In practice since 1979
(702) 998-0224

 

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FISCAL FITNESS FOR THE YEAR 2019

Financial planning experts counsel that the new year is an excellent time to do certain key things in evaluating ones investment portfolio.

 

10 Key Things To Do Now:

1.   Check that you have the right stock-bond mix.

2.   Cut back your investments  to a manageable  number.

3.   Make sure you are saving enough.

4.   Increase the size of your emergency  reserve.

5.   Look into boosting the returns on your cash holdings.

6.   Make the most of tax-favored savings plans.

7.   See whether it's worth paying down your mortgage.

8.   Monitor that your stock portfolio is well diversified.

9.   Get a handle on your annual investment costs.

10.  Determine if your tax bracket justifies owning municipal bonds.

 


2019 Tax Reform : a few important tax changes you need to know

We hope that 2018 has been a happy and prosperous year for you. As you probably know the President has signed the biggest tax reform law in over 30 years. Your tax return will look very different when you file your 2019 taxes. There will be Tax Rate changes, Standard Deduction increases, disappearing Deductions, and some new benefits for individuals. Here are some of the changes you need to know about :

• Tax return due dates change for Partnership and C Corporations.
• Due date for 2018 returns is April 15th.
• Tax refund fraud and identity theft are an increasing problem. Ignore phone calls that say they
are from the IRS. The IRS never calls. A letter stating you owe money and says to write a
check to the IRS is another scam. Checks always go to U.S. Treasury.
• If you sold any property, be sure to provide copies of escrow statements, loan estimate form
and closing disclosure form.
• 1099's or K-1's from investments in 2018 may require us to extend your returns. There are
increasing numbers of corrected information returns creating amendments and penalty problems.
• Annual Gift Tax Exclusion increases to $15,000 in 2018.
• IRC Sec.179 max is $1,000,000 in 2018.

You can find a complete list of 2019 Tax Rates here. Please feel free to contact me at (702) 998-0224 if you have any questions or need additional information. Network Tax Solutions "Helping You Keep More of the Money You Make!

Financially yours,
Esta Klatzkin, EA
Founder

 


5 Things To Do To Have A Solid Financial Groundwork By Age 30

1. Make a budget to track your income and expenses.

2. Begin a Retirement Account.

3. Have Savings for an emergency (rainy day account).

4. Have Zero Credit Card Debt.

5. Designate Beneficiaries for all your accounts including Life Insurance.

 


Eight Signs That It's Time to Get a New Tax Professional

Now is a good time to think about your relationship with your tax professional and make sure that it is a good fit. To help you decide, here are 8 signs that it might be time to get a new tax professional.


1. She's never prepared. It is unrealistic to expect that your tax professional has your file at the ready every time you call. But, part of the appeal of using the same tax professional over time is that your tax professional knows your financial story. If you're constantly having to remind her about the specifics of your situation, it may be a sign that the relationship is one-sided. A basic understanding of your financial picture and your goals is desirable. If she can't be bothered to familiarize herself with that information before a meeting or call, consider finding someone who will.

2. He doesn't have a PTIN. Anyone who prepares or assists in preparing federal tax returns for compensation must have a valid PTIN before preparing returns. The best way to ensure that your preparer has a PTIN is to ask. You can also search the IRS online PTIN directory.

3. She pressures you to be too aggressive. Part of being a good tax professional involves being proactive and suggesting how to improve your life as a taxpayer. But it always means being honest and doing what is legally correct.

4. He doesn't know the rules. You shouldn't realistically expect your tax professional to be able to cite IRS Regs on command or quote from an IRS Pub. Your tax professional should be familiar with the basics. If your tax professional is constantly struggling to answer your questions or can't seem to interpret correspondence from IRS, then find someone who is willing to do their homework. Credentialed tax professionals like Enrolled Agents and Certified Public Accountants are required to take extra tax courses throughout the year to stay on top of an ever-changing and expanding Tax Code. If your tax professional doesn't seem to know much beyond data entry, it might be time to switch.

5. She doesn't return phone calls or e-mail. I'm a firm believer that regular communication is important. Demanding immediate service is going overboard. But your tax professional should be able to respond within a reasonable amount of time. If you find yourself waiting days for that return phone call, consider finding someone who will respond to you in a more timely fashion.

