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As a US tax professional in Israel for a mainly Jewish clientele, I am faced with a moral and quasi-halachic/hashkafic dilemna for my clients. I seem to be faced with two potentially opposing values: we have fidelity to the tax law (dina demalchusa dina, gezel, etc…) and we have trying to ensure the financial success of our Jewish brothers and sisters (chasa HKB”H al mamonan shel Yisroel).
In general, I tend to err on the side honesty within tax law. I don’t believe in tax evasion and it disturbs me when I read about some of the things people do to avoid paying their share. But particularly for clients in Israel, there are some aspects of US tax law that really hit them unfairly:
1. self employed income- because of a lack of an agreement between Israel and the US, self employed individuals end up having to pay both social security tax AND bituach leumi (that’s in addition to income tax). For a small business that can be crippling.
2. Non-US investments- the IRS taxes certain non-US mutual funds at exorbitant rates… could be as much as 45% tax which is above and beyond the regular tax code and is extremely debilitating for Israeli Americans who are just trying to invest their savings in the Israeli market.
Specifically when it comes to tax laws that are almost certainly unfair, and in a situation where it is very unlikely for the IRS to catch on, would there be moral and halachic/hashkafic leeway to bend, even break, the law to help fellow Jews avoid these unfair taxes?
I’m not talking about enriching anyone on the backs of the US government or hard working taxpayers. I’m not talking about avoiding the taxes that any regular American would need to pay. It’s the double and triple tax that I’m discussing. Does Halacha require us close our eyes to this unfairness and flow these rules blindly? Are evading these taxes morally deplorable, questionable, or honorable?
I’m not a Rov or an accountant so this isn’t halachic or professional advice- just my personal opinion.
Signing your name to something that you know isn’t true, even if there’s no way you’re going to be caught is just wrong, plane and simple- there’s no two ways about it.
Being a citizen of a country entitles one to certain privileges and protections which ultimately costs the country money. While you may feel that paying taxes for the same income to the Israeli Government and then to the US Government is double paying- the respective governments look at us as their share of the costs to look out for their citizens.
Who decides what’s fair and unfair?
If your clients in Israel don’t feel like paying US income taxes, why don’t they just denounce their citizenship?
Fellow IRS agent here.
Thanks for letting me know of your dillemas.I will let my boss and colleagues know about this issue and we’ll make sure to solve it quickly, by adding extra audits and checks on Israeli American tax returns.
a good question. Maybe it is worth exploring if there are legal structures that can resolve the double taxation issue. For example, forming a corporation whether in Israel or in Us or in a 3rd party that will hold the profits. This is way beyond my expertise, I just hope that such methods are known to rich people and maybe should be shared with others also. It will a great thing both financially and hashkafically.
as to mutual funds, solution seems to be simple – just hold those investments that are tax-advantaged in your situation. There is no mitzva to hold all mutual funds in the world.
As the resident CR anti-government extremist seeing a thread called “Unfair tax evasion”
Oh boy, here we go again…
The law is the law – period, and chilul Hashem is chilul Hashem, – period. There’s no way to justify filing a return inaccurately because you don’t like the fact that there’s no US-Israel totalization agreement or how the PFIC rules work, and the chilul Hashem that will result when it’s found that Jews are coming up with reasons why the law does not apply to them is very significant.
I have a friend who is a US CPA who had to deal with a bunch of fraudulent claims of the child tax credit by Israel-resident US citizens – it got bad enough that just about anyone claiming the credit from Israel was flagged for audit, especially if the number of children seemed unrealistic to the IRS (tell them about families in Israel with 15+ children…). They don’t like the laws? As one commentator above said – renounce your US citizenship. Else, for work income, use a corporation (or an entity that elects to be treated as a corporation for US purposes), and for investment income, invest in either US mutual funds or Israeli funds that are not structured as corporations. I spoke with my CPA who explained this to me – it’s a bit of an inconvenience, and there could be some cost, but it does solve the issue.
an Israeli Yid
ok, anIraeliYid seem to confirm that incorporation helps. Could you guys flesh these solutions out so that the kahal could use them? The same about child credits.
simcha, you should start working with these people on their next year return and creating the right structure. Sanhedrin 40+ – you should always pray about the problem before it happens (Avraham near Ai)
Note that we had periods in history where Jews were unfairly targeted for extra taxation. In such cases, it might be acceptable to avoid them. In this case, this is an issue with any American abroad, so this is not an anti-Jewish gezerah.
