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.

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.

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.

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

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. :-)

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

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

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?