Tax Deduction Quotes

Can’t a lawyer take his client out to dinner to discuss the case? Haven’t you ever heard of the two-martini lunch?” “Yes, but this is dinner,” she corrected. “It’s the same thing. I looked it up in my Etiquette and Tax Deductions for Lawyers handbook . . .

You must therefore zealously guard in his mind the curious assumption 'My time is my own'. Let him have the feeling that he starts each day as the lawful possessor of twenty-four hours. Let him feel as a grievous tax that portion of this property which he has to make over to him employers, and as a generous donation that further portion which h allows to religious duties. But what he must never be permitted to doubt is that the total from which these deductions have been made was, in some mysterious sense, his own personal birthright.

You’re not privileged to call me ‘Boss’; you’re not tax deductible.

Bribes over two dollars are tax deductible

Sometimes you have to learn to love the little mo stars for something other than a tax deductions they provide you" ~Claire Seductions & Snacks

I find imaginary numbers useful when computing my tax deductions.

Generosity is not always tax deductible.

reason Amazon can take on such a slow, inefficient workforce,” noted one itinerant worker on her blog, Tales from the Rampage. “Since they are getting us off government assistance for almost three months of the year, we are a tax deduction for them.

Whether through blind luck or sound business sense, Blum ended up buying the whole set of soup cans for $1,000, paying $100 per month till it was paid off. In 1999 he sold them to the Museum of Modern Art for $7 million in cash and a $7 million tax deduction.

Pundits, opponents, and disillusioned supporters would blame Obama for squandering the promise of his administration. Certainly he and his administration made their share of mistakes. But it is hard to think of another president who had to face the kind of guerrilla warfare waged against him almost as soon as he took office. A small number of people with massive resources orchestrated, manipulated, and exploited the economic unrest for their own purposes. They used tax-deductible donations to fund a movement to slash taxes on the rich and cut regulations on their own businesses. While they paid focus groups and seasoned operatives to frame these self-serving policies as matters of dire public interest, they hid their roles behind laws meant to protect the anonymity of philanthropists, leaving more folksy figures like Santelli to carry the message.

MAKE WAVES WITH ME! My talk's not cheap, but sponsorship is inexpensive and tax-deductible.

We have the money. We’ve just made choices about how to spend it. Over the years, lawmakers on both sides of the aisle have restricted housing aid to the poor but expanded it to the affluent in the form of tax benefits for homeowners. 57 Today, housing-related tax expenditures far outpace those for housing assistance. In 2008, the year Arleen was evicted from Thirteenth Street, federal expenditures for direct housing assistance totaled less than $40.2 billion, but homeowner tax benefits exceeded $171 billion. That number, $171 billion, was equivalent to the 2008 budgets for the Department of Education, the Department of Veterans Affairs, the Department of Homeland Security, the Department of Justice, and the Department of Agriculture combined. 58 Each year, we spend three times what a universal housing voucher program is estimated to cost (in total ) on homeowner benefits, like the mortgage-interest deduction and the capital-gains exclusion. Most federal housing subsidies benefit families with six-figure incomes. 59 If we are going to spend the bulk of our public dollars on the affluent—at least when it comes to housing—we should own up to that decision and stop repeating the politicians’ canard about one of the richest countries on the planet being unable to afford doing more. If poverty persists in America, it is not for lack of resources.

infrastructures they’re actively not contributing to through tax avoidance and evasion while hypocritically scorning the underclasses as the scourge of society who sponge off the state when they’re the ones who are the biggest scroungers on society with no sense of community responsibility other than a very self-aggrandizing, tax-deductible form of fashionable charity they like to call philanthropism!

The scene is a writer's study, shabby, drafty but tax-deductible. The writer is reading the last hundred pages of his work in progress. For the past fifty or so, a kind of slow terror has been rising in his breast. All these pages had seemed necessary. They contain many good things. Ironies. Insights. And yet they seem to have a certain ineffable unsatisfactoriness. There is a word to describe this quality, the writer thinks, a horrible word. The B word. He begins to strike his forehead with a sweaty palm.

The Three D's of Creating True Happiness For All....... Declutter - Remove all unwanted items from your home, Donate - to your local charity, Deduct - Save money by claiming your donation on your tax return

Mad Rogan was walking next to me with that same confident stride that had made me notice him back in the arboretum, and I knew precisely where he was and how much distance separated us. My whole body was focused on him. I wanted him to touch me. I didn’t want him touching me. I was waiting for him to touch me. I didn’t know what the hell I wanted. “Did you like the carnations?” I reached into my pocket and handed him a small red card. “Texas Children’s Hospital is grateful to you for your generous donation. Thanks to you, every one of their rooms has beautiful flowers this morning. They think it might be at least partially tax deductible, and if your people talk to their people, the hospital will provide the necessary paperwork.” Mad Rogan took the card, brushing my hand with his warm, dry fingers. The card shot out of his hand and landed in the nearby trash bin.

The post-2020 fiscal reckoning does not require higher payroll taxes or lower retirement benefits, as new sources of fiscal revenue are available from drug legalization, increased tax progressivity, tax reform that eliminates most tax deductions, and a carbon tax that provides incentives to reduce emissions.

But a large minority was content to live off the dole. Every two weeks, I’d get a small paycheck and notice the line where federal and state income taxes were deducted from my wages. At least as often, our drug-addict neighbor would buy T-bone steaks, which I was too poor to buy for myself but was forced by Uncle Sam to buy for someone else.

The HSA (Health Savings Account) is a great way to save on premiums. The high deductible creates a much lower premium, and this plan allows you to save for medical expenses in a tax-free savings account.

as the economically advantaged groups unleash their greater resources in the political sphere. These groups lobby for tax loopholes, hire lawyers and accountants to maximize their benefit from tax laws, and then deduct the costs.

line where federal and state income taxes were deducted from my wages. At least as often, our drug-addict neighbor would buy T-bone steaks, which I was too poor to buy for myself but was forced by Uncle Sam to buy for someone else.