@Always_Ask_Questions – per the advice I heard, incorporation can help, but can be expensive. In Israel, there are rules about bookkeeping and reporting for a corporation, and following these rules can requires having an accountant and certain record-keeping systems. It could be expensive enough to make it not worthwhile to avoid paying the social security tax, as the social security tax can be less than the cost of having a company!
an Israeli Yid
Happy new year, I dont believe you are an IRS agent, and neither do I believe that you have a Jewish heart. Many, perhaps even most, of these people barely make ends meet and you are worried about the coffers of the criminal US government that spends billions on gender-mutilating “programs” for kids, medical help for illegals and education for their children, and on thousands of other non-sensical and non-essential programs with money the government steals from the middle class and also prints with no backing. The US government is at this point a criminal entity that is robbing hardworking Americans of their money.
Why not be proactive? Educate your clients (and the public) about how to avoid these problems! If you can invest 500,000nis or more, you can get in the Israeli market with an investment firm without running in to the tax issue. Otherwise, invest in US funds. I presume the self employed individual can find a work-around and get himself / herself technically employed – no?
I sympathize with those that are struggling to make ends meet but not paying taxes that are due is simply stealing. Signing your name to something that isn’t true is simply lying.
Like I wrote earlier- if someone doesn’t want to pay US taxes they’re more than welcome to renounce their citizenship and give up on all the benefits that come along with being a US Citizen.
It makes no difference if you agree with the policies of the US Government or how they spend the money they collect in taxes. If it bothers you go ahead and vote for someone whose policies are in line with your values.
(I was מקבל on myself this past ראש השנה to not post anything political so I’m not agreeing or disagreeing with your last sentences.)
I didn’t read the follow up comments to see if the following point was made yet, but the Halacha of dina demalchusa dina does NOT apply to these cases, since these people do not live in the US. Therefore US laws aren’t halachicly binding upon them.
Maybe you can start by asking your clients what their Rabbis pasken about this? It would be interesting to see the range of opinions.
As far as I know, there might be a heter to cheat oppressive governments, especially when there are laws targeting Jews, but not of democratic governments. But maybe there are other views. I am surprised that some people ^ just quote their feelings to allow something like that.
Dr. Pepper, i guess the early Americans were criminals for protesting against British taxation… and for daring to fight for independence, they sure broke many laws at that time… I can see people like you taking the side of the British monarchy because the “law is the law”… im not saying it’s right to simply cheat and not pay taxes randomly, im saying that some taxes cripple small businesses and can financially choke middle class families and due to the US government irresponsible tax laws and irresponsible spending, they have a right to put there well-being before a corrupt government’s corrupt “laws”.
Dr. Pepper, here’s a relevation of a tiny portion of the US government’s ridiculous spending:
LEFT FLIPS OUT: Trump Shuts USAID Agency; The Shocking Waste Of Money Starts Being Exposed
I’m very impressed with the Trump administration trying to clean this up, but i doubt after the Trump administration the next administration will continue down this path. The fact is that the government is corrupt, they are cleaning up now, let’s see what the future brings…But at this time talking about following every law of a corrupt government that would cause severe hardship to many individuals is like condemning the black market trade under the communist rule where people had no choice but to do certain “illegal” things to survive. To tell people to give up their rights to American citizenship is ridiculous, they dont have to give up their rights just because the government is abusing the rights of US citizens. When the government cleans up their act, stop their overspending and borrowing money they cannot ever repay and enact fair tax laws for every single class of citizens, particularly the middle class that can get crushed, then every US citizen would need to step up to the plate and follow every single tax law. Until then, these individuals, who are simply trying to survive financially, cannot be judged.I wrote earlier that there are benefits to being a US Citizen. The US Government is supposed to look after their citizens all over the world. This is an exposure for the government and it is an expense- regardless of whether you ever use it or not. Expecting the government to be there for you while cheating on your taxes (regardless of if you’re in the country or not) is stealing. I believe stealing isn’t covered by the Halacha of dina demalchusa dina.
