A Plea For Reform
...to any Constitutional attorney: I can’t pay you (see above), but I have a tax return that will make your eyes bleed. Get me in front of a jury or, better yet, the Supreme Court, and let us ask 12 or nine reasonable people if the burden of completing this particular tax return – a requirement I must meet to retain my liberty and my property – is reasonable or not. And if just one of the jury or bench believes that a reasonably educated person could accurately complete my tax return in a reasonable period, I’ll be happily defeated – as long as he shows me how.
Otherwise, use me as a legal guinea pig to pull down this entire rotten structure that turns good people into unwilling law breakers or liars of both... Our tax code is so complex that people our government deems too poor to buy their own health insurance must fork over nearly a tenth of their income just to comply with it.
It's an effect of using our tax code for social engineering instead of merely funding government.
ReplyDeleteEric Hines
When I was in a partnership, my tax return used to contain a line item for Hungarian property tax credits, not to mention a very hefty payment to both the city and state of New York (and smaller ones to the states of California and New Jersey), though I always lived and worked in Houston. The whole tax return was about 100 pages.
ReplyDeleteEh.
ReplyDeleteThe writer chose (fully voluntarily!) to use an S corporation--which is nowhere in the Constitution, of course. He spent money and time to set it up, and pays an annual filing fee, and so on.
An S corp offers a variety of business and tax advantages, all of which are benefits granted by the guv'mint. There's no Constitutional right to set up a powerful entity with full legal rights, and the choice to do so comes with tax consequences.
If you don't want to file complex tax returns, don't start an S corp. If you do, stop whining about it. It's like leasing a car and complaining that you have to pay every month; complexity is an up front part of the package.
I'm not comfortable with the notion that anything we do that's not spelled out in the Constitution as an unalienable right is fair game for the government to make as expensive and complicated as humanly possible. It seems a groveling approach.
ReplyDeleteSo then I am to assume if the government wishes to make you fill out 150 pages of forms in order to have a right to privacy (since it's not spelled out in the Constitution after all... penumbras and such notwithstanding)? That's just appalling. How about a drivers license? Is 150 pages of complicated forms an acceptable burden for the Federal government to ask to allow you to drive on Interstates?
ReplyDeleteThat one's not spelled out, but it is guaranteed. And if you think otherwise, it's a war on women. :-)
ReplyDeleteIs there any reason to think his tax return would be any simpler if he filed as a sole proprietor instead of an S corp? (Please don't say "Well, he made the choice to engage in business in the first place....")
ReplyDeleteHey, the right to operate a business isn't specifically guaranteed by the Constitution! In fact, who better for the government to shiv endlessly than a profiteer? That is, whenever the government graciously allows someone to go into business.
ReplyDeleteIs 150 pages of complicated forms an acceptable burden for the Federal government to ask to allow you to drive on Interstates?
ReplyDeleteNot 150 pages of complicated forms: 150 pages of complicated forms every year. With penalties for perjury if we find a mistake.
(I'm #Anonymous above.)
ReplyDeleteWhen you form a corporation, you're using the power of the government to grant you special privileges which other people don't have.
You form a "virtual person" who can hire, fire, own property, etc. Moreover (and very important) it permits you to protect your assets behind a corporate veil. It also provides an unusually straightforward way to handle other asset transfers--And last but not at ALL least, it functionally makes many such transfers exempt: in theory, private membership interests are taxable but in practice they aren't tracked and are not taxable.
Speaking as an attorney who does these, that is HUGE. If you want to sell me a 1/3 interest in your $5 mill property be prepared to pay tax and recording fees--perhaps in the five figures. But if you want to sell me a share in your corporation or a membership interest in your LLC, which owns/controls that same property... well, who will know but us? There's a reason rich people use S corps and "simplicity" is far down the list.
The author of that column is almost certainly someone who has worked the system to its extreme (note the very low taxes) to take advantage of every loophole in the law. Then AFTER finding all the loopholes, he's asserting some sort of "natural right" to pay that tax generally, and bitching about the loophole process.
and... no. If you want simple taxes, just file a 1040-EZ and take the standard deductions. If you want more complex ones, file a 1040. if you want corporate deductions, form an entity. Just don't whine about it for chrissakes.
jaed said...
Is there any reason to think his tax return would be any simpler if he filed as a sole proprietor instead of an S corp?
Yes. It is also a fair bet that most of his effort is due to the fact that he's working the loopholes, and not that he's some sort of honest entrepreneur who just so happens to have a bad tax burden.
I own my own law firm; AND I'm in Mass, which is not a simple state; AND I'm a sole proprietor; AND I have employees; AND own property.
My taxes cost me something like $1500/year to prepare. This guy is lying or so much of an outlier than his point is irrelevant.
Also, I'll bet $20 that the "150 pages" are
a) form instructions (anyone want to take that bet?);
b) lists of itemized deductions--which, again, if you WANT to set up something so that you can find every single deduction on the planet, at least have the decency not to bitch about having to write them down while taking them; and
c) lists of special deductions. Want to bet that this whiner is one of the folks who thinks that whatever income HE makes should be exempt, but not everyone ELSE'S income?
I mean, seriously. The guy pays far less tax than the average person, %age wise. And he saves so much money from doing so that it justifies spending a month's income on an accountant (assuming that is actually true.) I don't see that his complaint is justified.
...worked the system to its extreme (note the very low taxes) to take advantage of every loophole in the law....
ReplyDeleteWhich is my beef. Our tax code ought not be used for social engineering. If all it did was fund the government, it'd be very simple.
Eric Hines
An S-Corp tax exemption is not what I'd call a loophole. It's a system for treating a small corporation as if it were a partnership, taxwise, which is to say that the entity is invisible and taxes simply happen at the personal level.
ReplyDeleteThat's how all corporations should be treated for tax purposes, not just S-Corps.
This business of burdening people with rigamarole and taxes and then expecting them to be grateful when we grant the occasional dispensation is nonsense. Our financial and legal system allows corporations because they're incredibly beneficial for the economy in general. No one should have to apologize for taking advantage of this sensible tool.