The wealthy have also fought to underfund and defang the Internal Revenue Service, so it doesn’t have the resources to audit or fight dubious deductions. Only about 6 percent of tax returns of those with income of more than $1 million are audited, along with 0.7 percent of business tax returns. Meanwhile, there is one group that the IRS scrutinizes rigorously: the working poor with incomes below $20,000 a year who receive the Earned Income Tax Credit. More than one-third of all tax audits are focused on that group struggling to make ends meet, even as the agency cuts back on audits of the wealthy—while the top 5 percent of taxpayers account for more than half of all underreported income.

The rest of us, on the ·other hand-we members of the protected classes-have grown increasingly· dependent on our welfare programs. In 2020 the federal government spent more than $193 billion on homeowner subsidies, a figure that far exceeded the amount spent on direct housing assistance for low income families ($53 billion). Most families who enjoy those subsidies have six-figure incomes and are white. Poor families lucky enough to live in government-owned apartments of often have to deal with mold and even lead paint, while rich families are claiming the mortgage interest deduction on first and second homes. The lifetime limit for cash welfare to poor parents is five years, but families claiming the mortgage interest deduction may do so for the length of the mortgage, typically thirty years. A fifteen-story public housing tower and a mortgaged suburban home are both government subsidized, but only one looks (and feels) that way. If you count all public benefits offered by the federal government, America's welfare state (as a share of its gross domestic product) is the second biggest in the world, after France's. But that's true only if you include things like government-subsidized retirement benefits provided by employers, student loans and 529 college savings plans, child tax credits, and homeowner subsidies: benefits disproportionately flowing to Americans well above the poverty line. If you put aside these tax breaks and judge the United States solely by the share of its GDP allocated to programs directed at low-income citizens, then our investment in poverty reduction is much smaller than that of other rich nations. The American welfare state is lopsided.

To a foreign eye, America has so much philanthropy and so little charity. Most people have to kill themselves to prove that they deserve ordinary kindness, while a tiny group of people never stop boasting about how generous they are – as long as it’s tax-deductible.

However, though the request is reasonable and the citizenry is better off paying taxes as their price for maintaining a stable and efficient government, they are nevertheless reluctant to do so. In order to overcome this reluctance, governments must make it appear that they are not taking too many credits, and that they are considering each citizen’s rights and benefits. In other words, they must lower the percentage taken out of low incomes; they must allow deductions of various kinds to be made before the tax is assessed, and so on.

Tax relief through deductions is very precarious. It is a way for the government to let you keep a little cash without conceding that it is your money. Tax deductions can be taken away. . . "An income tax deduction is a matter of legislative grace," the U.S. Supreme Court said in 1943. In other words, all income belongs to the state. If it allows you to use some of it for purposes it chooses, be grateful. But don't think it is yours as a matter of right. That is where the Sixteenth Amendment to the U. S. Constitution has delivered us.

Algren’s book opens with one of the best historical descriptions of American white trash ever written.* He traces the Linkhorn ancestry back to the first wave of bonded servants to arrive on these shores. These were the dregs of society from all over the British Isles—misfits, criminals, debtors, social bankrupts of every type and description—all of them willing to sign oppressive work contracts with future employers in exchange for ocean passage to the New World. Once here, they endured a form of slavery for a year or two—during which they were fed and sheltered by the boss—and when their time of bondage ended, they were turned loose to make their own way. In theory and in the context of history the setup was mutually advantageous. Any man desperate enough to sell himself into bondage in the first place had pretty well shot his wad in the old country, so a chance for a foothold on a new continent was not to be taken lightly. After a period of hard labor and wretchedness he would then be free to seize whatever he might in a land of seemingly infinite natural wealth. Thousands of bonded servants came over, but by the time they earned their freedom the coastal strip was already settled. The unclaimed land was west, across the Alleghenies. So they drifted into the new states—Kentucky and Tennessee; their sons drifted on to Missouri, Arkansas and Oklahoma. Drifting became a habit; with dead roots in the Old World and none in the New, the Linkhorns were not of a mind to dig in and cultivate things. Bondage too became a habit, but it was only the temporary kind. They were not pioneers, but sleazy rearguard camp followers of the original westward movement. By the time the Linkhorns arrived anywhere the land was already taken—so they worked for a while and moved on. Their world was a violent, boozing limbo between the pits of despair and the Big Rock Candy Mountain. They kept drifting west, chasing jobs, rumors, homestead grabs or the luck of some front-running kin. They lived off the surface of the land, like army worms, stripping it of whatever they could before moving on. It was a day-to-day existence, and there was always more land to the west. Some stayed behind and their lineal descendants are still there—in the Carolinas, Kentucky, West Virginia and Tennessee. There were dropouts along the way: hillbillies, Okies, Arkies—they’re all the same people. Texas is a living monument to the breed. So is southern California. Algren called them “fierce craving boys” with “a feeling of having been cheated.” Freebooters, armed and drunk—a legion of gamblers, brawlers and whorehoppers. Blowing into town in a junk Model-A with bald tires, no muffler and one headlight … looking for quick work, with no questions asked and preferably no tax deductions. Just get the cash, fill up at a cut-rate gas station and hit the road, with a pint on the seat and Eddy Arnold on the radio moaning good back-country tunes about home sweet home, that Bluegrass sweetheart still waitin, and roses on Mama’s grave. Algren left the Linkhorns in Texas, but anyone who drives the Western highways knows they didn’t stay there either. They kept moving until one day in the late 1930s they stood on the spine of a scrub-oak California hill and looked down on the Pacific Ocean—the end of the road.

