Wednesday, 28 September 2016

The "Not Paying Taxes" Comment

At some point in the Clinton-Trump debate.....Hillary noted that Trump hadn't had to pay any taxes.  Trump responded....mostly grinning....that she's absolutely right, and that shows how he is smart about finances.

Here's the thing.....there are well over 80,000 pages of tax code existing today.  All of this....was written not by IRS people....but mostly by Congressmen and Senators.  You can go and ask a dozen of them about such-and-such code that they wrote into law back in the mid-1990s, and they have no idea what they wrote or how they really ended up.  That's the sad thing about taxation in America today.

I worked with an individual who owned horse property up in Montana back in the 1990s. For roughly six years....she owned the property and improved it (a $10,000 barn was erected on the property during this period).  As she got ready to sell it....she was shocked that property prices had gone up and there was a fair amount of profit now tied to the sale (in the $90,000 range over what she'd paid).  Naturally, she did the simple math and figured that it was going figure up to around $10,000 to $15,000 extra on taxes, on top of her military pay.  Well, the local Montana accountant did the numbers and the profit from the sale did not exist.

She was puzzled and went to the guy to ask how this was possible.  Some Senator had written a code that affected all horse ranches sold during this time period and basically made anything in Montana....almost tax-free on profits from a horse-ranch sale.  According to him...similar rules were in place for shrimp fishermen from Louisiana....or crab fishermen from the Massachusetts region.

Trump is simply taking advantage of the rules written down.  He pays an accountant to be smart and find each of these deductions.  There are hundreds of thousands of deductions sitting there.....which most people are simply not aware of.

Should we be angry?  Only at the Senators and Congressmen for creating this massive code which doesn't make any sense.  Ask Hillary how she'd want to fix it, and she will respond that she'd write more tax code to tax these people in some special way, and you respond.....well, what if a Senator comes up three weeks later and writes six different tax credits to ease the guy's pain and reshuffle the taxes back into the zero category?  She would just grin and say that's the whole game.

There is something broke here, but the idea that you could go and force everyone to pay one simple 7-percent flat-tax, period.....doesn't seem to be of interest to anyone.

So, settle back and just accept the fact.....the system is broke. Maybe some crazy nutcase like Trump might be willing to do something that Hillary isn't willing to do.....reset the whole tax code to one simple page, and flat-tax companies and individuals to one some method.

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