferson
Makes ya wonder…
Have the likes of Pelosi, Reid, Dodd, Frank… pretty much the whole bunch of 'em… ever heard of this Jefferson guy?
Hmmm, Jefferson. Jefferson… the name sounds vaguely familiar. Now who was that guy again? ;-)
That's a funny quote. I don't think I've seen that movie since the 1980s… maybe time to give it a second watch.
Ryan,
Canadians face pretty much the same thing here and it's
a giant *bleep off.
I remember when I started my first business. It was a tiny Graphic and Web Design
service intended to help other business owners who were (and still are) being gouged by advertising agencies…
I went through 11 months of pain. Didn't make a profit. Maxed out my credit card to the tune of $6000 always thinking that my income would cover that expense…
Well, no such luck. I made a series of bad decisions that I take responsibility for… but after it all… on the verge of homelessness (I hadn't paid full rent in two months) the government sent me a bill of $450 something dollars to thank me for doing my taxes.
This floored me completely. What the average entrepreneur doesn't know is that they aren't entitled to a lot of the benefits that employees or even the unemployed are. At least in Canada.
I applied for Social Assistance… my head hung in shame as I struggled just to survive… they told me “I was making too much money.”
Imagine that… I went 11 months and only made $3000 max, but I was making TOO MUCH for assistance. Meanwhile the bum down the street who begs me for money every time I walk down main here… is pulling in more in a year than I did in that business. And the woman who gets “knocked-up” is given a “reward” for every child she has up to three. Now maybe folks think I'm being too harsh here but there's people who make a “career” out of living on Social Assistance… I've seen it with my own eyes. It's sickening.
Long story short, I had to work two years in fast food just to survive. Nevermind paying off debts. I discovered copywriting, threw myself into that because of the higher profit margins… only to be gouged by the government again.
Thankfully now I'm making a fantastic living doing what I love… writing copy that sells but honestly… I'm downright terrified every time tax season comes round. And it hurts seeing crooks, liars, and bums abusing the system every day.
It's almost like modern society is run by people who feel entitled to the fruit of our efforts. We suffer for years for our goals then we're forced to give our pickings to the whiners who will never succeed in life… the quitters who have no right to the sweat of our labor.
Wow. I guess, I got a little riled up here. This topic really gets my goat. Government taxes almost made me homeless. I have a special spot in my heart for every one and any one in business… we're crooks from the time we open our business.
I'm not opposed to paying taxes. I think everyone should, but I wonder if any of our so-called tax dollars get used for good. It seems to me like our countries borrow what they spend. If they had to rely on our tax money they'd all be broke. The state of modern society is unsettling to say the least… but at least we don't live in a completely communist world yet…
This is a well written piece on a touchy subject Ryan.
Overall I'm VERY grateful to live in a country that does tax its citizens and by and large provide for basic services and infrastructure needs. Having lived through the alternative in the developing world, I know it's well worth it.
But that doesn't mean that our system has it right. We have a tax structure that disproportionately penalizes productive work and encourages widespread abuse and fraud, which is a shame… especially since it doesn't have to be that way!
-Brian
“I’ve worked in the private sector. They expect results!” Dr. Raymond Stantz, Ghostbusters
Dude…Ryan, don't even get me started.
This is a corrupt system that shouldn't even exist in my opinion. But like you, I trudge along, because the alternative (working as an employee) is worse…much worse.
Whew! A lot of emotion in that comment, Courtney. Bravo for telling it like you see it.
At least in the U.S. you don't owe taxes if you don't turn a profit. That's crazy they'd hit you up for $450 when you weren't even in the black!
Ryan
Thanks, Brian.
I totally agree with your point: It's good to live in a country that has a solid taxpayer-funded infrastructure. And I also agree it could be done better (and more fairly).
Getting rid of the progressive tax system would be a step in the right direction.
Ryan
Yeah,
Haha… sorry about that. Dang, you're hitting those emotional
chords with the topics you pick lately!
Good job.
Yeah, it had to do with retail sales tax I had collected. I did make a mistake on my side, and it was supposed to be refunded to me… but it still hasn't been. So that's wasn't much comfort at the time.
