rich

The Rich Don’t Pay Their Fair Share of Taxes!

~ gaslightgirl ~ 1 Comment

It’s that time of year. At least it is for us.

Time to pay my taxes.

As a baby accountant, in the years when my clients would bring their tax information in and I would compile it all and marvel, mouth dropped open, on “how much money they made” I swore to myself that I would NEVER complain about paying taxes when I made that much money.

Well damnit, I’m complaining….just a little.

But maybe complaining isn’t the exact right word. What I really want to do is educate. Because I love to turn the lights on for people. And also, because I’m sick and tired of hearing:

“The Rich Do Not Pay Their Fair Share of Taxes.”

#bullshitalert

I know, I know. It’s what you’ve heard. From your friends. From the media. From Facebook.

So it must be true, right?

#wrong

As the owner of a small business (defined as a business with revenues [that’s revenues…not profit!] of $1 million per year or less), I’d like to walk you through parts of my tax return. So that you can help me in dispelling this terrible myth. This “party line” that only serves to further separate us.

So let’s start with wages. You’ll notice I don’t make any.

That’s because I only earn money if my business makes money. So, I don’t take a wage…I take draws from my business as there is cash available.

I’m going to take a wild ass guess and imagine that your tax return likely has line #7 filled out for wages for you or your spouse. And I’m going to take a guess that, like me, you grumble because that number sure as hell is NOT the amount of cash that you saw go into your bank account, right?

Life and taxes…are a bitch.

Most of the reason that you didn’t see that cash in your bank account is due to two taxes: your income tax and a little thing called social security taxes. In fact, 7.65 percent of your total wage is taken out before you even see that money.

But did you know that your total social security tax due to the federal government is NOT 7.65%?!?!?! That’s correct! Social security due to the federal government on your behalf is actually 15.3 percent! But if you don’t pay the entire amount, then who does?!

Yes, that jerk who employs you does!

So, for the pleasure of employing you, the owner of the company you work for not only has to pay the full wage you see on that W-2 of yours and send in the 7.65% of your wage that is taken out of your paycheck…..they also have to PAY 7.65% in additional tax just for you.

Example: you make a wage of $50,000. $3,825 is taken out for Social Security/Medicare tax of 7.65%. Let’s say your effective tax rate is 10% or $5,000 per year. Your employer expends $50,000 by paying you your wages of $41,175 and remitting the remainder or $8,825 to the government for your taxes. In addition, they pay another $3,825 in Social Security/Medicare tax on your behalf. So, for the pleasure of employing you, their minimum cost is not your $50,000 wage, but it is $53,825!

Right now, my business, is a proverbial small business. We make revenues of less than $1 million dollars per year. (Sounds like a lot, I know…but at the end of the day….it isn’t!). We put three people to work full time and usually have an intern or others who work for us. Last year, the taxes my business paid was: $74,159.

This included the Social Security / Medicare tax I just explained to you, plus here in Washington I pay what’s called a Business and Occupation tax.

Oh yes, this is a tax that I get to pay for the pleasure of doing business in Washington. And it’s a gross receipts tax.

What does that mean? It means that for every dollar that comes in the door, I get to pay Washington 1.5% of my revenues. Make $1,000? I pay them $15. Make $10,000, I pay them $150. Before I ever get to enjoy any of the fruits of our work or deduct any expenses!

It’s super fun! So the $74,159 line item you see above are the taxes I get to pay for the pleasure of being in business and having employees!

But it doesn’t stop there.

I am self-employed. So I have to pay the federal government my own social security taxes at the full rate of 15.3%. This is a super fun one. Remember, I don’t have wages! But it doesn’t matter! For those of us who are self-employed, the IRS made special forms just for us!


This year, my total self-employment tax was: $27,924!!

Don’t worry…we’re still not done.

After all my business income and expenses and taxes paid to various government agencies, my accounting records said I had earned income from my business!

And just like you, because I earned income, I paid more taxes.

This year, we paid:


Yes, $111,,784….you read that right. And believe me, it makes my ass pucker, too. Especially, since we aren’t done yet.

You see, according to the IRS and their infinite wisdom, we didn’t pay enough in tax…so a little thing called the “Alternative Minimum Tax” needed to be calculated. You know, because

Rich People don’t pay their fair share in taxes.

So in addition to the Self Employment Tax and my income tax, we paid $1,088 in AMT, because, well, the government needed to get their fair share!

And NO…we STILL ARE NOT DONE!

Thanks to Obamacare, also known as the “ACA” I evidently did not pay enough medicare tax…you know, because not only did I pay my fair share via the Self Employment tax calculation and also on behalf of my employees…but I now have to pay EXTRA.

So, they tacked this $1,856 on:

If you haven’t kept track, let me help you:

Business Taxes $ 74,159.00
Self-Employment Tax $ 27,924.00
Federal Income Tax $ 111,784.00
Alternative Minimum Tax $ 1,088.00
Additional Medicare Tax $ 1,856.00
Total Taxes – Before State Taxes $ 216,811.00

Let that reality sink in a little.

What could you do with $216,811 in your bank account? And this is no gimmick. This is real cash. Out of my pocket, into the government’s hands. You know…the government that does great things with our tax money!

With that cash..how many more people could I give a job to? What are the raises I could give to the awesome people who work for me now?

And remember, my little business makes less than $1M per year. That’s less than $1 million before I pay employees, pay rent, pay all these taxes…pay our household…

#depressing

My friends, can I tell you something else about being rich?

We don’t get to take the same deductions as everyone else. That’s right. I have two teenage boys at home. They eat us out of house and home. They are expensive!
But see that line item called “Child Tax Credit?”

