Occupy the Economy: Challenging Capitalism (City Lights Open Media) by Wolff Richard D. & Barsamian David

Author:Wolff, Richard D. & Barsamian, David [Wolff, Richard D.]
Language: eng
Format: epub
Publisher: City Lights Publishers
Published: 2012-05-07T21:00:00+00:00

When somebody goes to have a cup of coffee and a sandwich for lunch, they can’t use that expenditure as a tax write-off. But when a CEO or some bankers go to The Four Seasons, a very expensive restaurant here in New York, for lunch, they can write that off as a business expense.

It’s one of many examples of what the Tax Code’s hundreds of pages contain: countless rules, details, and exceptions added and changed under the pressure of lobbyists for corporations and the rich. Their goal has always been the same: alleviate their tax burden.

Let me address the big issue here. Years ago, the Internal Revenue Service told Americans to use the Tax Code and use every gimmick there that might conceivably lower your tax bill. But average Americans lack the expertise and the access to the legalese language. For most Americans, it does not pay to hire a skilled tax accountant or lawyer to do that work for you since it would cost more than such a person could save you in taxes. After all, the IRS gives average Americans the option of taking a general exemption. But the situation differs for corporations and rich people. They often earn more than enough to make it very worthwhile to hire a professional tax accountant because that person can make sure every gimmick is used to lower the rich client’s taxes. Corporations and the rich have the resources to influence tax laws made in Congress and tax rules made in the IRS. Then they also use their resources to hire the best experts to take maximum advantage of the laws and rules.

Classic gimmicks include claims that, as an expense of doing business, you needed $300 per person lunches, travel to resorts where you “confer” with real or “potential” clients, and so on. Business expenses like that can be deducted from the revenues of your business, thereby reducing the net revenue subject to taxes. In this way—using rules and procedures to support such claims with an accountant’s careful paperwork—you lower your taxes. The rules make that a much less attractive or beneficial process for an average person buying a sandwich for lunch and taking the family for a week’s vacation at the lake. In such ways the system is structured to favor the corporations and the rich. And, of course, the more they reduce their taxes, the more the government must tax the middle and lower income people to offset the tax obligations that corporations and the rich escape.

One of my favorite tax-dodge examples involves the charitable deduction. You can give something you own to a charity of some sort and you can deduct the market price of what you gave them from your own income and thereby reduce your income tax. This has led to some creative manipulation among wealthy institutions and wealthy people. For example, suppose you are wealthy enough to have a very expensive painting by Pablo Picasso hanging in your living room. You are also earning so

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