6. He doesn't play well with others. Your tax professional is not an island. He should be part of a team (investment advisor, insurance broker, attorney, etc.) that you can trust to carry out a plan from start to finish. There are questions that may require that your tax professional interact with others on your team. If he seems reluctant, it may be time to ask some difficult questions.

7. She can't explain why the cost of services is always changing. Costs do go up. It's not unfair or unlikely that the cost of preparing your return or other tax related services might increase from time to time. If prices are often volatile, it's time to ask questions. Prices that constantly spike and fall without warning might be an indication that there is some financial stress inside the office. Always get your pricing schedule in writing and if your tax professional isn't willing to talk cost with you, time to move on.

8. He's under indictment. It happens. Trust me. An indictment isn't the same as a conviction. It's simply a formal charge. If you have any concerns about your tax professional's ability to do his job honestly, run far, far away.

 


Do you have a job or a career?

“Choose a job you love, and you will never have to work a day in your life.” – Confucius

Most people have jobs.  They faithfully go to work each morning, do their best to execute their duties, come home tired, and look forward to weekends and vacations. They do this to make ends meet, hoping something better will come along.  And better things do come now and then, along with setbacks.  But the drudgery continues.  Week in. Week out.  Forty years pass.  Life has been half miserable.  But it’s time for retirement.

Retirement means getting out of job jail. No more hated work.  It’s now time for relaxation and fun. 
Just kidding! As it turns out, retirement today is this:  After giving up a fairly well-paid full-time job, you take on several poorly paid part-time jobs (without benefits) to pay for your ever-increasing retirement expenses. But it doesn’t have to be that way. 

You can spare yourself the misery by ditching the job early on and replacing it with a career. What’s the difference?  A career is a life’s vocation. You work a job to make money. You work a career to build something you value.  With a job, you are always thinking about the time you won’t be working.  With a career, you are always thinking about it even when you aren’t working. 

The reason for this is a matter of focus.  A job looks inward: “I do this to make money for myself.”  A career looks outward:  “I am building  something  that others can appreciate or use.” The litmus test for determining whether you have a job or a career is this question:  If you could afford to, would you do it for free? You shouldn’t work for money.  You should work on having a career.

If you don’t like your work but are doing it because you have to support  yourself and/or a family, start working on a Plan B.  Plan B is titled: “Doing Something I Care About.” Measured in mundane, day-to-day terms, having a career can be challenging since you are constantly focused on the work, and the work sometimes does not go as well as you might want.  But even when the work is frustrating, it involves you in a way that is somehow satisfying.  And when the work goes well, there’s nothing like it.

If you have a job now, can you transform it into a career?  Well, it may depend on what you are doing. 
So that is the first and main thing.  But there are requirements for your work to be a career:

  • The work should be challenging.  It should require the best of you – your intelligence, your intuition, your stamina, and your care.  Ideally, it should require both knowledge and skill and thus give you the opportunity to learn and improve forever.
  • It should produce things or provide services that are enjoyable and/or useful to other people.  This adds a social component to the experience.
  • It should be accretive.  That is, the value of the goods or services you produce should increase as your career continues.

Not everyone can make a career out of his or her job.  An architect certainly could. Instead of designing commercial crap for the highest bidder, she could gradually develop her own style, one that she likes and that would serve people, and she could produce work over her lifetime that would endure for generations.

Think about it.  Start creating your Plan B.  Satisfaction comes from doing something you care about.  And if you can make money for 40 years doing something you care about and creating something that has value to others – you have a career! 

 


Made a mistake or overpaid? Amend your Tax Return

You must file an amended return (Form 1040X) if there has been a change in your filing status, income, tax deductions, or tax credits reported on your original return. There are other reasons for amending a return as well. For example, you may not have had complete information at the time you filed. Or, you may have been unaware that a certain item was taxable and then you received a reporting document indicating otherwise.

The procedure for filing an amended return is relatively straightforward. Note that you can only file an amended return after you’ve filed your original return. Additionally, you cannot e-file an amended return — you will have to mail it in. To begin, you will need IRS Form 1040X (Amended U.S. Individual Income Tax Return).

Form 1040X contains 3 columns. In Column A, you’ll need to provide the amounts you entered on the original tax return. In Column C, you must provide the corrected figures. In Column B, enter the “net change” from Column A to Column C, which is the difference between the two amounts. On the second page of the form, you must explain each change, taking care to make the information as complete as you can (so the IRS can process your amended return as quickly as possible).

