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The real issue is that society has become so tilted in the favor of the rich

A big part of this (in the U.S.) is the capital gains tax. And no, not in the way you think.

Yeah the long-term capital gains tax is 15%, which is lower than many tax brackets. But those tax brackets are graduated, meaning you can be in the 25% or 28% tax bracket and still be paying less than 15% overall. In fact after accounting for average deductions and exemptions, the threshold at which the average American reaches a 15% tax rate is somewhere in the neighborhood of $200,000/yr gross income (column T). When William Buffett said his secretary paid more than 15% income tax, that was because he pays his secretary really, really well.

The average effective income tax rate for someone making $100,000/yr (28% bracket) is less than 10%. The average effective income tax rate for someone making $40,000/yr (25% bracket) is less than 7%.

So the capital gains tax is too low for rich folks. But it's also too high (way too high) for low, middle, and lower-upper income folks. This means the tax discourages these people from investing, which is the best long-term way to make money as demonstrated over and over by wealthy people like Gates. Yes it should be increased for higher income brackets. But it'd be more helpful to lower or eliminate it entirely at lower income brackets and thereby encourage them to invest.

"The FCC employee was taken aback. Press charges? We don't do that."

They don't have the power to do that.

The IRS does - and they will. Your call after notifying the FCC/FTC should have been to the local branch.

https://www.irs.gov/uac/newsro...

https://www.treasury.gov/tigta...

Just pointing out that life expectancy at age 40, which is when these astronauts flew, is 79.9 years.

No mod points today, so just reinforcing your statement.

The life expectancy figures cited by grandparent are based on a starting age of "zero". A lot of kids don't make it to age five, many due to car accidents. Once you've made it to age five, the "average life expectancy" of the remaining pool has gone up quite a bit.

As you move up the population pool age brackets, you have already lost the people who were going to bring down the average. To state otherwise brings you to the situation where you're introduced to an 85 year old man and say to him "you should have been dead five years ago!" In the case of astronauts, you're also dealing with a bunch of guys who are in relatively good shape - you've already weeded out the morbidly obese, drug addiction, etc.

The IRS actually has tons of tables in the XLS format for figuring this sort of thing out. They're used primarily in figuring out distribution of retirement benefits over time, but have other uses.

Yes, it is correct.

The US IRS tax system is set up to make us ALL guilty of tax fraud

No, it isn't. It's just the result of a hundred or so years of feature creep and kludges meant to encourage/discourage certain behaviors in the population (like mortgage interest deductions to encourage home ownership) and to favor certain businesses as a result of lobbying and cronyism. It sucks, and it should be simplified drastically, but the tax preparation lobby is now very powerful and strongly resists efforts to make taxes easier.

It also explains why there are tens of thousands of armed IRS agents, equipped with REAL assault rifles (fully automatic, short barrel carbines) and other real military-grade equipment.

This is just untrue. The IRS' enforcement division has a payroll of about 3,500 people, about 2,500 of whom are agents (1). According to IRS policy, those agents might be armed with Remington Model 870 or 11-87 shotguns; Smith & Wesson M&P15 rifles; and/or Glock 22, 23, and 27 pistols (2). None of these weapons is fully automatic, none is unavailable to civilians, and there is nothing specially 'military-grade' about any of them.

You are entitled to your own opinions about the IRS, but not your own facts.

1) https://www.irs.gov/uac/crimin...
2) https://www.irs.gov/irm/part9/...

The US IRS tax system is set up to make us ALL guilty of tax fraud

No, it isn't. It's just the result of a hundred or so years of feature creep and kludges meant to encourage/discourage certain behaviors in the population (like mortgage interest deductions to encourage home ownership) and to favor certain businesses as a result of lobbying and cronyism. It sucks, and it should be simplified drastically, but the tax preparation lobby is now very powerful and strongly resists efforts to make taxes easier.

It also explains why there are tens of thousands of armed IRS agents, equipped with REAL assault rifles (fully automatic, short barrel carbines) and other real military-grade equipment.