Yeah…it’s blank. Because you know….rich assholes like us don’t deserve child tax credits, no matter how many kids we have. That’s a $2,000 tax deduction that we don’t get to enjoy.

But it gets better! Itemized deductions…you know for paying a mortgage, giving money to charity, all of that? Yeah….that gets diminished too. This is a fun one!

That’s $4,682 that could have reduced our taxable income that we weren’t allowed to claim because…”we made too much money.”

There you have it. A glimpse into a real “rich person’s” tax return.

Listen, we have an incredible life. And I get it, we live in a nice home, we drive nice vehicles and our kids go to private school. But also know, we shop at Walmart, I walked out of Kohl’s the other day because they wouldn’t give me an $80 discount I should have had on the items I was buying, and we are still as down to earth as two people can get.

And there’s the rub. The majority of people in this USA who are classified as rich are just like us. We are nice people. We work our asses off each day, we give people jobs and go without just to make payroll some days/weeks/months!

So, the next time you hear the premise that “rich people don’t pay their fair share of taxes.” Please remember this primer and please know that we don’t just pay our fair share…we pay more than our fair share.

And just like you, we help make up the backbone of our great and wonderful nation!

On Being a Rich Asshole

~ gaslightgirl ~ 1 Comment

My name is Tiffany. I live in a beautiful home with a substantial amount of square footage. Our home is surrounded by beautiful acreage. My mortgage is large but we live well within our means and so, it does not kill us to pay it each month.

And I am wholly and utterly embarrassed by it all.

To the point where I have a hard time inviting friends and even our own family over to enjoy it. And when they do come over, I cringe when Rusty gives them the “grand tour.”

Just a few weeks ago, one of the moms was dropping off her kid at our house and asked how many square feet we had.

I lied.

She said they were thinking of moving and purchasing a home on acreage with room for horses. She wanted to know what we spent on our place.

I lied about that, too.

(I could rationalize here, that it was just a small white lie and I wasn’t too far off…or that it wasn’t her business anyway…but that would be another lie I told myself to feel better.)

You see, I didn’t want this nice woman to feel bad. I didn’t want her to feel “less than”.

But more importantly, I didn’t want her to think we were ‘rich assholes’.

Because, you know: rich = asshole.

I can think of a few other beliefs I’ve likely held about “rich people” at some juncture in my life:

  • Rich = Snob
  • Rich = Entitled
  • Rich = Not part of the “real world”
  • Rich = Rich Kids Don’t Learn to Earn (Silver Spoon Syndrome)

In other words, if you were a rich person, you were a jerk and you likely didn’t appreciate what you had.

Here’s the problem I’m having:

I’ve come to accept that I am likely one of “them”, now. Only, when I look in the mirror, I don’t see entitled, or snobbish, or a bitch.

I am kind. I am giving. I am a loyal friend. I’m a good hot, sexy, wife to my husband. And a loving mom who puts her kids to work and finds joy when they find self-esteem from their own endeavors, not through what we give them.

I give thanks every day for what I have.

I am definitely not an asshole.

#WHOA

Here’s another truth:  I know other rich people!  And guess what? Most of them aren’t assholes, either!!!!

#MINDBLOWN

So why do I even write about this? To rub it in your face? To make you feel less than?

Nope.

To prove that money doesn’t bring you happiness?

Nope.

To prove that rich people aren’t assholes?

No, it’s not that, either.

It’s because we all have limiting beliefs about ourselves {I’m not good enough, I’m not pretty enough, I’m not lovable}.

And we all have limiting beliefs about money {we don’t have enough, how will we retire, we will never have a nice house or a nice car, what will people think if they knew we had all this money}. A lot of that includes putting people in “categories” based on what they have or what they don’t {rich people are jerks; poor people are stupid}.

You know, stereotypical stereotyping.

What if we just stopped all of that?

What if we were just kinder to each other…and more importantly, kinder to ourselves?

What if we dispelled the taboo money topics and found ways to support each other in order to have even more of it in our life?!

I get it. It feels selfish. It feels like we’re tempting fate. It feels like if we ask for more we don’t actually appreciate what we have. It feels like we would be turning into assholes.

#bullshitalert

Obviously, I still have work of my own to do. I have a big limiting belief that I need to let go of:

“What will people think of me if I live in this big fancy house?”

The real truth is, that I will still be still am Tiffany. I will be am the girl who worked in the cotton fields and later worked her way through college. I will be am the girl who felt lost in her early career, like I would never “make it”. I will be am the girl who started a business just to pay the bills at home and never once dreamed I’d be an employer whose business was supporting three other families.  I will still be am also the girl who has had the experience of setting all the bills out on the table and figuring out which ones to pay and which ones to push off for another month.

And not only will I be am I the girl who never forgets where she came from, I will be the girl who helps others find their way, too.

And money will not be a taboo subject when it comes to this journey we’re all on.

I have a new belief:

My name is Tiffany. I live in a big, beautiful home that I can’t wait to love to share with my family and friends. Our home is the place where our kids bring their friends. Where our friends become family. Where our family finds peace and solace. Where we eat, drink, and laugh – making priceless lifetime memories.

Post-Script ~

Before you think I’m crazy, go pick up Jen Sincero’s new book: “YOU are a BADASS at MAKING MONEY.”

Pick up a pen, a highlighter, and a journal while you’re at it. Go home and don’t just read it. Do yourself a favor and absorb every word, do the exercises in each chapter, and envision how you want money to show up in your life.

You can buy me a drink thank me later!