Summary
The complexity of the federal tax code, which spans thousands of pages, creates significant challenges for taxpayers and disproportionately benefits the wealthy. The current system allows high-income earners to exploit numerous loopholes, often with the assistance of expensive tax professionals, leading to a situation where the top 1% pays a smaller percentage of their income in taxes compared to average earners. This disparity is exacerbated by the fact that the IRS audits low-income individuals more frequently than high earners due to its limited resources.
The tax code's intricacies not only create a burden for individuals trying to navigate their tax obligations but also distort the economy by favoring certain industries, particularly real estate. Tax incentives, such as the 1031 exchange, encourage investment in properties while making housing less affordable for the average person. Critics argue that these incentives are outdated and contribute to a market that benefits investors at the expense of broader economic health.
Moreover, the inefficiency of the tax filing process leads to significant time and financial costs for Americans. The reliance on tax preparation services, driven by lobbying from these companies, perpetuates a cycle of complexity that discourages meaningful reform. As a result, many citizens harbor resentment towards taxes, not necessarily because of the financial obligation itself but due to the stress and confusion associated with compliance. The discussion highlights the urgent need for a reevaluation of the tax system to address these inequities and inefficiencies.
Show Notes
The Tax System is Broken... In Just The Right Way Looking to grow your business online? Get started today with a free 14-day trial from Odoo: https://www.odoo.com/r/xwl Sign up for our FREE newsletter! - https://www.compoundeddaily.com/ Books we recommend - https://howmoneyworkslibrary.com/ My Other Channel: @HowHistoryWorks Edited By: Svibe Multimedia Studio Music Courtesy of: Epidemic Sound Select Footage Courtesy of: Getty Images For sponsorship inquiries, please contact [email protected] Sign up for our newsletter https://compoundeddaily.com 👈 All materials in these videos are for educational purposes only and fall within the guidelines of fair use. No copyright infringement intended. This video does not provide investment or financial advice of any kind. #tax #finance #money The Federal Tax Code when written out from beginning to end is about two thousand six hundred [2,600] pages long. Depending on who you ask it can be as SEVENTY THOUSAND [70,000] pages IF you include all of the relevant legal rulings on the contents of the code itself. This snowballing complexity would be a big enough headache by itself, BUT the biggest problem of all, is that the Federal government only collects about a dozen different taxes… The guidelines on what these taxes are, how they are calculated and how they are collected take up a total of about 250 pages… everything ELSE in the code is allowances, credits, deductions, offsets, incentives and deferments. And that’s just FEDERAL taxes, things become EXPONENTIALLY more complicated when local and state taxes are included as well. Now it doesn’t matter if you believe that all taxes are theft, or if you think that the rich should be taxed out of existence, the CURRENT system is broken in JUUSSTT the right way. Ok so it’s no secret that tax loopholes benefit the rich… and that’s for TWO reasons… HOWEVER most people choose to just focus on one. The first reason is because wealthy people can afford to pay the billable hours of accountants and tax lawyers to set up their personal finances and business structures to take advantage of these loopholes. According to the National Association of tax professionals the average cost to prepare an individual tax return in America in 2023 was two hundred and forty eight dollars [$248]. That’s ALREADY more expensive than it should be BUT tax services go way up from there. Tailored tax services that submit the paperwork required to take advantage of some of these loopholes can cost tens of thousands of dollars every year to put together. That means that it’s only worth it for people that can save hundreds of thousands of dollars in tax by diligently structuring their affairs. The SECOND reason that tax loopholes only benefit rich people is because… they are the ones that pay tax. But distorting already highly problematic markets is just the first problem with the loophole arms race. So it’s time to learn How Money Works to find out why our taxes are so hard to fix. Follow to learn How Money Works. Find How Money Works on YouTube: https://www.youtube.com/@HowMoneyWorks Disclaimer: This podcast is an independently produced audio adaptation of content originally created by How Money Works. It was developed by a fan who values the channel’s clear and engaging approach to financial education, with the goal of making that knowledge more accessible in a hands-free, audio format. This is not an official production of How Money Works, and it is not affiliated with or endorsed by the channel. All rights to the original video content remain with How Money Works.