This is just untrue. The IRS' enforcement division has a payroll of about 3,500 people, about 2,500 of whom are agents (1). According to IRS policy, those agents might be armed with Remington Model 870 or 11-87 shotguns; Smith & Wesson M&P15 rifles; and/or Glock 22, 23, and 27 pistols (2). None of these weapons is fully automatic, none is unavailable to civilians, and there is nothing specially 'military-grade' about any of them.

You are entitled to your own opinions about the IRS, but not your own facts.

1) https://www.irs.gov/uac/crimin...
2) https://www.irs.gov/irm/part9/...

This was true once upon a time, but no longer. The United States taxes former citizens (even ones who have renounced their citizenship), or indefinitely without renouncement.

So no, you do not have a choice.

For another option the Model 3 would be $28k with the same credit and have around twice the range (200 vs 100) if you can wait until 2017. Remember the federal tax credit is phased out after 200,000 vehicles.

Interestingly enough, if you talk to anyone who actually knows what they're talking about a work schedule set by the employer is actually a minuscule bit of the IRS's three tests. Tenured college profs, for example, only actually have a set schedule on when they have to teach classes. Their office hours, when they're doing research, etc. are their own damn business. Even the much abused Associate Prof is an employee, and they don't even have to be in the state except for class time (which is negotiated with the school, not set from on-high) or office hours (which is set by the prof). Just about any high-level employee can similarly re-negotiate his work schedule and get a paid half-day off to help out at his kid's field trip.

It's also incredibly easy to find examples of contractors who have set schedules. You get hired as a contractor to fix an interior door in a building which is locked except during office hours, and the contract specifies you don't get paid unless you're done lickety–split, plus a nice juicy bonus if it's done tomorow, guess what you're doing from 9-5 tomorrow?

At-risk capital is much more important (Uber drivers own their vehicles, so they do have at--risk capital which indicates contractor), as is employer control (and since Uber drivers are damn near paranoid about pissing off the company, and act like Uber controls them, it does indicating employee), as is the nature of the business (if Uber's lawyers are right, and they aren't a transportation company this indicates contractor; if anyone sane is right and they sell cab rides it indicates employee).

Yes, you need a permit to have a garage sale, but unless you are running a business of holding garage sales, then as long as you are selling things for less than you paid for them, the sales are not reportable.

Well, now I'm gonna state that I think you're stretching the truth in a few places.

1. I highly doubt that you've ever met "a fair number American political refugees". Let me rephrase that. They were more likely to have committed a crime, and fleeing prosecution, and making the claim that it was for "political" reasons.... http://www.theguardian.com/uk/...

2. Dual citizen or not, Americans abroad have long been required to pay taxes on money earned overseas. Myself included, which I did for over 12 years. It's hardly just taking their money. There's a rather large "Foreign Earned Income" exclusion, which exempts about the first $100k of income. https://www.irs.gov/individual...

3. Renouncing citizenship isn't difficult. What could be an issue for someone is if they're trying to do so to escape debts, taxes owed, or military service. This is from the State Dept's site:
E. TAX & MILITARY OBLIGATIONS /NO ESCAPE FROM PROSECUTION
Persons who wish to renounce U.S. citizenship should be aware of the fact that renunciation of U.S. citizenship may have no effect whatsoever on his or her U.S. tax or military service obligations (contact the Internal Revenue Service or U.S. Selective Service for more information). In addition, the act of renouncing U.S. citizenship does not allow persons to avoid possible prosecution for crimes which they may have committed in the United States, or escape the repayment of financial obligations previously incurred in the United States or incurred as United States citizens abroad.

The IRS already defines Bitcoin as "property" and not currency.They seem to have tied an arm behind themselves. From this nifty press release: https://www.irs.gov/uac/newsro...

I give it another year or so before gold, silver, and "bitcoin" have a special designation that closes this loophole.

A niece and a friend's wife have been cleaning homes for the past 25 years; they constantly turn down new business and if they lose a client, there are many more interested in their services. Neither of them work weekends. They each make $40k/yr cash, unreported revenue. Neither of them will ever be without work.

Until someone reports them to the IRS (for the reward) and they get a hefty fine or jail time, or at least big bucks in lawyer fees. Not to sound too cynical, but only the uber-rich get away without paying taxes.

"The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30 percent of the additional tax, penalty and other amounts it collects."
https://www.irs.gov/uac/whistl...

