On the heels of their narrow victory in the recent elections, the Demoncrats are already plotting to raise taxes on the wealthy. That means us – if you are a business owner. They are going to take a larger slice of the pie.
If the tax burden on us one-percenters goes up significantly, there is only one basic strategy to avoid paying huge amounts of our money over to the government: Tax writeoffs.
If you own a business, as most of us in the top 1% do – you won’t have to look very far to find a tax shelter: It’s the place where you go to work – your business. Of course, any money you legitimately spend on your business is considered tax-exempt. It’s considered a part of the cost of doing business.
So, instead of taking money out of the business in the form of salary and bonuses for yourself, the course most of us will be forced to take is to reduce tax exposure by plowing profits back into our businesses. This is the only way to avoid taxes, while keeping the money close to home.
What are some of the ways to put money back into your business that will pay the best rewards? Expand by opening new locations; buy a new fleet of trucks; build another warehouse; add additional staff; invest in new equipment; patch the roof; offer employee pay incentives; advertise your brand; and a million other things, all of them tax-deductible.
If they are wisely deployed, these improvements should cause revenues and profits to increase, while avoiding expensive and confiscatory taxes.
Of course, there will be a negative side-effect: Rolling profits back into growth will create jobs, and unemployment will drop. Labor costs and wages will begin to increase. We may even have to improve employee benefits in order to retain the best people. A low unemployment rate will begin to re-empower labor.
However, there is no other course to take if our government insists on raising taxes on the wealthiest citizens.
Let’s hope that day never comes. Hopefully, the public will continue to believe (however ridiculous the theory may be) that lower taxes on the wealthy somehow creates jobs. We must continue to espouse that theory at every opportunity, or else we may be forced into an unwanted an expensive cycle of economic growth. (GATOR)