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Old October 18th, 2005, 10:41 AM
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Wolfman77 Wolfman77 is offline
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Default Re: The ultimate fraud?

It is a very bad system in my opinion as well. The way it's written the rich can claim correctly that they pay a higher percent of their income in taxes, because 1/2 - 3/4 of their income can be deducted as non-taxable. Here's an example:

If I make $25,000 in a year, and my standard deductions are $7,500. Because my job and the resulting limitations on my lifestyle, I have very little else I can claim as a tax deduction. That leaves $17,500 that I need to pay taxes on. At 20% tax on that, I pay $3,500. That comes out to 14% of my original $25k income.

Now say someone else makes $250,000 in a year. They then start subtracting all their deductions, $50k for a retirement savings, a "bussiness trip" to the bahamas for $10k, donations of around $5k, Buisiness lunches, wardrobe, home office space and equipment, even their childrens allowances can be deducted as household help. By the time they are done they can easily get down to claiming $100,000 as income, and if they pay 25% of that it comes to $25k, which is only 10% of their total income.

So they can say they pay a higher percent of their income, since they pay 25% instead of 20%, but after everything is calculated they come out quite a ways ahead.

Note that this is also just a generalization to show how the rich can bend the tax code, and is not to be taken as actual tax records. If you want numbers from the actual tax code, try this http://www.fourmilab.ch/ustax/ustax.html
or contact the IRS.
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