Indians pay no Federal Income Tax (read my lips). Oh yeah, it's deducted from their pay, but they get it all back when they file

Indians are in fact required to pay Federal Taxes, they are not required to pay into social security (SSID)because they can not get it when they retire. Their work visas simply expire since they no longer hold a job and return to India or apply for permanent residency.

Indians are willing to live 4+ in a two-bedroom apartment; are you willing to compete with them on that? Ever been to Mumbai, India? Like pooping in the street? That's what Americans are competing against.

Clearly you have not since they don't live like that and haven't for a long time. Do you really think companies are hiring some homeless indian with an OLPC laptop hooked up to a car battery living in the gutter without the means to pay for a haircut or toiletries? Of course you don't, but your too much of an ass much to know better. Travel to Hyderabad and see who your competition is, and how they compete with you. But they have a right to compete with you and are willing to do so, who are you to say "No! you must pay me more even though they are willing to live a less-costly lifestyle and accept less pay." Get your fucking entitled ass-wipes off my software prices / costs. I don't want to pay more for software in america because of ass-munch software developers costing us more economically than some place with greater freedom to hire whomever they want. We get the best value for our buck when our suppliers hire their best bang for their buck, no if's and's or but's.

Oh, your hamburger example is stupid too, plain and simple. All of the "chain" restaurants are so close in price as to not make any difference at all, and the better hamburger places tend to be more expensive. Amazingly, they're still in business, too. You failed to consider or explain that subtle point.

You completely missed the point where he said "If two companies are selling comparable hamburgers". I mean, how could you miss that? It's how the sentence started! Are your reading skills that bad or do you black in and out, because if you do, you should really have that looked at. Re-read the posts you reply to so you don't look like an ass-munch who doesn't pay attention to details, like an Indian programmer does.

I'm not against Indians per se; it's a very bad system in the U.S. of A. right now. Please don't paint hard-working Americans like toe jam because they have dignity and refuse to stoop to that way of living to compete..

Then get out of the market. If you are truly uncompetitive and can't compete, then you should stop costing some poor company their valuable resources.

-- A fourth generation American programmer

http://exchange.aaa.com/wp-con...

I used AAA which seems like a reasonable source and only calculated based on operating costs while not factor in operating costs. Their operating costs for a medium sedan were $0.1087/mile (gas), $0.052/mile (maintenance), and $0.0111/mile (tires) for a total operating cost of $0.1718/mile multiplied out by 3400 miles is $584.12.

You can also incorporate the fixed annual costs into your per mile figure by estimating the total number of miles you drive year.

Another source I could reference is the IRS and their use their 2016 standard mileage rate of $0.54/mile which incorporates fixed as well as operating costs. By that figure a 3400 mile trip costs $1,836. https://www.irs.gov/uac/newsro...

Every dollar you receive is taxed. And you have to pay estimated taxes every quarter. And then you gotta pay the self-employment tax.

It makes me much more keenly aware of the difference between pre-tax dollars and post-tax dollars. When I have to pay say, 100 dollars for something, I know how much I have to make in order to net 100 dollars, after tax.

There is at least one exception (of which I'm aware, I'm sure there are more): house flipping. The first 250K (500K if married) of profit is tax free (exclusions apply). And then it's taxed as a capital gain (at a 15% rate). Tax rules are a big source of politicians' power, and are thus heavily influenced by donations and lobbying.

No, "you can't buy if you don't have money" is not a hypothesis. Nor is "you can't sell if no one can buy".

Hmmmm your reasoning is simplistic, and you can't even state your own hypothesis correctly. Your hypothesis is, "giving money to average people will stimulate the economy." Another way of stating that is, "demand side economics are the way to economic improvement."

No, they didn't. They gave money to "job creators" who promptly hoarded it away because there's no point in investing if no one is buying due to lack of funds.

You're a moron. Seriously, please go shoot yourself if you're not willing to do your basic research. http://www.nber.org/digest/mar... https://www.irs.gov/uac/The-Ma...

Yes, we do (PDF).

