5 Myths About America's Tax System That You Probably Believe

The Band Of Patriots ^ | 9/25/12 | Bryan Thomas

[bthockey]

Most mainstream media outlets aide in the proliferation of myths about our tax system and our economy. Here are 5 myths about the US tax system that you probably thought were true.

1. Once A Millionaire, Always A Millionaire

As you can see by the graph below, this shows how many consecutive years millionaires file their taxes as millionaires. Half of the people who become millionaires are only at that status for one year.​

2. Tax Credits Only Help The Rich

This graph shows the effective tax rates since 1980. As you can see, because of tax credits and deductions, ​every American across the board is being helped by the loopholes in the tax system. For those less wealthy Americans, the tax loopholes make the effective tax rate below zero (meaning they don't have to pay any money in taxes, sometimes they receive money from the government).

[Sequoyah101]

OK. I must be really strange since I have never believed these myths and instead have always known the truth on each and every one of these subjects.

[TurboZamboni]

Same here. I’m guessing most freepers know this stuff and I’d bet most Yahoo news readers do not.

[wjcsux]

later

[Jedidah]

Check out the writers of this blog.

They’re kids.

When they say “you probably believe,” I would presume they’re talking to their peers. And they would be correct.

[Pollster1]

One of the saddest parts of progressive taxation is that it’s a lie - one that hurts those regular people who are tricked into supporting liberalism. Liberals don’t mind as much when Congress wastes our money, if that money comes from taxing “the rich”. Unfortunately, the rich do not passively accept a reduction in their spendable income. Lawyers (as one high-income example) who are taxed at over 50% raise their rates, passing that cost on to the physicians, grocery stores, and other businesses that employ them, and those costs are passed on to the tax-the-rich voters who think government is giving them something for nothing.

[ExTxMarine]

DING! DING! DING! We got a winner!

Companies do NOT pay taxes - CUSTOMERS pay taxes! Sales taxes directly and company taxes indirectly - by having the cost of the product go up!

Simple math is simple math! If I need to make a profit of $1000 a week in order to keep the doors open, pay my employees and keep my personal life in order, then every time my business taxes are raised, my product costs go up to ensure I continue to make that $1000 profit - PERIOD!

[Freedom1Man]

You are correct the customers pay all the taxes. If you jack up the taxes on a business they jack up the prices a customer has to pay.

There are other things too. Like the average citizen has never paid the income tax.

[lewislynn]

You are correct the customers pay all the taxes. If you jack up the taxes on a business they jack up the prices a customer has to pay.

Only people who have never had a business believe that myth.

If a business can raise their prices to maintain a profit after a tax increase, why can't/don't they just raise them anytime they want to increase profits?

[rolling_stone]

If a business can raise their prices to maintain a profit after a tax increase, why can’t/don’t they just raise them anytime they want to increase profits?

duh its called competition I see you still can’t grasp taxes and economics.....

[ExTxMarine]

First, I have ran my own business, so I know what I am talking about.

Second, because the market is set by the common denominator of public will! That means businesses set their prices as high as the public is willing to pay for their services.

Third, and last, see when the cost of business goes up for the cost of gas, then EVERY gas station raises their prices and yet the public continues to purchase gas. Another example is airline bag fees. The government put extra security fees and costs onto the airlines industry. So, the airlines industry created bag fees to offset their losses and yet, the American public continues to fly!

A more simple explanation would be that many businesses set an expected profit level and then work their business plan around that expected profit level even though MORE profit could be made. Then, when other companies realize that they can make thhat higher profit, they crush the smaller businesses and then set the market prices for the entire region (see WalMart business strategy as this example).

So, your premise that ALL BUSINESSES are and should be greedy for every public dollar is the MYTH, not my statement that businesses don’t pay taxes!

[lewislynn]

Second, because the market is set by the common denominator of public will! That means businesses set their prices as high as the public is willing to pay for their services.

