Reg. Class 4

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Tax System o Average tax rate: Total tax divided by total money o Marginal tax rate: How much tax on the next dollar  Top MTR in the USA: 35% for corporations. Over 50% with state and Medicare taxes. o Fixed cost of living: Make some money with out paying taxes on it o Progressive tax system: The more money you make the more taxes you pay o Flat tax system: some income excluded from tax, then a flat rate after that  Still a progressive tax system o Tithing system is the most equal tax system o 16th Amendment says taxes are bases off of income not population. o The Laffer Curve: Tax Planning o Shift income from one time period to another  Get your December income taxed in January so you can get the interest on that money. • 401(k): My Employer matches contributions to some extent, Tax free until withdrawal • Traditional IRA: Just like a 401(k) but no one matches the money you put in. ($4,000 max each year) • Roth IRA: Taxed up front, none when you pull out. (4,000 max each year) o Shift income from one pocket to another  State Taxes in NY but not in Texas… say your income in from Texas  Make taxes in your child’s name (lower taxes on kids). o Change the character of the income  Changing from ordinary income to… Loophole: Legal way of avoiding taxes. Your objective is not get lowest taxes, it is to get the most money after taxes. Tax Evasion o Al Capone  Killed people… didn’t pay his taxes… off to jail. o Make money in China, USA doesn’t know… tell them you did. o 1 and 3 chance, that someone says that is how the taxes should be. Careers in Taxation o 55,000 a year o Women go with taxes, very flexible, only 3 months a year.