Did you pay too much on last year's tax reutrn? Now that you filed last year's tax return, we can look it over at no charge. If we find that we can help you save more money, we will! Absolutely no obligation. Give us a call today! 702.998.0224

 


Hugging is Good Medicine

What does hugging do?

It transfers energy and gives the person hugged an emotional lift.

You need four hugs a day for survival, eight for maintenance, and twelve for growth. Scientists say that hugging is a form of communication because it can say things you don't have the words for. And the nicest thing about a hug is that you usually can't give one without getting one.

Hugging is healthy. It helps the body's immune system. It cures depression. It reduces stress. It's rejuvenating. It has no unpleasant side effects. It is God's miracle drug! It is all natural, it contains no chemicals, artificial ingredients, no pesticides, and no preservatives!

Hugging is practically perfect. There are no parts to break down, no monthly payments, non-taxable, non-polluting, and of course - fully returnable!

 


I Need a Clever Tax Pro

I need a clever tax pro
One with a nimble mind
Someone who thinks like I do
Who'll cover my behind

My pro must understand me
And never cause a fuss
My details may be fuzzy
But she'll curb the urge to cuss

We won't count Mom's deposit
Coming from the SSA
For five years I've enjoyed it
Ever since she passed away

It turns up just like clockwork
I just can't make it stop
A plea to call it off
Would cause a needless income drop

My home's a custom call site
For an extra little gig
My nifty IRS badge
Helps legitimize the jig

My pug is my true business
I therefore write him off
He's lavished with deductibles
At which most pros would scoff

My tax pro won't be bothered 
To check out what I say
She'll get me every credit
And make my tax go ‘way

She'll prove she's indispensable
And worth her weight in salt
But when we go to Tax Court
I'll say it's all her fault

 


Top 12 Tax Return Preparation Errors

  1. Number of transposition  and spelling errors.  This includes Social Security  numbers, addresses, etc.

  2. Unreported  1099 income.

  3. Tax payments. Client must provide proof.  Incorrect amounts  is a major cause of tax notices.

  4. Keeping review notes after the return is completed.  This can create liability issues.

  5. Not correcting  reason for tax notices for prior year on this year's return.

  6. Not questioning numbers that stretch the imagination.

  7. Not following up enough with clients to get missing information.

  8. Not specifically asking clients if they have, can sign or control a foreign bank account.

  9. Not telling clients about items that aren't  on return, such as IRA 's, flex spending, charitable contributions with appreciated stock, etc.

  10. High mortgage interest deductions.  This is a red flag for the IRS.

  11. Alternative minimum  tax. Watch for unapplied AMT credits and NOL 's and state tax refunds reported as income though not deducted in prior years because of AMT.

  12. Not calling a client to give them unexpected final results.



6 Tips When Starting A Small Business

1. Put a plan in place. Having a business plan that takes into account as many factors as possible helps ensure that you won't start a business that's doomed from the beginning. Business plans should account for many factors, including products, people, the marketplace, the competition and finances. When you put that all in one place, you'll see what your business needs to be successful and how you're able to meet those needs. You can also see weak areas that you might not have thought about. Be honest with yourself when creating the business plan. Check out Bplans for lots of examples and a wizard that will help you get started.

2. Know your banker. You want to establish a relationship with a banker, before you ever have to ask for a loan for your small business. When you start an account, don't just set it up with the clerk at the front counter. Ask to meet the loan officer and chat about your business, along with any services the bank might offer that could help you.

3. If you work from home, do it right. The ability to work from home is often a great way for small business owners getting started, because it allows them to spend precious capital on only what's absolutely necessary for the business. If you decide to work from home either to get started or indefinitely, try to set aside a room for a home office, and decorate it appropriately. Get into a routine of waking up, getting ready for work, just like if you worked in an office building. If you need a conference room or a business mailing address, you are usually able to rent those as needed.

4. Watch your cash flow. Cash flow is the lifeblood of any company. While the goal of a business is to make a profit, it can survive for some time without profit, but a lack of cash flow is deadly. Using financial software or just a spreadsheet, create a 12 month cash flow projection so you're able to take pre-emptive measures and avoid problems when necessary.

5. Tap your resources. Being a small business owner is daunting, but you don't have to go it alone. Anybody starting a small business should join the local chamber of commerce, rotary club or networking group. It is a great way to give back to the community while also meeting other business owners and taking advantage of services offered by them. Also consider joining a local or national industry organization in your field to network and get advice on regulartory, legal and other issues.