Here's the IRS page on the issue. Basically you won't owe any US tax on interest income as long as you don't work in the US or have other business interests in the US. However, since 2013 all US banks are required to report accounts of foreign nationals to the IRS if their country has an information sharing agreement with the US. This is not really for the IRS to tax you, but rather for the IRS to report your income to your home country so you can't hide US income from your country. See this page for more details and a list of applicable countries.

Even things like banning drivers who turn down too many rides? That's not an independent contractor - an independent contractor has the right to determine which rides they will take without repercussion

Umm...I'm the last person who'd defend Uber, however I don't see what the problem is there? If my business relied on contractors, I'd also favour the ones who showed themselves to be more reliable to take the work when it was available.
They also have a vested interest here, as it stops hobby drivers just creaming off the most profitable jobs and allows their dedicated drivers to more easily make a living. This is one of the reasons it's illegal for regulated taxis to turn down a fare (in the UK at least).

Ahh, a Brit. Divided by a common language in legal terms as usual.

In the US a contractor is supposed to be someone who a) has his own equipment, b) has his own business (ie: his own accountant, office, etc.), and c) takes jobs on a contract basis. If you've got a system where the contractor owns equipment (leased through Uber), uses Uber's statements for his financials, and thinks he has to take any work Uber offers that's by definition not a contractor. In fact if a driver HAS to take a job or he won;t get6 another job trhat triggers two of the three IRS Tests for skeezy-assholes trying to pass their employees as contractors to avoid labor laws. It violates the "Behavioral test" because it implies that the boss has a level of control over the driver then is typical in contractor relationships, and it violates the third "type of relationship" test because it codifies the idea that there is an on-going relationship. In theory a contractor is supposed to have a series of one-off contracts with completely different people, not a permanent gig.

In other words if Uber is contracting with drivers it has to treat them like independent businesses, and independent businesses are supposed to do shit to each-opther like cream off the most profitable routes.

That would be tricky.

The problem is that Uber has a lot of control over what it's drivers do because it deactivates (ie: fires) them for shit like refusing a fare or pissing management off. That makes it very tricky for them to get the IRS tests for employee or contractor to say contractor, which means that they are on the hook for a variety of things including the employer half of their driver's self-employment taxes. Since all 50 states have their own employee/contractor rules, with their own employee/contractor tests, and their own legal ramifications if you classify somebody wrongly it gets very complicated very quickly.

Under the settlement they pay current drivers off, and agree to a number of concessions that give Uber management significantly less control over how an individual Uber driver works. In particular they can't basically force a driver to accept a ride by including algorithms that fire him if he refuses to take a certain number of rides, they can't fire them for no reason, there's a whole Appeals Process, etc. There's also a lot more transparency regarding discipline, which is good because one of their problems was that when you asked them "are you doing thing x to your drivers that would insta-convert them to employees and fuck your business model?" Uber would have reams of paperwork saying "Hell no," and then you'd ask the drivers and they'd say "Hell yes." And if your contractors act like employees because they think you'll fire them if they don;t act like employees they are employees.

A person works to make $100; they can expect to end up with $70 in their paycheck.

Earned income has the highest tax rates. Most people who are familiar with the tax laws try to derive most of their income from portfolio (investments) and passive (real estate) income.

If someone's rich relative gives them $100, they get $80.

Under the IRS rules, the gift has to be over $14,000 before taxes come into play. So your example is bogus.

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Frequently-Asked-Questions-on-Gift-Taxes#5

The person doing nothing gets more, and they procreate, breeding more people who provide no benefit.

They're the ones who are cleaning your toilets, harvesting your food and doing the jobs you don't want to do.

The devil is in the details. Saying the capital gains tax in the United States is 0% to 15% is disingenuous. The details are more nuanced. Some useful definitions are at https://www.irs.gov/uac/Ten-Fa....

Short-term capital gains (investments held less than 1 year) are taxed at ordinary income tax rates, which are typically higher than the special treatment given to long-term capital gains but could be lower if the individual earning the gains is in a lower tax bracket because of their overall income being low.

For the folks with high incomes, long-term capital gains are 20%. For folks with somewhat smaller incomes, the long-term capital gains rate might be 15%, and for those with incomes that cause them to have a tax rate already below 15%, the capital gains rate could be as low as 0%. The fat cats with big incomes are not paying anything like the 0% tax on THEIR capital gains, but COULD be paying less than ordinary income tax rates if most of their income is from capital gains rather than ordinary income.