Hey Joseph,
Thank you.
Yeah, almost everything that affects Americans hits Canadians too. Our taxes might be slightly different but power and politicians remain much the same. The producers will always be forced to support the money-sucking vampires.
I think I have a bit of a chip on my shoulder but all the same this is a very troublesome issue for both our countries… and every entrepreneur.
I don't know anybody here has read “7 Steps To Freedom II” by Ben Suarez, but he had his own political problems…
It seems like the FDA, FTC, Taxes, and government are all slanted in one direction…
kicking every entrepreneur who doesn't know his place in the nads!
Thanks Joseph
No need to be sorry at all. I love passionate comments!
Thanks again, Courtney. :-)
Funny you should mention that book “7 Steps to Freedom II” — I just ordered it recently, but haven't read it yet.
In a similar vein, one of my current clients has had a nasty run-in with the FTC. Seems if your business gets big enough, an unpleasant meeting is almost a guarantee.
Ryan
Not only is the tax system corrupt, the money system itself is corrupt. If we really want to make things better here, I believe we need to start at the root of the problem: fiat money.
But I'll save that rant for another day. ;-)
Ryan
Ryan – great post! …so true…
Our present tax system is designed primarily to engineer 'social goods' as defined by the leftist bureaucrats in DC.
If it were mainly about generating the most revenue, taxes would actually be lower, much lower. ..since lower tax rates are proven to generate MORE revenue.
The 'dance' most productive citizens go thru to avoid the higher tax rates is wasteful of our most precious resource, …time.
This government, particularly, would like to see all citizens in traditional employee status, rather than independent entrepreneurs. Then everyone would be 'excitedly' waiting all year for their 'tax refund' which is actually an interest-free loan to the government!
Courtney,
Wow, I'm actually glad you got “riled up” a little here…not because of the negative impact on you of course :) , but because your story illustrates the soft underbelly (that no one wants to REALLY discuss) about how screwed up this ancient and inefficient tax system of ours in the U.S. is…because the similarities between ours and yours is shocking.
Thanks for sharing the detail Courtney.
Yeah, It's not the easiest read but it's definitely
everything I thought it would be.
I managed to get a near mint used copy of it. I was
actually surprised. Barely paid anything at all. :-)
You're right Ryan, it's getting worse by the day too.
So, Ryan, let's see…You live in the US, not, say, Sweden–and thus you pay about 1/3 of the taxes you might if you lived there. Of course, THEY get health care, extended vacations, and other cool benefits, while we get rather more mundane stuff like police, fire, sanitation, water, and sewer.
Somebody's got to pay for that stuff, and I don't mind the parts of my taxes that go for infrastructure. And I wouldn't begrudge paying for health care through tax dollars, as most civilized countries do. I do, however, begrudge the parts that go for military imperialism, tobacco subsidies, nuclear energy subsidies, etc. etc.
And actually, we self-employeds have an incredible good deal under US law…because all sorts of things are deductible as business expenses while working stiffs have to absorb those costs. Schedule C is a gift to entrepreneurs!
Your friendly neighborhood liberal contrarian,
I'm with Shel here.
I can understand why people get upset about paying tax. I've read one writer who claims that all taxation is legitimised robbery. In Medieval times, it probably was – the king levied taxes to pay for his wars against France!
However, I wish you to consider this. If you lived in a remote village in Papua New Guinea with a more traditional way of life, then you would be expected to do work for the community in order for it to function. Whilst everyone might have their individual projects or things they did to provide for their family, they would be expected to look after their elderly relatives, the sick and infirm and to take care of infrastructure as part of community duties. That is a kind of taxation.
In industrialised societies, this can't be guaranteed, especially not with the rise of the nuclear family. Also, it would be beyond the ability of small communities to deal with national infrastructure such as roads, and more localised infrastructure such as waste, schools, hospitals etc.
