'Tax The Rich'... Good Luck
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Oh internet. Conservatives… pissed. Liberals… rushing in defense. Twitter gleefully watching their platform blow up. In case you missed, New York Congresswoman Alexandria Ocasio-Cortez caused a stir w/ her dress at the Met Gal. AOC’s ’Tax The Rich’ dress was sprinkled in-between Kim K looking like a Disney Villian, Lil Nas dressing like a steroid C-3PO and a myriad of other…. interesting attire. Like or dislike her, AOC accomplished what she set out to do; bringing a ton of attention to her platform and getting both sides talking about it. Even I, a self proclaimed political fence sitter found myself diving into the tornado of debates happening across Twitter. To that end, applause to you Miss AOC.
All the tweets and attention aside, this sentiment is really nothing new. In my parents day Hippies took to the streets, more recently in mine they occupied Wall Street and dawned ‘We Are The 99%’ t-shirts. Now it’s ‘Tax the Rich’ (or the more extreme ‘Eat the Rich’). All really coming to the conclusion that:
’The Rich don’t pay their fair share of taxes’
While I’m not here to debate who should pay what, how much and where it should all go, I will say, when it comes to taxes we do a tremendously crap job at teaching youth and adults alike how the system works in the first place. This leads to heated debates across the internet on a subject most of us don’t have a fundamental understanding on how or why. Thus, taxes end up becoming fodder for Twitter debate’s or brilliant dress slogans.
I’ll admit, when I was 22-23, I was lock/step in w/ the idea that the rich had just screwed everything up. This was 2008 and I had just watched my measly income get taxed for the first time. Really just scraping by. The excitement of getting a job and becoming an adult, felt like a lie. Turbo Tax might’ve told me through a serious of dings and chimes that the little ‘write offs’ it discovered on my w9 income were exciting, but I checked my bank account daily back then and there was nothing too exciting going on.
Naturally, I looked at the government I’d just written checks who were in the midst of bailing out big banks and thought ‘fuck those guys’. I mean, this was dead middle of the ’08 financial crisis. Every day was news of more foreclosures, companies faltering, jobs lost, retirement savings gone… basically a systemic collapse at the feet of those rich ass holes on Wall Street. This was also right when juicy gov’t & corporate corruption stories were getting leaked on off stream sites and shared on this wild platform (Facebook). I didn’t understand yet this fancy Cambridge Analytica Algorithm knew that if I clicked on one article after another it would keep delivering me the tiny bits of information I so desired… ‘Google Pays $0 In Taxes… Again’, ‘Why The Rich Stay Richer’, ’This Nordic Country is Ranked #1 in Happiness…and Taxes’
Oh I was livid. You mean to tell me these bloated, inefficient bastards that are running our country into the ground pay nothing? Look at… at…. Denmark! They pay the highest income taxes and they’re ranked some of the happiest people! Just ‘Tax the Rich’ and be done with it, I thought!
But for all my rage, I had to go work, scrape by some more. I’d just save enough and go live off grid someday… maybe find some hut off the beach in Costa Rica, I thought. But still… fuck those guys!
…Fast forward…. 12 years….
At 35, I think I’m still young… relatively. Sure make back aches occasionally, but my AARP membership is a long ways off. Since the melt down of the ‘08 financial crisis the government made moves to stabilize and things went back to… ’normal’. Personally, during that same time frame (and like many of my pals), I’ve moved, grown a business, bought and sold some houses, own a few rentals, hustled my pants off and really just done what I figured every red-blooded American was supposed to do.
What I know at 35 that I didn’t realize at 23 is my frustration with my government and the corporate fat cats was a tad misplaced. Sure, my government had failed me, but not for the reason I thought. They didn’t fail me because they don’t tax the pants of the rich (sure mega corporate entities should pay more, but that’s a separate post), but instead they failed me because after years of being put through the education system I was an adult and had 0 idea on how the tax system even worked. To be perfectly honest, I had no idea how any of it worked; taxes, finances, real estate, nothing.