One of the reasons the rich get richer is that they buy more investments by taking advantage of the tax laws. In essence, the money that would have been paid in taxes is used to buy additional assets, which provide another deduction against income, which reduces the taxes due, legally.

Goodwill receives a billion pounds of clothing every year. Ultimately, they use less than half of the clothing they get. Clothing is cheap, and the cost of sorting, cleaning, storing, and transporting the clothes is higher than their value. If you wouldn’t give an article to a family member, it’s probably not good enough for charity. Sure, it’s great to get the tax deduction and it makes you feel like you didn’t waste money buying the clothes, but if you’re truly charitable, be sensitive to the needs of the organization. Charities aren’t dumping grounds for your trash.

he regards his time as his own and feels that it is being stolen. You must therefore zealously guard in his mind the curious assumption ‘My time is my own’. Let him have the feeling that he starts each day as the lawful possessor of twenty-four hours. Let him feel as a grievous tax that portion of this property which he has to make over to his employers, and as a generous donation that further portion which he allows to religious duties. But what he must never be permitted to doubt is that the total from which these deductions have been made was, in some mysterious sense, his own personal birthright. You

Sylvester says they sold their lefty student principles, if they ever had them, as soon as they left university and accepted an overpaid starter-salary in a morally objectionable corporate job offering lucrative career prospects and inflated annual bonuses which soon turned them into filthy-rich Tories with a hatred of the social welfare infrastructures they’re actively not contributing to through tax avoidance and evasion while hypocritically scorning the underclasses as the scourge of society who sponge off the state when they’re the ones who are the biggest scroungers on society with no sense of community responsibility other than a very self-aggrandizing, tax-deductible form of fashionable charity they like to call philanthropism!

I do wish, however, that Ms. Olson would give me some credit for the progress I’ve already made. In 1944, I filed my first 1040, reporting my income as a thirteen-year-old newspaper carrier. The return covered three pages. After I claimed the appropriate business deductions, such as $35 for a bicycle, my tax bill was $7. I sent my check to the Treasury and it — without comment — promptly cashed it. We lived in peace.

Using other people’s money is literally the best way to reduce your taxes in the I quadrant. That’s because you can take deductions for the purchases you make with other people’s money. Depreciation on real estate is a particularly great way to take tax benefits on someone else’s money. You get a deduction not just for the portion of the real estate you paid for with your own money, but you also get a depreciation deduction for the portion paid for with the bank’s money.

You must therefore zealously guard in his mind the curious assumption “My time is my own”. Let him have the feeling that he starts each day as the lawful possessor of twenty-four hours. Let him feel as a grievous tax that portion of this property which he has to make over to his employers, and as a generous donation that further portion which he allows to religious duties. But what he must never be permitted to doubt is that the total from which these deductions have been made was, in some mysterious sense, his own personal birthright.

They anger him because he regards his time as his own and feels that it is being stolen. You must therefore zealously guard in his mind the curious assumption 'My time is my own'. Let him have the feeling that he starts each day as the lawful possessor of twenty-four hours. Let him feel as a grievous tax that portion of this property which he has to make over to his employers, and as a generous donation that further portion which he allows to religious duties. But what he must never be permitted to doubt is that the total from which these deductions have been made, was in some mysterious sense, his own personal birth right

Income tax rules also made borrowing against a home’s equity attractive. Because mortgage interest payments can be deducted for income tax purposes, the interest paid on home equity loans could also be deducted, although interest on credit card debt or other debt was not deductible. Therefore it often paid anyone with any other kind of debt to pay off that debt with a home equity loan, whose interest would be deductible for income tax purposes. More and more people began to do this during the housing boom. In 2003, home equity loans totaled $593 billion. Such loans soared during the housing boom, nearly doubling to $1.13 trillion in 2007.

I know for a fact that I would be awful if I was built like Serena Williams or Jennifer Lopez... If I had a body remotely close to what they have, I would be a terror. My ass would cause me to do really inappropriate and rude things. I'd be so ridiculous that people would be able to pick my labia out of a lineup. I'd wear zero clothes any- and everywhere, every day. I'd show up at church rocking a denim thong and a cropped T-shirt and have the nerve to sit right next to the head usher and dare her to say anything to me. And if anyone did say something to me, I'd tell them, "Jesus blessed me in many ways, and I am just showing off His works. HALLELUJAH." People would be disgusted and appalled by me and I wouldn't care. All insults would bounce off my ample backside. To whom much is given, much is required, and I'd require that my much would be given nary an inch of fabric. I'd hire a band whose sole job would be to follow me around and play theme music for my yansh, based on the mood I was in... I might opt to walk backwards into any room I entered, because why not?... I might also declare my booty its own limited liability corporation, assigning myself as CEO and chairman of the Donk. My jeans would be tax-deductible business expenses, and I would add my ass to my LinkedIn profile's Skills section. Everyone would throw hate ration in my dancery, and I wouldn't even see it, protected as I would be by the throne I sat atop.

From World War II until 1981 the top marginal income tax rate never fell below 70 percent. Under President Dwight Eisenhower, a Republican whom no one ever accused of being a socialist, the top rate was 91 percent. Even after all deductions and credits, Americans with incomes of over $1 million (in today’s dollars) paid a top marginal rate, on average, of 52 percent. As recently as the late 1980s, the top tax rate on capital gains was 35 percent. But as income and wealth have accumulated at the top, so has the political power to reduce taxes. The Bush tax cuts of 2001 and 2003, which were extended for two years in December 2010, capped top rates at 35 percent, their lowest level in more than half a century, and reduced capital gains taxes to 15 percent.