The problem with a lot of americans is that they've got this rather naive ideology about being rugged individualists setting off across the prairies to the west coast as pioneers with no help from anyone. And so they seem to have this notion of a very small state and no interference. Great, if it works. But does it? If you don't like paying tax, then that is most likely what you're subscribing to – in which case don't expect to have any roads or public services, government, law enforcement, health care, schools, universities, public leisure facilities, emergency services, forestry, national parks, consumer protection, and I could go on for a while, but won't.
On a very pragmatic level, taxation is a necessary evil in an industrialised society in order to provide all the public services that actually oil the cogs of the country. On a more ideological level, tax is a way of redistributing wealth, which is needed to keep a balance. Whilst I agree that clever, ingenious, enterprising individuals should be rewarded for their efforts, it shouldn't be to an obscene degree. We all have a duty to look after those less fortunate than ourselves. When the gap between the rich and the poor becomes too wide, that is fertile ground for unrest and bloody revolution.
The comments from the person in Canada whining about paying $450 tax are a bit pathetic frankly, and add nothing of any substance to the argument. I imagine he is saying that he sold some stuff, charged sales tax, then didn't pay that over, forgot about it, then got a bill for it. No excuse for that – that 's just mismanagement. He had taken in money that “belonged” to the government (because he was charging their tax for them – it wasn't part of his price), and then had obviously spent it. No sympathy from me, and it was an erroneous argument. The money was never his in the first place.
Also, the argument about the small jewellery business seemed odd to me. I don't know if you do things differently your side of the pond, but over here pretty much everything is deductible, so if you don't make a profit, you don't pay tax, AND in fact you can carry losses forward from year to year. If you're making a profit, then be grateful and gratefully pay your tax! Get a good accountant to minimise it. Seems to me you're saying that she's effectively trading illegally by making cash sales below the radar. That's fine and she can carry on doing that, as well as selling via other means. I'm not sure what the problem is, unless your system is so different to ours.
So, let's say this. 66% of something is better than 100% of nothing. If the tax system battered you that badly, you wouldn't bother working for yourself. My experience is that the tax system is actually very favourable to self-employed people and I got considerably more money once I got off PAYE and onto coroporation tax.
Tax is a fact of life if you want to live in a civilised country where you don't personally have to deal with roads, sanitation, law enforcement, etc. Tax is also a way of making sure that the disadvantaged get a better chance in life, or that anyone of us who might become unemployed or infirm through no fault of our own will be looked after.
I therefore find the whole rant quite immature, I'm sorry to say.
Jane
I suspect your terror of tax comes from a misunderstanding of how it works. When you make money, you have to pay some of it as tax – you know that. Therefore, you need to set aside a proportion of what you earn – put it in as high an interest account as you can and forget about. Then, you come out ahead – you make interest before you pay it over.
If you're making a good living, and making enough to live on, then there's no reason why this would be a problem for you. It tends to become a problem for people when they either “forget” to set the money aside (mismanagement), or they have lean times and need to spend the money and hope to make it back again, but don't.
Good day Jane,
I've already agreed with most of what you said in your comment in my previous comments. So I'm not really sure what you're getting at. Sounds slightly insulting. But I roll with the punches and love almost everyone.
Here's a hug.
*hug
Indeed, I do make a good living, more than enough to pay my taxes. In that regard I've been blessed. I couldn't always say that. I've tried to start multiple business and all failed one after the other.
In fact, my understanding of taxes is partly responsible for my choice of copywriting as a career.
What a lot of people don't know about Canadian taxes is this.
Graphic Designers in Canada have to remit RST, even though architects, and copywriters… in many cases… do not. It turns out that the government's definition of what is taxable and not taxable is ridiculous to say the least. There is no difference between the intellectual creation I do now and what I used to do… except now… half of my taxes are dropped because I create intangible property.
Which is cool.
Anyone who says words aren't powerful… hasn't done their taxes. The difference between owing the Canadian Government thousands upon thousands this year comes down to the word: intangible.
At least, the government's definition of it.
I just don't have any faith in where the other half of that tax money goes.
I think what the public fails to understand is that businesses have built more schools and libraries in North America than government has. Good old Andrew Carnegie.
