- Days left
The controversy still rages over Joe the Plumber, who has been raked over the coals by the media and bloggers for asking presidential candidate Barack Obama a question about his tax plan. He's been accused of being a plant and an outright liar, and his divorce and delinquent taxes have been discussed ad nauseum.

Whether you're for or against Joe the Plumber, it's clear that he still represents the American dream. Maybe he's not considering buying a business. Maybe he doesn't have a plumber's license and instead works under someone who does. Maybe he's never going to make a lot of money.

But Joe represents the possibilities that Americans believe in. Someday he could be a business owner and he just might make enough to be considered one of those "high income" people. And indeed, many Americans believe they have a chance to someday be financially successful. But they also know that a strong U.S. economy depends on entrepreneurs.
Companies considered to be "high-growth" are responsible for creating almost all the job growth in the U.S., even though there are only about 30,000 of these companies. When inventors get to work and bring desirable products and services to the marketplace, we all benefit, and the economy expands. Our economy relies heavily on innovation, but that could be negatively impacted by a decreasing desire by consumers to start their own businesses in recent months.

It's popular to suggest that higher taxes on the "rich" are better for us as a whole, and that those in need are helped by such a move. Higher taxes likely would have just the opposite indirect effect, however. When governments seize more from taxpayers, the incentive to innovate and take risk is reduced. That results in less entrepreneurship, which results in fewer jobs, which impacts those in need very heavily.

A system that taxes more and distributes those funds to the less fortunate shouldn't ignore the side effects. Lower taxes encourage development of new companies and industries, and history has shown that the increased output from such development can greatly benefit all classes of taxpayers. So before we're too quick to believe that more taxes on the wealthiest of Americans are their duty (and even a "penalty" that they deserve for being wealthy), let's pay careful attention to what a move like this might mean for the rest of society, which depends on the jobs created by innovative entrepreneurs.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud

Increase your money and finance knowledge from home

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

Basics Of The Stock Market

Stock Market 101 - everything you need to know but were afraid to ask!

View Course »

TurboTax Articles

Cities with the Lowest Tax Rates

The total amount of tax you pay reaches far beyond what you owe the federal government. Depending on where you live, most likely you're required to pay additional taxes, including property and sales tax. The disparity between the amount of tax you pay in a low-tax city and that in a high-tax city can be dramatic. Living in any of these 10 cities could save you a bundle, although the exact amount may fluctuate based on your income and lifestyle choices.

Cities with the Highest Tax Rates

Much ado is made in the press about federal tax brackets, but cities can carry a tax bite of their own. Even if you live in a state that has no income tax, your city may levy a variety of taxes that could eat away the entire benefit of living in an income tax-free state, including property taxes, sales taxes and auto taxes. Consider all the costs before you move to one of these cities, and understand that rates may change based on your family's income level.

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as a deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

A Freelancer's Guide to Taxes

Freelancing certainly has its benefits, but it can result in a few complications come tax time. The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax. Here are things to consider as a freelancer when filing your taxes.

Tax Deductions for Voluntary Interest Payments on Student Loans

Most taxpayers who pay interest on student loans can take a tax deduction for the expense ? and you can do this regardless of whether you itemize tax deductions on your return. The rules for claiming the deduction are the same whether the interest payments were required or voluntary.

Add a Comment

*0 / 3000 Character Maximum