...every time my business taxes are raised, my product costs go up to ensure I continue to make that $1000 profit - PERIOD!

You contradicted yourself and went a long way to do it.

[lewislynn]

Taxes aren't gasoline or baggage fees. Fuel and baggage handling fees are a deductible cost of doing business...you said yourself the increased fees offset the costs.

If you raise your price to offset your income tax (income tax is the subject of the thread) you will increase your profit and hence you increase your tax. Your taxes ARE NOT A DEUCTIBLE cost of doing business and businesses pay tax on profits and gains.

Everything else being equal, raise your price, increase your profit, pay more tax...Then what? Raise your price higher?

[ExTxMarine]

Apparently, you can't keep a train of thought across a few posts and a few paragraphs. So, I will spell it out for you to understand. I did not "contradict myself," you failed to read or comprehend all of my post. Companies set their prices as high as the public is willing to pay at a profit margin acceptable to the business. I ASSUMED that you would be able to comprehend this concept across a few posts, without me having to write it out each time, but apparently not.

Let me explain it more, so that maybe you can understand: I own a construction company. I have five employees and I offer NO benefits. My company needs to make 4% profit on each job in order to pay all my bills, the employees and set aside money for future growth.

My competition across town has 200 employees and offers benefits. His company needs to make 8% profit on each job in order to pay bills, his employees and save for growth.

The market is willing and able to pay his 8% mark-up, but I can get the job and make a profit at a 4% mark-up, so I charge LESS THAN THE PUBLIC IS WILLING TO PAY, but I still make a living. NOW, do you understand now how the free market system works? Was that easy enough for you to understand? And this is in fact how I SUCCESSFULLY operated my construction business for five years.

This is reality - not the textbooks you have been reading.

[cynwoody]

Only those who pay net federal income taxes should be allowed to vote.

It's a conflict of interest to allow others to vote.

[ExTxMarine]

If you raise your price to offset your income tax (income tax is the subject of the thread) you will increase your profit and hence you increase your tax. Your taxes ARE NOT A DEUCTIBLE cost of doing business and businesses pay tax on profits and gains.

Once again, you do not understand how businesses work. As you stated, businesses pay taxes on PROFITS and GAINS (keep this in mind)! And, just because I increase my fees does NOT mean I increase my profits. Let me explain how many companies operate, since you think they take money in so as to be able to pay Uncle Sam (just for the record very few are in business to pay taxes)!

Since companies only get taxed on PROFIT, there are MANY tax deductions which people/companies do not claim on their taxes from year to year, but as their tax rates climb, taxpayers/companies start increasing their use of tax loopholes, tax deductions, etc... to offset their cost of doing business.

Many years I did NOT claim the tax deductions for working out of my house. However, when my profits were higher than normal (i.e., my taxes were going to be higher, etc...) I DID claim my home deductions and walla...my tax rate went down!

People like you either refuse to acknowledge or simply do not understand that the average tax rate paid into the Treasury is about 20% of GDP - REGARDLESS of the official tax rates! This is a FACT!

The reasoning behind this is because companies do not pay taxes; CUSTOMERS do! Many companies will increase their charitable contributions or take a loss on a short-term project to DECREASE their effective tax rate. Heck, I know of companies who moved their offices simply to take advantage of "moving expenses" deductions in order to limit their tax rates for the year (no, not me)!

See, you are one of those people who think that gasoline companies have some special tax loophole that allows them to "steal" from the public. When, in fact, they have the same tax deductions that any other commodity company has - a diminished return on investment deduction. As the oil reserves in the hole in the ground is expected to diminish over time, they are allowed to deduct the costs of operating and establishing the hole in the first place - but so too are the silver and gold miners and the rock quarry owners and many other companies! You also think companies get paid to ship jobs overseas - right? Nope, they take the same "moving expense" deductions which I mentioned above - nothing special, they simple use the deductions as they are written!

And THAT is why companies do not pay taxes, CUSTOMERS do!