In the end, the Alternative Minimum Tax can and does swoop in and raise the overall tax rate paid to 26% to 28%, again depending on overall income and how well someone has done reducing their overall tax rate with deductions and other treatments. Anyone triggering AMT also has a number of deductions taken away from them, making the 26% to 28% tax due on a greater portion of their gross income as well. More on the AMT https://www.irs.gov/taxtopics/.... Oh, and, in addition to AMT, the Affordable Care Act also added an additional 3.8% net investment income tax onto both short-term and long-term capital gains for individuals making over $200,000/year, so they are likely to be paying a total of 23.8% on their long-term capital gains, not someplace between 0% and 15%.

The reason given for the lower tax rate on long-term capital gains is typically to encourage people and corporations to invest their money (put it to work) instead of just sitting on it, and to keep it invested (for at least a year) instead of being speculative and trading it in and out, disruptively.

The devil is in the details. Saying the capital gains tax in the United States is 0% to 15% is disingenuous. The details are more nuanced. Some useful definitions are at https://www.irs.gov/uac/Ten-Fa....

Short-term capital gains (investments held less than 1 year) are taxed at ordinary income tax rates, which are typically higher than the special treatment given to long-term capital gains but could be lower if the individual earning the gains is in a lower tax bracket because of their overall income being low.

For the folks with high incomes, long-term capital gains are 20%. For folks with somewhat smaller incomes, the long-term capital gains rate might be 15%, and for those with incomes that cause them to have a tax rate already below 15%, the capital gains rate could be as low as 0%. The fat cats with big incomes are not paying anything like the 0% tax on THEIR capital gains, but COULD be paying less than ordinary income tax rates if most of their income is from capital gains rather than ordinary income.

In the end, the Alternative Minimum Tax can and does swoop in and raise the overall tax rate paid to 26% to 28%, again depending on overall income and how well someone has done reducing their overall tax rate with deductions and other treatments. Anyone triggering AMT also has a number of deductions taken away from them, making the 26% to 28% tax due on a greater portion of their gross income as well. More on the AMT https://www.irs.gov/taxtopics/.... Oh, and, in addition to AMT, the Affordable Care Act also added an additional 3.8% net investment income tax onto both short-term and long-term capital gains for individuals making over $200,000/year, so they are likely to be paying a total of 23.8% on their long-term capital gains, not someplace between 0% and 15%.

The reason given for the lower tax rate on long-term capital gains is typically to encourage people and corporations to invest their money (put it to work) instead of just sitting on it, and to keep it invested (for at least a year) instead of being speculative and trading it in and out, disruptively.

According to the IRS historical tax data for 2013, there were 41,520 returns filed in the State of New York with an Adjusted Gross Income greater than $1,000,000.

The total amount of income reported by that group was $161,908,290,000, or a round $162 billion. Taking a quick calculation of 1% of that gives $1.62 billion.

The total State of New York Education Budget for 2013 was $72.3 billion, of which that $1.62 billion is an extra 2.25%. It may not seem like much from a percentage, but the goal isn't to replace existing funding but supplement it to improve services -- and that amount can do some serious good.

http://www.usgovernmentspending.com/year_spending_2013NYbs_17bs2n_20#usgs302

https://www.irs.gov/uac/SOI-Tax-Stats-Historic-Table-2

And no, for anyone in that income bracket this isn't a speed-bump to moving up the ladder. You're already in the nose bleed section and can handle this without losing a step. There is a much greater benefit for those in the bottom 50% getting up a rung than someone of my ilk going from Top 5% to Top 4%.

It's plainly obvious if you look at the IRS individual tax stats. Click on 2013 since it's the latest and load it into a spreadsheet program.

The column of interest is T. This is the amount of income tax each bracket pays as a percent of their adjusted gross income (i.e. before deductions and exemptions) (T). As income increases, so does the percent paid as taxes up til about $1.5 million. There it starts to stall, and by the time you get to $5+ million, it's actually decreasing. As a fiscal conservative, I say this needs to be fixed so it continues to go up through each income bracket.

