The American Constitution

[rabanito]

You are not forced to take part; if it hurts, don't play.

Rob

I'm sorry to say this but this is a common-commonplace.
But:
If you see a group of  adults you respect- say - as photographers (or philosophers or whatever) - behaving like children, it hurts even if you don't "play".

[rabanito]

Oh, come on Robert, we are just having fun and a friendly banter. We love you all guys, French, Dutch, Brits, even Canadians ❤️

Interestingly even if you have probably a US Citizenship, I perceive you as Serb.
That's OK with me, don't get me wrong.

“He that is without sin among you, let him cast the first stone ...” said Jesus, I am told.
Wise sentence

[Alan Klein]

 

I am not sure that this is true.  There are probably more self-employed people in the US than in Europe and the chance for faking the books is much larger in that case (not reporting certain amounts of income, fake deductions, etc.).  A number of European countries have automatic income tax calculations by the government.  Perhaps Bart can weigh in on this but I've read that in The Netherlands it takes less than 10 minutes to do ones income tax.  Just look at what the government says you earned and confirm the number; that's it.  In our own case, the government knows every bit of my wife and my income and yet we have to get Turbo Tax every year and go through all the cumbersome data entry.  The IRS should be able to do the tax calculation for us for free!!!  Both of my daughters are in the same position as salaried workers.  It's just obscene that the tax code is bonkers in this regard.

I was responding to Rob C post regarding that it doesn;t pay to go after the ten percent of taxes due on people earning 10,000 or 15,000 per year.  Those people aren;t self-employed but rather get paid salaries where the employer deducts taxes due up front.  So there's little chance for those  cheating the IRS.  It is true that self-employed people or those who get paid cash cheat more.  The IRS estimated in 2010 that $400 billion in taxes were not paid that should have been. 

Filing taxes were pretty simple this year with the new Trump tax legislation.  It still cost me the accountant's fee.  I haven't switched to doing it myself.  Maybe next year.  Regarding the IRS knowing you and your wife's income, of course that's true.  But that's not the only income and deduction you make. YOu have mortgage payments, local property and state taxes, etc.  Your medical bills may be deductible if they exceed the minimum.   If you're over 70.5 years, you have to start taking out minimums on your tax deferred 401K plans.  The IRS can;t know those things. 

[Slobodan Blagojevic]

Interestingly even if you have probably a US Citizenship, I perceive you as Serb...

What that has to do with anything? My statement you quoted still stands, whether I am a Serb, American, or both.

And the Jesus quote... care to elaborate?

[rabanito]

What that has to do with anything? My statement you quoted still stands, whether I am a Serb, American, or both.

And the Jesus quote... care to elaborate?

Why is it that everybody and his mother-in-law feels completely entitled to criticize, mock, and spit on America and its sitting President? None of us on the American side complained or started running for our British nanny’s skirt, wailing about locking the thread, banning political discussions, etc. But when we return the favor, mildly, everybody is offended? Grow up.

Face it, it was Russians and Americans that saved your sorry asses. Dutch contribution was to unscrew air valves on German soldiers' bicycles.

As you can see, you are suggesting your American Citizenship all the time.
This is a great thing, make no mistake. I would also be proud of it.
Now read you statements quoted above.

I don't care to elaborate much on the Jesus quote. It's easy.
But I don't find right to mock the British, the French, the Dutch or even the Germans as a group.

[Slobodan Blagojevic]

...But I don't find right to mock the British, the French, the Dutch or even the Germans as a group.

Funny you didn’t include Americans in the above groups. As I already noted, it seems it goes without saying that America is a fair game for everyone.

[rabanito]

Funny you didn’t include Americans in the above groups. As I already noted, it seems it goes without saying that America is a fair game for everyone.

You extrapolate wrongly.
I admire Americans for many reasons even if they're not "perfect" 

[Alan Goldhammer]

I was responding to Rob C post regarding that it doesn;t pay to go after the ten percent of taxes due on people earning 10,000 or 15,000 per year.  Those people aren;t self-employed but rather get paid salaries where the employer deducts taxes due up front.  So there's little chance for those  cheating the IRS.  It is true that self-employed people or those who get paid cash cheat more.  The IRS estimated in 2010 that $400 billion in taxes were not paid that should have been. 

