So you hate taxes? Well you shouldn't! The second major complaint we will deal with is the following:
"My taxes only pay for the poor and lazy who don't want to work."
This is usually in regards to the "welfare kings or queens" or those who collect disabilities from the government despite not showing any signs of being permanently disabled. To a lesser extent this also covers those who make their money from illegal activities such as drug dealing or prostitution, yet still get government benefits like welfare. The final example is the illegal immigrant who gets free health-care benefits and food stamps.
Yes this is unfair, but it is not as much of a tax burden as you might think. To top it off, you have to realize that the individuals that live this lifestyle, despite driving "pimped out" Escalades or having decked out apartments with flat screen TVs and all the latest video game systems, their lives are miserable. First off, they are living paycheck to paycheck or in this case welfare or disability check to check. Secondly, if they are involved in illegal activities they have the "lifestyle tax" of always having to look over their shoulder.
Is it worth having a free flat screen TV knowing that someone could break into your house at any moment and steal it? NO!
Is it worth having a free Escalade with rims knowing that you could get car jacked at any moment? NO!
Is it fair to the rest of us? NO!
The reality is as a business owner or even a law-abiding citizen you can utilize tax strategies to your favor that welfare and disability recipients never could. As far as welfare and disability recipients, since welfare is not taxable and social security/disability is only taxable if the recipient has earned income above a certain threshold, they cannot qualify for any Earned Income Tax Credit. This is where working a job and producing for society is rewarded! Yes it will probably not be as much as receiving welfare for the year, but it can still be significant, we've seen hard working clients with 3 children receiving $8-10k refunds just by receiving refundable credits. Did we mention that these clients also had little to no taxes withheld from their check!
As far as a business owner, to focus on the welfare cases is barking up the wrong tree. You know that most of your purchases are deductible where as a welfare recipient makes the trade of a paycheck to paycheck lifestyle for the inability to rise from poverty and inability to gain any tax benefits from their purchases.
A great example is going back to the Escalade. If a drug dealer drives an Escalade for "business" use, he could possibly deduct it, but most likely wouldn't as he does not want to report his income for fear of incarceration. On the other hand, I have a friend who is a successful author and wrote a book about his success journey. One of his great promotional items is his Lamborghini. In addition, to the Lamborghini helping him sell books, he rarely drives the vehicle for pleasure and always has books to sell when driving. While it would be a stretch and he would have to keep thorough records, his car expenses could be deductible as business expenses!
Cheating the system isn't really worth it! You do everything by the books and you can reap much larger rewards with much lower risks than those who live the welfare case lifestyle. Using tax planning strategies that they could never use helps you receive many benefits they could never dream of. For advice on how to use the tax laws to your benefit, please contact one of our Tax Patriots who can help you utilize these tax strategies.
This is the second reason why we love taxes when you probably hate them. Stay tuned for Part 3.
Clint Masser
Licensed Tax Patriot & Director of Marketing
Jefferson Franklin Tax Services
Goodyear, AZ
Working on tax returns since 2006, he is currently a licensed tax professional in the process of studying for the Enrolled Agent exam. All of his work has been performed under the guidance of his father, a CPA/Enrolled Agent with over 30 years of experience who has provided tax preparation services and tax strategies for everyone from minimum wage employees to multi-millionaire business owners.
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