Now, where's all that tax money going? Roads? I don't drive. Buses? I don't need them? Welfare? It's constantly abused here. Schools? If so, why did college cost $30,000? Hmmmm… seems likes there's a lot of questions without answers… but nobody is asking them.
Maybe I have a career in upsetting people with politics… who knows? lol
Anyhow, gotta go, but I love your feedback Jane. You sound like someone who knows what she's doing. A person I would love to meet someday.
“I've read one writer who claims that all taxation is legitimised robbery. In Medieval times, it probably was – the king levied taxes to pay for his wars against France!”
How is this any different than the British and American imperialism of the last few hundred years?
Currently, the U.S. “king” levies taxes (direct and indirect) to pay for illegitimate wars in Iraq and Afghanistan.
It's the first war ever waged not against any particular country per se, but against an idea!
The War on Terror, just like The War on Poverty, cannot possibly succeed. In fact, by unleashing the U.S. war machine, we've created more terror in the world than the terrorists themselves.
******
“Tax is a fact of life if you want to live in a civilised country.”
By equating taxes with civilized society, are you implying that not paying taxes is the equivalent of barbarism?
If so, there are plenty of barbarians in the U.S. who are not paying taxes at all, yet still get the benefit of living in a “civilized country.”
These barbarians live on welfare.
How ironic that the taxes that make a country civilized fund the barbarians, which (by definition) must lead to the devolution of civilization.
******
I won't reply to the rest of your arguments here. Although I have started writing a follow-up post to address some of them. :-)
Ryan
Jane,
You express some valid points.
I have no problem paying my share of taxes, and as a small business owner, I sure have the flexibility to lessen my tax bite. What I'm deeply concerned about is the inflation of government at the expense of productivity in free enterprise.
As a country, we appear on a path that is not sustainable.
http://hotair.com/archives/2010/01/06/chart-of-…
What I find quite immature is how our Congress recklessly spends (er, now simply prints) trillions of dollars (thanks to tax dollars from productive businesses and individuals- the top 10% of income earners pay nearly 65% of all tax dollars collected in the U.S.) to shore up their re-elections.
Perhaps I, as an individual, would be a better, more responsible steward of my wealth than the government?
At the very least if I risked my capital, I put in my sweat and effort in building my business, I'd like to have the freedom to choose helping my fellow man vs. having my government forcing it upon me.
I apologise if I misunderstood. It sounds like the Canadian system is a little bonkers. Over here (as far as I know), any legitimate business expense is deductible or can be put down to depreciation and the simple outcome is that if you make money, you have to pay some in tax, but if you don't make any money once all deductions are accounted for, you don't pay tax. This applies to all businesses as far as I know, although some types do have special rules e.g. sub-contractors in construction.
I guess how tax dollars are spent is another discussion – more political and ideological. My only major gripes with tax pounds is them being spent on a pointless war in Afghanistan and propping up banks which don't seemt to have any intention of paying us back any time soon.
However, on a more pragmatic level, I think you'll find that you do need roads. Without roads, there'd be no food at your supermarket/grocery store and you wouldn't be able to walk there! So, let's have a little proportion maybe?
Oops – looks like I've opened a bit of a can of worms here!
I think we might be confusing various issues. Basically broken down, I think it amounts to whether you agree you should pay taxes to pay for communal infrastructure etc (the practical things that we take for granted), or whether you want to live in a state that's anarchic, and then the second argument is what taxes are spent on – the political and ideological aspects of it.
If we agree that some taxation is required in order to pay for infrastructure etc (as Shel was saying), then we must accept that we have to pay some tax, if we're fortunate enough to earn enough money to be tax payers.
However, as tenacious entrepreneurs, we will probably try to find ways to minimise our tax payments and always have a bit of a resentment about paying tax. I think this “phenomemon” is created by us only have to pay over taxes at the end of the financial year (in the UK at least), so we feel as if we're giving our money away. This is especially problematic if we didn't keep some money aside, and suddenly have to find money we don't have to pay taxes. That is, I think, what Ryan was getting at in the first post.