The IRS has insufficient resources to do the number of required audits to recover all the taxes that should be paid.  Maybe if they quit spending so much time auditing the President (at least according to him his returns are always under audit which is why they cannot be released).

Filing taxes were pretty simple this year with the new Trump tax legislation.  It still cost me the accountant's fee.  I haven't switched to doing it myself.  Maybe next year.  Regarding the IRS knowing you and your wife's income, of course that's true.  But that's not the only income and deduction you make. YOu have mortgage payments, local property and state taxes, etc.  Your medical bills may be deductible if they exceed the minimum.   If you're over 70.5 years, you have to start taking out minimums on your tax deferred 401K plans.  The IRS can;t know those things.

You still have to go through the exercise to see if the standard deduction is all that you will be permitted.  In most cases it will be but those who want to be sure that they are paying the minimum amount of taxes will have to go through that exercise.

You are wrong about certain things reported to the IRS.  IRA earnings (along with all brokerage earnings) are reported to the IRS as both my wife and I are mandated to take this out now.  Mortgage interest payments are also reported on a form that is copied to the IRS IIRC (our mortgage was paid off 15 years ago so I cannot be sure).  State and local taxes are not reported to IRS but if the US were to move eliminating all tax preferences there would not be any need to deal with these with your Federal tax return.

[Rob C]

Can't speak for the States, of course, but I take exception to the throwaway that the self-employed cheat more than other people.

For a start, nobody paid me cash. Everything was invoiced and paid by cheque that was paid into the business account. I can't speak for those working for the general public, but I sure wouldn't trust a cheque from one of them! In the brief period where I let the great British public cross my humble threshold, I was on a rapid learning curve about just how uncommon is common decency. From clients who vanished with proofs, to those who simply never showed up to collect, it was an unmitigated disaster. Had I not had my Damascene moment described some time ago, I would just have shut the studio door and handed back the keys.

Apart from that, I took advice and used an accountant from year 1, the advice being that it was the one way to keep a friendly relationship with the taxman. Expensive, but also saved me a lot of grief and even more painful learning curves which, clearly, did not begin with digital photography.

Rob

[Robert Roaldi]

Can't speak for the States, of course, but I take exception to the throwaway that the self-employed cheat more than other people.

For a start, nobody paid me cash. Everything was invoiced and paid by cheque that was paid into the business account. I can't speak for those working for the general public, but I sure wouldn't trust a cheque from one of them! In the brief period where I let the great British public cross my humble threshold, I was on a rapid learning curve about just how uncommon is common decency. From clients who vanished with proofs, to those who simply never showed up to collect, it was an unmitigated disaster. Had I not had my Damascene moment described some time ago, I would just have shut the studio door and handed back the keys.

Apart from that, I took advice and used an accountant from year 1, the advice being that it was the one way to keep a friendly relationship with the taxman. Expensive, but also saved me a lot of grief and even more painful learning curves which, clearly, did not begin with digital photography.

Rob

Leet me give you a couple of anecdotes. Years ago, we helped a friend of ours move into her new house in Toronto. This was in mid-October. The brick fireplace in the house needed some work and she called in a specialist for a quote. She asked him if he could do a cash job, off books. He declined because it was October and his accountant had told him to put a few jobs on the books before year's end to avoid suspicion and tax audits.

Several people I know had summer jobs in small firms where we were young and still at school. We have compared notes over the years and every one of those firms had family members on the books as employees and consultants in "no-show" jobs.

I've also known barbers and hairdressers who spent their evenings doing off-books work at clients' homes.

I'll disclose to being a complete cynic, so take this next statement with that caveat in mind. I believe that in some sectors of the economy, where audits are next to impossible to do without expensive clandestine surveillance (so basically it never happens), doing work off-books for many businesses is the only way they can stay in business, because it's the only way to keep prices low enough to compete with all the other businesses that are dong the same thing.

And that's just businesses that are doing legal work, I'm not including the criminal sector. I'm sure most of them don't declare all their income either.

[Rob C]

Leet me give you a couple of anecdotes. Years ago, we helped a friend of ours move into her new house in Toronto. This was in mid-October. The brick fireplace in the house needed some work and she called in a specialist for a quote. She asked him if he could do a cash job, off books. He declined because it was October and his accountant had told him to put a few jobs on the books before year's end to avoid suspicion and tax audits.