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10 Ways Billionaires Avoid Tax On A Massive Scale - How Money Works Get 10% off your first month of therapy with our sponsors BetterHelp: http://BetterHelp.com/HowMoneyWorks Sign up for my newsletter https://compoundeddaily.com 👈 ------------- Rich people didn’t get rich by paying a lot of taxes and for some of them avoiding uncle Sam has become their favourite pastime. Say what you will about billionaires, but they can be a very creative bunch where their money is concerned. Last year ProPublica a non-profit investigative journalism organisation was leaked a cache of IRS files that contained tax information about the richest people in America. Dozens of journalists and forensic accountants were able to reverse engineer a number of systems that the billionaires used to pay much lower rates of income tax than most regular working Americans. #tax #billionaire #howmoneyworks ProPublica Articles: https://www.propublica.org/article/billionaires-tax-avoidance-techniques-irs-files https://www.propublica.org/article/a-massive-oil-spill-helped-one-billionaire-avoid-paying-income-tax-for-14-years Edited By: Andrew Gonzales Music Courtesy of: Epidemic Sound Select Footage Courtesy of: Getty Images All materials in these videos are for educational purposes only and fall within the guidelines of fair use. No copyright infringement intended. This video does not provide investment or financial advice of any kind. Follow to learn How Money Works. Find How Money Works on YouTube: https://www.youtube.com/@HowMoneyWorks Disclaimer: This podcast is an independently produced audio adaptation of content originally created by How Money Works. It was developed by a fan who values the channel’s clear and engaging approach to financial education, with the goal of making that knowledge more accessible in a hands-free, audio format. This is not an official production of How Money Works, and it is not affiliated with or endorsed by the channel. All rights to the original video content remain with How Money Works. For any concerns, inquiries, or content-related requests, please feel free to reach out. - -------------------------------
Why Dumb People Earn More Than Smart People ------ Edited By: Andrew Gonzales Music Courtesy of: Epidemic Sound Select Footage Courtesy of: Getty Images For sponsorship inquiries, please contact [email protected] All materials in these videos are for educational purposes only and fall within the guidelines of fair use. No copyright infringement intended. This video does not provide investment or financial advice of any kind. #business #finance #careers ------ Dumb people make more money than smart people and it took a study conducted by really smart people to prove it. A study out of Sweden has found that top earners have lower intelligence than the people in income levels directly below them. The Plateauing of cognitive ability among top earners drew on data from 59,000 men who had to take a compulsory military conscription aptitude test. It then tracked their earnings over their professional careers to find the relationship between intelligence and income. Before Tai Lopez gets any ideas for more shitty YouTube commercials or the hustle bros learn how to read journal articles and use this to encourage people to drop out of college, I want you all to know how this data really works. The relationship between intelligence and income was strong, smarter people earnt more money but only up to six hundred and seventy thousand Swedish krona or sixty-four thousand dollars per year. After that intelligence didn’t mean much anymore and at the very top end of income earners, the 1%, dumber people actually did better. So is this a sign that watching TikTok and reality TV is actually better for your career than going to college? Well maybe actually, for two important reasons but there are also two reasons why you should probably ignore this and keep studying hard if you want to get ahead financially. Reason number one why dumb people are doing better than smart people is that smart people fill in high prestige jobs that don’t have high salaries. Academics and research scientists are some of the smartest people in the world, but they don’t get paid well. Doctors, lawyers and elite financiers also need to be very smart to get through demanding schooling and admission exams and these professionals ARE typically compensated very competitively BUT most of them don’t make it all the way into the 1%. In the USA to be in the top 1% of income earners an individual needs to make at least five hundred and ninety-seven thousand dollars before tax and that’s just the minimum to join the 1% club. so it’s time to learn How Money Works to find out why dumb people are earning more than smart people and why this trend is completely meaningless for your own career planning. Follow to learn How Money Works. Find How Money Works on YouTube: https://www.youtube.com/@HowMoneyWorks Disclaimer: This podcast is an independently produced audio adaptation of content originally created by How Money Works. It was developed by a fan who values the channel’s clear and engaging approach to financial education, with the goal of making that knowledge more accessible in a hands-free, audio format. This is not an official production of How Money Works, and it is not affiliated with or endorsed by the channel. All rights to the original video content remain with How Money Works. For any concerns, inquiries, or content-related requests, please feel free to reach out. - ----------
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jUsT BUiLd MorE hOusEs!! Follow to learn How Money Works. Find How Money Works on YouTube: https://www.youtube.com/@HowMoneyWorks Disclaimer: This podcast is an independently produced audio adaptation of content originally created by How Money Works. It was developed by a fan who values the channel’s clear and engaging approach to financial education, with the goal of making that knowledge more accessible in a hands-free, audio format. This is not an official production of How Money Works, and it is not affiliated with or endorsed by the channel. All rights to the original video content remain with How Money Works. For any concerns, inquiries, or content-related requests, please feel free to reach out. --------------------------------
The Great Corporate Extinction Meet your new favorite daily sneaker-Vessi is waterproof, ultra-comfy, and fits every part of your routine. Visit https://vessi.com/MONEY and enjoy 15% off your first pair at checkout! ----- Sign up for our FREE newsletter! - https://www.compoundeddaily.com/ Books we recommend - https://howmoneyworkslibrary.com/ My Other Channel: @HowMoneyWorksUncut @HowHistoryWorks Edited By: Svibe Multimedia Studio Music Courtesy of: Epidemic Sound Select Footage Courtesy of: Getty Images 📩 Business Inquiries ➡️ [email protected] Sign up for our newsletter https://compoundeddaily.com 👈 All materials in these videos are for educational purposes only and fall within the guidelines of fair use. No copyright infringement intended. This video does not provide investment or financial advice of any kind. #business #finance #money 2023 saw a record number of new businesses being created here in America, with five and a half MILLION new companies being registered within the year. Data hasn’t been published for 2024 yet, but most expectations suggest this record could be broken again. At the same time it seems like every pre-revenue, pre-idea, pre-clue startup that vaguely mentions artificial intelligence is getting billions of dollars thrown at them by cashed up investors. And yet there is a problem that you may not have noticed. There just aren’t that many companies anymore. In 1996 the market hit an all time record of 8,090 companies publicly listed on the various stock markets around America. Today almost 30 years later, despite the economy being THREE times larger, and the market handling about SEVEN times as much capital, there are fewer than HALF as many companies publicly available to buy shares in. There are a lot of theories about what is going on here, from private equity making wall street irrelevant, corporate consolidation, to the dwindling savings of average investors. BUT there are some even bigger issues at play here. Follow to learn How Money Works. Find How Money Works on YouTube: https://www.youtube.com/@HowMoneyWorks Disclaimer: This podcast is an independently produced audio adaptation of content originally created by How Money Works. It was developed by a fan who values the channel’s clear and engaging approach to financial education, with the goal of making that knowledge more accessible in a hands-free, audio format. This is not an official production of How Money Works, and it is not affiliated with or endorsed by the channel. All rights to the original video content remain with How Money Works. For any concerns, inquiries, or content-related requests, please feel free to reach out. - ---------------------------------