6. Know when to grow. While you want to grow your business, keep in mind that growth comes with bigger inventory and expense. Don't put your business in jeopardy. Watch carefully how you spend your capital.

There's no way to guarantee success, of course, but following these tips is a great way to help your business grow up happy and healthy.

 


The Top 10 Most Endangered Jobs in America

We knew it was happening: Automation is changing the way America works. Here are 10 jobs that could see big changes as a result.

Based on the job search platform CareerCast's new report of the 10 jobs with the worst growth outlook between now and 2024 found U.S. postal worker are the most endangered. Like many of the other positions on the list, automation is mostly to blame. But the bots can't shoulder all the blame for lost jobs in America; market preferences and cost-efficient outsourcing are just as responsible. While automated sorting and delivery has undoubtedly taken a toll on the career trajectory of mail carriers, whose jobs the report says will decline 28 percent by 2024 to become the most endangered job in America, the biggest culprit is email, text messaging, and social media. The low-cost platforms have become preferred ways to stay in touch for many. And that grim job outlook for jewelers and seamstresses? It's partially due to the cost saving benefits of outsourcing these roles.

Here's the full list of the top 10 endangered jobs in America, in order of expected decline in job growth outlook by 2024:

  1. Mail Carrier

  2. Typist/Word Processor

  3. Meter Reader

  4. Disc Jockey

  5. Jeweler

  6. Insurance Underwriter

  7. Seamstress/Tailor

  8. Broadcaster

  9. Newspaper Reporter

  10. Computer Programmer

-Originally published in Inc.com

 


5 Highest Property Tax Cities

Bridgeport,  CT     


3.88%

Detroit, MI

 

3.81%

Aurora, IL    

 

2.68%

Newark, NJ 

 

.2.68%

Milwaukee,  WI

 

2.68%

 

 

5 Lowest Property Tax Cities

Boston, MA


.67%

Birmingham, AL

 

.66%

Denver, CO

 

.66%

Cheyenne,  WY

 

.65%

Honolulu, HI

 

.30%

 

 


Why You Should Never Do Your Own Taxes

Never do your own taxes. The U.S. tax system is overly complicated. Until that gets reformed, don’t do your own taxes. You might save a few hundred bucks by using TurboTax instead of hiring an accountant but you will lose thousands in the long run. As you start to make more money, get married, buy a home, invest in stocks, run other businesses and so on, your taxes will continue to get more complicated. The bad news is that there will be lots more paperwork. The good news is that there will be a lot more loopholes that you can use to your advantage. Not only will you save time and avoid audits by using a CPA, you will essentially be increasing your annual income. So, is a CPA telling you it's going to cost $500 to do your taxes? Trust me…smile and pay them.

-Len Kendall "Get ready to retire at 50…Not because you want to but because you'll have to."

 


BEST & WORST PLACES TO RETIRE

15 Worst places to retire

  1.  Washington, DC            9.  Utah   
  2.  California                     10.  Texas 
  3.  New Mexico                11.  Illinois 
  4.  New York                   12.  Montana
  5.  Minnesota                    13.  Maryland
  6.  North Carolina             14.  Massachusetts                
  7.  Nebraska                     15.  Indiana

 

10 Best places to retire

  1.  Delaware                     6.  Arizona       
  2.  Florida                         7.  Hawaii
  3.  West Virginia               8.  Iowa
  4.  Pennsylvania                9.  Kansas
  5.  South Dakota              10.  Wyoming

-Kiplinger

 


BEST & WORST STATES FOR TAXES

 

1. Wyoming
2. Alaska
3. South Dakota
4. Texas
5. Louisiana
6. Tennessee
7. New Hampshire
8. Nevada
9. South Carolina
10. Alabama
11. Mississippi
12. Oklahoma
13. Minnesota
14. New Mexico
15. North Dakota
16. Georgia
17. Arizona
18. Missouri
19. Colorado
20. Florida
21. Virginia
22. Iowa
23. Utah
24. Washington
25. Kansas

26.  Nebraska
27.  Idaho
28.  Kentucky
29.  Indiana
30.  Michigan
31.  Hawaii
32.  West Virginia
33.  Ohio
34.  North Carolina
35.  Oregon
36.  Delaware
37.  Maine
38.  Illinois
39.  Arkansas
40.  Massachusetts
41.  Pennsylvania
42.  Vermont
43.  Rhode Island
44.  Maryland
45.  Minnesota
46.  Wisconsin
47.  California
48.  Connecticut
49.  New Jersey
50.  New York


-Forbes

 


Five Financial Lessons For Your Children

One of the greatest lessons you can pass on to your children is teaching them how to budget,
save, and spend wisely. Some basic money value concepts are:

1. Money isn't free -you have to earn it
The saying, "Money doesn't grow on trees" means that we have to find ways to earn
money in order to be able to spend money. Helping children understand the value of
work can be one of the most important lessons they will learn.