(I’d feel differently if the US had, for example, a rule that its citizens can’t drink alcohol no matter where in the world they are and you decided to drink alcohol out the country where the host country has no rule against it.)
Like I keep writing- the US has benefits for its citizens all over the world. Expecting to get those benefits (or even just being covered by those benefits) while cheating on your taxes is stealing. If you have a problem with the taxes, you have the option to leave and renounce your citizenship or vote out the politicians collecting taxes you don’t agree with to pay for things that you don’t want them to spend money on. (You can also fight for your independence.)
My point though, and I’ll write it again, is that expecting to get the benefits from the US Government while not contributing what they tell you you owe- is stealing.
I agree with you 100% that the government is wasting ridiculous amounts of money but that doesn’t give you the right to steal. Would you say it’s ok to steal from a grocery store that donates a percentage of purchases to something you abhor? Hopefully not. You have the right to either pay for your groceries (knowing where some of the profits are going) or shopping elsewhere. Same with citizenship.
But I disagree with you that someone stealing from the government can’t be judged. (And by the way- there will NEVER be a tax code written that is fair to everyone.)
Yes, in my opinion it is stealing. They can tax any amount that they want and if you want to be a citizen (or resident) you have to pay that. If you don’t want to pay taxes you’re welcome to leave and give up your citizenship or vote out the current politicians. But until then, if you’re a US Citizen and getting the benefits of citizenship you’re stealing if you cheat on your taxes.
Dr. Pepper you write, “They can tax any amount that they want…”
Well, I disagree with that. That is an abuse of power.
Kings and queens also felt they could do what they want, but there were revolutions against those monarchies. Were the citizens who rebelled against tgem “break the laws” of their country? You havent responded to my point against the colonists engaging in “illegal activities” against the British king. Was their not paying taxes to the British monarchy “stealing”? There are many people supporting their governments committing atrocities against innocent people “because those people broke the laws” of their country. Political prisoners, political murders, etc. many governments and leaders get away with committing crimes because there are millions of citizens supporting the laws these criminal leaders in power create.
No, our government cannot “tax any amount they want”. They do not have a right to do that.
phil: i guess the early Americans were criminals for protesting against British taxation
One difference is that Brits did not give Americans an option to quit Britain, they came to collect those taxes.
As Dr Pepper said, you can renounce your US citizenship and live freely and honestly.from halakhipedia, these are some starting points for the discussion.
One who does not pay taxes violates a Torah commandment of “lo tigzol” (Vayikra 19:13), as one is stealing from the government. Shulchan Aruch C.M. 369:6. Rabbi Menashe Klein writes that tax evasion is equivalent to hafkaat halvaa, withholding payment for debt, which is only prohibited in case of chillul hashem (Mishneh Halachot, Chelek 12, Siman 445).
One who violates tax laws of a country with a legitimate system of taxes is obligated to pay the resulting fines. Shulchan Aruch Choshen Mishpat 369:7; Rambam, Hilchos Melachim 4:1, Hilchos Gezeilah 5:12
A Jew is permitted to work a tax agency and turn in Jews found guilty Shevet Halevi, Chelek 2, Siman 18
It is prohibited to avoid paying taxes in a democracy such as the United States. Shu”t Igrot Moshe CM 2:29, Shu”t Shevet Halevi 2:58,
taxes nowadays would not only be binding because of dina dimalchuta dina. Paying taxes is also your obligation to the partnership because taxes are used to provide services to the citizens (fire, police, military, garbage, mail etc). All the people of the city, state, country have to contribute to provide for that. Thus, one who withholds his taxes is not only taking from the government. He is taking from the other citizens, which inevitably includes other Jews. Rav Schachter
According to some poskim, patronizing a Jewish merchant who cheats on his taxes violates the biblical prohibition of lifnei iver. Rav Schachter ?