It turns out that addressing the most urgent problems of our time is, well, hard. But what is maddening about this debate is not how difficult fair-tax implementation would be but how utterly easy it is to find enough money to defeat poverty by closing nonsensical tax loopholes. If you don’t like the changes I suggested above, I can propose twenty smaller reforms, or fifty tinier ones, or a hundred even more innocuous nudges to get us there. We could raise $25 billion by winding down the mortgage interest deduction, which disproportionately benefits high-income families and does nothing to promote homeownership. We could find $64.7 billion by increasing the maximum taxable amount of earnings for Social Security so that high- and low-income workers are taxed at the same rate. We could scratch out another $37.3 billion if we treated capital gains and dividends for wealthy Americans the same way we treat income for tax purposes.

• Auto and Homeowner Insurance—Choose higher deductibles in order to save on premiums. With high liability limits, these are the best buys in the insurance world. • Life Insurance—Purchase twenty-year level term insurance equal to about ten times your income. Term insurance is cheap and the only way to go; never use life insurance as a place to save money. • Long-Term Disability—If you are thirty-two years old, you are twelve times more likely to become disabled than to die by age sixty-five. The best place to buy disability insurance is through work at a fraction of the cost. You can usually get coverage that equals from 50 to 70 percent of your income. • Health Insurance—The number one cause of bankruptcy today is medical bills; number two is credit cards. One way to control costs is to look for large deductibles to lower your premium. The HSA (Health Savings Account) is a great way to save on premiums. The high deductible creates a much lower premium, and this plan allows you to save for medical expenses in a tax-free savings account.

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The upshot of the distinctions [making business travel & entertainment tax-deductible] is to put a direct premium on the habit— which some people have considered all too prevalent for many years anyhow— of talking business at all hours of the day and night, and in all kinds of company.

So the place attracted drifters, artists, misfits, natural exiles, political and other eccentrics and slightly deranged or badly messed-up people of more or less every sort, and always had. Most were from Ulubis but some were more exotic and from further afield, generally trustafarians and-or gappers portaling in from the rest of the Mercatoria, taking time out between education and responsibility to relax a little. The place produced good art, it was an unofficial - but tax-deductible - finishing school for the aforesaid children of the rich (give the darling brats true freedom and let them see how empty it was, was the idea), it was a way station for those heading out to disgrace or back from perdition, and it was a halfway house for those who might or might not ever again contribute anything useful to society but who just might galvanise it fundamentally. (And, if you wanted to be really paranoid about stuff, it was - as far as the authorities were concerned - a relatively easy-to-watch and even easier-to-close-down sump for dangerous ideas: a radical trap.) It was useful, in other words. It fulfilled a purpose, if not several.

Chapter 1: What to Expect in Investing   Similar to other concepts that you may grasp, there is no “real way” to prepare for investing. Initially, you just have to jump in to start learning how you can manage different aspects of this activity as you go along. However, you still have to make the necessary preparations by learning the fundamental techniques and other intricacies included in this art and science. Also included in the things you should know are the expectations that you need to have when investing. "You need to expect tax deductions from the government.

Oil and Gas Investing in Permian Basin-Smart Move As the true scope of Permian Basin is being understood, one thing is very clear; it is going to attract a lot of investment. As in case of all oil and gas investments, the sooner you invest, the better your returns are going to be. Right now is the perfect time for oil and gas investing in Permian Basin. There are a lot of benefits of choosing to invest in things other than the property, shares and stocks circuit. It not just helps you spread out your earnings, it lets you test potential markets such as these. As these markets are not overcrowded, there is more scope for growth. But why should you choose oil and gas investing in Permian Basin when you have dependable assets elsewhere? The answer is that those assets multiply at such a slow pace that you forget they are there while when there is an oil and gas boom, it turns your fortunes. An oil well investment brings with it years of steady income with the benefit of tax deduction on the investment. It is not as much a gamble as it is made out to be and oil strikes are more frequent than people would like you to believe. About 15% annual income from oil and gas wells is exempt from tax and 65-85% of your first year's investment can be waived off. Gone are the days when all you could do with oil well was bore increasingly downwards, vertically. Now there is technology available that lets you draw oil supply for a long, long time after the initial vertical bore runs dry. With new advancements in drilling and extracting techniques, a lot of oil that was earlier as good as not being there has suddenly become readily available. Being with a company that is well equipped with the latest technology gives your investment more stability. That is one of the reasons for a revival of the boom in Permian Basin and it has been predicted to last for a long time to come. Choose with great care a reliable and experienced company that is a seasoned hand at oil and gas drilling and production. Oil and gas investing in Permian Basin is bound to attract many investors looking to be a part of the upward trend. Invest today and reap benefits for years to come.

prevents them from deducting their rent, employee salaries, or utility bills, forcing them to pay taxes on a far larger amount of income than other businesses with the same earnings and costs. They also say the taxes, which apply to medical and recreational marijuana sellers alike, are stunting their hiring, or even threatening to drive them out of business. The issue reveals a growing chasm between the 23 states, plus the District of Columbia, that allow medical or recreational marijuana and the federal bureaucracy, from national forests in Colorado where possession is a federal crime to federally regulated banks that turn away marijuana businesses, and the halls of the IRS. The tax rule, an obscure provision known as 280E, catches many marijuana entrepreneurs by surprise, often in the form of an audit notice from the IRS. Some marijuana businesses in Colorado, California, and other marijuana-friendly states have taken the IRS to tax court. This year, Allgreens, a marijuana shop in Colorado, successfully challenged an IRS policy that imposed about $30,000 in penalties for paying its payroll taxes in cash — common in an industry in which businesses cannot get bank accounts. “We’re talking about legal businesses, licensed businesses,’’ said Rachel Gillette, the executive director of Colorado’s chapter of the National Organization for the Reform of Marijuana Laws and the lawyer who represented Allgreens. “There’s no reason that they should be taxed out of existence by the federal government.

foundations have an overriding obligation to the public to perform their duties according to the highest standards of effectiveness and stewardship. That obligation arises especially from the tax deductibility of gifts to create foundations and the tax exempt status granted to foundation assets and income once they are established. As a result of these benefits, United States taxpayers annually benefit United States foundations with foregone taxes in excess of twenty billion dollars. For that reason alone, foundations must somehow be made accountable, preferably by means of voluntary action, but, failing that, through legally mandated regulation or through voluntary action. Many foundations

income potential, full ownership, appreciation of equity, and tax deductions.

