(I was feeling a little frisky today, so this one is fun….)
Several years ago I wrote a post with a rather obnoxious title, Never Pay Taxes Again, in which I outline our strategy to minimize our tax burden in the years to come. It is still one of the most popular posts on this rather obnoxious blog.
Then I recently outlined how we’ve paid no income tax for 4 years while increasing Roth accounts from $0 to $100k and raising basis in our stock portfolio by $145k. Not only was this all tax free, but will be tax free forever.
As you might expect, quite a few people have taken time out of their busy schedules to express their opinion about the taxes of a guy who writes stuff on a blog. There is something truly magical about the Internet that encourages this kind of sharing.
The strongest opinions seem to come in 3 main forms:
“You are the scum of the earth and a truly disgusting individual.”
“This just goes to show that the US tax system only favors the rich.”
“That’s great for you. What about the orphans, the homeless, and others in need? What about roads, police, hospitals, and other important infrastructure?”
“Yeah! Tax is theft! Bring down the system, man!”
I also have an opinion. And since this is my blog…
It’s great to be passionate about this stuff. While passion alone probably just leads to ignored and deleted comments, passion combined with knowledge and understanding can be a great tool for change.
So here are some fun and interesting things about the US tax system.
The US Tax System…
The US tax system is convoluted, obtuse, contradictory, and expensive… yes, all of those things.
It’s also ridiculously generous. To everybody.
All Americans benefit from some of the lowest tax rates on the planet, in addition to:
- Low income households get the Earned Income Tax Credit.
- Students get subsidized education loans.
- Working class families get:
- tax deductible 401ks and IRAs
- the Saver’s credit
- Child Tax Credits
- the Childcare tax credit
- no capital gains on the sale of a primary home.
- Retirees get low dividend and capital gain taxes.
- Older retirees get tax-free (or nearly tax-free) Social Security and Medicare benefits.
- High income families and people in SF and NYC get mortgage interest and property tax deductions.
- Landlords get depreciation deductions.
- Corporations get deductions for Research & Development (amongst others)
- Oil companies get deductions for whatever oil companies do.
- Hedge fund guys and gals get tax-free carried interest.
- Politicians get assistance with the cost of their re-election campaigns.
- Lobbyists get well paid jobs.
- Accountants and lawyers get to charge high bill rates for doing all of the paperwork.
There is literally something for everybody.
Now that we have a partial list of commonly used deductions and tax advantages, let’s have fun with future passionate comments.
When complaining about how we pay our legally required tax obligations and no more, please also include a list of the tax benefits you are eligible for but choose not to use.
- I own a home and can claim the mortgage interest and property tax deductions, but I choose not to. Here is a copy of my Schedule A for verification.
- I was eligible for a few grants and subsidized student loans, but I chose not to go to college instead. Here is a photo of me working for minimum wage while I save money to pay full tuition.
- I was going to make a deductible contribution to an IRA this year, but I decided I would rather work longer before retirement. Here is a copy of my IRA statement showing a balance of zero.
- We sold our house for $500k more than we paid for it. I thought it was silly that I didn’t have to pay any tax on that gain, so I sent 25% of it as a gift to the US Treasury. Here is a copy of the check.
Thank you kindly,
Go Curry Cracker, a truly disgusting individual
How much extra $ do you gift to the US Treasury?
Thanks for playing along 🙂
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