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Taxes! Misleading the unwary with ‘slippery language’

(Flickr/401(K) 2012)

Taxes. We all hate ‘em.

But unless we want to live without a government, they are a necessary evil.

The way most taxes actually work is quite different from what most people think. Listen in, and we can help you understand some of the sneakiest linguistic tricks used to mislead an unwary public.

We will also bring you up to date on the provisions in the version of tax “reform” just passed by the House. (Hint: there is NO simplification, just a boatload of tax giveaways masquerading as tax “reductions.”  You won’t see most any of these unless you are among a chosen few.)

Examples of “slippery language:”

• Tax “rates” are different from taxes. If you get a ton of deductions and exemptions, you can pay very low taxes even when you have high tax “rates.”  Be wary when any politician speaks of tax “rates.”   You are about to get your pocket picked.

• Stated (nominal) rates are not the same as the rates you pay. For example, the U.S. has relatively high stated tax “rates” but the amount of taxes we pay is lower than almost all developed countries. Listen in: we’ll read the list.

Loopholes and exemptions. Our tax system is riddled with these. That is how we can have high tax “rates” and still low rates of taxation.  Unless you get your share of these loopholes and deductions, your taxes will not be low. But some select few will get unbelievably low rates. (Campaign contributions seem to help here).

• Small businesses are NOT what you think they are. Think these are “mom and pop” shops? Think again. Huge multi-billion dollar companies can be small businesses.  (The Trump Organization is one). All the term “small business” means in the tax world is what legal classification you choose; it has nothing to do with your size or income.

The Think Tank

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