2. Take money seriously
Money is something that should be handled carefully. Teach your kids to be wise about
their purchases. The value of their hard earned dollars should be appreciated.


3. Saving money builds a better future
It is easy for young people to get excited about having money and coming up with ways
to spend it. _It's important to demonstrate how saving for a particular goal can result in a
big payoff. Help your kids find a specific spending .goal and encourage them to set aside
money to meet that goal, like saving for college.


4. Don' t spend what you don't have
Since credit is easily obtained, help your children understand how to live within a budget.
Discuss when it may be acceptable to take on debt, such as making payments on a car.
Teach them how to calculate payments that are well within their grasp, so that your kids
can remain in control of their debt in the future.


5. Time is on your side
As you begin to talk to your children about investing, emphasize the biggest financial
advantage they have - time. The sooner they can begin setting money aside for a larger
goal, the more their money can work for them. Discuss the benefits of saving on a
regular basis.


These points can help your children set a solid foundation for their financial future. Keep in
mind that one of the best ways to make financial lessons stick is to live by them yourself.

 


Get Your Financial House In Order

Tips for each month that can help you reduce fees, lower the cost of insurance and thwart identity theft.


January
File your taxes ASAP. The earlier you file your taxes, the less likely a thief will beat you to the punch, claiming a refund using your stolen Social Security number.

February
Prep for bigger payments. If you are among the millions who took out a home equity line of
credit before the housing bust, your monthly payment could soon jump by hundreds of dollars.
These loans usually allow interest-only payments for the first 10 years, then require borrowers
to begin repaying principal too.

March
Convert to a Roth. Consider taking advantage of falling stock prices to transfer some shares
from a traditional IRA into a tax-friendly Roth IRA. You'll pay ordinary income tax on the value of the shares transferred. Once in the Roth, those shares will recover and future gains won't be taxable.

April
Fund a Health Savings Account. More employers offer a high-deductible health plan combined
with this savings account. You have until April 15 to contribute for 2019. Individuals can invest
$3,500 pretax and $7,00 for families- plus another $1,000 if age 55 and up. Monies from this account can be withdrawn tax-free to pay medical expenses. Money used for non-medical expenses will be taxed and if under age 65 will be charged a 20% penalty.

May
Build an emergency fund. You should know about setting aside 3 to 6 months' worth of living expenses to pay for unexpected expenses. One out of five people ages 50 to 64 raided their retirement savings last year to pay for an emergency. Those withdrawals can trigger taxes as well as penalties. Build that "rainy day account" today.

June
Check those fees. How much of the money in your 401K, and IRAs is being eaten up by fees?
Most people thought they didn't pay anything. If you don't know how much you are paying, you are probably paying too much! Get that information now by checking FeeX.com, a free service.

July
Fix your credit card. Most cards have a variable interest rate. If you carry a balance, look for a low fixed-rate card which can save you money as well as hedge against future rate hikes by the
Federal Reserve.

August
Crunch your net worth. This simple yet critical check-up should be done every year to show you
where you stand financially. Add up all your assets, and then subtract your liabilities. This is
your net worth. You can use an online calculator at Bankrate.com to help determine your net
worth. If your net worth keeps dropping year after year, do something to control your spending.
See your financial advisor, CPA or Enrolled Agent to assist you.

September
Shop for insurance. Insurance premiums should be reviewed annually. If you become
complacent, some insurance companies will set premiums using "price optimization," charging
as much as 25% more if they think you are not shopping coverage elsewhere.

October
Open enrollment. Buying health insurance through a state-sponsored exchange starts Oct. 15
and runs through Dec.7. You MUST have insurance either from your employer, an exchange or
be self-insured. The penalty for not being insured is steep, and rising annually. The flat dollar penalty will be adjusted annually for inflation.

