There seems to be a stigma that it’s wrong to use tax strategies or even legal loopholes to make our tax obligation as low as possible. Somehow, they are more patriotic if they overpay on taxes. Is it our job to fill the treasury by paying as much as we can in taxes? I think it might come down to our understanding of taxes. So, really, what are taxes?
Tax Rant Coming
Back in the 1940s coming into Washington DC crossing the Potomac River, there were two bridges. One bridge required a toll, the other bridge, 15 minutes out of the way, was free. Complaints were brought before the United States District Court about this, like it’s unreasonable. People should just be paying for the bridge that costs money instead of driving out of the way.
There’s a very famous quote from one of the district court judges, Learned Hand, about that issue.
“Anyone may so arrange his affairs that his taxes shall be as low as possible. He is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes.”
That’s a judge basically saying we are not obligated to pay more to the government that what is legally required.
What are Taxes?
A few years later, another court case came up, Commissioner v. Newman. This quote is in the judgment that was provided by the judge.
“Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.”
Or in other words, cant is hypocrisy.
In their summary statement, the judge said,
“Paying your fair share is patriotic. Paying more than your fair share is moronic.”
So obviously we agree with these judges, that you should pay the least amount possible and going out of your way to figuring out tax strategies, there’s nothing wrong about that.
Today’s Perspective on Taxes
This was back in the forties. So quite frankly, 60 years ago, things weren’t nearly as bad as they are now, from my perspective of the way politicians use the tax code to buy votes. It is wrong to assess taxes for programs that do nothing other than buy votes for the politicians.
Now, if you’re watching this, you’re not one of the people out there who just go and listen, like you’re the sheep that follow. “Oh yeah. Well, that sounds bad. I’m just not going to research.” Right? You know, that looking into things makes a lot of sense. Well, when it comes to politicians and paying taxes, there’s unfortunately a very strong correlation. I just encourage you to continue to find ways to pay the least amount in taxes possible. That is patriotic.
Paying more than that, not doing the due diligence, and leaving money on the table is effectively burning money. And honestly is encouraging politicians to continue to get away with what they’re getting away with. Which is setting up programs in the name of helping people. When in reality the only benefit is that they now have more votes from people who thought that what they’re getting is good, but that’s not the case.
Almost Done with Rant
So, one last thing about my tax rant, the tax code is effectively a playbook of what the government wants to incentivize us to do. That’s why certain things like, oh, you get tax benefits if you have a rental property versus, I don’t get any tax benefits based on, I don’t know, buying weight equipment for my house.
They’re incentivizing people to be landlords, which I don’t even know if I’m allowed to say that term anymore, to own rental properties. But they’re not currently providing any incentive for people to be healthy. So, you find the incentives the government wants you to do in order to maximize your tax savings. That’s okay.
Back to what are taxes? They are enforced exactions. How do we know exactly what to pay taxes on and how much? Look at the tax code. It’s what the current government is encouraging people to do for whatever variety of reasons they have. That’s where benefits come into play. The tax advantages from using legal strategies should be used to benefit you and your business. That’s why they’ve been included in the tax code. It’s foolish not to take advantage of them.
So, a bit of a rant. I really hope you’re trying to lower your taxes to the lowest amount legally possible. To help you save thousands on taxes, we have a FREE Big Sexy Beefy Tax Crushing Packet for you to download, full of tax saving strategies.
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