As humans, I think it’s easy to mistrust (inevitably hating) what we don’t understand. It’s like when I was a kid. I actually hated playing football when I was really young, because I didn’t understand the rules. It was complicated… when can i run? Why am i in trouble for moving before the snap? Whats a slant?… Now I think it’s the greatest game on the planet because by 8 I figured it out (sorry soccer fans, I mean American Football… your sport is just… I mean… score more).
What I came to accept is, for better or worse, I had to learn the game I was playing in. By the time I’d gotten to my mid-20s I had done all the stuff they said to do; go to school, get a job, saved some money, even started increasing my income…. That got me no where. My aha moment was a few years into being a Real Estate Agent, essentially operating my own small business. I watched girls/guys that were doing the exact same career and getting ahead. I’m not talking by the typical standard either (driving fancier car, swanky house or fresh threads), I mean they were gaining real assets (rental properties, robust equity portfolios, side companies or growing their business exponentially). So I just finally accepted that my simple work hard, save as much as I could only to get the pants taxes off me at the end of the year was not going to work long run.
My aha moment was when, after several discussions, books and following others on the internet led me to this conclusion:
Taxes are, simply, Incentives from the Government on What They Want Done
The US Tax Code is 4000 pages long and only the first 50 describe how to file and pay your taxes. The following, describe how to legally avoid. For example, if the government wants to ensure more new cars get produced/sold (check out the 179 deduction ) or more solar panels installed they’ll may provide tax incentives, credits and deductions to do so. And on, and on, and on….
For anyone that’s had that moment of discovery, it’s game changing. To use more of my football analogy above, it’s like running the ball every game, every down before someone tells you it’s legal to throw it… it changes the game.
‘But Gentry, so much of that is written for businesses, not the average middle to lower income individual!’
False.
They want you to save/invest. So there’s advantages to having a 401k/Roth IRA.
They want you to buy a house. So there’s deductions on mortgage interest and depreciation.
They want you to drive a car. So there’s deductions on miles/maintenance
Do businesses have more maneuverability within tax code? You bet your ass they do.
Frankly, they should. Because despite all the well publicized criticisms of business over the decades, America is still (and hopefully always will be) a capitalist society where 99% of the businesses within are ‘small businesses’. Each one required someone taking a risk to start and then the risk to operate.
I’m one of those small businesses and every year around tax time it’s like a treasure hunt discovering what one can legally deduct to not only increase my personal profit, but pay my staff, buy better systems to support my clients, buy marketing for listings, throw the occasional function or even buy property/vehicle through my business. Where younger me would’ve frowned upon ‘taking advantage’, 2021 me knows the dollars I use to deduct from my taxes goes directly into the pocket of a local small business, vendor or staff member… and the government has provided me the ability to do so. It’s primarily because the government doesn’t want your hard earned $$ sitting in savings accounts. They want it going to work, so they incentivize the living poo-poo out of each of us to go out work and acquire assets.
The part I’m annoyed with is I just didn’t know this sooner. It took me a lot of mistakes over the years (and still making them) to simply know/execute on the wonderful tax advantages we’re provided in the ol USA. While we tend to make political fodder out of taxes, it really doesn’t matter whether you vote blue, red or purple… once you recognize how the game is played it’s tough to argue with a better system.
So, perhaps at the next Met Gala Miss AOC’s next dress could feature a far less catchy phrase like ‘Taxes are Incentives’. Likely doesn’t play as well, but anticipate it would benefit her constituents and all those across our great land to start understanding.
PS - If you’ve read this far thank you for entertaining a lengthy piece about taxes. I personally believe tech mega giants and banking conglomerates need to pay more (much like when anti-trust laws helped break up the oil, steel monopolies of yesteryear these firms have simply become too large for the collective good), but small to mid sized businesses should be left to operate and be incentivized to do so! There’s my one semi-political statement.