Also, note that contrary to what most people think, the 15% capital gains tax rate is not low. Due to income tax brackets being graduated and the wide availability of deductions, taxpayers don't exceed a real 15% income tax rate until they're making on average around $150,000/yr (T22-T23). In other words, when Warren Buffet said he paid less in taxes than his secretary, it was because his secretary made a lot more money than the typical secretary or even executive. However, this still points to another problem. Because the capital gains tax does not scale with income, it effectively discourages "regular" people from investing, thus relegating them to low-interest bank savings accounts. People complain that the wealthy make most of their money from investments, yet we have a tax mechanism in place which discourages the poor and middle class from investing. This needs to be fixed as well.

Also if you add up columns e24-e29, you find that people making $500,000+/yr (the top 0.72%) only account for 17.4% of all income. They make $1.2 trillion/yr, and already pay $333 billion of that in taxes. To cover the $483b deficit last year, you'd have to raise their effective income tax rate from ~28% to 68%. You're not realistically gonna be able to balance the budget by raising taxes on only them, at least not without a huge fight. The meat of the income base is between $50,000/yr to $500,000/yr (63% of all income). That's where you have to raise taxes if you want it to make an appreciable increase in tax revenue for relatively small increases in tax rate.

Greyhound service is available from my city to where I work 40 miles away... at 3X the price of me driving

Bullshit. The IRS says it costs 54 cents per mile to drive a car. I can take the Greyhound from San Diego to Oceanside 40 miles away for $6, which is only 15 cents per mile. Where does it cost $1.62 per mile to take the Greyhound?

Your alternative proposal would scrap the rules, which means every business large and small would be finding new ways to barter efficiently.

Barter is considered income -- and is subject to the same income tax.

It is a simple system.

https://www.irs.gov/pub/irs-pd...

36 pages defining income compared to the tax code that is how long?

Require tax returns to be filed electronically and digitally sign them using the private key of individuals.

If you file your return electronically, you need to provide last year's adjusted gross income number, your own PIN or get a filing PIN.

https://www.irs.gov/Individuals/Electronic-Filing-PIN-Request

Q-8: Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities?

A-8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.

You can read about it here: https://www.irs.gov/Businesses...

>For any normal person you don't come to an agreement with the government, they state how much tax you owe and you have to pay it or you go to jail, there's no negotiation.

That's not actually true. The IRS will sometimes negotiate with you: https://www.irs.gov/Individual...

In the case of Google, the settlement amount is so small, I suspect the UK knew it would lose in court, since Google has been very clever with its tax strategies.

False: A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status.
If it were otherwise, contributions to political parties would be tax deductible.

Well, the IRS says the EIN was revoked (for non-filing of the 990) on May 15 2012. The Letter of Determination on X.org's site shows standing on May 17 2012 (and still current).)

Guidestar is often slow at finding 990s. If The Foundation filed its first return as the new 170(b)(1)(A)(vi) in Feb 2014 (extensions after first FY?) it may still be working its way through the system.

Still, the revocation is unusual, and cause for a second look.

I have not one but several limited liability corporations and, according to the paperwork, the audits were (I'm not sure if this is verbatim) because of, "Random and/or computer screening." I passed with flying colors - I have good documentation kept on my behalf. I'm not sure how much information you can get from this link but this link mentions the program:

https://www.irs.gov/Businesses...

As it's a Limited Liability Corporation (complete with president, vice president, and treasurer) it's considered a small business. I'm guessing it probably was the generation process. I'd just recently sold and had gone through a lot of work with lawyers and accountants and had ended up setting up three of them in a row plus a couple of trusts. It was probably flagged as suspicious by the computer? I don't really know and I don't think they ever were willing to divulge their reasons.

I've read about some really, really evil stuff that the IRS has done - like come stomping in and freezing your assets and whatnot, even without trial or due process. It was nothing like that. I went to two meetings each time. I spent maybe an hour at each one and my lawyer dealt with the rest. Rather than be an idiot, I went to a lawyer, finance manager, and accountant while the business was still in the process of selling. I had no idea what I was doing and it was rather overwhelming so I consulted people who knew what they were talking about and shut up and listened. I dare say, that policy has served me well over the years. It's a recurring theme.

