i think the govt should announce the philosophy of the tax structure to the american people. is it meant to be equitable or beneficial. many people ignore one or the other. i suppose an explanation by the govt is impossible since there are numerous policy makers people dont care too much when things are ok, but now, more explanation would help (and maybe it would get people to stop voting in sales taxes)
You can't make that statement definitively. For the government a tax cut can result in more revenue, less revenue, or be revenue neutral. Furthermore losses of revenue that are accompanied by spending cuts serve to starve the government and a smaller government benefits all of us. It would be more accurate for you to say tax cuts that result in less revenue that are not accompanied by responsible spending habits may hurt us all. This seems to be your standard line in tax discussions and it always irks me because depreciation is an actual expense. It reads as if you think businesses should artificially inflate profits and pay more taxes.
Because I know what depreciation is. Have you ever looked at a set of Financial statements? Depreciation expense reduces profit. Just because there is no cash outlay does not mean no expense exists. I suppose you could be of the opinion that depreciation artifially deflates profits and results in less revenues for the government, but anyone who knows the difference between cash in hand and profit would roll there eyes. When a company buys an asset it cannot deduct the entire expense in the first year. Depreciation breaks the expense into smaller increments which are recognized over the life of the asset. Over the life of the asset the company gets to expense the entire asset.
i know nothing of business, but to me depreciation is only an expense if you sell the asset. for example, i never care about depreciation of my cars because i drive them til they die.
Does it not? Calling a widget an expense doesn't make it one. Spending cash on a widget certainly does. Expense -noun The cost of something, the money spent on something. The costs incurred by a task. A thing upon which one is required to spend money. I know how depreciation works. I question the necessity, the complexity, and the tax loss of it. But I feel less strongly about depreciation than I do the other loopholes, evasions, and credits.
Yes but something actually being an expense does make it one. Depreciation is an expense for all the reasons I pointed out in my previous post. A. Cash was spent on assets being depreciated. B. Your statement here is not technically correct. Spending cash on a widget could be a operating expense if the purchase does not acquire, improve, or prolong the life of an asset. Most business necessary operating expenses are recognized entirely when incurred. The widget could have been a capital expenditure though in which case the cash outlay would be expensed over the life of the asset through depreciation. Depreciation is entirely necessary to really understand a businesses financial position. Your businesses probably operate on a cash basis whch is why you don't understand depreciation, but if you decide to sell one of your businesses your buyer will likely want to see accrual basis financial statements because they more fairly represent the real financial picture. There is no tax loss caused by depreciation. Businesses pay taxes on their profits and buying capital assets reduces profit. You should feel strongly about tax evasion. That is illegal, but everything else you speak of are legal means of tax avoidance. Why do you thik the government is entitled to so much of our money?
No, you really didn't say why it was an expense. You took that for granted. Not always, I have inherited houses that I must depreciate as rental property. I spent nothing on them. Depreciation allows me to show low profits, sometimes losses, despite the fact that I'm actually making money on them. Great for me, but not the best situation for creating revenues for the nation. Now this is a better explanation. I admit, I'm talking mostly in terms of buildings. A computer is junk in five years and a truck in ten, I see the depreciation there. But properly cared-for real estate never depreciates to nothing and often appreciates. They seem more like permanent assets. I think we have to pay as we go and taxes are how we pay. Government is entitled to no more or less than is needed to pay the budget, just like the rest of us. I realize these things are legal, that is my point. They are a part of the immense complexity of the tax code and they do provide ways for business to avoid paying taxes, which doesn't help the nation. For a flat tax to work, I feel that these avoidances need to be flattened into it, eliminated where possible, and simplified where necessary. More taxes for businesses, perhaps, but the savings in accountants, tax lawyers, and bookeepers would be immense.
You inherited the properties and any associated liabilities, but the asset is new to your books and looses the previous basis. This is part of the reason there is an inheritance tax. Our property and businesses do not exist to make revenues for the nation. The feudal system does not exist in the USA pal. Well there is a different in land and in buildings. Land is never depreciated, but buildings have useful lives and will fall apart and be worthless or have negative value, like tear down structures, if not cared for. We depreciate buildings and things like new driveways and roofs for this reason. I don't think government is entitled to anything of mine. I earned it all on my own. I realize I have a share to pay for things like the military and roads. The government's budget should be tied to tax revenues not the reverse.