How that money is spent and how much tax we pay, is another matter altogether. I can sympathise with the sentiments in the US. Whilst I don't know a huge amount about it, what I've read is that you pay about the same as we do, but you don't get the welfare, National Health service or any of that. Indeed, Dubya probably was being like a medieval king spending it on his wars. Couldn't agree more with those sentiments, and there is growing unrest over here about the price we're paying (in lives, as much as anything) for this futile war in Afghanistan. And let's not even get started on the defence contracts (your tax dollars!) being given to Bush's cronies and “mates”!
The size of the state and what taxes are spent on seems to me to be an ideological argument. As a fairly typical liberal Brit, I'm a bit of a social capitalist – i.e. I believe in free enterprise and creativity, but I also believe in “the greater good”, which involves some aspects of socialism and the welfare state. I believe this country is a better one for having instituted the welfare state, and is in alignment with all of our European contemporaries. We therefore generally don't have situations where people are refused medical treatment or schooling or any other things that we consider to be basic human rights. We still have problems e.g. homelessness, but for most people the welfare state is a “buffer zone” for if or when they lose their job through no fault of their own, or become ill. Why wouldn't we look after people when they fall on hard times?
I've been through tough times and know how hard it is it get yourself out of a downward spiral. Most people are NOT lazy ne'er do wells, but they get trapped in situations that they can't get out of, because they need a “turbo boost”. When given that turbo boost, most people will do their utmost to get themselves and their family on to the next level and away from poverty permanently. Some people exploit the system; the vast majority do not, and therefore the welfare state (no matter how imperfect) is still better than allowing an economic apartheid to develop with its corresponding disaffection and criminal behaviour. Think South Africa – middle class whites living in “compounds” with guns under their pillows – constantly in fear of crime perpetrated by people who have next to nothing.
What I think we probably could all agree on is that many super-rich people and corporations have found increasingly ingenious ways to avoid paying tax and that then places an unfair burden on “regular folks”. I once had a tax inspector come all the way from Scotland to inspect my books and they had a bit of an argument with me over my mobile phone bill. We eventually sorted it out once I'd properly justified it and I wasn't taxed on it. But what I couldn't believe was that they were using tax payers money to send someone 400 miles, who then would have had to stay in a hotel to inspect a business with a turnover of $50k! You can't help wondering why they aren't hassling Tesco who have literally BILLIONS off-shore in tax-avoidance loopholes.
Many americans that I've come across do seem to have a view that is totally at odds with what we take for granted in Europe/UK. Even right-wingers here accept that we need the health service, unemployment benefits etc. I can intellectually understand the argument that it should be up to each individual as to what charity they want to provide. However, left to their own devices, most people probably wouldn't pay enough to create a sustainable, consistent welfare system. Worse than that, during times of recession, they would probably curtail their payments, when even more people need welfare – we currently have something like 2.5 million unemployed. Most people, sadly, could not be relied upon to make provision for others as we live in an increasingly ego-centric, selfish society. Therefore, it is up to the state to enforce taxation to pay for these things. However, I accept the notion that it might be better if people and communities were left to sort these things out themselves – I'm just not sure it works in practice – particularly not in industrialised, urban societies where we no longer know our neighbours.
In utopia, we would probably all live in settlements of about 500 and provide for all our own basic needs e.g. food, education, health, employment etc. It would be the whole of the community's responsibility if people fell on hard times, and we'd all work together towards the overall welfare of the community. Failing that, I think we need to pay some tax and let the government get on with it.
My understanding is that the quality of life is much higher in Scandinavia, where, as Shel says, they pay huge amounts of tax. Apparently, the Finns are the happiest people in the world. I wonder if there's a correlation between large welfare state, life expectancy, quality of life, distribution of wealth and low crime rates? Personally, I despair at the British system because it's always creaking and just about ready to fall over – we should probably pay more tax and get more creative about how we can fund healthcare and education.
