(09-30-2020, 07:27 PM)mikesez Wrote:

(09-30-2020, 04:29 PM)The Real Marty Wrote: Maybe a better word than "reasonable" would be "typical."  I think anywhere between 25% and 38% is typical for most high earners, although one can incur even higher percentages due to the Obamacare surtax on investment income.  I'm just talking about federal income tax. 

In Biden's case, if he earned about $15 million on his book deal and speaking fees, and if he paid about $3.7 million in income tax, that would be about 25%, which I would consider a pretty typical rate.  I haven't seen his tax return, I've just read articles about it, so I don't know the details.  

In answer to your question, of course I would like to get as close to zero as possible.  Trouble is, unlike Mr. Trump, I make money.  I don't lose money.  So I'm not deducting losses like he is.  That's one of the interesting things about his taxes- he loses loads of money on most of his businesses, especially all the golf courses he owns.  He made a lot of money on the Apprentice, and that made up for some of his losses on the other businesses, but apparently, he loses enough money that he doesn't wind up with much taxable income.   His "fortune" seems to be a house of cards, and maybe an illusion.  

If you're making money, it is really really hard to avoid paying taxes.  The idea that "the rich" can avoid paying taxes is a complete myth.  The top 1% pay almost 40% of all income taxes.  If your are rich, you pay taxes.  That's all there is to it.   That's one thing that makes Trump's tax bill really unusual for a guy who claims to be rich.  If he's as rich as he claims to be, why is his tax bill so incredibly, consistently miniscule?

This is not strictly true.
If you have large reserves of cash, and lots of diverse and esoteric business interests, you can create a new corporation, give it a whole bunch of seed money out of your income. That income is not taxed. Then have it sell you "shares" one year at a low price. Then, 367 days later, have that company buy those shares back at a much higher price. Remember this is not a publicly traded company, so you get to name whatever price you want at both ends. The difference between the two prices would get taxed under the long-term capital gains rate, which varies between 15 and 20%. But if you had just taken your income that year, and not hidden it away in a shell corporation for a year plus one day, that money probably would have been taxed at a marginal rate closer to 40%.
This is the old Mitt Romney trick.

So, if I understand you correctly, suppose a person has a million bucks, which has already been taxed, and he starts a corporation and seeds it with that million bucks.  You say, "then you have it sell you shares..."   If you started a corporation with a million bucks, then you would already own all the shares.  So the corporation would have to create more shares if it wants to sell you more shares.  So let's suppose it does that.  It sells you half a million in new shares.   That means you just put half a million more into the corporation.  That was your money you just used to buy those shares, so it has also already been taxed.   So then you say it buys the shares back for a higher price than what you bought them for.  So you pay capital gains tax on the shares you sold the corporation.  

What have you accomplished, other than to create a taxable event out of nothing?  You churned your own money in order to create a capital gain that you have to pay tax on.  What income tax are you avoiding?  There's no income anywhere in your scenario, other than this artificially created capital gain.

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