The Principles On Paying Tax

Why tax loopholes have to exist

A long long time ago, in a country far far away, in China to be precise, there was a hunter that put nets in 4 sides of the forest.  The hunter wanted to catch all the animals.  Then a king passed by and said, "Remove the nets in the 3 sides of the forest.  Let the animals go anywhere they want.  Let only those who do not follow Tao end up in your net”. 

Not too long ago, a bunch of liberals said: "Let's tax all the income.  Block all loop holes.  Make sure that no one could escape from our cruel net tax.  Punish the productive people." 

Then a wise man among them quickly indicated.  "If we close all loop holes, the best and brightest will be obligated to destroy the net.  Allow them to have the loopholes.  Let the best and brightest among them free.  If they know they can be free, they won’t bother destroying our net.  Instead, they will only stay away from our net.  Let those who are so blinded with unreasonable morality and do not follow Tao wind up paying taxes." 

And that is the reason why you pay tax, whereas the rich pay lawyers and politicians. 

Did you get that?  As a matter of fact, the super rich, don't just pay tax, they actually receive tax payment.  For example, rich landlord farmers hire many blue collar workers paycheck in the form of farming subsidy so that it only benefits land owning farmers. 

Governments only use tax money to help businesses that they prefer based on family value.  So a business with the governors' or presidents' relatives as the director is more likely to obtain lucrative contracts paid with your tax money, the way most poor and middle class ask for. 

Two things you need to know if you want to reduce your tax 

The very first business class that I took was, "How to run an efficient business”.   Not...  "How to increase productivity”.  Not...  "How do we pay our workers higher, make the world a better place, and still make money." No.  My first business class taught me how to avoid paying income tax. 

By the way, here is a little warning.  Things are not as easy as they appear.  You need to consult lawyers before you try any of these stunts. 

You see.  What is income?  The formal standard meaning of income is the amount of money you spent plus the increase of your capacity to spend.  For example, let’s say that you work in the office and get a check for $50,000.  Now, let’s suppose that from that money you spend $20,000 and are able to save $30,000.  What's your income?  The sum of $20,000 and $30,000 = $50,000.  What if you spend $1 and save $49,999?  What's your income?  Well, your income will still be $1 plus $49,999=$50,000. 

So regardless of how you spend your money your income will stay the same.  Governments make that easy for you.  They help yourself pay your tax before you even see the money.  Isn't that useful? 

Now, the entrepreneurs also have the same definition of income.  However, they have 2 very important tax deductions. 

1.  Money we have not spent is still not considered.  So we don't pay tax on that.  The tax is deferred until they spend it. 

2.  Money we do spend is expenditure.  So it is deductible from our income.