I suspect it comes down to very different perspectives either side of the pond. There seems to be a seam or undercurrent of “every man for himself” in the US and many people wanting small government (or maybe none at all!). We obviously have a very different mindset here, and I for one am very grateful to Attely and Bevan for setting up the welfare state after the war. My father – a died in the wool Tory (right wing), was once proselytising about how wonderful private health care was. When I pointed out that none of these hospitals have A&E (ER) the penny finally dropped. They're nice if you can afford them, but they don't provide the full range of services and ALL of us need the NHS, no matter what insurance policy we have.
Anyway, a complex and interesting issue. Taps into all kinds of veins and hits all kinds of nerves!
Jane
Jesus said it was tyrannical to submit the people to a 10% tax rate. We have a rate of about 50% or 5 X tyrannical.
Anytime you take from some people and give to others, that's stealing. And it doesn't matter if it's a government. It's still stealing.
When a government taxes its people for infrastructure, justice, and defense of its sovereignty, it's within its rights as a good government. When it taxes its citizens for anything else, it's wrong.
I find it incredible (and incredibly frustrating) that the average person doesn't have a clue how the monetary and tax systems work, how inflation steals us blind and the income tax steals our money and our privacy. And it blows my mind that people actually think that having corporations pay income tax means they are hurting any one but themselves.
I've said it for years: businesses, if they are going to stay in business, don't pay income taxes (beyond a certain point); they find a way to pass that expense on to their customers or they go out of business. Unfortunately for you Ryan, like other small business owners, this just puts the squeeze on you and helps large corporations (who often have some kind of situational government-given advantage and the means to buy…er…I mean influence votes) to stomp on who would be their real competition: the small business owner.
My best wishes to you on working through the mess that is business taxes.
- John
There’s a movement to radically change California government, by getting rid of career politicians and chopping their salaries in half. A group known as Citizens for California Reform wants to make the California legislature a part time time job, just like it was until 1966.
I sold books and other items in an eBay and Amazon store for three years before becoming a copywriter.
Yes, it was disheartening at times knowing that my net profits were only about a third of my gross profits, after expenses and the small amount I paid in taxes.
But It was a very valuable experience and I'm glad the thought of paying taxes didn't scare me away from doing it.
There are many good reasons why your wife should consider opening an Etsy store:
1. It will give her an outlet away from the kids.
2. It's a good use of her creative skills and when you earn money from being creative you push yourself to learn more and more opportunities come your way (this is how I discovered copywriting).
3. She'll learn the basics of running a business and those are valuable skills to have in this economy. Keeping track of inventory isn't as tedious as it sounds and paying an accountant $200 to do taxes isn't the end of the world. My tax bill was always pretty small and was offset by deductions and the amount taken from my husband's paycheck.
And besides, you pay far more in taxes than she ever would, yet it doesn't stop you from being an entrepreneur. :-)
The stuff about your wife isn't totally accurate – first of all she does not need to open separate bank accounts, or even form a company. She can run her business as a sole proprietor, and there's actually no requirement that says business expenses can't come out of a personal account. She also doesn't need to do any of the inventory stuff – all she needs to do is keep track of how much she earns and how much she spends and report it to the IRS. The odds are good that her business wouldn't make enough to pay taxes anyway.
Hey Dan!
Funny you should mention that book. It's sitting on my desk right now. I'm more than halfway done with it.
G. Edward Griffin is amazing. It's all non-fiction, but it reads like an international crime novel.
Ryan
Hey Ryan,
Thanks for bringing this to people's attention.
Did you know that the income tax does not go to pay for any government services?
None!
Reagan appointed the Grace commission in the 80's to investigate where the money from the income tax goes. They found 100% of it goes to pay the national debt.
And do you know where that is? The Federal Reserve, a private for-profit corporation of foreign bankers.
The scariest book I ever read was “The Creature From Jekyll Island”. It explains who really owns the Federal Reserve and will show you where your tax dollars are going.
Scary stuff indeed.
Laura – You are correct: She wouldn't have to open a separate bank account or form a company. She could do it as a sole proprietor, and maybe that's what she should do.
The only challenge is that if you do make enough money to pay taxes, you have to pay much more as a sole proprietor than an LLC filing as an S-Corp.
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