Several people I know had summer jobs in small firms where we were young and still at school. We have compared notes over the years and every one of those firms had family members on the books as employees and consultants in "no-show" jobs.

I've also known barbers and hairdressers who spent their evenings doing off-books work at clients' homes.

I'll disclose to being a complete cynic, so take this next statement with that caveat in mind. I believe that in some sectors of the economy, where audits are next to impossible to do without expensive clandestine surveillance (so basically it never happens), doing work off-books for many businesses is the only way they can stay in business, because it's the only way to keep prices low enough to compete with all the other businesses that are dong the same thing.

And that's just businesses that are doing legal work, I'm not including the criminal sector. I'm sure most of them don't declare all their income either.

I never heard of one of our accountants coming up with stuff like that. It would appear career-suicidal.

That Atlantic sure makes a difference!

[JoeKitchen]

Leet me give you a couple of anecdotes. Years ago, we helped a friend of ours move into her new house in Toronto. This was in mid-October. The brick fireplace in the house needed some work and she called in a specialist for a quote. She asked him if he could do a cash job, off books. He declined because it was October and his accountant had told him to put a few jobs on the books before year's end to avoid suspicion and tax audits.

Several people I know had summer jobs in small firms where we were young and still at school. We have compared notes over the years and every one of those firms had family members on the books as employees and consultants in "no-show" jobs.

I've also known barbers and hairdressers who spent their evenings doing off-books work at clients' homes.

I'll disclose to being a complete cynic, so take this next statement with that caveat in mind. I believe that in some sectors of the economy, where audits are next to impossible to do without expensive clandestine surveillance (so basically it never happens), doing work off-books for many businesses is the only way they can stay in business, because it's the only way to keep prices low enough to compete with all the other businesses that are dong the same thing.

And that's just businesses that are doing legal work, I'm not including the criminal sector. I'm sure most of them don't declare all their income either.

My question with this is, there is only so much cash you can actually hold onto at once.  Eventually, when the sums get big enough, you need to put it into the bank, creating a paper trail. 

Not to mention, any commercial work is going to be a writen off and reported by the client. 

If I had a sudden influx of cash, regularly, I can't think of what I would spend it on without it eventually going into the bank.  Groceries, the occasional diner and show with my wife, etc., but how much does that add up to.  I mean eventually, if I wanted to use it for any kind of major purchase (mortgage, car, etc.), doing so would create some kind of paper trail.  Maybe I'm just boring; I don't gamble, go to strip clubs, drink in excess.

PS, not that I am saying you are wrong, just how do you manage large sums of cash without it eventually getting noted somewhere. 

[Rob C]

My question with this is, there is only so much cash you can actually hold onto at once.  Eventually, when the sums get big enough, you need to put it into the bank, creating a paper trail. 

Not to mention, any commercial work is going to be a writen off and reported by the client. 

I just may be a boring guy, but if I had a sudden influx of cash, regularly, I can't think of what I would spend it on without it eventually going into the bank.  Groceries, the occasional diner and show with my wife, etc., but how much does that add up to.  I mean eventually, if I wanted to use it for any kind of major purchase (mortgage, car, etc.), doing so would create some kind of paper trail.

That's how they always fall. It's just not worth being greedy. If the work exists for you, do it, pay up and look good. Having an accountant encourage and collude means you'd be better changing accountants. A hunded to one, that paper trail won't end in his office. Like Atlas, he'll just shrug and deny any knowledge at all beyond the paperwork he produces for the fuzz.

[Slobodan Blagojevic]

One word: Bitcoin.

[Robert Roaldi]

My question with this is, there is only so much cash you can actually hold onto at once.  Eventually, when the sums get big enough, you need to put it into the bank, creating a paper trail. 

Not to mention, any commercial work is going to be a writen off and reported by the client. 

If I had a sudden influx of cash, regularly, I can't think of what I would spend it on without it eventually going into the bank.  Groceries, the occasional diner and show with my wife, etc., but how much does that add up to.  I mean eventually, if I wanted to use it for any kind of major purchase (mortgage, car, etc.), doing so would create some kind of paper trail.  Maybe I'm just boring; I don't gamble, go to strip clubs, drink in excess.

PS, not that I am saying you are wrong, just how do you manage large sums of cash without it eventually getting noted somewhere.