I'd watched a documentary, not long before the first audit, where some guy had a restaurant business (small, a couple of them as I recall) and they came in and pretty much destroyed his life by freezing his assets which made him default, owe more money, and they cleared him at the end with not so much as an apology but leaving him in ruin. I was pretty damned scared. Fortunately, it was nothing like that and everything was accounted for and all the documentation was in order.

I'd not done anything different the second time around and don't recall doing anything that might have triggered something but, then again, they're not exactly open about what "random" or 'computer selected" means. Meh... Buggered if I know. If you do get to a position where you manage to accumulate some wealth quickly, hire a professional - several of them. There are some crazy rules and they don't exactly make them clear. An example is, part of the sale was stock in the now-parent company. I was unable to divest for either 60 days or 6 months (I forget which) or the SEC would have come in with things like arrest warrants and asset seizures.

I can work outside of the U.S. for a foreign based company with not a single penny coming from U.S. sales for that company and I STILL GET TO PAY U.S. INCOME TAXES EACH AND EVERY YEAR!

Then you need to fire your accountant. The IRS allows you to exclude up to $100,000 in foreign income alone. There are also deductions you can take in addition to that. Most people I know who work overseas essentially pay no income tax.

I get no say in the matter.

That is a lie. The IRS has many deductions you can take.

Yet, U.S. based corporations get to offshore their non-U.S. profits until it is advantageous for them to bring them in.

That's as asinine as saying the UK gets to tax money that British Airways makes in the US.

Unions are classified by the IRS as 501(c)(5) corporations. (PDF)

It's not tax avoidance per se. The IRS issues a huge number of "written determinations" each year to clarify ambiguities in the tax code. Unfortunately, its vastness makes it difficult to search (while providing a steady income for tax attorneys), and many of the clarifications are so specific that you can't be certain if it'll apply to your case because a variable or two are different.

This isn't like math or physics, where there's an immutable grand order and self-consistency which allows perfect predictability. It is pure, unadulterated case law - constantly changing, frequently inconsistent, and sometimes even self-contradictory. If you can find several similar cases in the IRS determinations which say what you're planning to do is OK in the IRS' eyes, then you can be reasonably sure that they won't audit you over it and say you violated tax law. But you can't be certain.* The only way to be certain is to find a case which exactly matches what you're planning to do - no different variables.

If you can find an exact match, of course you're going to do that instead. Not because it lets you avoid taxes, but because it removes any uncertainty about the tax implications, and thus eliminates any chance of the expense of a future audit and possibly having the IRS make you pay back taxes or even force you to reverse what you did, potentially undoing years of work you've done restructuring in the interim. It sounds like Yahoo wanted to spin off the foreign asset into a different holding company, and found IRS determinations saying spinning off domestic assets weren't taxable, but couldn't find one saying spinning off a foreign assets weren't taxable (the one different variable). So they went the route which had the most certainty - spun off all the domestic assets.

* I've run across this too. My father and a business partner constructed a pair of strip malls, and operated them as 50%/50% partners. Two decades later, the partner wanted to part ways, with my father getting one building and him getting another. But if they sold their share of each building to each other, that would be a taxable event. They would have to pay capital gains taxes on the appreciated value of their 50% of the buildings as if they were selling them for cash, even though they weren't actually keeping any of the cash - the "money" was immediately being reinvested into buying the partner's 50% share.

Fortunately, there's a tax vehicle which covers exactly this situation - the 1031 exchange which allows swaps of like-for-like property without being a taxable event. Unfortunately, in the case of 1031 real estate swaps, all the IRS determinations they could find applied to real (owned) property. My father and his partner owned the buildings, but leased the land. Because of that one different variable, they had to do the 1031 exchange, then wait several years to see if there would be an IRS audit which might force them to reverse the swap. During the wait, they had to avoid any work or corporate restructuring which might be difficult to reverse should the IRS decide their 1031 exchange was invalid.

Yes. An individual can deduct the amount minus ($100 + 10% of AGI) Source: NY Times, Extortion counts as theft. IRS

Businesses get treated more favorably, they can deduct actual losses.

