taxes, taxes, taxes- time to realize system is broke

[Rich Weese]

I was forming a reply to a thread "when does someone become rich" and realized the thread had turned to a discussion on taxes. I decided to start a new thread, just on that subject.It has been a huge concern for me the last 35 years, through all the changes, leading to the current system.

Since taxes are one of the largest potential obstacles to creating real wealth, it needs to be understood and dealt with by every person trying to increase liklihood of having assets to retire on.

Our tax system is a complete joke. I'm proof of it!
2% pay 38% of all taxes
10% pay 90% of ALL taxes
51% pay NO taxes (these are NOT automatically, the poor)

I know this, because I normally fall into the last category. That is ridiculous. I posted in the past I showed a total tax burden of $238 owed for the year. The government automatically assumes I'm poor and gives me a earned income credit of $120, leaving my total taxes owed for the YEAR of $118!!

It is also UNSUSTAINABLE to continually reduce the pool of tax payers which is now the minority. Increasing spending, as we are doing in this country currently will not work. We'll run out of taxpayers.

Personally, a flat tax hurts me, but would probably be better for the country. A VAT or consumption tax might also work, even as a PART of a new tax code.

While visiting Singapore, I found they have some great programs and is the reason they do so well. One is a gigantic progressive consumption tax on autos. If you want to own a Mucielago, your tax increases the price paid to nearly 1 million dollars. This would be ok with me also.

There are many exemptions that all of us would not like to see disappear, but the current system just can't work.

A couple days ago I looked at someones' tax return while trying to structure an investment program. There were several credits that actually caused a refund of MORE than paid. This couple has 2 kids- she is a nurse and he is general contractor and the govt. gives them money above what they paid.
I don't apologize for using the deuctions afforded to me by the govt, aneither should this contact. Judge Learned Hand came down with a decision DECADES ago that stated it is the right/obligation of every taxpayer to arrange his finances in a way to pay the least amount of taxes possible (paraphrased).This ability has definitely helped in wealth creation for me and others.

It is crazy that the tax burden continues to be carried by fewer and fewer people. With the current spending pace AND the continuing drop in taxpayers, we WILL eventually run out of taxpayers.

So, if it is a problem, what changes should we as investors hope for to help save the system? As I mentioned, the current system benefits me and:

The rich( who afford expensive tax accountants/attorneys.(you determine what rich is)

The poor, who get many benefits from the govt. without contributing nothing (51%)

All those with business/2nd businesses- that allows unbelievable exemptions.

How do we fix the problem and how will the "fix" affect us who are striving to create wealth and an estate. Rich