November
Break up with your bank. Is your bank taking you for granted? Paying nothing on savings and
charging you for checking? Maybe it is time to switch! There may be better alternatives. Free
checking is available at credit unions, online banks and small community banks. Many online
banks pay more than 1% on savings requiring no minimum deposits. Search for federally
insured online banks at Bankrate.com.

December
Sell those gift cards. About one quarter of people who receive a gift card have yet to spend it
after one year. Don't let cards go to waste. If you are not going to use them, sell the cards for a
discount at GiftCards.com, GiftCardRescue.com or MonsterGiftCard.com.

 


Should your Small Business Create a Blog?

As a small business owner trying to keep shelves stocked, employees paid, and customers satisfied, why should you create a web log or "blog"? What if you've already got a website? What blogging pitfalls should you avoid? And, most importantly, what will a blog cost in terms of time and dollars?

  • The benefits of blogging Like a personal journal that's posted to the Internet, a blog is simply a place for sharing ideas about your business. Easier to update than a website, a blog offers an inexpensive way to talk directly to customers via text, audio, or video. With a blog you don't have to learn web design or hire someone to create web pages. Timely feedback from your readers can provide ideas for targeting products and services to address specific customer needs — like standing at the service counter and chatting with regular patrons. Blogging sites such as typepad.com and blogger.com are good places to visit for software tools and ideas.
  • Drawbacks Don't expect more from a blog than it can reasonably produce. A blog is not a substitute for a website. A blog, for example, generally won't provide the functionality to allow online purchasing, and its contribution to your bottom line may be difficult to measure. Like a magazine article, a blog is primarily a place to communicate ideas.
  • Pitfalls If you're publishing a blog for general consumption, it should be well-written. Grammatical errors, poor punctuation, spelling mistakes — these can damage your business reputation, causing readers to question the quality of your products and services. Don't use a blog as a forum for in-your-face sales. Its purpose is to inform, to build relationships, to connect. And don't leave it static. Vary your blog's content routinely by adding links to helpful resources, video interviews, and podcasts.
  • Costs Besides minimal subscription expense for a business blogging site, time will be your biggest expenditure. By allocating the task of blog updates among several employees — with final edits by a good writer — you can ensure that content stays fresh, readers remain engaged, and a single employee isn't saddled with blogging duty. You might start by updating posts every other week, increasing your frequency later.

Like any new product or promotion, a business blog probably won't generate revenue right away. So be patient and find a format that works well for your company.

 


The Tax System Explained in Beer

Suppose that once a week, ten men go out for beer and the bill for all ten comes to £100.If they paid their bill the way we pay our taxes, it would go something like this..

The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18.
And the tenth man (the richest) would pay £59.
So, that ' s what they decided to do.

The ten men drank in the bar every week and seemed quite happy with the arrangement until, one day, the owner caused them a little problem. "Since you are all such good customers," he said, "I'm going to reduce the cost of your weekly beer by £20.” Drinks for the ten men would now cost just £80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free but what about the other six men? The paying customers? How could they divide the £20 windfall so that everyone would get his fair share? They realized that £20 divided by six is £3.33 but if they subtracted that from everybody's share then not only would the first four men still be drinking for free but the fifth and sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fairer to reduce each man's bill by a higher percentage. They decided to follow the principle of the tax system they had been using and he proceeded to work out the amounts he suggested that each should now pay.

And so, the fifth man, like the first four, now paid nothing (a100% saving).
The sixth man now paid £2 instead of £3 (a 33% saving).
The seventh man now paid £5 instead of £7 (a 28% saving).
The eighth man now paid £9 instead of £12 (a 25% saving).
The ninth man now paid £14 instead of £18 (a 22% saving).
And the tenth man now paid £49 instead of £59 (a 16% saving).
Each of the last six was better off than before with the first four continuing to drink for free.

But, once outside the bar, the men began to compare their savings. "I only got £1 out of the £20 saving," declared the sixth man. He pointed to the tenth man, "but he got £10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a £1 too. It's unfair that he got ten times more benefit than me!"
"That's true!" shouted the seventh man. "Why should he get £10 back, when I only got £2? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!" The nine men surrounded the tenth and beat him up.

The next week the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important - they didn't have enough money between all of them to pay for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy and they just might not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

 

David R. Kamerschen, Ph.D.
Professor of Economics.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible




Esta Klatzkin, EA
Network Tax Solutions
"Helping You Keep More of the Money You Make"

 

 

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