richmondeagle .AT. comcast .D.OT net wrote:
>> The big difference between income tax and regular expense is regular
>> expenses we pay someone else benefits them, but the money we pay in
>> taxes is money we pay to ourself for our own benefit. This make income
>> taxes, even if viewed as an expense, a special kind of outlay.
>>
>
> Leland, now here you may have put your finger on the difference between us. For the most part, because of the excessive regulation and interference in our lives, many of us view much of our tax bill as money flushed down the toilet... hence a definite expense not payment for a benefit. Beyond that, I get benefit from the phone company, but my phone bill is still an expense.
After giving this more thought, I've changed my mind, and agree that the
expense of government is a real expense to the taxpayer.
Without going into to much complicated details, the relationship between
the taxpayer and government is much like the relationship between a
corporation an its affiliate. For example a company that makes a
variety of tractors ranging from home units used to mow lawns to big
commercial tractors used in framing, creates an affiliated company to
market its wares. The manufacturing company owns almost all the stock
of its affiliate marketing corporation that have stores around the
country to sell its tractors. The manufacturing corporation marks up
the price of its tractors and sell them to its affiliate at wholesale.
The affiliate marketing corporation then sell the tractor at a retail
markup to the final customer.
The financial statement of the two corporations are reported on a
consolidated basis, whereby all inter-company transactions are
eliminated to reflect the actual revenue from retail sales and actual
cost of goods sold to arrive and gross profit form operations of the
two corporations combined.
The American people have an affiliation with the government which they
own. Although taxes are paid by the taxpayer, which is recognized as
revenue by the government, this transaction could be eliminated to show
consolidated results of a national economy that included the actual
expenses paid by the American people to provide governmental services.
>
>
> I would agree that deficit spending is the culprit, but many see this as the result in excessive spending and government operation rather than insufficient taxation.
>
If you read some of the link I provided, you will see that cutting
government spending is no simple matter, as some really big expenses are
already lock into the budget for many years to come, like servicing the
interest expense on the national debt, paying Social Security and
Medicare, (eg although SS and Medicare are funded through payroll tax
deductions, which are paid into a trust fund, the government has raided
the trust fund to pay operating expense; because, tax revenues have
fallen short of covering all budgeted services. This is yet another way
to fund a deficit, and it creates a government debt due back to the
trust fund). America, as one nation, cannot continue to borrow to fund
deficits due to deficiencies in tax revenue indefinitely, and an
inflation tax or real income tax increase at some point in the future
may be the only solution, regardless of how unpopular that would be.
Regards,
LelandJ
> Larry Miller
>
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©2007 Leland F. Jackson, CPA |