Always ask, I’m not talking about myself and my citizenship and my taxes. I’m talking about MILLIONS of Americans who cannot, and therefore do not, pay whatever the government deems to rob them of. You are living in a bubble if you think this issue is all about a few thousand Jews. MILLIONS of Americans whose lives are being affected by unfair taxes levied upon them have a RIGHT TO LIVE FREELY and to be taxed fairly. The US government has absolutely no right to overtax its citizens, period.
Dr. Pepper, you make it seem as if I’m promoting not paying taxes. I am not saying that at all, nor am I saying that Americans do not need to contribute, through taxes, their fair share to the American government for the services they provide. I am saying, and the Founding Fathers and all those who fought for our freedom from tyranny would agree with me, is that it is a basic right of all Americans to pay FAIR taxes, and that politicians do NOT have the right to STEAL American’s income through so-called “taxes” that are excessive to the point of causing financial hardship to those who work hard for their money.
I agree with you that raising taxes to an astronomical amount is an abuse of power but I don’t agree with you that something can’t be done “because it’s an abuse of power. I’m not getting into politics but there have been some things done recently that just about everyone agrees were an abuse of power – but they were done.
I’d feel differently if a country considered you their property and didn’t let you leave or won’t let you give up your citizenship but that’s definitely not the case with the US. You’re free to leave and renounce your citizenship.
By the way- I did respond to your question about “ illegal activities” against the British king- I told you that you can fight for your independence.
You, on the other hand, didn’t respond to my question. I’m going to ask it again.
Would you say it’s ok to steal from a grocery store that donates a percentage of purchases to something you abhor?
I’m definitely not happy with the tax rate and where lots of the tax money is going but why are you saying that the government has no right to do that?
1. Paying both Social Security AND Bituach Leumi is a benefit for the employee. When the employee retires he can collect from both Social Security and Bituach Leumi. Not paying is cheating not only the governments of both countries , it is cheating the employee! These payments will give benefits to the employee that are greater then the cost.
A tax preparer signs as the preparer. The taxpayer is the one who signs and takes responsibility for the accuracy and completeness of the return. If a tax agency finds evidence of fraud, it’s the taxpayer who is contacted. If the end result is that there is additional tax due, it’s the taxpayer who has to pay. If the case goes to court and the taxpayer loses but refuses to pay, the taxpayer is the one who goes to prison.
Additionally, a tax preparer should have a agreement sign by all his clients which says something like “Because our firm is relying on the accuracy and completeness of the information you provide, you agree to indemnify and hold our firm and any of its members and employees harmless with respect to any and all claims arising from the use of the tax returns for any purpose other than filing with the tax authorities regardless of the nature of the claim.”
It is your client that provides you with his income information, you are simply providing your services based on the information provided. If he doesn’t pay BTL or SS that’s on him not on you.Dr. Pepper, you write “By the way- I did respond to your question about “ illegal activities” against the British king- I told you that you can fight for your independence.” Are you suggesting i take up arms against the US gov and stop paying taxes like the colonists did against the British monarchy? Please explain your comment how i can “fight for my independence ” from the US gov.
Dr. Pepper, the colonists were also “free to leave”. Not being able to leave is not what living under tyranny is about. The Founding Fathers established the US to be a free and fair state for all citizens. Politicians have no right to ROB hard earned money from US citizens just as they have no right to rob land from them.
You ask “Would you say it’s ok to steal from a grocery store that donates a percentage of purchases to something you abhor?”. When you buy something you need to pay for that. When you live in a country you need to pay taxes to the government and I never, ever said otherwise. I said taxes need to be fair. When leaders of a country demand an unfair percentage of the income from the citizens in their country, to the point that it causes them financial hardship, THEY ARE STEALING from the citizens.
