I’ll try to keep this brief, but… I work as a risk manager and claims adjuster for doctors. Our little company is owned by a health insurance company that brings in about $1.5 billion per year. When I have an employee embezzlement case I try and get out and meet with the employee when they are informed they have been found out. By couching my questions the right way I usually get them to talk about the whole thing and in so doing I try to draw them out as to how they spent the money as it opens a lot of avenues for subrogation/restitution. Recently I was so performing this little task and when the interview was completed I asked the now ex employee what she planned on doing. She stated she was going to sell everything she owned and move to Thailand (or some country) to live with a friend who was also a fugitive from the law. Her friend worked as a ‘gopher’ for a production company owned by Brad Pitt. I wondered aloud why he would have a company there and was glibly told it was to avoid paying US taxes. That last remarked led to have a discussion with our parent companies’ CFO about such tax dodges. He went on for about 20 minutes that virtually every entertainer, athlete and business big wig making serious money has legal means to avoid nearly all, if not all, US taxes on income. Just about the only people who can’t fully do this are pro athletes with their initial paychecks, but after that (if they make enough in endorsements…) they do the same thing. It was his educated opinion that of the people who have a gross income of $5 million or more annually, probably 80% hide the vast majority of their money (if not all) in areas that are legally non taxable. That leads me to think about if we had a 7% flat tax to every citizen with no write-offs how much more would these people bring their money back in to be taxed. Senator Wyden (D-OR) opines that a 7% flat tax would bring in much more revenue than our current tax collection laws.
The bottom line is if you have significant wealth, it's a positive NPV investment to lobby Congress to allow exceptions in the tax code and to invest in tax-dodging investment vehicles. The people really getting screwed by taxes are the middle class.
I have a question about taxes hopefully someone can answer. Do you know what the ratio is you get back if you make charitable contributions? If I gave away 50% of my paycheck to the charity of my choice and deducted it off my earnings, how much would I get back on my tax return percentage-wise? I'm trying to determine if it makes more sense to dictate where my taxpayer money would go if I gave my money away to charities or organizations upfront and then reducing my taxes going to the State & Fed, which spend it in ways I don't always agree with.
My understanding is it's based on your adjusted gross income. You can deduct only amounts above a certain percentage of that.
Maybe so, but some groups claim that a 7% flat tax (with no write-offs) exceedes current income tax revenues. We wouldn't really know until we tried it.
Right, but what would that figure be? Would I have to donate an amount dropping me down to a lower tax bracket? I figure either way I'm going to not see the money because it's being taxed, but I'd rather be able to determine where that taxable income is going versus giving it to the state & fed to determine for me. Does that make sense?
Without hesitation, I say give your money to charities directly, regardless of the effect on your bottom line.
Here's a hypothetical example. Let's say your AGI is $75,000. You can deduct charitable contributions if they exceed 30% (or whatever that % is) of your AGI. Then, even then you can only deduct a percentage of that.
I do give to charity now, but if it makes sense to give more I want to. I do have to worry about my bottomline too there's a limit to how much I can give.