Of course. It doesn't work for everyone, depends on the business, and if you go too far it becomes easier to get caught. If all the groceries you buy for your family over a 15 year period, say, was bought with cash from off book sources, that would be trivially easy to manage and would add up to a tidy amount. It's not millions, but it doesn't need to be. And it would require some effort for an investigator to discover, so they probably don't bother. Some recently disclosed (hit the news about a year ago) private papers show billions of dollars have escaped the Cdn tax man into offshore tax shelters. If they can't do anything about that, how are they going to track down some barber who doesn't report every 10th head of hair he cuts.

[Alan Goldhammer]

My question with this is, there is only so much cash you can actually hold onto at once.  Eventually, when the sums get big enough, you need to put it into the bank, creating a paper trail. 

Not to mention, any commercial work is going to be a writen off and reported by the client. 

If I had a sudden influx of cash, regularly, I can't think of what I would spend it on without it eventually going into the bank.  Groceries, the occasional diner and show with my wife, etc., but how much does that add up to.  I mean eventually, if I wanted to use it for any kind of major purchase (mortgage, car, etc.), doing so would create some kind of paper trail.  Maybe I'm just boring; I don't gamble, go to strip clubs, drink in excess.

PS, not that I am saying you are wrong, just how do you manage large sums of cash without it eventually getting noted somewhere.

Joe - the problem is that the IRS is doing far fewer audits these days because resource constraints.  Obviously banks will have records of deposits but what are the chances of an audit?  Look how long it takes authorities to uncover true money laundering that involves huge amounts of money.  I serve on a non-profit board and one of the members is a retired forensic accountant.  We were talking about this matter a couple of months ago and he noted how much time and effort it takes to uncover fraud at the corporate level.  Things can go on for years before malfeasance is discovered (good examples are Enron and Madoff at the macro level).

[Rob C]

Of course. It doesn't work for everyone, depends on the business, and if you go too far it becomes easier to get caught. If all the groceries you buy for your family over a 15 year period, say, was bought with cash from off book sources, that would be trivially easy to manage and would add up to a tidy amount. It's not millions, but it doesn't need to be. And it would require some effort for an investigator to discover, so they probably don't bother. Some recently disclosed (hit the news about a year ago) private papers show billions of dollars have escaped the Cdn tax man into offshore tax shelters. If they can't do anything about that, how are they going to track down some barber who doesn't report every 10th head of hair he cuts.

Regarding that barber: I may have got a garbled account of it - I didn't want to pry - but I feel fairly confident that a local bar owner told me that when you have a small business such as his, there's a system where you opt for a given band of business activity/estimated earnings, and it gets resolved on a broad basis of a standard charge according to the expected grade. For the two years that I ran an offshoot of my photo business here, nothing like that applied, and I had to make official VAT/IVA returns every year, regardless of what did or did not come in.

Differently, in the UK, you only had to register for VAT if you were turning over in excess of 30 grand p.a., or, alternatively, if you weren't, you could register voluntarily in order to take advantage of its benefits.

Which, incidentally, puts the lie yet again to those who swallow the gospel of a European tryany that always trumps (oops!) national law.

Rob

[Robert Roaldi]

Regarding that barber: I may have got a garbled account of it - I didn't want tp pry - but I feel fairly confident that a local bar owner told me that when you have a small business such as his, there's a system where you opt for a given band of business activity/estimated earnings, and it gets resolved on a broad basis of a standard charge according to the expected grade. For the two years that I ran an offshoot of my photo business here, nothing like that applied, and I had to make official VAT/IVA returns every year, regardless of what did or did not come in.

Differently, in the UK, you only had to register for VAT if you were turning over in excess of 30 grand p.a., or, alternatively, if you werenit, you could register voluntarily in order to take advantage of its benefits.

Which, incidentally, puts the lie yet again to those who swallow the gospel of a European tryany that always trumps (oops!) national law.

Rob

Maybe all those barbers should move their money to Ireland, like Apple does.

I can't remember the exact anecdote, or even if it was real, but wasn't there a story once about Warren Buffet paying less tax than his secretary. And I think I remember Trump bragging about not paying any tax. But I'm sure we're all better off for it. If we let the 1% keep more of their money, they will create jobs for the rest of us. Some economist said so. They've been saying that since 1980 or earlier. But now it takes two people working to pay for a house, and their kids are paying crippling tuition increases, but I'm sure it's all working out as it should.