Philosopher,
It seems like, using your logic, I can refuse to pay shul dues because they are excessive, unfair and are robbing me of hard earned incomeTaxes are what they are and part of the reason they are what they are is because of tax fraud. (It may be a small amount compared to the waste caused by crooked politicians but it definitely contributes.) You may not be promoting tax cheats it but you sure seem to be justifying them. Like I wrote before, if you feel that politicians are stealing from you, you have the right to vote against them.
There is no way to create a tax system that is fair to everyone. What people are trumpeting as fair share will definitely not be fair to many families. Are you ok with anyone cheating on their taxes when they feel it’s not fair for them? Did the founding fathers write that anyone who feels that taxes aren’t fair for them have the right to cheat on their taxes?
If someone feels that Yeshiva Tuition is too high for them (or they don’t like the way the Yeshiva spends it’s money) and the scholarship given to them by the school isn’t enough- do they have the right to lie about their income on the scholarship application?
(As a side point- I was told by a lawyer many years ago about how I could legally lie to save myself hundreds of Dollars per month. He said that the law in the case is that lying isn’t illegal but it gives them the right to sue me for all ill gotten gains but they’re too lazy to do anything about it. I asked a shaila and was told that irregardless of US Law it’s אסור להלכה as it’s stealing from all stakeholders and I’d have to repay every single one of them.)
@essmeir – if you took the amount you contribute to social security and invested it in, say, the S&P 500, then purchased an annuity at retirement, you’d almost definitely do significantly better than the amount you’d get in social security benefits.
As my accountant explained to me – someone who is not self-employed and works outside of the US CAN NOT pay social security, and will not get benefits – that’s how the system works. Having someone set up a non-US company so that one is an employee is a completely legitimate way to avoid the need to pay US social security – and for most people, the idea of paying an additional 15% of income for a potential future benefit, on top of the 15% paid as Bituach Leumi, is just unaffordable.
an Israeli Yid
anonymous Jew, you write “It seems like, using your logic, I can refuse to pay shul dues because they are excessive, unfair and are robbing me of hard earned income. ”
If your shul dues are causing you such extreme financial hardship that effects you and your family severely, then i urge you to contact the many frum charity organizations who will help you out in your dire situation.
Dr. Pepper, I never heard of the term “legally lie”…. in any case, im not promoting not paying taxes, I am defending those who cannot pay the ridiculously high percentage of taxes that are imposed on them which would cause severe financial hardship for them and their families.
You wrote “I’m definitely not happy with the tax rate and where lots of the tax money is going but why are you saying that the government has no right to do that?” Your comment prior to this comment was “They can tax any amount that they want” and to THAT i replied “absolutely not”. No government has the right to “tax” its citizens any amount they want. That is preposterous.
A tax prepararer cannot prepare a fraudelant return and no amount of indemnity in an engagement letter will protect them. There are penalties called tax preparer penalties and they could also lose their license. While the tax preparer may only prepare the return based on the information proided to them, it is the preparer’s responsibility to know the law and apply it and ask question to ensure compliance. So if someone is a dual citizen and is filing a US return, the preparer can’t say they didn’t know that the income was subsect to US social security. If there is income which is questionable if it is, it is the preparer’s responsibility to research the issue and they cannot rely on the tax payer saying to them, this income is exempt or anything similar.
It’s been great talking to you on this topic.
I stand firm that taxes will never ever be fair to everyone and that cheating on your taxes is wrong and stealing. (Even if you justify it by “they’re not fair”.)
If another country invaded yours and started charging an exorbitant tax rate I’d be OK with overthrowing the invading country but I’d still feel that it’s stealing to sit back and enjoy the benefits of the new government and cheat on your taxes.
Like I wrote many times before and I’ll write one last time- if you don’t think the taxes here are fair, you’re free to leave the country and renounce your citizenship.
I don’t think I’m going to convince you otherwise and you’re definitely not going to convince me otherwise.
At this point I think we’re just going to have to agree to disagree.