Table 5.2 Retiring before 70 Means Much Lower Benefits “Net” Replacement Rate for Medium Worker by Retirement Age, 1980–2030 Note: Year is date retiree reaches age 65. Replacement rate is net of Part B and D premiums, as well as taxation of benefits. Part B SMI deduction for 2030 assumes SMI continues to cover 26 percent of plan costs and uses Trustees’ Report enrollment and cost growth assumptions. The assumptions are that the beneficiary has enough other income to have benefits taxed (about $10,000 in 2030) and that the tax rate is 12.5 percent. Sources: Authors’ calculations based on Centers for Medicare and Medicaid Services (2013); and Social Security Administration (2013b).

If you fully convert your home to rental property and use it that way for years before selling it, after you do sell you can either take advantage of the lower long-term capital gains rates or do a tax deferred exchange. For tax purposes, you get to deduct depreciation and all of the write-offs during the ownership and you can shelter up to $25,000 in income from active sources subject to income eligibility requirements. (Please

In fact, Bopp’s law firm and the James Madison Center had the same office address and phone number, and although Bopp listed himself as an outside contractor to the center, virtually every dollar from donors went to his firm. By designating itself a nonprofit charitable group, though, the Madison Center enabled the DeVos Family Foundation and other supporters to take tax deductions for subsidizing long-shot lawsuits that might never have been attempted otherwise. “The relationship between this organization and Bopp’s law firm is such that there really is no charity,” observed Marcus Owens, a Washington lawyer who formerly oversaw tax-exempt groups for the Internal Revenue Service. “I’ve never heard of this sort of captive charity/foundation funding of a particular law firm before.

Clayton Coppin, who taught history at George Mason and compiled the confidential study of Charles’s political activities for Bill Koch, describes Mercatus outright in his report as “a lobbying group disguised as a disinterested academic program.” The arrangement, he points out, had financial advantages for the Kochs, because it enabled Charles “to have a tax deduction for financing a group, which for all practical purposes is a lobbying group for his corporate interest.

Ricardo’s other necessary condition for comparative advantage is that a country’s capital seeks its comparative advantage in its home country and does not seek more productive use abroad. Ricardo confronts the possibility that English capital might migrate to Portugal to take advantage of the lower costs of production, thus leaving the English workforce unemployed, or employed in less productive ways. He is able to dismiss this undermining of comparative advantage because of “the difficulty with which capital moves from one country to another” and because capital is insecure “when not under the immediate control of its owner.” This insecurity, “fancied or real,” together “with the natural disinclination which every man has to quit the country of his birth and connections, and entrust himself, with all his habits fixed, to a strange government and new laws, check the emigration of capital. These feelings, which I should be sorry to see weakened, induce most men of property to be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign lands.”   Today, these feelings have been weakened. Men of property have been replaced by corporations. Once the large excess supplies of Asian labor were available to American corporations, once Congress limited the tax deductibility of CEO pay that was not “performance related,” once Wall Street pressured corporations for higher shareholder returns, once Wal-Mart ordered its suppliers to meet “the Chinese price,” once hostile takeovers could be justified as improving shareholder returns by offshoring production, capital and jobs departed the country.   Capital has become as mobile as traded goods.

When something in society goes so wrong, that something is often a product of one very large agreement instead of the various small disagreements that consume the political sphere. Looming over the fights about which administration is to blame for housing becoming so unstable and what percentage increase this or that program is entitled to sits the inconsistency of America spending about $70 billion a year subsidizing homeownership through tax breaks like deferred taxes on capital gains and the mortgage interest deduction (MID), which allows homeowners to deduct the interest on their home loan from their federal income taxes. Together these tax breaks amount to a vast upper-middle-class welfare program that encourages people to buy bigger and more expensive houses, but because their biggest beneficiaries are residents of high-cost cities in deep blue redoubts like New York and California, even otherwise liberal politicians fight any attempt to reduce them. These programs are also entitlements that live on budgetary autopilot, meaning people get the tax breaks no matter how much they cost the government. Contrast that with programs like Section 8 rental vouchers, which cost about $20 billion a year, have been shown to be highly effective at reducing homelessness, and cost far less than the morally repugnant alternative of letting people live in tents and rot on sidewalks, consuming police resources and using the emergency room as a public hospital. That program has to be continually re-upped by Congress, and unlike middle-class homeowner programs, when the money runs out, it’s gone. This is why many big cities either have decades-long lines for rental vouchers or have closed those lines indefinitely on account of excess demand. The message of this dichotomy, which has persisted for decades regardless of which party is in charge and despite the mountains of evidence showing just how well these vouchers work, is that America is willing to subsidize as much debt as homeowners can gorge themselves on but that poor renters, the majority of whom live in market-rate apartments, are a penny-ante side issue unworthy of being prioritized.

Not factored into the equation are marketing costs, allocations for overhead expenses, interest payments on debt, or income taxes. Deduction of these items would yield net profit.

