Winsor Crosby wrote:
> The wealthy class as well. Or a stimulus for the building industry
> and it keeps the economy afloat. There has been lots of discussion
> behind the scenes of doing away with the home mortgage deduction. No
> real love for the middle class, but the shaky economy has saved the
> deduction for now.
>
Politically impossible to repeal in anything short of a huge financial
crisis. Way too many voters depend on it to make their ends meet.
Social Security is much the same. Talk as come folks will about cutting
benefits, nothing significant can be done now. Way too many voterseither
already dependent on SS income or close enough to see that they will
either be dirt poor or working until death without it in their near future.
> To add to the picture:
>
> Capital gains or the profit of buying and selling is 15 percent, well
> below the tax rate for the middle class income.
>
> There is also enough of the word of mouth kind of story to indicate
> that there is also a lot of wink wink nudge nudge that goes on in IRS
> acceptance of underreporting of income that is considered capital
> gain. For instance about ten years ago I was acquainted with someone
> who had a girlfriend who was talented in the shopping arena and
> turned it into a business. She would cultivated wealthy clients and
> she travelled to New York City several times a year to buy very
> expensive designer clothes for them. She was clearing well over a
> $100K per year but reported and income of $10K. In her fourth year
> she got an anonymous call who said they were the IRS and told her
> enough for her to realize that they knew exactly how much she was
> making. This anonymous voice told her to show at least $35K worth of
> her income if she did not want problems. She happily complied. Sadly
> people with wages or salaries are not given that slack. Different
> rules for different people.
>
This sounds unlikely, for several reasons, but all I will comment on is
that the story you tell has nothing whatsoever to do with Capital Gains
tax. She was in a business of either short term buying and selling or of
receiving a fee for doing other folks shopping. Both are businesses not
subject to personal income tax, but to business taxes either as a
company or self employed person.
If she was indeed getting away with such huge underreporting, you could
have gained a reward of 10% by turning her in. I, as a partially self
employed person who reports and pays taxes on all that income would
applaud that.
Moose
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