Best of luck
Talking about social security, I’m really wondering if the Trump administration can save it. I am skeptical that future presidents/administrations will try to continue fixing the mess the us gov is in. The way social security was run till now places it on the brink, the program will almost certainly crash in the near future, imo. The system is unsustainable.
anIsraeliYid, the argument about SS payments looks especially silly. This is something that will be paid back with reasonable assurance. OK, it may be not the most efficient vehicle and it may be on top of your Israeli withholdings, but at the end it is the same investment paid by any US citizen and you’ll get the benefit the same way as them. “Unaffordable” is “just” a cash flow problem. If you do other investments, you can reduce them as SS is an investment, or you can even borrow against that investment … anyway, this is not a direct loss at all.
If you treat SS as simply payment to current retirees in exchange to a vague promise of future generations paying for you later – then, maybe SS becomes a payment to the people who build all the life and peace you enjoyed as a kid, growing in US (and frankly not in the US also); or as a charity to support old people.
But what about income tax – I thought that paying income tax on all world income is the biggest issue with US system of taxing all income?
I also wonder whether non-US taxes are a bigger burden and maybe having a US corp can help minimize overall tax burden. But maybe Israel and EU tax you for the work done on their territory anyway. Say, you are a tax preparer for US citizens in Israel, spend April in US when you are actually filing all taxes and claim US-only income? Of course, maybe not paying Israeli taxes is worse option and there is an issue of leaving EY to pursue additional income (at the expense of other Israeli citizens).
phil > Talking about social security
Phil, I think that your attitude that you don’t need to follow the laws that you don’t find convenient is a bigger issue than what will happen with social security. In a democracy, voters will come to some consensus how to spend money and how to support old people. And you will be able to express your opinion. And please consider any offense you perceive society perpetrated against you in the context of all the good that you enjoy daily. Sorry for sounding like Obama “you didnt build that”, but this goes back to, I think, Ben Azzai who wondered in morning brochos how many people had to work that day to make all the things he will be using.
Dr. Pepper, you wrote “At this point I think we’re just going to have to agree to disagree.” I agree on that.
You seem to be a nice person and kept our differences respectful- thanks for that.
I also never heard of the term “legally lie” before and after. He explained that basically I wasn’t signing that everything was true- I was signing that if something isn’t true, they have the right to sue me. That raised a red flag. Another red flag was that I needed to pay in cash and not get a receipt so that there’s no trail. I wasn’t comfortable with the whole thing.
I think what we don’t agree on boils down to whether or not the government has the right to charge “unfair” taxes and not if someone is allowed to cheat on taxes if they feel that it’s not fair. We probably both agree that there’s enormous amounts of waste in the taxes being collected.
I’m trying very hard to stay out of politics but I will say that, in my opinion, the taxes being charged nowadays are exorbitant and unfair to many families. I will also say though that for some people it’s working and would work better if the government would raise taxes.
I also think we disagree on whether it’s fair or not to tell someone who doesn’t like the tax rates to either vote out the politicians (you probably agree with me on that one) or leave the country and renounce citizenship.
I don’t think it’s possible to save Social Security – at least not in a way that would give everyone 100% of what they should be getting. It’s a shame because I see how my 401(k)s are growing and the amount paid towards Social Security (between me and my employers) is significantly higher than what my employers and I set aside towards retirement.
People are retiring at a younger age nowadays and there aren’t enough people working vs the amount of people getting Social Security. Had the government funneled the funds towards an annuity with an insurance company- I think we’d all be in a better position.
Always ask,
I said that:
1. The government has no right to tax people simply any amount they decide to. Taxes have to be fair, they should not have a devastating financial effect on people and their families. A government demanding heavy taxes is stealing from its citizens.