John Myers, who spent thirty-seven years at GE, ran its pension fund for years, and sat on the GE Capital board, explained to me the keys to the success of GE Capital: GE’s AAA credit rating, allowing it to borrow money very cheaply. “Banks weren’t even rated AAA at that time,” he said. “We borrowed money cheaper than anyone could.” GE could also use GE Capital to reduce the taxes GE would otherwise pay on earnings from its very profitable industrial businesses. Here’s how that worked: If, say, an airline bought a new jet, it would have an asset that would depreciate over time, and the airline could use the depreciation to reduce its taxable income. But, at that time anyway, most airlines didn’t make much money, if any, so the value of the depreciation deductions was of little use to them. But to GE, the depreciation—the tax deductions—would be very valuable as a way to reduce GE’s pretax income and therefore to pay less in taxes. With that logic, GE Capital would buy the jets, lease them to the airlines at commercially attractive rates, and then use the depreciation on the jets to reduce the pretax income at GE.

The truth is that an HSA can be an incredibly powerful investment account because you can contribute tax-free money, take a tax deduction, and then grow it tax-free—it’s a triple whammy. If you use this account correctly, you will earn hundreds of thousands of dollars.

If you rented, you paid someone else $24,000. But if you owned and itemized your federal income taxes, you likely deducted over $10,600 in mortgage interest on your income taxes. You also paid your loan down by over $4,000 while at the same time increasing your equity position in the house by nearly $20,000.

leave your job, your earned income would drop to $0. So, if you were to withdraw from your 401(k) an amount equal to your standard deduction, that amount would be tax-free!

One of the benefits of real estate investments is that the real estate loopholes generally give you more deductions than you receive in cash flow. The best write-off of all is depreciation, which you can maximize to create paper losses. However, if your income is more than $150,000 per year, you cannot use those paper losses as deductions against your other income to reduce your taxes. That’s the spot Jean had been in.

The “curvilinear informality” of the Schnelles’ design was formalized into workstations with shelves, cabinets, and dividing panels—what would eventually devolve into the cubicle.12 (The development, like so many in American history, was facilitated by the tax code: The Revenue Act, passed in 1962, allowed for a seven percent tax credit on property with a “useful life” of eight years. You couldn’t deduct the cost of a fixed wall. But a partition? Go for it.)

Every so often I see a tax return from a new, real-estate-owning client that doesn’t show depreciation. And it’s not because the client has owned the real estate for 40 years. No, it’s because for some reason the client or his or her accountant didn’t take the depreciation deduction. This is not only wrong—it’s also stupid. Why not take the deduction? If you don’t, you’re in essence cheating yourself. It makes no sense to me, but I see it at least once a month.

Strategy #10 – Saving for Your Child’s Education with Maximum Tax Benefits The challenge I have with government-sponsored educational savings plans is that the government is in control of your money, how you use it, when you use it, and how it’s taxed. For example, in a 529 plan (also called a Coverdell IRA), you can deduct money you contribute to the IRA and then when you use it tax-free for your child’s education. Sounds almost too good to be true, doesn’t it? What sort of limitations do you think the government places on these funds in order to control your money? First, they control how much you can contribute. Then, they control what you can do with the money in the plan, even controlling how you invest the money. Next, they control what expenses you can pay for with the fund. Only certain educational expenses qualify. Finally, if you don’t use the funds for education, you have only two choices. One choice is to transfer the money to a relative who can use it for their education. The other is to distribute it to yourself and pay taxes and penalties. So, if you make too much money from your investments in the plan, you pay a penalty for not using all of the money for education. What if you could have all of the tax benefits of a 529 plan without giving the government any control over your money? Wouldn’t that be a lot better? In tax strategy #5 we talked about paying your children to work in your business. When I teach this principle in my Tax and Asset Protection class, the question always comes up about what to do with the money you pay them. This is the perfect opportunity to have your children pay for their own education without having to rely on Section 529 plans or other tax-deferred, government controlled educational savings plans. Your children can contribute their money to an LLC, limited partnership, or S corporation that owns a business or investments. Like a 529 plan, you get a deduction when you pay your child a salary. Like a 529 plan, there is no tax to the child when received. Like the 529 plan, with good planning, especially in real estate, there is no tax on the cash flow from the investment. But unlike a 529 plan, you have full control over the investment. Unlike a 529 plan, you can take it out and use it for any expense for your child (except for support, like food and clothing), and you can take it out any time you like. Unlike a 529 plan, there are no penalties for distributing the money or accumulating a huge amount over a lifetime. Now isn’t that a much better plan than a government-controlled savings plan? Stop using government plans and make your own plan. You will have much more control and

Limitation #4 – Specified Service Businesses Businesses that are in the accounting, legal, health, performing arts, actuarial, athletic, consulting, financial services and brokerage services do not qualify for the 20% pass-through business deduction unless the taxable income of the owner is less than $315,000 ($157,500 for single individuals). This limitation also applies to any business whose principal asset is the skill or reputation of one of the employees or owners, such as an independent contractor

observation-model-prediction. That is, in science, you figure out what happened, then figure out why it happened, then, using that knowledge, cleverly deduce what may happen in the future. An example would be Isaac Newton observing an apple falling to Earth, deducing universal gravitation, and from his deductions realizing that the moon orbits the Earth because of Earth’s gravitational pull. He can then generalize this logic to predict the future: he may realize that an apple will fall on the surface of any heavenly body, like the moon or Mars, and not just the Earth. This is science, running from cause to effect, observation to prediction, and past to future. Accounting is materially the opposite. In accounting, you start out with what is going to happen in the future: ie: that you are not going to pay any taxes, then figure out why you’re not going to pay any taxes, and then, from this, decide what, for tax purposes, happened in the past.

