On Paying Tax The Principles

by David Jenyns on December 9, 2011

W4 Calculator Withholding

Why Tax Loop Holes Must Exist

A long long time a go, in a country far far away, in China to be exact, there was a hunter that put nets in 4 sides of the forest. The hunter wanted to catch all animals. Then a king passed by. He said, “Remove the nets in the 3 sides of the forest. Let the animals go wherever they want. Let only those who do not follow Tao end up in your net.”

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Not so long ago, a bunch of liberals say, “Let’s tax all the income. Block all loop holes. Ensure that no body can get away from our cruel net tax. Punish the productive.”

Then a wise man among them quickly point out. “If we close all loop holes, the best and brightest will be forced to destroy the net. Let them have the loopholes. Let the best and brightest among them free. When they know they can be free, they don’t bother destroying our net. They’ll simply avoid our net. Let those who are so blinded with unfair morality and do not follow Tao end up paying tax.”

And that’s why you pay tax, while the rich pay lawyers and politicians.

Got it? In fact, the super rich, don’t only pay tax, they actually receive tax payment. Rich landlord farmers, for example, get a lot of blue collar workers paycheck in the form of farming subsidy that only benefits land owning farmers.

Governments simply use tax money to help businesses that they prefer based on family value. So a business with the governors’ or presidents’ relatives as the director will be more likely to get lucrative contracts paid with your tax money, the way most poor and middle class ask for.
Two Things You Need to Know to Reduce Your Tax

Capital Gains Tax Laws Explained

The very first business class that I took in US was, “How to run an efficient business.” No. “How to improve productivity.” No. “How do we pay our workers higher, make the world a better place, and still make money.” No. My very first business class taught me how to avoid paying income tax.

Oh ya a word of warning. Things are not as simple as it seems. You need to consult lawyers before trying all these stunts.

You see. What is income? The formal standard definition of income is the amount of money you spent plus the increase of your capability to spend. For example, say you work in the office. Say you get $50,000 pay check. Say you spend $20,000 and save $30,000. What’s your income? The sum of $20,000 and $30,000 = $50,000. What about if you spend $1 and save $49,999? What’s your income? $1 plus $49,999=$50,000. Right Nelly?

So no matter how you spend your money your incomes remain the same. Governments make that easy for you. They help your self pay your tax before you even see the money. Isn’t that convenient?

Itemized Income Tax Deductions, Should You Itemize Your Taxes?

Now, the entrepreneurs also have the same definition of income. However, they have 2 important deductions.

1. Money you haven’t spent is not income yet. So we don’t pay tax on that. The tax is deferred till we spend it.
2. Money we do spend is expenditure. So it’s deductible from our income.

Now, that sounds fair isn’t it? It is. I’ll show some samples and explain it in more detail in my website

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