2. I said that for those whom taxes affect to such an extent as to cause financial harm to themselves and their families, I can understand why they wouldn’t pay all the tax the government claims they need to pay.Your response to what i said is interesting and revealing because you are going sideways and claiming i said things i never said. You write, “Phil, I think that your attitude that you don’t need to follow the laws that you don’t find convenient…”Er, I find many laws inconvenient, I never advocated not to follow those “laws” i find inconvenient….You don’t even know anything about my tax situation, you ASSUME that because I believe that people should have sufficient income and the government has no right to take it away from them, that I don’t pay my taxes. I never said that I don’t pay my taxes nor did I insinuate that. And I absolutely never spoke about not following laws in general that I find inconvenient.
You write:” In a democracy, voters will come to some consensus how to spend money and how to support old people”. It is irrelevent how voters will decide. Numbers need to add up regardless of votes. At some point , if facts and numbers don’t add up, governments collapse, certainly government programs do. Not that i believe Americans would in any case have a vote on “how to support old people”, but even if we had any say, it’s irrelevent if it’s not a sustainable program.
You write “And please consider any offense you perceive society perpetrated against you in the context of all the good that you enjoy daily”??? Where have I said anything about society perpetuating offenses against me?
You write”Sorry for sounding like Obama “you didnt build that”, but this goes back to, I think, Ben Azzai who wondered in morning brochos how many people had to work that day to make all the things he will be using.” Huh? Whats the shaychus? I never said I don’t appreciate what others contribute/d to our society, that’s irrelevent to this conversation.
Dr. Pepper, thank you for being respectful as well despite our differences in opinions regarding this topic.
We do indeed both agree regarding government waste. Where we disagree is whether individuals must pay taxes that cause them financial hardship and whether the government has a right to levy any tax amount on its citizens. Or if you agree with me on these two things, perhaps we differ only whether we believe citizens are “cheating” if they don’t pay heavy taxes that will cause them financial hardship. As we already discussed, I don’t agree not paying these taxes is cheating as I believe no government has a right to levy taxes on individuals to the point that it causes them harm, the governmenthas no right to that money.
I totally agree with you on Social Security. As almost all other programs, it is not run well. Because the government is too big and because there’s the printing money without gold backing and raising taxes with no restraint, money is not being spent responsibly and trillions is being wasted. The individuals running the US government don’t care much if the SS program crashes- the majority of elected officials are rich to begin with and most often get even richer in office so it doesn’t concern them personally. I am super-impressed with Trump and Elon Musk trying to make some order and i hope they will get to do that with Social Security program as well. I am wary though how it will all pan out long-term and what will be with future administrations.
phil, thanks for clarifying your position. I went too far in interpreting your words
> The government has no right to tax people simply any amount they decide to. Taxes have to be fair, they should not have a devastating financial effect on people and their families. A government demanding heavy taxes is stealing from its citizens.I may want to government tax us less, but we live in a democracy where voters make certain decisions in a generally fair way. Is each of us allowed to decide what is “fair” and what is “devastating” and not pay extra? There are a lot of suboptimal, and sometimes simply silly, decisions by the government in how they tax and distribute funds. For example, FAFSA recently (quietly) changed (by Biden admin) from “family index” to “student index”, which means that family income is considered for every college student in the family instead of being divided by number of current students in college (this is while forgiving loans to those who work in non-profits, mostly democrats). So, we are paying way more than planned. Am I justified to fudge my income to correspond to the “fair” value?!
In the particular case of SS tax, even this seems not to work – government forces you to pay into a program that has a reasonable chance to benefit you in the future and that, presumably, your parents and grandparents are/were beneficiaries of. The case of income tax, this seems like a really heavy burden to pay it in both in a local high-tax country (Israel or EU) and in USA – is this actually happening? can someone clarify please.
Here’s my solution to the OP:
1) Form a general corporation all your clients should use to route their self employment earnings through. They will then not be double taxed, but not need to set up their own corporation. You can call it Berkshire Hasaway. Because, when there’s a will there’s a way. Also because, there is plenty of precedent for one corporation to do many different things. Advertise a lot so people know to do this in advance.
2) Sad to say, but American citizens should not invest in funds that are punitively taxed. Instead, if they want to contribute positively to Israel, they should give to charities that do result in a tax credit.