Case #6 Sandy and Bob Bob is a successful dentist in his community. In the 15 years since he established his own practice, he has established a reliable base of patients and has built a thriving business in a great location. A couple years ago, he brought his wife, Sandy, a business expert with an MBA, on board to help him oversee the business end of the dental practice. She had recently left her job at a financial services firm, and Bob knew that Sandy’s business acumen would be helpful in getting his administrative house in order. She brought on new employees, developed effective new processes, and enhanced the office’s marketing efforts. Within a few months, Sandy’s improvements had managed to make the dental practice a well-oiled machine. Now she could turn her attention to their real estate portfolio. Bob and Sandy owned three small apartment buildings around town, as well as one small commercial center that was home to a nail salon, a chiropractor’s office, a coffee house and a wine shop. Fortunately, Bob’s dental practice was a success and their investments earned a nice passive income for them. Unfortunately, because Bob earned on average $250,000 per year, the couple couldn’t use passive loss, which in their case came to about $100,000, from their investments to offset his high earned income. Eventually, they would be earning sheltered profits—when the mortgages on their properties were paid off and the rentals made pure profit, or if they were to sell a property. When those things eventually happened, they could use their losses to shelter those profits. But until that time, the losses were going unused. Sandy made an appointment with their CPA to discuss the situation and see how they might improve their tax situation. The CPA asked, “What about becoming a real estate professional?” He explained to Sandy that if she spent 750 hours per year, or about 15 hours a week, on the couple’s real estate investments, she would be considered a real estate professional by the IRS. This would enable the couple to write off 100 percent of their passive losses against Bob’s high income, which would bring his taxable income down to $100,000. This $100,000 deduction brought Bob and Sandy into a lower tax bracket, saving them roughly $31,000 in taxes. Sandy already devoted a large percentage of her time to overseeing their investments, and when she saw the tax advantages, her decision became clear: She would file the Section 469(c)(7) and become a real estate professional.

Let’s start with the assumption that all members of a household enjoy an equal standard of living. Measuring poverty by household means that we lack individual level data, but in the late 1970s, the UK government inadvertently created a handy natural experiment that allowed researchers to test the assumption using a proxy measure.16 Until 1977, child benefit in Britain was mainly credited to the father in the form of a tax reduction on his salary. After 1977 this tax deduction was replaced by a cash payment to the mother, representing a substantial redistribution of income from men to women. If money were shared equally within households, this transfer of income ‘from wallet to purse’ should have had no impact on how the money was spent. But it did. Using the proxy measure of how much Britain was spending on clothes, the researchers found that following the policy change the country saw ‘a substantial increase in spending on women’s and children’s clothing, relative to men’s clothing’.

The tax-deferred accounts with which Americans are most familiar are 401(k)s and Individual Retirement Accounts (more commonly known as IRAs). Other tax-deferred accounts, such as 403(b)s, 457s, SIMPLES, SEPs, and Keoghs, have different rules that apply to them, but they all generally have two things in common: Contributions are tax-deductible. Generally, when you put money into this bucket, you get a tax deduction. For example, if you make $100,000 this year, and you put $10,000 into your 401(k), your new taxable income is $90,000. Distributions are treated as ordinary income. When you divert a portion of your income to a tax-deferred investment, all you’re really doing is postponing the receipt of that income until a point in time much further down the road. When you take the money out, you pay taxes at whatever the rate happens to be in the year you make the distribution. For that reason, the IRS calls these distributions ordinary income and taxes them accordingly.

Because many of the itemized deductions phase out before retirement, most retirees are stuck with the standard deduction. So, if you need $120,000 per year of income in retirement and your deductions are only $24,000, then your taxable income would be $96,000 per year. That puts you at a marginal federal tax rate of 22%. Throw in another 6% (on average) for state tax, and you’re looking at a marginal tax rate of 28%. That’s a lot higher than most retirees are anticipating!

It all comes down to deductions. Even if tax rates in the future are the same as they are today, you could still end up in a higher-income tax bracket in retirement than in your working years!

While it might take a bit of math to figure out, there is generally a perfect amount to have in the tax-deferred bucket by the time you retire. In short, you want RMDs at age 70½ to be equal to or less than whatever your deductions happen to be in that year (which is $24,000 in today’s dollars).*4 In most cases, if you contribute only up to your employer match during working years, your 401(k) balance will be at or below this ideal amount by the time you retire.

Contributions to the Roth IRA are made with after-tax dollars, meaning that you do not get a tax deduction at the time of contribution. However, once your money is in a Roth IRA, your dollars grow tax-free and are tax-free upon distribution as long as you’re at least 59½.

If a building is a historical building, the government may give you a tax credit, which is far better than a tax deduction, to improve your investment,

Whenever you sell a capital asset for a gain or loss, that sale gets reported on Schedule D. The gains and losses are sorted based on timing: short-term for assets held for one year or less and long-term for assets held longer than one year. That timing matters because gains on short-term holdings are taxed at ordinary rates rather than the more favorable capital gains tax rates (0 percent, 15 percent, or 20 percent depending on your income). Capital gains can be used to offset capital losses, and you only have to pay tax on your overall net capital gains. If you end up with a net capital loss, you can deduct up to $3,000 of it against your other income; the rest gets carried forward to the next year.

As an investor, you pay lower capital gains taxes on any property sale profits. As a dealer, you pay higher ordinary income tax rates plus self-employment taxes (Social Security and Medicare). If you do get stuck in this dealer category, you’ll probably be eligible for the 20 percent deduction, so check with your tax preparer.

There’s a special tax provision called Section 179 that lets business owners deduct 100 percent of the cost of personal property (such as desks and computers) in the year it was bought instead of having to depreciate it over time. In the past, rental property owners weren’t allowed to use this provision for personal property (such as appliances, carpets, and furniture) in their rental units. The Tax Cuts and Jobs Act (TCJA) removed that restriction, and now landlords can take full advantage of Section 179 deductions, up to a total of $1 million (but the deduction can’t create a net loss).

