Tax Write Off

So I don't get it. Tax write off. Ok, Actually, I do get it. So, lets have a little tax 101. Class is in session:

Its like this: A company sells a product. They get revenue. They then spend some money to make more money. The difference between the 2, thats profit, and its what gets taxed. So, everything... Everything.... EVERYTHING is a write off, because its a business expense. Very few things *aren't* business expenses. Basically, you have to work pretty hard at spending company money on personal stuff for it not to be a write off. And you know what, in those cases, its called.... Embezzlement. So, its not really about taxes at all, its about being ethical with money that is only *partly* yours because most business owners answer to either stockholders, or a board, or your customers, or at the least, they you answer to future you(who by the way, we all owe something to... hmmm there's another blog post right there, )

What is tricky is that corporations get taxed twice in a way: The corp gets taxed on its profit. And then the money that gets distributed to employees gets taxed as well. So, if your a smart corporation, you jiggle things a little to minimize the corp's profit and pass it on to employees as salary, everybody's happy. Or, you can be a little bit more elitist. You can have the company make a big profit, the company gets taxed, but the stock price goes up, and the stockholders and senior management sell their stock and then pay only the capital gains tax (which is lower than personal income tax) . Aha! you say, the capital gains tax, now wasn't that lowered by Bush and Cronie Co. Yes! It was the one smart thing he did in office. Because when you sell $30 Million in stock, you don't put it in the bank to earn 2% interest. You put it back in the stock market, so the capital gains tax decrease actually encourages strong investing. Which, is probably more important to the economy than oil prices, unemployment, and interest rates combined.

We all together now? Ok, so here is the lesson: the "tax write off" as most people use the term is an entity that doesn't exist. Its based on the belief that corporations and businessmen get away with breaking the rules because the rules are written for them. This of course, is entirely incorrect. Corporations and businessmen get away with breaking the rules because they have enough money to convince the right people that the rules don't apply to them. Which, in retrospect is not really much of a distinction.


Ok, I was wrong. This post was a waste of time. I think I'll just write it off.