That should fix both your problems. LEGALLY.
@JR87 see this post.
(Post #2359769)
He is asking what to do in cases where it’s too late….
AAQ- there are always solutions and strategies if you are being proactive. An ounce of prevention is worth a pound of cure. That is obviously the ideal. The problem is with taxpayers who make decisions without even realizing it could be problematic (sometimes not even realizing they are subject to US tax) and by the time the realization hits, it’s too late and they are legally subject to extremely expensive and seemingly punitive tax rules.
What to do if too late?
Pay the punitive tax for one year and count it as your contribution to lessons learned and 2 countries who benefit you. People are desperate to live in the US so hopefully everyone will admit there is a benefit to being American.There are many things in life that are too late to take care of and some extra taxes for one year are not the worst possible thing that is too late.
If you’re running a business or earning more than a couple dollars, you should always figure out tax implications in advance. They should teach this in schools. If you didn’t, well, now you know for next year.
JR87, thanx for the idea!
“This is something that will be paid back with reasonable assurance.”
No, THIS is silly. If you only got back exactly what you paid in, it wouldn’t be enough for anyone to live on rendering SS useless. It depends on a constant influx of new “investors” (taxpayers). The problem with a pyramid scheme model isn’t that it’s immoral or fraudulent. The problem is that it is mathematically impossible for them to work. If they worked, every financial institution would be doing this, and it would be a great way for private retirement funds to operate. The number of new investors needed to sustain it goes up exponentially, so after a few iterations, you start needing an insane amount of new buy in. I doubt the numbers are readily available, but I would assume we currently need more people than are currently residing in the US (maybe the world) to be paying into SS to actually pay for it. Since that isn’t happening, they’ll just pay for it with debt. At that point, why not just pay for all of it with debt and save the taxpayer some money?“Is each of us allowed to decide what is “fair” and what is “devastating” and not pay extra?”
We should be. That’s his point. You’ve been trained to think it’s crazy, but it’s not.Dr. Pepper:
If I take your money at gun point, I’m obviously stealing. If I hold you at gun point and force you to buy an item you don’t actually want for a price you don’t agree upon, you would also probably call that stealing. Yet, somehow when the government does exactly that, not only is it not stealing in your eyes, it would be stealing for the victim for not pay for the unwanted item.The argument that the government effectively owns us and therefore has the right to anything we earn is effectively comparable to slavery. Meaning, they could take 100% of our income and make us work for free, and that would be their right because they own us. They graciously allow us to keep 50-80% of our earnings because they are benevolent masters apparently. At what percentage do you have a problem with this, or do you genuinely hold that they have the right to take everything? I get the taxation as a necessary evil case, but I absolutely do not understand how anyone can argue that tax collectors are on the moral high ground and that it would be stealing not to be extorted by them. Any other time in history, you probably would have seen it this way. People have become a little too comfortable in America.
“People are desperate to live in the US so hopefully everyone will admit there is a benefit to being American.”
People from North Korea are desperate to live in China. People in Somalia are desperate to live in Iran. It’s all relative, and I would contend you don’t really believe your own argument. If someone were desperate to leave his country (eg. the folks you mention who want to come to the US), does that mean they should not pay taxes to their country since they don’t see the benefit of it?I would say people SHOULD only have to pay taxes on the programs where they actually see real benefit. I believe your argument, but you don’t.
Neville > “Is each of us allowed to decide what is “fair” and what is “devastating” and not pay extra?”
We should be. That’s his point. You’ve been trained to think it’s crazy, but it’s not.I am not sure what is your theory, maybe I missed it in your previous points. Are you suggesting a charity system to substitute for any tax? Or only for taxes that you think are unfair, like US double-taxation? I can assure you that every revenue source has someone objecting to it. So, we all can participate in a democracy and influence the policy, but can we simply cheat to avoid paying? I’d like to see a halachik source for that. There are plenty of sources saying that one should pay taxes in a medina shel chesed (Igros Moshe)
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