Virtually all brokerage firms offer individual retirement accounts (IRAs). There are two main types: traditional and Roth. The main difference between them is tax treatment. Traditional IRAs give you a tax deduction now, and tax-deferred growth for the money in the account; you pay taxes only when you begin to withdraw money. Roth IRAs give you no tax deduction now, but all of the money in the account grows tax-free as long as you don’t take it out early (the after-tax money you put in you can still access penalty-free if you need to).

The TCJA created a tax treasure for pass-through business owners, such as landlords set up as sole proprietorships, LLCs, and partnerships. Any profits earned through the rental properties get “passed through” to your personal income tax return. If your rental properties qualify as a business for tax purposes—and they almost always do when you actively participate in the business—the new tax law lets you deduct 20 percent of your net rental income from your taxable income. That can translate into huge tax savings, freeing up more money so you can beef up your investments or pay down some debt.

Unlike the house you live in, practically every expense attached to your rental property counts as a deductible business expense for tax purposes. Expenses to deduct include: • Mortgage interest • Property taxes • Insurance • Homeowners association dues • Advertising (to fill a vacancy) • Utilities • Repairs and maintenance • Pest control • Landscaping • Trash pickup • Depreciation What doesn’t count as an expense? Any major repairs or renovations you perform count as capital expenditures that get added to the cost basis of the property, effectively reducing your taxable income when you eventually sell.

What would make the IRS consider you a dealer instead of an investor? • You’ve flipped multiple homes during the year. • Most of your work time is spent on flipping homes. • A large percentage of your income is earned flipping houses. • Your house-flipping business is active. You may have noticed that those factors are vague; that’s not an accident. The IRS hasn’t published specific guidelines, so it’s possible to fight dealer classification (especially if you have an experienced tax accountant). Remember, under the current tax law dealers may get to use the 20 percent deduction, which could result in a lower tax bill.

Yale economist and Nobel Prize winner Robert Shiller argues that, when maintenance is accounted for, a house isn’t a much better investment than any other asset class. Still, we see our first home purchase as a sign of our progress and trajectory as adults, and it is a form of forced savings. The government has bought into this (see above: National Association of Realtors), and the interest on your mortgage is tax deductible. The mortgage tax deduction is one of the costliest tax breaks in America. Another?

Churches and preachers are some of the most valuable political operatives in America today, and they work mostly (though not exclusively) on the side of the Republican party. Since churches are subsidized with public money through tax deductions and other tax advantages, one could say that the United States now has a publicly subsidized political party that promotes an agenda of religious nationalism.

Remember that if you itemize your taxes, any amount above 7.5 percent of your adjusted gross income (AGI) that you spend on health care qualifies for an additional tax deduction!

mortgage interest is a tax deduction.

Winners include big corporations, with a major tax reduction from 35% to 21%, small businesses, with a 20% net income deduction, and real estate, with major depreciation incentives and the 20% net income deduction given to other small businesses.

When you are in a trade, you get to deduct your expenses just like you would if you were in business. For stock traders, this is even better than for the typical business owner. You get to deduct your expenses as ordinary deductions, and your trading gains are capital gains—not ordinary income, which is taxed higher. If you don’t meet the trader rules, then your expenses are investment expenses.

the tax laws favor entrepreneurs and investors? That’s because entrepreneurs and investors generally put money into the economy to produce rather than consume. The key to making an expense deductible is to make it a business or investment expense. As long as the purpose of the expense is to produce more income, it can be deductible.

The key to making an expense deductible is to make it a business or investment expense. As long as the purpose of the expense is to produce more income, it can be deductible.

All income taxes in developed countries are based on net income, which is simply income after deductions. And deductions come from expenses.

Business expenses are the best kind of deductions. Real estate expenses are the next best.

Your first step to increasing your deductible expenses is to become an entrepreneur or investor.

When you start a business, your options for deductible expenses skyrocket. And making most of your expenses deductible is easy

the losses and expenses of a passive investor can be deductible,

Put your family to work. Make your business a family business. Then when you travel for business, your family’s travel is deductible. And you can shift income from your higher tax bracket to their lower tax bracket. This creates permanent tax savings.

All of the money Pierre puts back into his business is deductible against his $200,000 of income. That would leave him with $100,000. Now let’s say that he has a home office and that his van is used primarily for business; that when he spent money on a vacation, he took his wife and children, who are all owners of the business with him and that they spent more than half of each weekday on business; and that whenever Pierre and his wife went to dinner during the year, they had a business discussion.

Suppose, for example, Pierre invests the $100,000 in oil and gas drilling and development. In the United States, he’d receive a deduction equal to the entire $100,000 the year he made his investment. So he still doesn’t have to pay more than $3,300 on his total income of $200,000.

your real estate investment doesn’t just give you tax-free cash flow. It actually reduces your taxes on your salary and/or business income, because while there is positive cash flow of $7,000, the depreciation deduction of about $27,000 gives you a tax deduction against your other income of $20,000 ($27,000 less $7,000 to offset real estate income). That $20,000 additional deduction against your other income is worth $6,000 of reduced taxes on your other income in a typical 30% ordinary income tax bracket.

Invest where you travel. Do you have a favorite destination? Consider investing in the area. It gives you a great reason to keep returning, and you turn the travel expenses you already have into deductible expenses, keeping more money in your pocket.

Any travel can be deductible by making it a business or investment expense. As long as your travel has its primary purpose as business, then all of the travel expenses, including hotel, airfare and meals, will be deductible.

This extends the length of the audit and gives the auditor more to dig into—and to come up with more deductions to disallow.