[Rob C]

Maybe all those barbers should move their money to Ireland, like Apple does.

I can't remember the exact anecdote, or even if it was real, but wasn't there a story once about Warren Buffet paying less tax than his secretary. And I think I remember Trump bragging about not paying any tax. But I'm sure we're all better off for it. If we let the 1% keep more of their money, they will create jobs for the rest of us. Some economist said so. They've been saying that since 1980 or earlier. But now it takes two people working to pay for a house, and their kids are paying crippling tuition increases, but I'm sure it's all working out as it should.

Valid points, all.

My own take on the double-incomes need is simple: when women were made to feel embarrassed about being "mere" housewives, despite a constantly present mother being the greatest influence on the bringing up of children (and thus our civilization), more so than a father in that respect, excluding, of course, his financial input to keeping the concept of family life afloat, it went pear-shaped - which is not a reference to a certain demographic of city people of a sedentary disposition - but to the result of the business truism: price expands in proportion to the budget available.

As family income grew, so did prices of everything. Stands to reason. Family earns almost double, where did anyone expect prices to head - downhill? The payoff is that singletons are screwed very hard, trying to make it on one paycheck. The resulting social upheavals are obvious and self-perpetuating unless the system changes back again. Equal rights for both sexes was not the issue; the issue was a strident feminism that failed to see that all women do not fit the same mould, and a women's magazine world that seized upon the new ethos as a splendid opportunity for creating an entirely new form of journalism. That's what led to the introduction of Cosmopolitan into the UK; I can't remember a trip where the models didn't head for the airport magazine kiosk and sit there on the 'plane with their noses deep in Cosmo. Forget Vogue or 'Bazaar, they never bought that stuff anyway.

[Alan Klein]

Valid points, all.

My own take on the double-incomes need is simple: when women were made to feel embarrassed about being "mere" housewives, despite a constantly present mother being the greatest influence on the bringing up of children (and thus our civilization), more so than a father in that respect, excluding, of course, his financial input to keeping the concept of family life afloat, it went pear-shaped - which is not a reference to a certain demographic of city people of a sedentary disposition - but to the result of the business truism: price expands in proportion to the budget available.

As family income grew, so did prices of everything. Stands to reason. Family earns almost double, where did anyone expect prices to head - downhill? The payoff is that singletons are screwed very hard, trying to make it on one paycheck. The resulting social upheavals are obvious and self-perpetuating unless the system changes back again. Equal rights for both sexes was not the issue; the issue was a strident feminism that failed to see that all women do not fit the same mould, and a women's magazine world that seized upon the new ethos as a splendid opportunity for creating an entirely new form of journalism. That's what led to the introduction of Cosmopolitan into the UK; I can't remember a trip where the models didn't head for the airport magazine kiosk and sit there on the 'plane with their noses deep in Cosmo. Forget Vogue or 'Bazaar, they never bought that stuff anyway.

I think you left out an important component in the formula for pricing - women's production.   Doubling incomes for households when women went to work did not raise prices due to more income because the woman produces her share of the goods.  Her work adds to more production doubling the amount of goods a country produces which balances the prices.  (Assuming one to one man to woman production and the number of workers).  Otherwise, if you;re correct, when you double a country's population, prices would double also.  But that doesn't happen because the amount of goods a country produces doubles as well.  So the prices stay constant.


The problem of having to work harder today is because of the government, not private industry, not the rich.  It is that taxes have gone up enormously.  Additionally, deficit spending, debt, and money printing (inflation) raises prices.  Business owners are protected the quickest when this happens because they can raise prices.  Workers on the other hand have to wait for salary increases which follow much later.  So they feel inflation the worse. 


Regarding escalating high tuition mention by Roaldi, that's another government caused problem.  By guaranteeing college loans to every Tom, Dick and Harry, half who should be learning a trade rather than going to college, you have too much money chasing too little goods.  So naturally the price of tuition has gone up four fold compared to inflation for everything else.  Meanwhile, you have all these kids in debt who won;t be able to get a starter house and buy other things due to all the debt.  Another government boondoggle.   Same thing happened 15 years ago with government mandated loans to buy homes given to people who couldn't afford it.  Artificially raised the price of homes until the market collapsed and we had the 2008 worldwide recession.  Another clever government attempt at equalizing wealth and advantage that took the country off the rails.