Learn how taxes on income/profit in an LLC work. They flow through to the owners as personal income - meaning, Zuckerberg has to pay income tax on any profits his LLC earns. It's not an accounting dodge or fraud vehicle at all. Educate yourself. In actuality, a trust is a MUCH better vehicle for deferring taxes, especially a "non profit" trust where it can earn lots of profits, and as long as it gives away 90% of those earnings (meaning - it only keeps 10%), the retained profits are tax free. Oh, and members of the trust can use assets of the trust without penalty or income issues (trust owns the cars, jets, homes that the members/directors use).

The IRS overview of the expatriation tax. If your total assets - cash, retirement accounts, property, stock options, etc - adds up to over $2 million and you want to renounce your citizenship, the IRS can and will tax up to 40% of your total asset accumulation. It really covers pretty much all your assets - and you don't get to claim the personal residence deduction of the first $250K (or $500K for a married couple) either for this tax.

This isn't true. Foreign taxes are either excludable or deductible.

Not always. At least that's what the IRS claims, and they're the ones who will try to collect that tax.

Actually, no... I do know what changes were made and I know that not one change effected how research stood in regards to where it's placed as a line item on your accounting. You can still write off your expenses. Your silly belief that you can't may be why you're still struggling to actually get beyond the point of being a mere business owner.

Hell, a quick look at Wikipedia indicates that nothing, at all, changed regarding taxation policies for research. No, you can't just stuff it into a subsidiary and that's it.

Your statement:

It only existed because research and development could be written off in its day.

Is untrue...

You can still write off research and development. You don't really own a business at all. I'm not sure why you feel compelled to throw around false accusations. It is factual that you can, indeed, still write this stuff off. Here's a link:

https://www.irs.gov/publicatio...

That will take you down the rabbit hole but, the important part (barring a desire to actually educate you):

The costs of research and experimentation are generally capital expenses. However, you can elect to deduct these costs as a current business expense. Your election to deduct these costs is binding for the year it is made and for all later years unless you get IRS approval to make a change.

Like always you've needed to be able to justify it If you want to write it off. This did not change in the tax code changes of 1986. It has always needed to be business related (however tangentially - they've always been pretty lax there so long as you can show the result *might* improve a product or offering). This did not change. It has been the same since, IIRC, something like 1917 but I'd need to look that up or ask my accountant.

If you're not amortizing, writing down, or deferring your research then you're doing it wrong and need a better accountant. You don't actually own a business, do you? If you do then, well, I may know a decent accounting firm you can use.

Don't forget the tax credit you can claim for purchasing it.

http://www.irs.gov/uac/Newsroo...

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil.

Note: based on hard data.

Why should it NOT be up to the individual to classify themselves at contractor or employee?

There are guidelines of when a person is a contractor and when they are an employee.

http://www.irs.gov/Businesses/...

It's pretty simple actually. For example, if your contractor must exclusively work for you as a person, then that is an employee, not a contractor. Contractors could replace themselves with someone else, their own employee, but that could be an issue in cases where contractor == person == employee.

If I hire a contractor to do my roof, I'm not hiring one person to smack nails through shingles. I'm hiring a company (which could be much more than 1 person), to do a job and I don't care who personally is on the roof.

The problem is not with people wanting to be contractors. The problem is with companies that want contractors for legal purposes, but treat them as employees internally. They want to skirt labor laws to squeeze extra money out of the employee.

http://www.irs.gov/uac/SOI-Tax...

I finally looked at http://www.irs.gov/uac/Facts-%... and some of the pages it links to, and can find no information that readily converts to taxes paid by various tax brackets as a percentage of income.

In theory, in the US, we fill out a form which is handed to the employer that give a number of deductions that you are taking. For me as a single parent of two, the computation comes out to 5 (one for each kid, three for me)

Here is the "I am an employee" version of the form, the W-4

http://www.irs.gov/pub/irs-pdf...

Now, in practice, I always pay way to much taxes, and get a huge tax return, but there is a penalty for not paying enough taxes through the year on a routine basis, so it is not worth correcting. I end up getting about a 5% tax return, I have never really understood where the discrepancy comes from, but it just isn't worth correcting.